G.R. Nos. 173654-765 August 28, 2008 PEOPLE OF THE PHILIPPINES, !t"t"o#!$, %s.

TERESITA P&IG '#( RO)EO PORRAS, $!s o#(!#ts.

D E C I S I O N (CHICO-NAZARIO, J.:) This is a Petition for Re ie! "n#er R"$e %& of the Re ise# R"$es of Co"rt !ith 'etitioner Peo'$e of the Phi$i''ines, re'resente# () the Offi*e of the So$i*itor +enera$, 'ra)in, for the re ersa$ of the Or#ers #ate# -. Jan"ar) /..0 an# 1 J"ne /..0 of the Re,iona$ Tria$ Co"rt (RTC) of the 0th J"#i*ia$ Re,ion, 2ran*h 03, D"4an,as, I$oi$o, #is4issin, the 55/ *ases of 6"a$ifie# Theft fi$e# a,ainst res'on#ents Teresita P"i, an# Ro4eo Porras, an# #en)in, 'etitioner7s 8otion for Re*onsi#eration, in Cri4ina$ Cases No. .&--.&% to .&--50&. The fo$$o!in, are the fa*t"a$ ante*e#ents: On 9 No e4(er /..&, the I$oi$o Pro in*ia$ Prose*"tor7s Offi*e fi$e# (efore 2ran*h 03 of the RTC in D"4an,as, I$oi$o, 55/ *ases of 6"a$ifie# Theft a,ainst res'on#ents Teresita P"i, (P"i,) an# Ro4eo Porras (Porras) !ho !ere the Cashier an# 2oo::ee'er, res'e*ti e$), of 'ri ate *o4'$ainant R"ra$ 2an: of Pototan, In*. The *ases !ere #o*:ete# as Cri4ina$ Cases No. .&--.&% to .&-50&. The a$$e,ations in the Infor4ations5 fi$e# (efore the RTC !ere "nifor4 an# 'ro-for4a, e;*e't for the a4o"nts, #ate an# ti4e of *o44ission, to !it: IN<OR8ATION That on or a(o"t the 5st #a) of A","st, /../, in the 8"ni*i'a$it) of Pototan, Pro in*e of I$oi$o, Phi$i''ines, an# !ithin the ="ris#i*tion of this Honora($e Co"rt, a(o e-na4e# >res'on#ents?, *ons'irin,, *onfe#eratin,, an# he$'in, one another, !ith ,ra e a("se of *onfi#en*e, (ein, the Cashier an# 2oo::ee'er of the R"ra$ 2an: of Pototan, In*., Pototan, I$oi$o, !itho"t the :no!$e#,e an#@or *onsent of the 4ana,e4ent of the 2an: an# !ith intent of ,ain, #i# then an# there !i$$f"$$), "n$a!f"$$) an# fe$onio"s$) ta:e, stea$ an# *arr) a!a) the s"4 of <I<TEEN THOASAND PESOS (P5&,......), Phi$i''ine C"rren*), to the #a4a,e an# 're="#i*e of the sai# (an: in the aforesai# a4o"nt. After 'er"sin, the Infor4ations in these *ases, the tria$ *o"rt #i# not fin# the e;isten*e of 'ro(a($e *a"se that !o"$# ha e ne*essitate# the iss"an*e of a !arrant of arrest (ase# on the fo$$o!in, ,ro"n#s: (5) the e$e4ent of Bta:in, !itho"t the *onsent of the o!ners7 !as 4issin, on the ,ro"n# that it is the #e'ositors-*$ients, an# not the 2an:, !hi*h fi$e# the *o4'$aint in these *ases, !ho are the o!ners of the 4one) a$$e,e#$) ta:en () res'on#ents an# hen*e, are the rea$ 'arties-in-interestC an# (/) the Infor4ations are (ereft of the 'hrase a$$e,in, D#e'en#en*e, ,"ar#ianshi' or i,i$an*e (et!een the res'on#ents an# the offen#e# 'art) that !o"$# ha e *reate# a hi,h #e,ree of *onfi#en*e (et!een the4 !hi*h the res'on#ents *o"$# ha e a("se#.D It a##e# that a$$o!in, the 55/ *ases for 6"a$ifie# Theft fi$e# a,ainst the res'on#ents to '"sh thro",h !o"$# (e io$ati e of the ri,ht of the res'on#ents "n#er Se*tion 5%(/), Arti*$e III of the 5139 Constit"tion !hi*h states that in a$$ *ri4ina$ 'rose*"tions, the a**"se# sha$$ en=o) the ri,ht to (e infor4e# of the nat"re an# *a"se of the a**"sation a,ainst hi4. <o$$o!in, Se*tion 0, R"$e 55/ of the Re ise# R"$es of Cri4ina$ Pro*e#"re, the RTC #is4isse# the *ases on -. Jan"ar) /..0 an# ref"se# to iss"e a !arrant of arrest a,ainst P"i, an# Porras. A 8otion for Re*onsi#eration/ !as fi$e# on 59 A'ri$ /..0, () the 'etitioner. On 1 J"ne /..0, an Or#er- #en)in, 'etitioner7s 8otion for Re*onsi#eration !as iss"e# () the RTC, fin#in, as fo$$o!s: A**or#in,$), the 'rose*"tion7s 8otion for Re*onsi#eration sho"$# (e, as it here(), DENIED. The Or#er #ate# Jan"ar) -., /..0 STANDS in a$$ res'e*ts. Petitioner !ent #ire*t$) to this Co"rt ia Petition for Re ie! on Certiorari "n#er R"$e %&, raisin, the so$e $e,a$ iss"e of: EHETHER OR NOT THE 55/ IN<OR8ATIONS <OR 6AAFI<IED THE<T SA<<ICIENTFG AFFE+E THE EFE8ENT O< TAHIN+ EITHOAT THE CONSENT O< THE OENER, AND THE 6AAFI<GIN+ CIRCA8STANCE O< +RAIE A2ASE O< CON<IDENCE. Petitioner 'ra)s that ="#,4ent (e ren#ere# ann"$$in, an# settin, asi#e the Or#ers #ate# -. Jan"ar) /..0 an# 1 J"ne /..0 iss"e# () the tria$ *o"rt, an# that it (e #ire*te# to 'ro*ee# !ith Cri4ina$ Cases No. .&--.&% to .&--50&. Petitioner e;'$ains that "n#er Arti*$e 513. of the Ne! Ci i$ Co#e, Dfi;e#, sa in,s, an# *"rrent #e'osits of 4one) in (an:s an# si4i$ar instit"tions sha$$ (e ,o erne# () the 'ro isions *on*ernin, si4'$e $oans.D Coro$$ar) thereto, Arti*$e 51&- of the sa4e Co#e 'ro i#es that Da 'erson !ho re*ei es a $oan of 4one) or an) other f"n,i($e thin, a*J"ires the o!nershi' thereof, an# is (o"n# to 'a) to the *re#itor an eJ"a$ a4o"nt of the sa4e :in# an# J"a$it).D Th"s, it 'osits that the #e'ositors !ho '$a*e their 4one) !ith the (an: are *onsi#ere# *re#itors of the (an:. The (an: a*J"ires o!nershi' of the 4one) #e'osite# () its *$ients, 4a:in, the 4one) ta:en () res'on#ents as (e$on,in, to the (an:. Petitioner a$so insists that the Infor4ations s"ffi*ient$) a$$e,e a$$ the e$e4ents of the *ri4e of J"a$ifie# theft, *itin, that a 'er"sa$ of the Infor4ations !i$$ sho! that the) s'e*ifi*a$$) a$$e,e that the res'on#ents !ere the Cashier an# 2oo::ee'er of the R"ra$ 2an: of Pototan, In*., res'e*ti e$), an# that the) too: ario"s a4o"nts of 4one) !ith ,ra e a("se of *onfi#en*e, an# !itho"t the :no!$e#,e an# *onsent of the (an:, to the #a4a,e an# 're="#i*e of the (an:.
1

Parentheti*a$$), res'on#ents raise 'ro*e#"ra$ iss"es. The) *ha$$en,e the 'etition on the ,ro"n# that a Petition for Re ie! on Certiorari ia R"$e %& is the !ron, 4o#e of a''ea$ (e*a"se a fin#in, of 'ro(a($e *a"se for the iss"an*e of a !arrant of arrest 'res"''oses e a$"ation of fa*ts an# *ir*"4stan*es, !hi*h is not 'ro'er "n#er sai# R"$e. Res'on#ents f"rther *$ai4 that the De'art4ent of J"sti*e (DOJ), thro",h the Se*retar) of J"sti*e, is the 'rin*i'a$ 'art) to fi$e a Petition for Re ie! on Certiorari, *onsi#erin, that the in*i#ent !as in#orse# () the DOJ. Ee fin# 4erit in the 'etition. The #is4issa$ () the RTC of the *ri4ina$ *ases !as a$$e,e#$) #"e to ins"ffi*ien*) of the Infor4ations an#, therefore, (e*a"se of this #efe*t, there is no (asis for the e;isten*e of 'ro(a($e *a"se !hi*h !i$$ ="stif) the iss"an*e of the !arrant of arrest. Petitioner assai$s the #is4issa$ *onten#in, that the Infor4ations for 6"a$ifie# Theft s"ffi*ient$) state fa*ts !hi*h *onstit"te (a) the J"a$if)in, *ir*"4stan*e of ,ra e a("se of *onfi#en*eC an# (() the e$e4ent of ta:in,, !ith intent to ,ain an# !itho"t the *onsent of the o!ner, !hi*h is the 2an:. In #eter4inin, the e;isten*e of 'ro(a($e *a"se to iss"e a !arrant of arrest, the RTC ="#,e fo"n# the a$$e,ations in the Infor4ation ina#eJ"ate. He r"$e# that the Infor4ation fai$e# to state fa*ts *onstit"tin, the J"a$if)in, *ir*"4stan*e of ,ra e a("se of *onfi#en*e an# the e$e4ent of ta:in, !itho"t the *onsent of the o!ner, sin*e the o!ner of the 4one) is not the 2an:, ("t the #e'ositors therein. He a$so *ites Peo'$e . Ho* Son,,% in !hi*h this Co"rt he$#: There 4"st (e a$$e,ation in the infor4ation an# 'roof of a re$ation, () reason of #e'en#en*e, ,"ar#ianshi' or i,i$an*e, (et!een the res'on#ents an# the offen#e# 'art) that has *reate# a hi,h #e,ree of *onfi#en*e (et!een the4, !hi*h the res'on#ents a("se#. At this 'oint, it nee#s stressin, that the RTC J"#,e (ase# his *on*$"sion that there !as no 'ro(a($e *a"se si4'$) on the ins"ffi*ien*) of the a$$e,ations in the Infor4ations *on*ernin, the fa*ts *onstit"ti e of the e$e4ents of the offense *har,e#. This, therefore, 4a:es the iss"e of s"ffi*ien*) of the a$$e,ations in the Infor4ations the fo*a$ 'oint of #is*"ssion. 6"a$ifie# Theft, as #efine# an# '"nishe# "n#er Arti*$e -5. of the Re ise# Pena$ Co#e, is *o44itte# as fo$$o!s, iK: ART. -5.. 6"a$ifie# Theft. L The *ri4e of theft sha$$ (e '"nishe# () the 'ena$ties ne;t hi,her () t!o #e,rees than those res'e*ti e$) s'e*ifie# in the ne;t 're*e#in, arti*$e, if *o44itte# () a #o4esti* ser ant, or !ith ,ra e a("se of *onfi#en*e, or if the 'ro'ert) sto$en is 4otor ehi*$e, 4ai$ 4atter or $ar,e *att$e or *onsists of *o*on"ts ta:en fro4 the 're4ises of a '$antation, fish ta:en fro4 a fish'on# or fisher) or if 'ro'ert) is ta:en on the o**asion of fire, earthJ"a:e, t)'hoon, o$*ani* er"'tion, or an) other *a$a4it), ehi*"$ar a**i#ent or *i i$ #ist"r(an*e. (E4'hasis s"''$ie#.) Theft, as #efine# in Arti*$e -.3 of the Re ise# Pena$ Co#e, reJ"ires the 'h)si*a$ ta:in, of another7s 'ro'ert) !itho"t io$en*e or inti4i#ation a,ainst 'ersons or for*e "'on thin,s. The e$e4ents of the *ri4e "n#er this Arti*$e are: 5. Intent to ,ainC /. An$a!f"$ ta:in,C -. Persona$ 'ro'ert) (e$on,in, to anotherC %. A(sen*e of io$en*e or inti4i#ation a,ainst 'ersons or for*e "'on thin,s. To fa$$ "n#er the *ri4e of 6"a$ifie# Theft, the fo$$o!in, e$e4ents 4"st *on*"r: 5. Ta:in, of 'ersona$ 'ro'ert)C /. That the sai# 'ro'ert) (e$on,s to anotherC -. That the sai# ta:in, (e #one !ith intent to ,ainC %. That it (e #one !itho"t the o!ner7s *onsentC &. That it (e a**o4'$ishe# !itho"t the "se of io$en*e or inti4i#ation a,ainst 'ersons, nor of for*e "'on thin,sC 0. That it (e #one !ith ,ra e a("se of *onfi#en*e. On the s"ffi*ien*) of the Infor4ation, Se*tion 0, R"$e 55. of the R"$es of Co"rt reJ"ires, inter a$ia, that the infor4ation 4"st state the a*ts or o4issions *o4'$aine# of as *onstit"ti e of the offense. On the 4anner of ho! the Infor4ation sho"$# (e !or#e#, Se*tion 1, R"$e 55. of the R"$es of Co"rt, is en$i,htenin,: Se*tion 1. Ca"se of the a**"sation. The a*ts or o4issions *o4'$aine# of as *onstit"tin, the offense an# the J"a$if)in, an# a,,ra atin, *ir*"4stan*es 4"st (e state# in or#inar) an# *on*ise $an,"a,e an# not ne*essari$) in the $an,"a,e "se# in the stat"te ("t in ter4s s"ffi*ient to ena($e a 'erson of *o44on "n#erstan#in, to :no! !hat offense is (ein, *har,e# as !e$$ as its J"a$if)in, an# a,,ra atin, *ir*"4stan*es an# for the *o"rt to 'rono"n*e ="#,4ent. It is e i#ent that the Infor4ation nee# not "se the e;a*t $an,"a,e of the stat"te in a$$e,in, the a*ts or o4issions *o4'$aine# of as *onstit"tin, the offense. The test is !hether it ena($es a 'erson of *o44on "n#erstan#in, to :no! the *har,e a,ainst hi4, an# the *o"rt to ren#er ="#,4ent 'ro'er$).& The 'ortion of the Infor4ation re$e ant to this #is*"ssion rea#s:
2

A?(o e-na4e# >res'on#ents?, *ons'irin,, *onfe#eratin,, an# he$'in, one another, !ith ,ra e a("se of *onfi#en*e, (ein, the Cashier an# 2oo::ee'er of the R"ra$ 2an: of Pototan, In*., Pototan, I$oi$o, !itho"t the :no!$e#,e an#@or *onsent of the 4ana,e4ent of the 2an: ; ; ;. It is (e)on# #o"(t that te$$ers, Cashiers, 2oo::ee'ers an# other e4'$o)ees of a 2an: !ho *o4e into 'ossession of the 4onies #e'osite# therein en=o) the *onfi#en*e re'ose# in the4 () their e4'$o)er. 2an:s, on the other han#, !here 4onies are #e'osite#, are *onsi#ere# the o!ners thereof. This is er) *$ear not on$) fro4 the e;'ress 'ro isions of the $a!, ("t fro4 esta($ishe# ="ris'r"#en*e. The re$ationshi' (et!een (an:s an# #e'ositors has (een he$# to (e that of *re#itor an# #e(tor. Arti*$es 51&- an# 513. of the Ne! Ci i$ Co#e, as a''ro'riate$) 'ointe# o"t () 'etitioner, 'ro i#e as fo$$o!s: Arti*$e 51&-. A 'erson !ho re*ei es a $oan of 4one) or an) other f"n,i($e thin, a*J"ires the o!nershi' thereof, an# is (o"n# to 'a) to the *re#itor an eJ"a$ a4o"nt of the sa4e :in# an# J"a$it). Arti*$e 513.. <i;e#, sa in,s, an# *"rrent #e'osits of 4one) in (an:s an# si4i$ar instit"tions sha$$ (e ,o erne# () the 'ro isions *on*ernin, $oan. In a $on, $ine of *ases in o$ in, 6"a$ifie# Theft, this Co"rt has fir4$) esta($ishe# the nat"re of 'ossession () the 2an: of the 4one) #e'osits therein, an# the #"ties (ein, 'erfor4e# () its e4'$o)ees !ho ha e *"sto#) of the 4one) or ha e *o4e into 'ossession of it. The Co"rt has *onsistent$) *onsi#ere# the a$$e,ations in the Infor4ation that s"*h e4'$o)ees a*te# !ith ,ra e a("se of *onfi#en*e, to the #a4a,e an# 're="#i*e of the 2an:, !itho"t 'arti*"$ar$) referrin, to it as o!ner of the 4one) #e'osits, as s"ffi*ient to 4a:e o"t a *ase of 6"a$ifie# Theft. <or a ,ra'hi* i$$"stration, !e *ite RoJ"e . Peo'$e,0 !here the a**"se# te$$er !as *on i*te# for 6"a$ifie# Theft (ase# on this Infor4ation: That on or a(o"t the 50th #a) of No e4(er, 5131, in the 4"ni*i'a$it) of <$ori#a($an*a, 'ro in*e of Pa4'an,a, Phi$i''ines an# !ithin the ="ris#i*tion of his Honora($e Co"rt, the a(o e-na4e# a**"se# ASANCION +AFAN+ RO6AE, (ein, then e4'$o)e# as te$$er of the 2asa Air 2ase Sa in,s an# Foan Asso*iation In*. (2A2SFA) !ith offi*e a##ress at 2asa Air 2ase, <$ori#a($an*a, Pa4'an,a, an# as s"*h !as a"thoriKe# an# re'ose# !ith the res'onsi(i$it) to re*ei e an# *o$$e*t *a'ita$ *ontri("tions fro4 its 4e4(er@*ontri("tors of sai# *or'oration, an# ha in, *o$$e*te# an# re*ei e# in her *a'a*it) as te$$er of the 2A2SFA the s"4 of TEN THOASAND PESOS (P5.,......), sai# a**"se#, !ith intent of ,ain, !ith ,ra e a("se of *onfi#en*e an# !itho"t the :no!$e#,e an# *onsent of sai# *or'oration, #i# then an# there !i$$f"$$), "n$a!f"$$) an# fe$onio"s$) ta:e, stea$ an# *arr) a!a) the a4o"nt of P5.,......, Phi$i''ine *"rren*), () 4a:in, it a''ear that a *ertain #e'ositor () the na4e of Antonio Sa$aKar !ith#re! fro4 his Sa in,s A**o"nt No. 5-&1, !hen in tr"th an# in fa*t sai# Antonio Sa$aKar #i# not !ith#r>a?! the sai# a4o"nt of P5.,...... to the #a4a,e an# 're="#i*e of 2A2SFA in the tota$ a4o"nt of P5.,......, Phi$i''ine *"rren*). In *on i*tin, the therein a''e$$ant, the Co"rt he$# that: >S?in*e the te$$er o**"'ies a 'osition of *onfi#en*e, an# the (an: '$a*es 4one) in the te$$er7s 'ossession #"e to the *onfi#en*e re'ose# on the te$$er, the fe$on) of J"a$ifie# theft !o"$# (e *o44itte#.9 A$so in Peo'$e . Sison,3 the 2ran*h O'erations Offi*er !as *on i*te# of the *ri4e of 6"a$ifie# Theft (ase# on the Infor4ation as herein *ite#: That in or a(o"t an# #"rin, the 'erio# *o4'resse# (et!een Jan"ar) /%, 511/ an# <e(r"ar) 5-, 511/, (oth #ates in*$"si e, in the Cit) of 8ani$a, Phi$i''ines, the sai# a**"se# #i# then an# there !i$f"$$), "n$a!f"$$) an# fe$onio"s$), !ith intent of ,ain an# !itho"t the :no!$e#,e an# *onsent of the o!ner thereof, ta:e, stea$ an# *arr) a!a) the fo$$o!in,, to !it: Cash 4one) a4o"ntin, to P0,...,...... in #ifferent #eno4inations (e$on,in, to the PHIFIPPINE CO88ERCIAF INTERNATIONAF 2ANH (PCI2an: for (re it)), F"neta 2ran*h, 8ani$a re'resente# () its 2ran*h 8ana,er, HEFEN A. <AR+AS, to the #a4a,e an# 're="#i*e of the sai# o!ner in the aforesai# a4o"nt of P0,...,......, Phi$i''ine C"rren*). That in the *o44ission of the sai# offense, herein a**"se# a*te# !ith ,ra e a("se of *onfi#en*e an# "nfaithf"$ness, he (ein, the 2ran*h O'eration Offi*er of the sai# *o4'$ainant an# as s"*h he ha# free a**ess to the '$a*e !here the sai# a4o"nt of 4one) !as :e't. The ="#,4ent of *on i*tion e$a(orate# th"s: The *ri4e 'er'et"ate# () a''e$$ant a,ainst his e4'$o)er, the Phi$i''ine Co44er*ia$ an# In#"stria$ 2an: (PCI2), is 6"a$ifie# Theft. A''e$$ant *o"$# not ha e *o44itte# the *ri4e ha# he not (een ho$#in, the 'osition of F"neta 2ran*h O'eration Offi*er !hi*h ,a e hi4 not on$) so$e a**ess to the (an: a"$t ;;;. The 4ana,e4ent of the PCI2 re'ose# its tr"st an# *onfi#en*e in the a''e$$ant as its F"neta 2ran*h O'eration Offi*er, an# it !as this tr"st an# *onfi#en*e !hi*h he e;'$oite# to enri*h hi4se$f to the #a4a,e an# 're="#i*e of PCI2 ; ; ;.1 <ro4 another en#, Peo'$e . Fo*son,5. in a##ition to Peo'$e . Sison, #es*ri(e# the nat"re of 'ossession () the 2an:. The 4one) in this *ase !as in the 'ossession of the #efen#ant as re*ei in, te$$er of the (an:, an# the 'ossession of the #efen#ant !as the 'ossession of the 2an:. The Co"rt he$# therein that !hen the #efen#ant, !ith ,ra e a("se of *onfi#en*e, re4o e# the 4one) an# a''ro'riate# it to his o!n "se !itho"t the *onsent of the 2an:, there !as ta:in, as *onte4'$ate# in the *ri4e of 6"a$ifie# Theft.55 Cons'i*"o"s$), in a$$ of the fore,oin, *ases, !here the Infor4ations 4ere$) a$$e,e# the 'ositions of the res'on#entsC that the *ri4e !as *o44itte# !ith ,ra e a("se of *onfi#en*e, !ith intent to ,ain an# !itho"t the :no!$e#,e an# *onsent of the 2an:, !itho"t ne*essari$) statin, the 'hrase (ein, assi#"o"s$) insiste# "'on () res'on#ents, Dof a re$ation () reason of #e'en#en*e, ,"ar#ianshi' or i,i$an*e, (et!een the res'on#ents an# the offen#e# 'art) that has *reate# a hi,h #e,ree of *onfi#en*e (et!een the4, !hi*h res'on#ents a("se#,D5/ an# !itho"t e4'$o)in, the !or# Do!nerD in $ie" of the D2an:D !ere *onsi#ere# to ha e satisfie# the test of s"ffi*ien*) of a$$e,ations. As re,ar#s the res'on#ents !ho !ere e4'$o)e# as Cashier an# 2oo::ee'er of the 2an: in this *ase, there is e en no reason to J"i(($e on the a$$e,ation in the Infor4ations that the) a*te# !ith ,ra e a("se of *onfi#en*e. In fa*t, the Infor4ation !hi*h 3

a$$e,e# ,ra e a("se of *onfi#en*e () a**"se# herein is e en 4ore 're*ise, as this is e;a*t$) the reJ"ire4ent of the $a! in J"a$if)in, the *ri4e of Theft. In s"44ar), the 2an: a*J"ires o!nershi' of the 4one) #e'osite# () its *$ientsC an# the e4'$o)ees of the 2an:, !ho are entr"ste# !ith the 'ossession of 4one) of the 2an: #"e to the *onfi#en*e re'ose# in the4, o**"') 'ositions of *onfi#en*e. The Infor4ations, therefore, s"ffi*ient$) a$$e,e a$$ the essentia$ e$e4ents *onstit"tin, the *ri4e of 6"a$ifie# Theft. On the theor) of the #efense that the DOJ is the 'rin*i'a$ 'art) !ho 4a) fi$e the instant 'etition, the r"$in, in 8o(i$ia Pro#"*ts, In*. . Ha=i4e A4eKa!a5- is instr"*ti e. The Co"rt th"s en"n*iate#: In a *ri4ina$ *ase in !hi*h the offen#e# 'art) is the State, the interest of the 'ri ate *o4'$ainant or the offen#e# 'art) is $i4ite# to the *i i$ $ia(i$it) arisin, therefro4. Hen*e, if a *ri4ina$ *ase is #is4isse# () the tria$ *o"rt or if there is an a*J"itta$, a re*onsi#eration of the or#er of #is4issa$ or a*J"itta$ 4a) (e "n#erta:en, !hene er $e,a$$) feasi($e, insofar as the *ri4ina$ as'e*t thereof is *on*erne# an# 4a) (e 4a#e on$) () the '"($i* 'rose*"torC or in the *ase of an a''ea$, () the State on$), thro",h the OS+. ; ; ;. On the a$$e,e# !ron, 4o#e of a''ea$ () 'etitioner, s"ffi*e it to state that the r"$e is !e$$-sett$e# that in a''ea$s () *ertiorari "n#er R"$e %& of the R"$es of Co"rt, on$) errors of $a! 4a) (e raise#,5% an# herein 'etitioner *ertain$) raise# a J"estion of $a!. As an asi#e, e en if !e ,o (e)on# the a$$e,ations of the Infor4ations in these *ases, a *$oser $oo: at the re*or#s of the 're$i4inar) in esti,ation *on#"*te# !i$$ sho! that, in#ee#, 'ro(a($e *a"se e;ists for the in#i*t4ent of herein res'on#ents. P"rs"ant to Se*tion 0, R"$e 55/ of the R"$es of Co"rt, the ="#,e sha$$ iss"e a !arrant of arrest on$) "'on a fin#in, of 'ro(a($e *a"se after 'ersona$$) e a$"atin, the reso$"tion of the 'rose*"tor an# its s"''ortin, e i#en*e. So$i en . 8a:asiar,5& as reiterate# in A$$a#o . Drio:no,50 e;'$aine# that 'ro(a($e *a"se for the iss"an*e of a !arrant of arrest is the e;isten*e of s"*h fa*ts an# *ir*"4stan*es that !o"$# $ea# a reasona($) #is*reet an# 'r"#ent 'erson to (e$ie e that an offense has (een *o44itte# () the 'erson so",ht to (e arreste#.59 The re*or#s reasona($) in#i*ate that the res'on#ents 4a) ha e, in#ee#, *o44itte# the offense *har,e#. 2efore *$osin,, $et it (e state# that !hi$e it is tr"$) i4'erati e "'on the fis*a$ or the ="#,e, as the *ase 4a) (e, to re$ie e the res'on#ents fro4 the 'ain of ,oin, thro",h a tria$ on*e it is as*ertaine# that no 'ro(a($e *a"se e;ists to for4 a s"ffi*ient (e$ief as to the ,"i$t of the res'on#ents, *on erse$), it is a$so eJ"a$$) i4'erati e "'on the ="#,e to 'ro*ee# !ith the *ase "'on a sho!in, that there is a 'ri4a fa*ie *ase a,ainst the res'on#ents. EHERE<ORE, 're4ises *onsi#ere#, the Petition for Re ie! on Certiorari is here() +RANTED. The Or#ers #ate# -. Jan"ar) /..0 an# 1 J"ne /..0 of the RTC #is4issin, Cri4ina$ Cases No. .&--.&% to .&--50& are REIERSED an# SET ASIDE. Fet the *orres'on#in, Earrants of Arrest iss"e a,ainst herein res'on#ents TERESITA PAI+ an# RO8EO PORRAS. The RTC J"#,e of 2ran*h 03, in D"4an,as, I$oi$o, is #ire*te# to 'ro*ee# !ith the tria$ of Cri4ina$ Cases No. .&--.&% to .&--50&, in*$"si e, !ith reasona($e #is'at*h. No 'rono"n*e4ent as to *osts. SO ORDERED.

*PI FA)IL+ *AN,, - %!$sus A)A-O FRAN.O '#( .O&RT OF APPEALS, G.R. No. 1234/8, No%!01!$ 23, 2007
2an:s are e;horte# to treat the a**o"nts of their #e'ositors !ith 4eti*"$o"s *are an# "t4ost fi#e$it). Ee reiterate this e;hortation in the *ase at (en*h. 2efore "s is a Petition for Re ie! on Certiorari see:in, the re ersa$ of the Co"rt of A''ea$s (CA) De*ision>5? in CA-+.R. CI No. %-%/% !hi*h affir4e# !ith 4o#ifi*ation the ="#,4ent>/? of the Re,iona$ Tria$ Co"rt, 2ran*h &&, 8ani$a (8ani$a RTC), in Ci i$ Case No. 1.-&-/1&. This *ase has its ,enesis in an ostensi($e fra"# 'er'etrate# on the 'etitioner 2PI <a4i$) 2an: (2PI-<2) a$$e,e#$) () res'on#ent A4a#o <ran*o (<ran*o) in *ons'ira*) !ith other in#i i#"a$s,>-? so4e of !ho4 o'ene# an# 4aintaine# se'arate a**o"nts !ith 2PI-<2, San <ran*is*o #e$ 8onte (S<D8) (ran*h, in a series of transa*tions. On A","st 5&, 5131, Te este*o Arrastre-Ste e#orin, Co., In*. (Te este*o) o'ene# a sa in,s an# *"rrent a**o"nt !ith 2PI-<2. Soon thereafter, or on A","st /&, 5131, <irst 8etro In est4ent Cor'oration (<8IC) a$so o'ene# a ti4e #e'osit a**o"nt !ith the sa4e (ran*h of 2PI-<2 !ith a #e'osit of P5..,...,......, to 4at"re one )ear then*e. S"(seJ"ent$), on A","st -5, 5131, <ran*o o'ene# three a**o"nts, na4e$), a *"rrent,>%? sa in,s,>&? an# ti4e #e'osit,>0? !ith 2PI-<2. The *"rrent an# sa in,s a**o"nts !ere res'e*ti e$) f"n#e# !ith an initia$ #e'osit of P&..,...... ea*h, !hi$e the ti4e #e'osit a**o"nt ha# P5,...,...... !ith a 4at"rit) #ate of A","st -5, 511.. The tota$ a4o"nt of P/,...,...... "se# to o'en these a**o"nts is tra*ea($e to a *he*: iss"e# () Te este*o a$$e,e#$) in *onsi#eration of <ran*o7s intro#"*tion of E$a#io Te es,>9? !ho !as $oo:in, for a *on#"it (an: to fa*i$itate Te este*o7s ("siness transa*tions, to Jai4e Se(astian, !ho !as then 2PI-<2 S<D87s 2ran*h 8ana,er. In t"rn, the f"n#in, for the P/,...,...... *he*: !as 'art of the P3.,...,...... #e(ite# () 2PI-<2 fro4 <8IC7s ti4e #e'osit a**o"nt an# *re#ite# to Te este*o7s *"rrent a**o"nt '"rs"ant to an A"thorit) to De(it '"r'orte#$) si,ne# () <8IC7s offi*ers. It a''ears, ho!e er, that the si,nat"res of <8IC7s offi*ers on the A"thorit) to De(it !ere for,e#.>3? On Se'te4(er %, 5131, Antonio On,,>1? "'on (ein, sho!n the A"thorit) to De(it, 'ersona$$) #e*$are# his si,nat"re therein to (e a for,er). Anfort"nate$), Te este*o ha# a$rea#) effe*te# se era$ !ith#ra!a$s fro4 its *"rrent a**o"nt (to !hi*h ha# (een *re#ite# the
4

P3.,...,...... *o ere# () the for,e# A"thorit) to De(it) a4o"ntin, to P-9,%&&,%5..&%, in*$"#in, the P/,...,...... 'ai# to <ran*o. On Se'te4(er 3, 5131, i4'e$$e# () the nee# to 'rote*t its interests in $i,ht of <8IC7s for,er) *$ai4, 2PI-<2, thr" its Senior Ii*ePresi#ent, Se erino Corona*ion, instr"*te# Jes"s Aran,orin>5.? to #e(it <ran*o7s sa in,s an# *"rrent a**o"nts for the a4o"nts re4ainin, therein.>55? Ho!e er, <ran*o7s ti4e #e'osit a**o"nt *o"$# not (e #e(ite# #"e to the *a'a*it) $i4itations of 2PI-<27s *o4'"ter.>5/? In the 4eanti4e, t!o *he*:s>5-? #ra!n () <ran*o a,ainst his 2PI-<2 *"rrent a**o"nt !ere #ishonore# "'on 'resent4ent for 'a)4ent, an# sta4'e# !ith a notation Ma**o"nt "n#er ,arnish4ent.N A''arent$), <ran*o7s *"rrent a**o"nt !as ,arnishe# () irt"e of an Or#er of Atta*h4ent iss"e# () the Re,iona$ Tria$ Co"rt of 8a:ati (8a:ati RTC) in Ci i$ Case No. 31-%110 (8a:ati Case), !hi*h ha# (een fi$e# () 2PI-<2 a,ainst <ran*o et a$.,>5%? to re*o er the P-9,%&&,%5..&% re'resentin, Te este*o7s tota$ !ith#ra!a$s fro4 its a**o"nt. Nota($), the #ishonore# *he*:s !ere iss"e# () <ran*o an# 'resente# for 'a)4ent at 2PI-<2 'rior to <ran*o7s re*ei't of noti*e that his a**o"nts !ere "n#er ,arnish4ent.>5&? In fa*t, at the ti4e the Noti*e of +arnish4ent #ate# Se'te4(er /9, 5131 !as ser e# on 2PI-<2, <ran*o ha# )et to (e i4'$ea#e# in the 8a:ati *ase !here the !rit of atta*h4ent !as iss"e#. It !as on$) on 8a) 5&, 511., thro",h the ser i*e of a *o') of the Se*on# A4en#e# Co4'$aint in Ci i$ Case No. 31-%110, that <ran*o !as i4'$ea#e# in the 8a:ati *ase.>50? I44e#iate$), "'on re*ei't of s"*h *o'), <ran*o fi$e# a 8otion to Dis*har,e Atta*h4ent !hi*h the 8a:ati RTC ,rante# on 8a) 50, 511.. The Or#er Fiftin, the Or#er of Atta*h4ent !as ser e# on 2PI-<2 on e en #ate, !ith <ran*o #e4an#in, the re$ease to hi4 of the f"n#s in his sa in,s an# *"rrent a**o"nts. Jes"s Aran,orin, 2PI<27s ne! 4ana,er, *o"$# not forth!ith *o4'$) !ith the #e4an# as the f"n#s, as 're io"s$) state#, ha# a$rea#) (een #e(ite# (e*a"se of <8IC7s for,er) *$ai4. As s"*h, 2PI-<27s *o4'"ter at the S<D8 2ran*h in#i*ate# that the *"rrent a**o"nt re*or# !as Mnot on fi$e.N Eith res'e*t to <ran*o7s sa in,s a**o"nt, it a''ears that <ran*o a,ree# to an arran,e4ent, as a fa or to Se(astian, !here() P%..,...... fro4 his sa in,s a**o"nt !as te4'orari$) transferre# to Do4in,o 6"iaoit7s sa in,s a**o"nt, s"(=e*t to its i44e#iate ret"rn "'on iss"an*e of a *ertifi*ate of #e'osit !hi*h 6"iaoit nee#e# in *onne*tion !ith his isa a''$i*ation at the Tai!an E4(ass). As 'art of the arran,e4ent, Se(astian retaine# *"sto#) of 6"iaoit7s sa in,s a**o"nt 'ass(oo: to ens"re that no !ith#ra!a$ !o"$# (e effe*te# therefro4, an# to 'reser e <ran*o7s #e'osits. On 8a) 59, 511., <ran*o 're-ter4inate# his ti4e #e'osit a**o"nt. 2PI-<2 #e#"*te# the a4o"nt of P0-,531... fro4 the re4ainin, (a$an*e of the ti4e #e'osit a**o"nt re'resentin, a# an*e interest 'ai# to hi4. These transa*tions s'a!ne# a n"4(er of *ases, so4e of !hi*h !e ha# a$rea#) reso$ e#. <8IC fi$e# a *o4'$aint a,ainst 2PI-<2 for the re*o er) of the a4o"nt of P3.,...,...... #e(ite# fro4 its a**o"nt.>59? The *ase e ent"a$$) rea*he# this Co"rt, an# in 2PI <a4i$) Sa in,s 2an:, In*. . <irst 8etro In est4ent Cor'oration,>53? !e "'he$# the fin#in, of the *o"rts (e$o! that 2PI-<2 fai$e# to e;er*ise the #e,ree of #i$i,en*e reJ"ire# () the nat"re of its o($i,ation to treat the a**o"nts of its #e'ositors !ith 4eti*"$o"s *are. Th"s, 2PI-<2 !as fo"n# $ia($e to <8IC for the #e(ite# a4o"nt in its ti4e #e'osit. It !as or#ere# to 'a) P0&,--/,-/5.11 '$"s interest at 59O 'er ann"4 fro4 A","st /1, 5131 "nti$ f"$$) restore#. In t"rn, the 59O sha$$ itse$f earn interest at 5/O fro4 O*to(er %, 5131 "nti$ f"$$) 'ai#. In a re$ate# *ase, E#,ar#o 2"ena ent"ra, 8)rna FiKar#o an# Go$an#a Ti*a (2"ena ent"ra, et a$.),>51? re*i'ients of a P&..,...... *he*: 'ro*ee#in, fro4 the P3.,...,...... 4ista:en$) *re#ite# to Te este*o, $i:e!ise fi$e# s"it. 2"ena ent"ra et a$., as in the *ase of <ran*o, !ere a$so 're ente# fro4 effe*tin, !ith#ra!a$s>/.? fro4 their *"rrent a**o"nt !ith 2PI-<2, 2onifa*io 8ar:et, E#sa, Ca$oo*an Cit) 2ran*h. Fi:e!ise, !hen the *ase !as e$e ate# to this Co"rt #o*:ete# as 2PI <a4i$) 2an: . 2"ena ent"ra,>/5? !e r"$e# that 2PI-<2 ha# no ri,ht to freeKe 2"ena ent"ra, et a$.7s a**o"nts an# a#="#,e# 2PI-<2 $ia($e therefor, in a##ition to #a4a,es. 8ean!hi$e, 2PI-<2 fi$e# se'arate *i i$ an# *ri4ina$ *ases a,ainst those (e$ie e# to (e the 'er'etrators of the 4"$ti-4i$$ion 'eso s*a4.>//? In the *ri4ina$ *ase, <ran*o, a$on, !ith the other a**"se#, e;*e't for 8an"e$ 2ien eni#a !ho !as sti$$ at $ar,e, !ere a*J"itte# of the *ri4e of Estafa as #efine# an# 'ena$iKe# "n#er Arti*$e -&5, 'ar. /(a) of the Re ise# Pena$ Co#e.>/-? Ho!e er, the *i i$ *ase>/%? re4ains "n#er $iti,ation an# the res'e*ti e ri,hts an# $ia(i$ities of the 'arties ha e )et to (e a#="#i*ate#. ConseJ"ent$), in $i,ht of 2PI-<27s ref"sa$ to hee# <ran*o7s #e4an#s to "nfreeKe his a**o"nts an# re$ease his #e'osits therein, the $atter fi$e# on J"ne %, 511. !ith the 8ani$a RTC the s"(=e*t s"it. In his *o4'$aint, <ran*o 'ra)e# for the fo$$o!in, re$iefs: (5) the interest on the re4ainin, (a$an*e>/&? of his *"rrent a**o"nt !hi*h !as e ent"a$$) re$ease# to hi4 on O*to(er -5, 5115C (/) the (a$an*e>/0? on his sa in,s a**o"nt, '$"s interest thereonC (-) the a# an*e interest>/9? 'ai# to hi4 !hi*h ha# (een #e#"*te# !hen he 're-ter4inate# his ti4e #e'osit a**o"ntC an# (%) the 'a)4ent of a*t"a$, 4ora$ an# e;e4'$ar) #a4a,es, as !e$$ as attorne)7s fees. 2PI-<2 tra erse# this *o4'$aint, insistin, that it !as *orre*t in freeKin, the a**o"nts of <ran*o an# ref"sin, to re$ease his #e'osits, *$ai4in, that it ha# a (etter ri,ht to the a4o"nts !hi*h *onsiste# of 'art of the 4one) a$$e,e#$) fra"#"$ent$) !ith#ra!n fro4 it () Te este*o an# en#in, "' in <ran*o7s a**o"nts. 2PI-<2 asse erate# that the *$ai4e# *onsi#eration of P/,...,...... for the intro#"*tion fa*i$itate# () <ran*o (et!een +eor,e Daantos an# E$a#io Te es, on the one han#, an# Jai4e Se(astian, on the other, s'o:e o$"4es of <ran*o7s 'arti*i'ation in the fra"#"$ent transa*tion. On A","st %, 511-, the 8ani$a RTC ren#ere# ="#,4ent, the #is'ositi e 'ortion of !hi*h rea#s as fo$$o!s: EHERE<ORE, in ie! of a$$ the fore,oin,, ="#,4ent is here() ren#ere# in fa or of ><ran*o? an# a,ainst >2PI-<2?, or#erin, the $atter to 'a) to the for4er the fo$$o!in, s"4s: 5. P90,&..... re'resentin, the $e,a$ rate of interest on the a4o"nt of P%&.,...... fro4 8a) 53, 511. to O*to(er -5, 5115C
5

/. P%13,19-./- re'resentin, the (a$an*e on ><ran*o7s? sa in,s a**o"nt as of 8a) 53, 511., to,ether !ith the interest thereon in a**or#an*e !ith the (an:7s ,"i#e$ines on the 'a)4ent thereforC -. P-.,...... () !a) of attorne)7s feesC an# %. P5.,...... as no4ina$ #a4a,es. The *o"nter*$ai4 of the #efen#ant is DIS8ISSED for $a*: of fa*t"a$ an# $e,a$ an*hor. Costs a,ainst >2PI-<2?. SO ORDERED.>/3? Ansatisfie# !ith the #e*ision, (oth 'arties fi$e# their res'e*ti e a''ea$s (efore the CA. <ran*o *onfine# his a''ea$ to the 8ani$a RTC7s #enia$ of his *$ai4 for 4ora$ an# e;e4'$ar) #a4a,es, an# the #i4in"ti e a!ar# of attorne)7s fees. In affir4in, !ith 4o#ifi*ation the $o!er *o"rt7s #e*ision, the a''e$$ate *o"rt #e*ree#, to !it: EHERE<ORE, fore,oin, *onsi#ere#, the a''ea$e# #e*ision is here() A<<IR8ED !ith 4o#ifi*ation or#erin, >2PI-<2? to 'a) ><ran*o? P0-,531... re'resentin, the interest #e#"*te# fro4 the ti4e #e'osit of '$aintiff-a''e$$ant. P/..,...... as 4ora$ #a4a,es an# P5..,...... as e;e4'$ar) #a4a,es, #e$etin, the a!ar# of no4ina$ #a4a,es (in ie! of the a!ar# of 4ora$ an# e;e4'$ar) #a4a,es) an# in*reasin, the a!ar# of attorne)7s fees fro4 P-.,...... to P9&,....... Cost a,ainst >2PI-<2?. SO ORDERED.>/1? In this re*o"rse, 2PI-<2 as*ri(es error to the CA !hen it r"$e# that: (5) <ran*o ha# a (etter ri,ht to the #e'osits in the s"(=e*t a**o"nts !hi*h are 'art of the 'ro*ee#s of a for,e# A"thorit) to De(itC (/) <ran*o is entit$e# to interest on his *"rrent a**o"ntC (-) <ran*o *an re*o er the P%..,...... #e'osit in 6"iaoit7s sa in,s a**o"ntC (%) the #ishonor of <ran*o7s *he*:s !as not $e,a$$) in or#erC (&) 2PI-<2 is $ia($e for interest on <ran*o7s ti4e #e'osit, an# for 4ora$ an# e;e4'$ar) #a4a,esC an# (0) 2PI<27s *o"nter-*$ai4 has no fa*t"a$ an# $e,a$ an*hor. The 'etition is 'art$) 4eritorio"s. Ee are in f"$$ a**or# !ith the *o44on r"$in, of the $o!er *o"rts that 2PI-<2 *annot "ni$atera$$) freeKe <ran*o7s a**o"nts an# 're*$"#e hi4 fro4 !ith#ra!in, his #e'osits. Ho!e er, *ontrar) to the a''e$$ate *o"rt7s r"$in,, !e ho$# that <ran*o is not entit$e# to "nearne# interest on the ti4e #e'osit as !e$$ as to 4ora$ an# e;e4'$ar) #a4a,es. <irst. On the iss"e of !ho has a (etter ri,ht to the #e'osits in <ran*o7s a**o"nts, 2PI-<2 "r,es "s that the $e,a$ *onseJ"en*e of <8IC7s for,er) *$ai4 is that the 4one) transferre# () 2PI-<2 to Te este*o is its o!n, an# *onsi#erin, that it !as a($e to re*o er 'ossession of the sa4e !hen the 4one) !as re#e'osite# () <ran*o, it ha# the ri,ht to set "' its o!nershi' thereon an# freeKe <ran*o7s a**o"nts. 2PI-<2 *onten#s that its 'osition is not "n$i:e that of an o!ner of 'ersona$ 'ro'ert) !ho re,ains 'ossession after it is sto$en, an# to i$$"strate this 'oint, 2PI-<2 ,i es the fo$$o!in, e;a4'$e: !here P7s te$e ision set is sto$en () G !ho thereafter se$$s it to Z, an# !here Z "n!ittin,$) entr"sts 'ossession of the TI set to P, the $atter !o"$# ha e the ri,ht to :ee' 'ossession of the 'ro'ert) an# 're*$"#e Z fro4 re*o erin, 'ossession thereof. To (o$ster its 'osition, 2PI-<2 *ites Arti*$e &&1 of the Ci i$ Co#e, !hi*h 'ro i#es:

Arti*$e &&1. The 'ossession of 4o a($e 'ro'ert) a*J"ire# in ,oo# faith is eJ"i a$ent to a tit$e. Ne erthe$ess, one !ho has $ost an) 4o a($e or has (een "n$a!f"$$) #e'ri e# thereof, 4a) re*o er it fro4 the 'erson in 'ossession of the sa4e. If the 'ossessor of a 4o a($e $ost or of !hi*h the o!ner has (een "n$a!f"$$) #e'ri e#, has a*J"ire# it in ,oo# faith at a '"($i* sa$e, the o!ner *annot o(tain its ret"rn !itho"t rei4("rsin, the 'ri*e 'ai# therefor. 2PI-<27s ar,"4ent is "nso"n#. To (e,in !ith, the 4o a($e 'ro'ert) 4entione# in Arti*$e &&1 of the Ci i$ Co#e 'ertains to a s'e*ifi* or #eter4inate thin,.>-.? A #eter4inate or s'e*ifi* thin, is one that is in#i i#"a$iKe# an# *an (e i#entifie# or #istin,"ishe# fro4 others of the sa4e :in#.>-5? In this *ase, the #e'osit in <ran*o7s a**o"nts *onsists of 4one) !hi*h, a$(eit *hara*teriKe# as a 4o a($e, is ,eneri* an# f"n,i($e.>-/? The J"a$it) of (ein, f"n,i($e #e'en#s "'on the 'ossi(i$it) of the 'ro'ert), (e*a"se of its nat"re or the !i$$ of the 'arties, (ein, s"(stit"te# () others of the sa4e :in#, not ha in, a #istin*t in#i i#"a$it).>--? Si,nifi*ant$), !hi$e Arti*$e &&1 'er4its an o!ner !ho has $ost or has (een "n$a!f"$$) #e'ri e# of a 4o a($e to re*o er the e;a*t sa4e thin, fro4 the *"rrent 'ossessor, 2PI-<2 si4'$) *$ai4s o!nershi' of the eJ"i a$ent a4o"nt of 4one), i.e., the a$"e thereof, !hi*h it ha# 4ista:en$) #e(ite# fro4 <8IC7s a**o"nt an# *re#ite# to Te este*o7s, an# s"(seJ"ent$) tra*e# to <ran*o7s a**o"nt. In fa*t, this is !hat 2PI-<2 #i# in fi$in, the 8a:ati Case a,ainst <ran*o, et a$. It sta:e# its *$ai4 on the 4one) itse$f !hi*h 'asse# fro4 one a**o"nt to another, *o44en*in, !ith the for,e# A"thorit) to De(it. It (ears e4'hasiKin, that 4one) (ears no ear4ar:s of 'e*"$iar o!nershi',>-%? an# this *hara*teristi* is a$$ the 4ore 4anifest in the instant *ase !hi*h in o$ es 4one) in a (an:in, transa*tion ,one a!r). Its 'ri4ar) f"n*tion is to 'ass fro4 han# to han# as a 4e#i"4 of e;*han,e, !itho"t other e i#en*e of its tit$e.>-&? 8one), !hi*h ha# 'asse# thro",h ario"s transa*tions in the ,enera$ *o"rse of (an:in, ("siness, e en if of tra*ea($e ori,in, is no e;*e'tion. Th"s, inas4"*h as !hat is in o$ e# is not a s'e*ifi* or #eter4inate 'ersona$ 'ro'ert), 2PI-<27s i$$"strati e e;a4'$e, ostensi($) (ase# on Arti*$e &&1, is ina''$i*a($e to the instant *ase.
6

There is no #o"(t that 2PI-<2 o!ns the #e'osite# 4onies in the a**o"nts of <ran*o, ("t not as a $e,a$ *onseJ"en*e of its "na"thoriKe# transfer of <8IC7s #e'osits to Te este*o7s a**o"nt. 2PI-<2 *on enient$) for,ets that the #e'osit of 4one) in (an:s is ,o erne# () the Ci i$ Co#e 'ro isions on si4'$e $oan or 4"t""4.>-0? As there is a #e(tor-*re#itor re$ationshi' (et!een a (an: an# its #e'ositor, 2PI-<2 "$ti4ate$) a*J"ire# o!nershi' of <ran*o7s #e'osits, ("t s"*h o!nershi' is *o"'$e# !ith a *orres'on#in, o($i,ation to 'a) hi4 an eJ"a$ a4o"nt on #e4an#.>-9? A$tho",h 2PI-<2 o!ns the #e'osits in <ran*o7s a**o"nts, it *annot 're ent hi4 fro4 #e4an#in, 'a)4ent of 2PI-<27s o($i,ation () #ra!in, *he*:s a,ainst his *"rrent a**o"nt, or as:in, for the re$ease of the f"n#s in his sa in,s a**o"nt. Th"s, !hen <ran*o iss"e# *he*:s #ra!n a,ainst his *"rrent a**o"nt, he ha# e er) ri,ht as *re#itor to e;'e*t that those *he*:s !o"$# (e honore# () 2PI-<2 as #e(tor. 8ore i4'ortant$), 2PI-<2 #oes not ha e a "ni$atera$ ri,ht to freeKe the a**o"nts of <ran*o (ase# on its 4ere s"s'i*ion that the f"n#s therein !ere 'ro*ee#s of the 4"$ti-4i$$ion 'eso s*a4 <ran*o !as a$$e,e#$) in o$ e# in. To ,rant 2PI-<2, or an) (an: for that 4atter, the ri,ht to ta:e !hate er a*tion it '$eases on #e'osits !hi*h it s"''oses are #eri e# fro4 sha#) transa*tions, !o"$# o'en the f$oo#,ates of '"($i* #istr"st in the (an:in, in#"str). O"r 'rono"n*e4ent in Si4e; Internationa$ (8ani$a), In*. . Co"rt of A''ea$s>-3? *ontin"es to resonate, th"s: The (an:in, s)ste4 is an in#is'ensa($e instit"tion in the 4o#ern !or$# an# '$a)s a ita$ ro$e in the e*ono4i* $ife of e er) *i i$iKe# nation. Ehether as 4ere 'assi e entities for the safe:ee'in, an# sa in, of 4one) or as a*ti e instr"4ents of ("siness an# *o44er*e, (an:s ha e (e*o4e an "(iJ"ito"s 'resen*e a4on, the 'eo'$e, !ho ha e *o4e to re,ar# the4 !ith res'e*t an# e en ,ratit"#e an#, 4ost of a$$, *onfi#en*e. Th"s, e en the h"4($e !a,e-earner has not hesitate# to entr"st his $ife7s sa in,s to the (an: of his *hoi*e, :no!in, that the) !i$$ (e safe in its *"sto#) an# !i$$ e en earn so4e interest for hi4. The or#inar) 'erson, !ith eJ"a$ faith, "s"a$$) 4aintains a 4o#est *he*:in, a**o"nt for se*"rit) an# *on enien*e in the sett$in, of his 4onth$) (i$$s an# the 'a)4ent of or#inar) e;'enses. ; ; ;. In e er) *ase, the #e'ositor e;'e*ts the (an: to treat his a**o"nt !ith the "t4ost fi#e$it), !hether s"*h a**o"nt *onsists on$) of a fe! h"n#re# 'esos or of 4i$$ions. The (an: 4"st re*or# e er) sin,$e transa*tion a**"rate$), #o!n to the $ast *enta o, an# as 'ro4't$) as 'ossi($e. This has to (e #one if the a**o"nt is to ref$e*t at an) ,i en ti4e the a4o"nt of 4one) the #e'ositor *an #is'ose of as he sees fit, *onfi#ent that the (an: !i$$ #e$i er it as an# to !ho4e er #ire*ts. A ($"n#er on the 'art of the (an:, s"*h as the #ishonor of the *he*: !itho"t ,oo# reason, *an *a"se the #e'ositor not a $itt$e e4(arrass4ent if not a$so finan*ia$ $oss an# 'erha's e en *i i$ an# *ri4ina$ $iti,ation.

The 'oint is that as a ("siness affe*te# !ith '"($i* interest an# (e*a"se of the nat"re of its f"n*tions, the (an: is "n#er o($i,ation to treat the a**o"nts of its #e'ositors !ith 4eti*"$o"s *are, a$!a)s ha in, in 4in# the fi#"*iar) nat"re of their re$ationshi'. ; ; ;. Ine$"*ta($), 2PI-<2, as the tr"stee in the fi#"*iar) re$ationshi', is #"t) (o"n# to :no! the si,nat"res of its *"sto4ers. Ha in, fai$e# to #ete*t the for,er) in the A"thorit) to De(it an# in the 'ro*ess ina# ertent$) fa*i$itate the <8IC-Te este*o transfer, 2PI-<2 *annot no! shift $ia(i$it) thereon to <ran*o an# the other 'a)ees of *he*:s iss"e# () Te este*o, or 're ent !ith#ra!a$s fro4 their res'e*ti e a**o"nts !itho"t the a''ro'riate *o"rt !rit or a fa ora($e fina$ ="#,4ent. <"rther, it (o,,$es the 4in# !h) 2PI-<2, e en !itho"t #e$ in, into the a"thenti*it) of the si,nat"re in the A"thorit) to De(it, effe*te# the transfer of P3.,...,...... fro4 <8IC7s to Te este*o7s a**o"nt, !hen <8IC7s a**o"nt !as a ti4e #e'osit an# it ha# a$rea#) 'ai# a# an*e interest to <8IC. Consi#erin, that there is as )et no in#"(ita($e e i#en*e esta($ishin, <ran*o7s 'arti*i'ation in the for,er), he re4ains an inno*ent 'art). As (et!een hi4 an# 2PI-<2, the $atter, !hi*h 4a#e 'ossi($e the 'resent 're#i*a4ent, 4"st (ear the res"$tin, $oss or in*on enien*e. Se*on#. Eith res'e*t to its $ia(i$it) for interest on <ran*o7s *"rrent a**o"nt, 2PI-<2 ar,"es that its non-*o4'$ian*e !ith the 8a:ati RTC7s Or#er Fiftin, the Or#er of Atta*h4ent an# the $e,a$ *onseJ"en*es thereof, is a 4atter that o",ht to (e ta:en "' in that *o"rt. The ar,"4ent is ten"o"s. Ee a,ree !ith the s"**in*t ho$#in, of the a''e$$ate *o"rt in this res'e*t. The 8ani$a RTC7s or#er to 'a) interests on <ran*o7s *"rrent a**o"nt arose fro4 2PI-<27s "n="stifie# ref"sa$ to *o4'$) !ith its o($i,ation to 'a) <ran*o '"rs"ant to their *ontra*t of 4"t""4. In other !or#s, fro4 the ti4e 2PI-<2 ref"se# <ran*o7s #e4an# for the re$ease of the #e'osits in his *"rrent a**o"nt, s'e*ifi*a$$), fro4 8a) 59, 511., interest at the rate of 5/O (e,an to a**r"e thereon.>-1? An#enia($), the 8a:ati RTC is este# !ith the a"thorit) to #eter4ine the $e,a$ *onseJ"en*es of 2PI-<27s non-*o4'$ian*e !ith the Or#er Fiftin, the Or#er of Atta*h4ent. Ho!e er, s"*h a"thorit) #oes not 're*$"#e the 8ani$a RTC fro4 r"$in, on 2PI-<27s $ia(i$it) to <ran*o for 'a)4ent of interest (ase# on its *ontin"e# an# "n="stifie# ref"sa$ to 'erfor4 a *ontra*t"a$ o($i,ation "'on #e4an#. After a$$, this !as the *ore iss"e raise# () <ran*o in his *o4'$aint (efore the 8ani$a RTC. Thir#. As to the a!ar# to <ran*o of the #e'osits in 6"iaoit7s a**o"nt, !e fin# no reason to #e'art fro4 the fa*t"a$ fin#in,s of (oth the 8ani$a RTC an# the CA. Note!orth) is the fa*t that 6"iaoit hi4se$f testifie# that the #e'osits in his a**o"nt are a*t"a$$) o!ne# () <ran*o !ho si4'$) a**o44o#ate# Jai4e Se(astian7s reJ"est to te4'orari$) transfer P%..,...... fro4 <ran*o7s sa in,s a**o"nt to 6"iaoit7s a**o"nt.>%.? His testi4on) *annot (e *hara*teriKe# as hearsa) as the re*or#s re ea$ that he ha# 'ersona$ :no!$e#,e of the arran,e4ent 4a#e (et!een <ran*o, Se(astian an# hi4se$f.>%5? 2PI-<2 4a:es *a'ita$ of <ran*o7s (e$ate# a$$e,ation re$ati e to this 'arti*"$ar arran,e4ent. It insists that the transa*tion !ith 6"iaoit !as not s'e*ifi*a$$) a$$e,e# in <ran*o7s *o4'$aint (efore the 8ani$a RTC. Ho!e er, it a''ears that 2PI-<2 ha# i4'$ie#$) *onsente# to the tria$ of this iss"e ,i en its e;tensi e *ross-e;a4ination of 6"iaoit. Se*tion &, R"$e 5. of the R"$es of Co"rt 'ro i#es:
7

Se*tion &. A4en#4ent to *onfor4 to or a"thoriKe 'resentation of e i#en*e.Q Ehen iss"es not raise# () the '$ea#in,s are trie# !ith the e;'ress or i4'$ie# *onsent of the 'arties, the) sha$$ (e treate# in a$$ res'e*ts as if the) ha# (een raise# in the '$ea#in,s. S"*h a4en#4ent of the '$ea#in,s as 4a) (e ne*essar) to *a"se the4 to *onfor4 to the e i#en*e an# to raise these iss"es 4a) (e 4a#e "'on 4otion of an) 'art) at an) ti4e, e en after ="#,4entC ("t fai$"re to a4en# #oes not affe*t the res"$t of the tria$ of these iss"es. If e i#en*e is o(=e*te# to at the tria$ on the ,ro"n# that it is no! !ithin the iss"es 4a#e () the '$ea#in,s, the *o"rt 4a) a$$o! the '$ea#in,s to (e a4en#e# an# sha$$ #o so !ith $i(era$it) if the 'resentation of the 4erits of the a*tion an# the en#s of s"(stantia$ ="sti*e !i$$ (e s"(ser e# there(). The *o"rt 4a) ,rant a *ontin"an*e to ena($e the a4en#4ent to (e 4a#e. (E4'hasis s"''$ie#) In a$$, 2PI-<27s ar,"4ent that this *ase is not the ri,ht for"4 for <ran*o to re*o er the P%..,...... (e,s the iss"e. To reiterate, 6"iaoit, testif)in, #"rin, the tria$, "neJ"i o*a$$) #is*$ai4e# o!nershi' of the f"n#s in his a**o"nt, an# 'ointe# to <ran*o as the a*t"a$ o!ner thereof. C$ear$), <ran*o7s a*tion for the re*o er) of his #e'osits a''ro'riate$) *o ers the #e'osits in 6"iaoit7s a**o"nt. <o"rth. Not!ithstan#in, a$$ the fore,oin,, 2PI-<2 *ontin"es to insist that the #ishonor of <ran*o7s *he*:s res'e*ti e$) #ate# Se'te4(er 55 an# 53, 5131 !as $e,a$$) in or#er in ie! of the 8a:ati RTC7s s"''$e4enta$ !rit of atta*h4ent iss"e# on Se'te4(er 5%, 5131. It 'osits that as the 'art) that a''$ie# for the !rit of atta*h4ent (efore the 8a:ati RTC, it nee# not (e ser e# !ith the Noti*e of +arnish4ent (efore it *o"$# '$a*e <ran*o7s a**o"nts "n#er ,arnish4ent. The ar,"4ent is s'e*io"s. In this ar,"4ent, !e 'er*ei e 2PI-<27s *$e er ("t trans'arent '$o) to *ir*"4 ent Se*tion %, >%/? R"$e 5- of the R"$es of Co"rt. It sho"$# (e note# that the stri*t reJ"ire4ent on ser i*e of *o"rt 'a'ers "'on the 'arties affe*te# is #esi,ne# to *o4'$) !ith the e$e4entar) reJ"isites of #"e 'ro*ess. <ran*o !as entit$e#, as a 4atter of ri,ht, to noti*e, if the reJ"ire4ents of #"e 'ro*ess are to (e o(ser e#. Get, he re*ei e# a *o') of the Noti*e of +arnish4ent on$) on Se'te4(er /9, 5131, se era$ #a)s after the t!o *he*:s he iss"e# !ere #ishonore# () 2PI-<2 on Se'te4(er /. an# /5, 5131. Ieri$), it !as 're4at"re for 2PI-<2 to freeKe <ran*o7s a**o"nts !itho"t e en a!aitin, ser i*e of the 8a:ati RTC7s Noti*e of +arnish4ent on <ran*o. A##itiona$$), it sho"$# (e re4e4(ere# that the enfor*e4ent of a !rit of atta*h4ent *annot (e 4a#e !itho"t in*$"#in, in the 4ain s"it the o!ner of the 'ro'ert) atta*he# () irt"e thereof. Se*tion &, R"$e 5- of the R"$es of Co"rt s'e*ifi*a$$) 'ro i#es that Mno $e ) or atta*h4ent '"rs"ant to the !rit iss"e# ; ; ; sha$$ (e enfor*e# "n$ess it is 're*e#e#, or *onte4'oraneo"s$) a**o4'anie#, () ser i*e of s"44ons, to,ether !ith a *o') of the *o4'$aint, the a''$i*ation for atta*h4ent, on the #efen#ant !ithin the Phi$i''ines.N <ran*o !as i4'$ea#e# as 'art)-#efen#ant on$) on 8a) 5&, 511.. The 8a:ati RTC ha# )et to a*J"ire ="ris#i*tion o er the 'erson of <ran*o !hen 2PI-<2 ,arnishe# his a**o"nts.>%-? Effe*ti e$), therefore, the 8a:ati RTC ha# no a"thorit) )et to (in# the #e'osits of <ran*o thro",h the !rit of atta*h4ent, an# *onseJ"ent$), there !as no $e,a$ (asis for 2PI-<2 to #ishonor the *he*:s iss"e# () <ran*o. <ifth. Anent the CA7s fin#in, that 2PI-<2 !as in (a# faith an# as s"*h $ia($e for the a# an*e interest it #e#"*te# fro4 <ran*o7s ti4e #e'osit a**o"nt, an# for 4ora$ as !e$$ as e;e4'$ar) #a4a,es, !e fin# it 'ro'er to reinstate the r"$in, of the tria$ *o"rt, an# a$$o! on$) the re*o er) of no4ina$ #a4a,es in the a4o"nt of P5.,....... Ho!e er, !e retain the CA7s a!ar# of P9&,...... as attorne)7s fees. In ,rantin, <ran*o7s 'ra)er for interest on his ti4e #e'osit a**o"nt an# for 4ora$ an# e;e4'$ar) #a4a,es, the CA attri("te# (a# faith to 2PI-<2 (e*a"se it (5) *o4'$ete$) #isre,ar#e# its o($i,ation to <ran*oC (/) 4is$ea#in,$) *$ai4e# that <ran*o7s #e'osits !ere "n#er ,arnish4entC (-) 4isre'resente# that <ran*o7s *"rrent a**o"nt !as not on fi$eC an# (%) ref"se# to ret"rn the P%..,...... #es'ite the fa*t that the ostensi($e o!ner, 6"iaoit, !ante# the a4o"nt ret"rne# to <ran*o. In this re,ar#, !e are ,"i#e# () Arti*$e //.5 of the Ci i$ Co#e !hi*h 'ro i#es: Arti*$e //.5. In *ontra*ts an# J"asi-*ontra*ts, the #a4a,es for !hi*h the o($i,or !ho a*te# in ,oo# faith is $ia($e sha$$ (e those that are the nat"ra$ an# 'ro(a($e *onseJ"en*es of the (rea*h of the o($i,ation, an# !hi*h the 'arties ha e foreseen or *o"$# ha e reasona($e foreseen at the ti4e the o($i,ation !as *onstit"te#. In *ase of fra"#, (a# faith, 4a$i*e or !anton attit"#e, the o($i,or sha$$ (e res'onsi($e for a$$ #a4a,es !hi*h 4a) (e reasona($) attri("te# to the non-'erfor4an*e of the o($i,ation. (E4'hasis s"''$ie#.) Ee fin#, as the tria$ *o"rt #i#, that 2PI-<2 a*te# o"t of the i4'et"s of se$f-'rote*tion an# not o"t of 4a$e o$en*e or i$$ !i$$. 2PI-<2 !as not in the *orr"'t state of 4in# *onte4'$ate# in Arti*$e //.5 an# sho"$# not (e he$# $ia($e for a$$ #a4a,es no! (ein, i4'"te# to it for its (rea*h of o($i,ation. <or the sa4e reason, it is not $ia($e for the "nearne# interest on the ti4e #e'osit. 2a# faith #oes not si4'$) *onnote (a# ="#,4ent or ne,$i,en*eC it i4'orts a #ishonest '"r'ose or so4e 4ora$ o($iJ"it) an# *ons*io"s #oin, of !ron,C it 'arta:es of the nat"re of fra"#.>%%? Ee ha e he$# that it is a (rea*h of a :no!n #"t) thro",h so4e 4oti e of interest or i$$ !i$$.>%&? In the instant *ase, !e *annot attri("te to 2PI-<2 fra"# or e en a 4oti e of se$f-enri*h4ent. As the tria$ *o"rt fo"n#, there !as no #enia$ !hatsoe er () 2PI-<2 of the e;isten*e of the a**o"nts. The *o4'"ter-,enerate# #o*"4ent !hi*h in#i*ate# that the *"rrent a**o"nt !as Mnot on fi$eN res"$te# fro4 the 'rior #e(it () 2PI-<2 of the #e'osits. The re4e#) of freeKin, the a**o"nt, or the ,arnish4ent, or e en the o"tri,ht ref"sa$ to honor an) transa*tion thereon !as resorte# to so$e$) for the '"r'ose of ho$#in, on to the f"n#s as a se*"rit) for its inten#e# *o"rt a*tion,>%0? an# !ith no other ,oa$ ("t to ens"re the inte,rit) of the a**o"nts. Ee ha e ha# o**asion to ho$# that in the a(sen*e of fra"# or (a# faith,>%9? 4ora$ #a4a,es *annot (e a!ar#e#C an# that the a# erse res"$t of an a*tion #oes not 'er se 4a:e the a*tion !ron,f"$, or the 'art) $ia($e for it. One 4a) err, ("t error a$one is not a ,ro"n# for ,rantin, s"*h #a4a,es.>%3? An a!ar# of 4ora$ #a4a,es *onte4'$ates the e;isten*e of the fo$$o!in, reJ"isites: (5) there 4"st (e an in="r) *$ear$) s"staine# () the *$ai4ant, !hether 'h)si*a$, 4enta$ or 's)*ho$o,i*a$C (/) there 4"st (e a *"$'a($e a*t or o4ission fa*t"a$$)
8

esta($ishe#C (-) the !ron,f"$ a*t or o4ission of the #efen#ant is the 'ro;i4ate *a"se of the in="r) s"staine# () the *$ai4antC an# (%) the a!ar# for #a4a,es is 're#i*ate# on an) of the *ases state# in Arti*$e //51 of the Ci i$ Co#e.>%1? <ran*o *o"$# not 'oint to, or i#entif) an) 'arti*"$ar *ir*"4stan*e in Arti*$e //51 of the Ci i$ Co#e,>&.? "'on !hi*h to (ase his *$ai4 for 4ora$ #a4a,es. Th"s, not ha in, a*te# in (a# faith, 2PI-<2 *annot (e he$# $ia($e for 4ora$ #a4a,es "n#er Arti*$e ///. of the Ci i$ Co#e for (rea*h of *ontra*t.>&5? Ee a$so #en) the *$ai4 for e;e4'$ar) #a4a,es. <ran*o sho"$# sho! that he is entit$e# to 4ora$, te4'erate, or *o4'ensator) #a4a,es (efore the *o"rt 4a) e en *onsi#er the J"estion of !hether e;e4'$ar) #a4a,es sho"$# (e a!ar#e# to hi4.>&/? As there is no (asis for the a!ar# of 4ora$ #a4a,es, neither *an e;e4'$ar) #a4a,es (e ,rante#. Ehi$e it is a so"n# 'o$i*) not to set a 're4i"4 on the ri,ht to $iti,ate,>&-? !e, ho!e er, fin# that <ran*o is entit$e# to reasona($e attorne)7s fees for ha in, (een *o4'e$$e# to ,o to *o"rt in or#er to assert his ri,ht. Th"s, !e affir4 the CA7s ,rant of P9&,...... as attorne)7s fees. Attorne)7s fees 4a) (e a!ar#e# !hen a 'art) is *o4'e$$e# to $iti,ate or in*"r e;'enses to 'rote*t his interest,>&%? or !hen the *o"rt #ee4s it ="st an# eJ"ita($e.>&&? In the *ase at (en*h, 2PI-<2 ref"se# to "nfreeKe the #e'osits of <ran*o #es'ite the 8a:ati RTC7s Or#er Fiftin, the Or#er of Atta*h4ent an# 6"iaoit7s "n!a erin, assertion that the P%..,...... !as 'art of <ran*o7s sa in,s a**o"nt. This ref"sa$ *onstraine# <ran*o to in*"r e;'enses an# $iti,ate for a$4ost t!o (/) #e*a#es in or#er to 'rote*t his interests an# re*o er his #e'osits. Therefore, this Co"rt #ee4s it ="st an# eJ"ita($e to ,rant <ran*o P9&,...... as attorne)7s fees. The a!ar# is reasona($e in ie! of the *o4'$e;it) of the iss"es an# the ti4e it has ta:en for this *ase to (e reso$ e#.>&0? Si;th. As for the #is4issa$ of 2PI-<27s *o"nter-*$ai4, !e "'ho$# the 8ani$a RTC7s r"$in,, as affir4e# () the CA, that 2PI<2 is not entit$e# to re*o er P-,3..,...... as a*t"a$ #a4a,es. 2PI-<27s a$$e,e# $oss of 'rofit as a res"$t of <ran*o7s s"it is, as a$rea#) 'ointe# o"t, of its o!n 4a:in,. A**or#in,$), the #enia$ of its *o"nter-*$ai4 is in or#er. EHERE<ORE, the 'etition is PARTIAFFG +RANTED. The Co"rt of A''ea$s De*ision #ate# No e4(er /1, 511& is A<<IR8ED !ith the 8ODI<ICATION that the a!ar# of "nearne# interest on the ti4e #e'osit an# of 4ora$ an# e;e4'$ar) #a4a,es is DEFETED. No 'rono"n*e4ent as to *osts.

G.R. No. 155223 A $"2 4, 2007 *O*IE ROSE 3. FRIAS, $! $!s!#t!( 14 5!$ Atto$#!4-"#-6'7t, )ARIE F. F&8ITA, P!t"t"o#!$, %s. FLORA SAN -IEGO-SISON, R!s o#(!#t.
2efore "s is a Petition for Re ie! on Certiorari fi$e# () 2o(ie Rose I. <rias re'resente# () her Attorne)-in-fa*t, 8arie Re,ine <. <"=ita ('etitioner) see:in, to ann"$ the De*ision5 #ate# J"ne 53, /../ an# the Reso$"tion/ #ate# Se'te4(er 55, /../ of the Co"rt of A''ea$s (CA) in CA-+.R. CI No. &/3-1. Petitioner is the o!ner of a ho"se an# $ot $o*ate# at No. &31 2atan,as East, A)a$a A$a(an,, 8"ntin$"'a, 8etro 8ani$a, !hi*h she a*J"ire# fro4 Is$an# 8asters Rea$t) an# De e$o'4ent Cor'oration (I8RDC) () irt"e of a Dee# of Sa$e #ate# No . 50, 511..- The 'ro'ert) is *o ere# () TCT No. 50359- of the Re,ister of Dee#s of 8a:ati in the na4e of I8RDC.% On De*e4(er 9, 511., 'etitioner, as the <IRST PARTG, an# Dra. <$ora San Die,o-Sison (res'on#ent), as the SECOND PARTG, entere# into a 8e4oran#"4 of A,ree4ent& o er the 'ro'ert) !ith the fo$$o!in, ter4s: NOE, THERE<ORE, for an# in *onsi#eration of the s"4 of THREE 8IFFION PESOS (P-,...,......) re*ei't of !hi*h is here() a*:no!$e#,e# () the <IRST PARTG fro4 the SECOND PARTG, the 'arties ha e a,ree# as fo$$o!s: 5. That the SECOND PARTG has a 'erio# of Si; (0) 4onths fro4 the #ate of the e;e*"tion of this *ontra*t !ithin !hi*h to notif) the <IRST PARTG of her intention to '"r*hase the afore4entione# 'ar*e$ of $an# to,ether !ithin (si*) the i4'ro e4ents thereon at the 'ri*e of SIP 8IFFION <OAR HANDRED THOASAND PESOS (P0,%..,......). A'on noti*e to the <IRST PARTG of the SECOND PARTG7s intention to '"r*hase the sa4e, the $atter has a 'erio# of another si; 4onths !ithin !hi*h to 'a) the re4ainin, (a$an*e of P-.% 4i$$ion. /. That 'rior to the si; 4onths 'erio# ,i en to the SECOND PARTG !ithin !hi*h to #e*i#e !hether or not to '"r*hase the a(o e-4entione# 'ro'ert), the <IRST PARTG 4a) sti$$ offer the sai# 'ro'ert) to other 'ersons !ho 4a) (e intereste# to (") the sa4e 'ro i#e# that the a4o"nt of P-,...,...... ,i en to the <IRST PARTG 2G THE SECOND PARTG sha$$ (e 'ai# to the $atter in*$"#in, interest (ase# on 're ai$in, *o4'o"n#e# (an: interest '$"s the a4o"nt of the sa$e in e;*ess of P9,...,...... sho"$# the 'ro'ert) (e so$# at a 'ri*e 4ore than P9 4i$$ion. -. That in *ase the <IRST PARTG has no other (")er !ithin the first si; 4onths fro4 the e;e*"tion of this *ontra*t, no interest sha$$ (e *har,e# () the SECOND PARTG on the P- 4i$$ion ho!e er, in the e ent that on the si;th 4onth the SECOND PARTG !o"$# #e*i#e not to '"r*hase the afore4entione# 'ro'ert), the <IRST PARTG has a 'erio# of another si; 4onths !ithin !hi*h to 'a) the s"4 of P- 4i$$ion 'esos 'ro i#e# that the sai# a4o"nt sha$$ earn *o4'o"n#e# (an: interest for the $ast si; 4onths on$). An#er this *ir*"4stan*e, the a4o"nt of P- 4i$$ion ,i en () the SECOND PARTG sha$$ (e treate# as >a? $oan an# the 'ro'ert) sha$$ (e *onsi#ere# as the se*"rit) for the 4ort,a,e !hi*h *an (e enfor*e# in a**or#an*e !ith $a!. ; ; ; ;.0
9

Petitioner re*ei e# fro4 res'on#ent t!o 4i$$ion 'esos in *ash an# one 4i$$ion 'esos in a 'ost-#ate# *he*: #ate# <e(r"ar) /3, 511., instea# of 5115, !hi*h ren#ere# sai# *he*: sta$e.9 Petitioner then ,a e res'on#ent TCT No. 50359- in the na4e of I8RDC an# the Dee# of A(so$"te Sa$e o er the 'ro'ert) (et!een 'etitioner an# I8RDC. Res'on#ent #e*i#e# not to '"r*hase the 'ro'ert) an# notifie# 'etitioner thro",h a $etter3 #ate# 8ar*h /., 5115, !hi*h 'etitioner re*ei e# on$) on J"ne 55, 5115,1 re4in#in, 'etitioner of their a,ree4ent that the a4o"nt of t!o 4i$$ion 'esos !hi*h 'etitioner re*ei e# fro4 res'on#ent sho"$# (e *onsi#ere# as a $oan 'a)a($e !ithin si; 4onths. Petitioner s"(seJ"ent$) fai$e# to 'a) res'on#ent the a4o"nt of t!o 4i$$ion 'esos. On A'ri$ 5, 511-, res'on#ent fi$e# !ith the Re,iona$ Tria$ Co"rt (RTC) of 8ani$a, a *o4'$aint5. for s"4 of 4one) !ith 're$i4inar) atta*h4ent a,ainst 'etitioner. The *ase !as #o*:ete# as Ci i$ Case No. 1--0&-09 an# raff$e# to 2ran*h -.. Res'on#ent a$$e,e# the fore,oin, fa*ts an# in a##ition thereto a erre# that 'etitioner trie# to #e'ri e her of the se*"rit) for the $oan () 4a:in, a fa$se re'ort55 of the $oss of her o!ner7s *o') of TCT No. 50359- to the Ta,i, Po$i*e Station on J"ne -, 5115, e;e*"tin, an affi#a it of $oss an# () fi$in, a 'etition5/ for the iss"an*e of a ne! o!ner7s #"'$i*ate *o') of sai# tit$e !ith the RTC of 8a:ati, 2ran*h 5%/C that the 'etition !as ,rante# in an Or#er5- #ate# A","st -5, 5115C that sai# Or#er !as s"(seJ"ent$) set asi#e in an Or#er #ate# A'ri$ 5., 511/5% !here the RTC 8a:ati ,rante# res'on#ent7s 'etition for re$ief fro4 ="#,4ent #"e to the fa*t that res'on#ent is in 'ossession of the o!ner7s #"'$i*ate *o') of TCT No. 50359-, an# or#ere# the 'ro in*ia$ '"($i* 'rose*"tor to *on#"*t an in esti,ation of 'etitioner for 'er="r) an# fa$se testi4on). Res'on#ent 'ra)e# for the e;-'arte iss"an*e of a !rit of 're$i4inar) atta*h4ent an# 'a)4ent of t!o 4i$$ion 'esos !ith interest at -0O 'er ann"4 fro4 De*e4(er 9, 5115, P5..,...... 4ora$, *orre*ti e an# e;e4'$ar) #a4a,es an# P/..,...... for attorne)7s fees. In an Or#er #ate# A'ri$ 0, 511-, the E;e*"ti e J"#,e of the RTC of 8ani$a iss"e# a !rit of 're$i4inar) atta*h4ent "'on the fi$in, of a (on# in the a4o"nt of t!o 4i$$ion 'esos.5& Petitioner fi$e# an A4en#e# Ans!er50 a$$e,in, that the 8e4oran#"4 of A,ree4ent !as *on*ei e# an# arran,e# () her $a!)er, Att). Car4e$ita FoKa#a, !ho is a$so res'on#ent7s $a!)erC that she !as as:e# to si,n the a,ree4ent !itho"t (ein, ,i en the *han*e to rea# the sa4eC that the tit$e to the 'ro'ert) an# the Dee# of Sa$e (et!een her an# the I8RDC !ere entr"ste# to Att). FoKa#a for safe:ee'in, an# !ere ne er t"rne# o er to res'on#ent as there !as no *ons"44ate# sa$e )etC that o"t of the t!o 4i$$ion 'esos *ash 'ai#, Att). FoKa#a too: the one 4i$$ion 'esos !hi*h has not (een ret"rne#, th"s 'etitioner ha# fi$e# a *i i$ *ase a,ainst herC that she !as ne er infor4e# of res'on#ent7s #e*ision not to '"r*hase the 'ro'ert) !ithin the si; 4onth 'erio# fi;e# in the a,ree4entC that !hen she #e4an#e# the ret"rn of TCT No. 50359- an# the Dee# of Sa$e (et!een her an# the I8RDC fro4 Att). FoKa#a, the $atter ,a e her these #o*"4ents in a (ro!n en e$o'e on 8a) &, 5115 !hi*h her se*retar) '$a*e# in her atta*he *aseC that the en e$o'e to,ether !ith her other 'ersona$ thin,s !ere $ost !hen her *ar !as for*i($) o'ene# the fo$$o!in, #a)C that she so",ht the he$' of Att). FoKa#a !ho a# ise# her to se*"re a 'o$i*e re'ort, to e;e*"te an affi#a it of $oss an# to ,et the ser i*es of another $a!)er to fi$e a 'etition for the iss"an*e of an o!ner7s #"'$i*ate *o')C that the 'etition for the iss"an*e of a ne! o!ner7s #"'$i*ate *o') !as fi$e# on her (eha$f !itho"t her :no!$e#,e an# neither #i# she si,n the 'etition nor testif) in *o"rt as fa$se$) *$ai4e# for she !as a(roa#C that she !as a i*ti4 of the 4ani'"$ations of Att). FoKa#a an# res'on#ent as sho!n () the fi$in, of *ri4ina$ *har,es for 'er="r) an# fa$se testi4on) a,ainst herC that no interest *o"$# (e #"e as there !as no a$i# 4ort,a,e o er the 'ro'ert) as the 'rin*i'a$ o($i,ation is itiate# !ith fra"# an# #e*e'tion. She 'ra)e# for the #is4issa$ of the *o4'$aint, *o"nter-*$ai4 for #a4a,es an# attorne)7s fees. Tria$ on the 4erits ens"e#. On Jan"ar) -5, 5110, the RTC iss"e# a #e*ision,59 the #is'ositi e 'ortion of !hi*h rea#s: EHERE<ORE, ="#,4ent is here() RENDERED: 5) Or#erin, #efen#ant to 'a) '$aintiff the s"4 of P/ 8i$$ion '$"s interest thereon at the rate of thirt) t!o (-/O) 'er *ent 'er ann"4 (e,innin, De*e4(er 9, 5115 "nti$ f"$$) 'ai#. /) Or#erin, #efen#ant to 'a) '$aintiff the s"4 of P9.,...... re'resentin, 're4i"4s 'ai# () '$aintiff on the atta*h4ent (on# !ith $e,a$ interest thereon *o"nte# fro4 the #ate of this #e*ision "nti$ f"$$) 'ai#. -) Or#erin, #efen#ant to 'a) '$aintiff the s"4 of P5..,...... () !a) of 4ora$, *orre*ti e an# e;e4'$ar) #a4a,es. %) Or#erin, #efen#ant to 'a) '$aintiff attorne)7s fees of P5..,...... '$"s *ost of $iti,ation.53 The RTC fo"n# that 'etitioner !as "n#er o($i,ation to 'a) res'on#ent the a4o"nt of t!o 4i$$ion 'esos !ith *o4'o"n#e# interest '"rs"ant to their 8e4oran#"4 of A,ree4entC that the fra"#"$ent s*he4e e4'$o)e# () 'etitioner to #e'ri e res'on#ent of her on$) se*"rit) to her $oane# 4one) !hen 'etitioner e;e*"te# an affi#a it of $oss an# instit"te# a 'etition for the iss"an*e of an o!ner7s #"'$i*ate tit$e :no!in, the sa4e !as in res'on#ent7s 'ossession, entit$e# res'on#ent to 4ora$ #a4a,esC an# that 'etitioner7s (are #enia$ *annot (e a**or#e# *re#en*e (e*a"se her testi4on) an# that of her !itness #i# not a''ear to (e *re#i($e. The RTC f"rther fo"n# that 'etitioner a#4itte# that she re*ei e# fro4 res'on#ent the t!o 4i$$ion 'esos in *ash ("t the fa*t that 'etitioner ,a e the one 4i$$ion 'esos to Att). FoKa#a !as !itho"t res'on#ent7s :no!$e#,e th"s it is not (in#in, on res'on#entC that res'on#ent ha# a$so 'ro en that in 511-, she initia$$) 'ai# the s"4 of P-.,...... as 're4i"4 for the iss"an*e of the atta*h4ent (on#, P/.,...... for its rene!a$ in 511%, an# P/.,...... for the rene!a$ in 511&, th"s '$aintiff sho"$# (e rei4("rse# *onsi#erin, that she !as *o4'e$$e# to ,o to *o"rt an# as: for a !rit of 're$i4inar) atta*h4ent to 'rote*t her ri,hts "n#er the a,ree4ent. Petitioner fi$e# her a''ea$ !ith the CA. In a De*ision #ate# J"ne 53, /../, the CA affir4e# the RTC #e*ision !ith 4o#ifi*ation, the #is'ositi e 'ortion of !hi*h rea#s: EHERE<ORE, 're4ises *onsi#ere#, the #e*ision a''ea$e# fro4 is 8ODI<IED in the sense that the rate of interest is re#"*e# fro4 -/O to /&O 'er ann"4, effe*ti e J"ne 9, 5115 "nti$ f"$$) 'ai#.51 The CA fo"n# that: 'etitioner ,a e the one 4i$$ion 'esos to Att). FoKa#a 'art$) as her *o44ission an# 'art$) as a $oanC res'on#ent #i# not re'$a*e the 4ista:en$) #ate# *he*: of one 4i$$ion 'esos (e*a"se she ha# #e*i#e# not to (") the 'ro'ert) 10

an# 'etitioner :ne! of her #e*ision as ear$) as A'ri$ 5115C the a!ar# of 4ora$ #a4a,es !as !arrante# sin*e e en ,rantin, 'etitioner ha# no han# in the fi$in, of the 'etition for the iss"an*e of an o!ner7s *o'), she e;e*"te# an affi#a it of $oss of TCT No. 50359- !hen she :ne! a$$ a$on, that sai# tit$e !as in res'on#ent7s 'ossessionC 'etitioner7s *$ai4 that she tho",ht the tit$e !as $ost !hen the (ro!n en e$o'e ,i en to her () Att). FoKa#a !as sto$en fro4 her *ar !as ho$$o!C that s"*h #e*eitf"$ *on#"*t *a"se# res'on#ent serio"s an;iet) an# e4otiona$ #istress. The CA *on*$"#e# that there !as no (asis for 'etitioner to sa) that the interest sho"$# (e *har,e# for si; 4onths on$) an# no 4oreC that a $oan a$!a)s (ears interest other!ise it is not a $oanC that interest sho"$# *o44en*e on J"ne 9, 5115/. !ith *o4'o"n#e# (an: interest 're ai$in, at the ti4e the t!o 4i$$ion !as *onsi#ere# as a $oan !hi*h !as in J"ne 5115C that the (an: interest rate for $oans se*"re# () a rea$ estate 4ort,a,e in 5115 ran,e# fro4 /&O to -/O 'er ann"4 as *ertifie# to () Pr"#entia$ 2an:,/5 that in fairness to 'etitioner, the rate to (e *har,e# sho"$# (e /&O on$). Petitioner7s 4otion for re*onsi#eration !as #enie# () the CA in a Reso$"tion #ate# Se'te4(er 55, /../. Hen*e the instant Petition for Re ie! on Certiorari fi$e# () 'etitioner raisin, the fo$$o!in, iss"es: (A) EHETHER OR NOT THE CO8POANDED 2ANH INTEREST SHOAFD 2E FI8ITED TO SIP (0) 8ONTHS AS CONTAINED IN THE 8E8ORANDA8 O< A+REE8ENT. (2) EHETHER OR NOT THE RESPONDENT IS ENTITFED TO 8ORAF DA8A+ES. (C) EHETHER OR NOT THE +RANT O< CORRECTIIE AND EPE8PFARG DA8A+ES AND ATTORNEG7S <EES IS PROPER EIEN I< NOT 8ENTIONED IN THE TEPT O< THE DECISION.// Petitioner *onten#s that the interest, !hether at -/O 'er ann"4 a!ar#e# () the tria$ *o"rt or at /&O 'er ann"4 as 4o#ifie# () the CA !hi*h sho"$# r"n fro4 J"ne 9, 5115 "nti$ f"$$) 'ai#, is *ontrar) to the 'arties7 8e4oran#"4 of A,ree4entC that the a,ree4ent 'ro i#es that if res'on#ent !o"$# #e*i#e not to '"r*hase the 'ro'ert), 'etitioner has the 'erio# of another si; 4onths to 'a) the $oan !ith *o4'o"n#e# (an: interest for the $ast si; 4onths on$)C that the CA7s r"$in, that a $oan a$!a)s (ears interest other!ise it is not a $oan is *ontrar) to Art. 51&0 of the Ne! Ci i$ Co#e !hi*h 'ro i#es that no interest sha$$ (e #"e "n$ess it has (een e;'ress$) sti'"$ate# in !ritin,. Ee are not 'ers"a#e#. Ehi$e the CA7s *on*$"sion, that a $oan a$!a)s (ears interest other!ise it is not a $oan, is f$a!e# sin*e a si4'$e $oan 4a) (e ,rat"ito"s or !ith a sti'"$ation to 'a) interest,/- !e fin# no error *o44itte# () the CA in a!ar#in, a /&O interest 'er ann"4 on the t!o-4i$$ion 'eso $oan e en (e)on# the se*on# si; 4onths sti'"$ate# 'erio#. The 8e4oran#"4 of A,ree4ent e;e*"te# (et!een the 'etitioner an# res'on#ent on De*e4(er 9, 511. is the $a! (et!een the 'arties. In reso$ in, an iss"e (ase# "'on a *ontra*t, !e 4"st first e;a4ine the *ontra*t itse$f, es'e*ia$$) the 'ro isions thereof !hi*h are re$e ant to the *ontro ers)./% The ,enera$ r"$e is that if the ter4s of an a,ree4ent are *$ear an# $ea e no #o"(t as to the intention of the *ontra*tin, 'arties, the $itera$ 4eanin, of its sti'"$ations sha$$ 're ai$./& It is f"rther reJ"ire# that the ario"s sti'"$ations of a *ontra*t sha$$ (e inter'rete# to,ether, attri("tin, to the #o"(tf"$ ones that sense !hi*h 4a) res"$t fro4 a$$ of the4 ta:en =oint$)./0 In this *ase, the 'hrase Dfor the $ast si; 4onths on$)D sho"$# (e ta:en in the *onte;t of the entire a,ree4ent. Ee a,ree !ith an# a#o't the CA7s inter'retation of the 'hrase in this !ise: Their a,ree4ent s'ea:s of t!o (/) 'erio#s of si; 4onths ea*h. The first si;-4onth 'erio# !as ,i en to '$aintiff-a''e$$ee (res'on#ent) to 4a:e "' her 4in# !hether or not to '"r*hase #efen#ant-a''e$$ant7s ('etitionerRs) 'ro'ert). The se*on# si;4onth 'erio# !as ,i en to #efen#ant-a''e$$ant to 'a) the P/ 4i$$ion $oan in the e ent that '$aintiff-a''e$$ee #e*i#e# not to (") the s"(=e*t 'ro'ert) in !hi*h *ase interest !i$$ (e *har,e# Dfor the $ast si; 4onths on$)D, referrin, to the se*on# si;-4onth 'erio#. This 4eans that no interest !i$$ (e *har,e# for the first si;-4onth 'erio# !hi$e a''e$$ee !as 4a:in, "' her 4in# !hether to (") the 'ro'ert), ("t on$) for the se*on# 'erio# of si; 4onths after a''e$$ee ha# #e*i#e# not to (") the 'ro'ert). This is the 4eanin, of the 'hrase Dfor the $ast si; 4onths on$)D. Certain$), there is nothin, in their a,ree4ent that s",,ests that interest !i$$ (e *har,e# for si; 4onths on$) e en if it ta:es #efen#ant-a''e$$ant an eternit) to 'a) the $oan./9 The a,ree4ent that the a4o"nt ,i en sha$$ (ear *o4'o"n#e# (an: interest for the $ast si; 4onths on$), i.e., referrin, to the se*on# si;-4onth 'erio#, #oes not 4ean that interest !i$$ no $on,er (e *har,e# after the se*on# si;-4onth 'erio# sin*e s"*h sti'"$ation !as 4a#e on the $o,i*a$ an# reasona($e e;'e*tation that s"*h a4o"nt !o"$# (e 'ai# !ithin the #ate sti'"$ate#. Consi#erin, that 'etitioner fai$e# to 'a) the a4o"nt ,i en !hi*h "n#er the 8e4oran#"4 of A,ree4ent sha$$ (e *onsi#ere# as a $oan, the 4onetar) interest for the $ast si; 4onths *ontin"e# to a**r"e "nti$ a*t"a$ 'a)4ent of the $oane# a4o"nt. The 'a)4ent of re,"$ar interest *onstit"tes the 'ri*e or *ost of the "se of 4one) an# th"s, "nti$ the 'rin*i'a$ s"4 #"e is ret"rne# to the *re#itor, re,"$ar interest *ontin"es to a**r"e sin*e the #e(tor *ontin"es to "se s"*h 'rin*i'a$ a4o"nt./3 It has (een he$# that for a #e(tor to *ontin"e in 'ossession of the 'rin*i'a$ of the $oan an# to *ontin"e to "se the sa4e after 4at"rit) of the $oan !itho"t 'a)4ent of the 4onetar) interest, !o"$# *onstit"te "n="st enri*h4ent on the 'art of the #e(tor at the e;'ense of the *re#itor./1 Petitioner an# res'on#ent sti'"$ate# that the $oane# a4o"nt sha$$ earn *o4'o"n#e# (an: interests, an# 'er the *ertifi*ation iss"e# () Pr"#entia$ 2an:, the interest rate for $oans in 5115 ran,e# fro4 /&O to -/O 'er ann"4. The CA re#"*e# the interest rate to /&O instea# of the -/O a!ar#e# () the tria$ *o"rt !hi*h 'etitioner no $on,er assai$e#.5a!'hi5.nSt In 2a"tista . Pi$ar De e$o'4ent Cor'.,-. !e "'he$# the a$i#it) of a /5O 'er ann"4 interest on a P5%/,-/0.%- $oan. In +ar*ia . Co"rt of A''ea$s,-5 !e s"staine# the a,ree4ent of the 'arties to a /%O 'er ann"4 interest on an P3,0%1,/&.... $oan. Th"s, the interest rate of /&O 'er ann"4 a!ar#e# () the CA to a P/ 4i$$ion $oan is fair an# reasona($e.
11

Petitioner ne;t *$ai4s that 4ora$ #a4a,es !ere a!ar#e# on the erroneo"s fin#in, that she "se# a fra"#"$ent s*he4e to #e'ri e res'on#ent of her se*"rit) for the $oanC that s"*h fin#in, is (ase$ess sin*e 'etitioner !as a*J"itte# in the *ase for 'er="r) an# fa$se testi4on) fi$e# () res'on#ent a,ainst her. Ee are not 'ers"a#e#. Arti*$e -5 of the Ci i$ Co#e 'ro i#es that !hen the *i i$ a*tion is (ase# on an o($i,ation not arisin, fro4 the a*t or o4ission *o4'$aine# of as a fe$on), s"*h *i i$ a*tion 4a) 'ro*ee# in#e'en#ent$) of the *ri4ina$ 'ro*ee#in,s an# re,ar#$ess of the res"$t of the $atter.-/ Ehi$e 'etitioner !as a*J"itte# in the fa$se testi4on) an# 'er="r) *ases fi$e# () res'on#ent a,ainst her, those a*tions are entire$) #istin*t fro4 the *o$$e*tion of s"4 of 4one) !ith #a4a,es fi$e# () res'on#ent a,ainst 'etitioner. Ee a,ree !ith the fin#in,s of the tria$ *o"rt an# the CA that 'etitioner7s a*t of tr)in, to #e'ri e res'on#ent of the se*"rit) of her $oan () e;e*"tin, an affi#a it of $oss of the tit$e an# instit"tin, a 'etition for the iss"an*e of a ne! o!ner7s #"'$i*ate *o') of TCT No. 50359- entit$es res'on#ent to 4ora$ #a4a,es.5aTU@'hi5.net 8ora$ #a4a,es 4a) (e a!ar#e# in *"$'a *ontra*t"a$ or (rea*h of *ontra*t *ases !hen the #efen#ant a*te# fra"#"$ent$) or in (a# faith. 2a# faith #oes not si4'$) *onnote (a# ="#,4ent or ne,$i,en*eC it i4'orts a #ishonest '"r'ose or so4e 4ora$ o($iJ"it) an# *ons*io"s #oin, of !ron,. It 'arta:es of the nat"re of fra"#.-The 8e4oran#"4 of A,ree4ent 'ro i#es that in the e ent that res'on#ent o'ts not to (") the 'ro'ert), the 4one) ,i en () res'on#ent to 'etitioner sha$$ (e treate# as a $oan an# the 'ro'ert) sha$$ (e *onsi#ere# as the se*"rit) for the 4ort,a,e. It !as testifie# to () res'on#ent that after the) e;e*"te# the a,ree4ent on De*e4(er 9, 511., 'etitioner ,a e her the o!ner7s *o') of the tit$e to the 'ro'ert), the Dee# of Sa$e (et!een 'etitioner an# I8RDC, the *ertifi*ate of o**"'an*), an# the *ertifi*ate of the Se*retar) of the I8RDC !ho si,ne# the Dee# of Sa$e.-% Ho!e er, not!ithstan#in, that a$$ those #o*"4ents !ere in res'on#ent7s 'ossession, 'etitioner e;e*"te# an affi#a it of $oss that the o!ner7s *o') of the tit$e an# the Dee# of Sa$e !ere $ost. A$tho",h 'etitioner testifie# that her e;e*"tion of the affi#a it of $oss !as #"e to the fa*t that she !as of the (e$ief that sin*e she ha# #e4an#e# fro4 Att). FoKa#a the ret"rn of the tit$e, she tho",ht that the (ro!n en e$o'e !ith 4ar:in,s !hi*h Att). FoKa#a ,a e her on 8a) &, 5115 a$rea#) *ontaine# the tit$e an# the Dee# of Sa$e as those #o*"4ents !ere in the sa4e (ro!n en e$o'e !hi*h she ,a e to Att). FoKa#a 'rior to the transa*tion !ith res'on#ent.-& S"*h state4ent re4aine# a (are state4ent. It !as not 'ro en at a$$ sin*e Att). FoKa#a ha# not ta:en the stan# to *orro(orate her *$ai4. In fa*t, e en 'etitioner7s o!n !itness, 2eni$#a Gnfante (Gnfante), !as not a($e to esta($ish 'etitionerRs *$ai4 that the tit$e !as ret"rne# () Att). FoKa#a in ie! of GnfanteRs testi4on) that after the (ro!n en e$o'e !as ,i en to 'etitioner, the $atter 'asse# it on to her an# she '$a*e# it in 'etitioner7s atta*hS *ase-0 an# #i# not (other to $oo: at the en e$o'e.-9 It is *$ear therefro4 that 'etitioner7s e;e*"tion of the affi#a it of $oss (e*a4e the (asis of the fi$in, of the 'etition !ith the RTC for the iss"an*e of ne! o!ner7s #"'$i*ate *o') of TCT No. 50359-. Petitioner7s a*t"ation !o"$# ha e #e'ri e# res'on#ent of the se*"rit) for her $oan !ere it not for res'on#ent7s ti4e$) fi$in, of a 'etition for re$ief !here() the RTC set asi#e its 're io"s or#er ,rantin, the iss"an*e of ne! tit$e. Th"s, the a!ar# of 4ora$ #a4a,es is in or#er. The entit$e4ent to 4ora$ #a4a,es ha in, (een esta($ishe#, the a!ar# of e;e4'$ar) #a4a,es is 'ro'er.-3 E;e4'$ar) #a4a,es 4a) (e i4'ose# "'on 'etitioner () !a) of e;a4'$e or *orre*tion for the '"($i* ,oo#.-1 The RTC a!ar#e# the a4o"nt of P5..,...... as 4ora$ an# e;e4'$ar) #a4a,es. Ehi$e the a!ar# of 4ora$ an# e;e4'$ar) #a4a,es in an a,,re,ate a4o"nt 4a) not (e the "s"a$ !a) of a!ar#in, sai# #a4a,es,%. no error has (een *o44itte# () CA. There is no J"estion that res'on#ent is entit$e# to 4ora$ an# e;e4'$ar) #a4a,es. Petitioner ar,"es that the CA erre# in a!ar#in, attorne)7s fees (e*a"se the tria$ *o"rt7s #e*ision #i# not e;'$ain the fin#in,s of fa*ts an# $a! to ="stif) the a!ar# of attorne)7s fees as the sa4e !as 4entione# on$) in the #is'ositi e 'ortion of the RTC #e*ision. Ee a,ree. Arti*$e //.3%5 of the Ne! Ci i$ Co#e en"4erates the instan*es !here s"*h 4a) (e a!ar#e# an#, in a$$ *ases, it 4"st (e reasona($e, ="st an# eJ"ita($e if the sa4e !ere to (e ,rante#.%/ Attorne)Rs fees as 'art of #a4a,es are not 4eant to enri*h the !innin, 'art) at the e;'ense of the $osin, $iti,ant. The) are not a!ar#e# e er) ti4e a 'art) 're ai$s in a s"it (e*a"se of the 'o$i*) that no 're4i"4 sho"$# (e '$a*e# on the ri,ht to $iti,ate.%- The a!ar# of attorne)Rs fees is the e;*e'tion rather than the ,enera$ r"$e. As s"*h, it is ne*essar) for the tria$ *o"rt to 4a:e fin#in,s of fa*ts an# $a! that !o"$# (rin, the *ase !ithin the e;*e'tion an# ="stif) the ,rant of s"*h a!ar#. The 4atter of attorne)Rs fees *annot (e 4entione# on$) in the #is'ositi e 'ortion of the #e*ision.%% The) 4"st (e *$ear$) e;'$aine# an# ="stifie# () the tria$ *o"rt in the (o#) of its #e*ision. On a''ea$, the CA is 're*$"#e# fro4 s"''$e4entin, the (ases for a!ar#in, attorne)7s fees !hen the tria$ *o"rt fai$e# to #is*"ss in its De*ision the reasons for a!ar#in, the sa4e. ConseJ"ent$), the a!ar# of attorne)Rs fees sho"$# (e #e$ete#. EHERE<ORE, in ie! of a$$ the fore,oin,, the De*ision #ate# J"ne 53, /../ an# the Reso$"tion #ate# Se'te4(er 55, /../ of the Co"rt of A''ea$s in CA-+.R. CI No. &/3-1 are A<<IR8ED !ith 8ODI<ICATION that the a!ar# of attorne)7s fees is DEFETED. No 'rono"n*e4ent as to *osts. SO ORDERED.

9G.R. No. 12207/. 8u#! 27, 1//7:

12

SPO&SES ANTONIO E.A. .ON.EP.ION '#( )AN&ELA S. .ON.EP.ION, !t"t"o#!$s, %s. HON. .O&RT OF APPEALS, HO)E SA3INGS *AN, AN- TR&ST .O)PAN+, '#( 's #o0"#'2 '$t4-(!6!#('#ts, THE SHERIFF ASSIGNE- TO SAN 8&AN, )ETRO )ANILA, '#( ;5o 7o#(u7t!( t5! 'u7t"o# s'2! '#( t5! REGISTER OF -EE-S o$ 5"s $! $!s!#t't"%! o6 S'# 8u'#, )!t$o )'#"2', '#( ASA8E REALT+ .ORPORATION, $!s o#(!#ts.
D E C I S I O N (IITA+, J.:) The s'o"ses Antonio E.A. Con*e'*ion an# 8an"e$a S. Con*e'*ion assai$, ia the instant 'etition for re ie! on *ertiorari, the #e*ision,>5? #ate# 5& Se'te4(er 511&, of the Co"rt of A''ea$s, affir4in, !ith 4o#ifi*ation the ="#,4ent of the Re,iona$ Tria$ Co"rt (DRTCD),>/? 2ran*h 5&9, of Pasi, Cit),>-? that #is4isse# the *o4'$aint of herein 'etitioners a,ainst 'ri ate res'on#ents. The fa*ts, here"n#er narrate#, are *"$$e# fro4 the fin#in,s of the a''e$$ate *o"rt. On 59 Jan"ar) 5191, the Ho4e Sa in,s 2an: an# Tr"st Co4'an) (no! Ins"$ar Fife Sa in,s an# Tr"st Co4'an)) ,rante# to the Con*e'*ions a $oan a4o"ntin, to P5,%..,....... The Con*e'*ions, in t"rn, e;e*"te# in fa or of the (an: a 'ro4issor) note an# a rea$ estate 4ort,a,e o er their 'ro'ert) $o*ate# at 55 A$(an) St., +reenhi$$s, San J"an, 8etro 8ani$a. The $oan !as 'a)a($e in eJ"a$ J"arter$) a4ortiKations for a 'erio# of fifteen (5&) )ears an# *arrie# an interest rate of si;teen 'er*ent (50O) 'er ann"4. The 'ro4issor) note 'ro i#e# that the Con*e'*ions ha# a"thoriKe# D; ; ; the 2an: to *orres'on#in,$) in*rease the interest rate 'resent$) sti'"$ate# in this transa*tion !itho"t a# an*e noti*e to 4e@"s in the e ent the Centra$ 2an: of the Phi$i''ines raises its re#is*o"nt rate to 4e4(er (an:s, an#@or the interest rate on sa in,s an# ti4e #e'osit, an#@or the interest rate on s"*h $oans an#@or a# an*es.D>%? In a**or#an*e !ith the a(o e 'ro ision, the (an: "ni$atera$$) in*rease# the interest rate fro4 50O to /5O effe*ti e 59 <e(r"ar) 513.C fro4 /5O to -.O effe*ti e 59 O*to(er 513%C an# fro4 -.O to -3O effe*ti e 59 No e4(er 513%, in*reasin, the J"arter$) a4ortiKations fro4 P09,3-.... to, res'e*ti e$), P99,051.9/, P5.%,005.5., an# P5/-,919..& for the 'erio#s aforestate#. The Con*e'*ions 'ai#, "n#er 'rotest, the in*rease# a4ortiKations of P99,051.9/ an# P5.%,005.5. "nti$ Jan"ar) 513& ("t thereafter fai$e# to 'a) the J"arter$) a4ortiKation of P5/-,919..& (startin, #"e #ate of 59 A'ri$ 513&). In a $etter, #ate# 5& J"$) 513&, the (an:Rs Presi#ent 4a#e a #e4an# on the Con*e'*ions for the 'a)4ent of the arreara,es. The Con*e'*ions fai$e# to 'a), *onstrainin, the (an:Rs *o"nse$ to sen# a fina$ #e4an# $etter, #ate# /0 A","st 513&, for the 'a)4ent of P-1-,393.35, *o erin, the s'o"sesR #"e a**o"nt for three J"arter$) 'a)4ents '$"s interest, 'ena$t), an# ser i*e *har,es. Sti$$, no 'a)4ent !as re*ei e#. On 5% A'ri$ 5130, the (an: fina$$) fi$e# !ith the Offi*e of the Pro in*ia$ Sheriff of Pasi, Cit) a 'etition for e;tra="#i*ia$ fore*$os"re of the rea$ estate 4ort,a,e e;e*"te# () the Con*e'*ions. A noti*e of sa$e !as iss"e# on 5& 8a) 5130, settin, the '"($i* a"*tion sa$e on 55 J"ne 5130. The noti*e !as '"($ishe# in the ne!s'a'er D8a("ha).D A *o') of the noti*e !as sent to the Con*e'*ions at &1 Ehitefie$# St., Ehite P$ains S"(#i ision, 6"eKon Cit) an#@or at 55 A$(an) St., +reenhi$$s S"(#i ision, San J"an, 8etro 8ani$a. The '"($i* a"*tion sa$e !ent on as s*he#"$e# !ith the (an: e4er,in, as the hi,hest (i##er. A Certifi*ate of Sa$e !as iss"e# in fa or of the (an:. The Con*e'*ions !ere "na($e to e;er*ise their ri,ht of re#e4'tion !ithin the one-)ear 'erio# 'ro i#e# "n#er A*t No. -5-&. The (an: th"s *onso$i#ate# its tit$e o er the 'ro'ert) an#, after the *an*e$$ation of the tit$e in the na4e of the Con*e'*ions, a ne! transfer *ertifi*ate of tit$e (No. .1.-R) !as iss"e# in the na4e of Ho4e Sa in,s 2an: an# Tr"st Co4'an). On -5 J"$) 5139, the (an: e;e*"te# a Dee# of A(so$"te Sa$e in fa or of Asa=e Rea$t) Cor'oration an# a ne! *ertifi*ate of tit$e !as iss"e# in the $atterRs na4e. 8ean!hi$e, on /1 J"$) 5139, the Con*e'*ions fi$e# an a*tion a,ainst Ho4e Sa in,s 2an: an# Tr"st Co4'an), the Sheriff of San J"an, 8etro 8ani$a, an# the Re,ister of Dee#s of San J"an, 8etro 8ani$a, for the *an*e$$ation of the fore*$os"re sa$e, the #e*$aration of n"$$it) of the *onso$i#ation of tit$e in fa or of the (an:, an# the #e*$aration of n"$$it) of the "ni$atera$ in*reases of the interest rates on their $oan. The s'o"ses $i:e!ise *$ai4e# #a4a,es a,ainst the #efen#ants. The Con*e'*ions, ha in, $earne# of the sa$e of the 'ro'ert) to Asa=e Rea$t) Cor'oration, fi$e# an a4en#e# *o4'$aint i4'$ea#in, the rea$t) *or'oration an# so 'ra)in, as !e$$ for the *an*e$$ation of the sa$e e;e*"te# (et!een sai# *or'oration an# the (an: an# the *an*e$$ation of the *ertifi*ate of tit$e iss"e# in the na4e of Asa=e. On -5 A","st 511/, the tria$ *o"rt fo"n# for the #efen#ants an# r"$e#: DIn ie! of a$$ the fore,oin, 're4ises, this Co"rt fina$$) *on*$"#es that the '$aintiffs ha e no *a"se of a*tion either a,ainst #efen#ant Ho4e Sa in,s 2an: V Tr"st Co4'an) or #efen#ant Asa=e Rea$t) Cor'orationC an# "n#er the *ir*"4stan*es of this *ase, it #ee4s it ="st an# eJ"ita($e that attorne)Rs fees an# e;'enses of $iti,ation sho"$# (e re*o ere# () sai# #efen#ants. DEHERE<ORE, ="#,4ent is here() ren#ere# #is4issin, the a4en#e# *o4'$aint of '$aintiffs S'o"ses Antonio E.A. Con*e'*ion an# 8an"e$a S. Con*e'*ion a,ainst the #efen#ants for $a*: of 4erit, an# or#erin, the sai# '$aintiffs to 'a) attorne)Rs fees an# e;'enses of $iti,ation in the s"4 of P-.,...... to #efen#ant Ho4e Sa in,s 2an: V Tr"st Co4'an) an# in the a4o"nt of P/&,...... to #efen#ant Asa=e Rea$t) Cor'oration, in a##ition to their res'e*ti e *osts of s"it. DSO ORDERED.D>&? The Con*e'*ions !ent to the Co"rt of A''ea$s. On 5& Se'te4(er 511&, the a''e$$ate *o"rt affir4e# the tria$ *o"rtRs #e*ision, !ith 4o#ifi*ation, as fo$$o!s:
13

DAn#er the fa*ts an# *ir*"4stan*es of the *ase at (en*h, the a!ar# of attorne)Rs fees, e;'enses of $iti,ation an# *osts of s"it in fa or of #efen#ant-a''e$$ee sho"$# (e #e$ete#. It is not a so"n# 'o$i*) to '$a*e a 'ena$t) on the ri,ht to $iti,ate, nor sho"$# *o"nse$Rs fees (e a!ar#e# e er)ti4e a 'art) !ins a s"it (Arenas s. Co"rt of A''ea$s, 501 SCRA &&3). DEHERE<ORE, the a''ea$e# ="#,4ent is A<<IR8ED !ith the 4o#ifi*ation that the a!ar# of attorne)s fees, $iti,ation e;'enses an# *osts of s"it in fa or of #efen#ant-a''e$$ees are #e$ete# fro4 the #is'ositi e 'ortion. DSO ORDERED.D>0? The Con*e'*ions forth!ith fi$e# !ith this Co"rt a 'etition for re ie! on *ertiorari, *onten#in, that the) ha e (een #enie# their *ontra*t"a$$) sti'"$ate# ri,ht to (e 'ersona$$) notifie# of the fore*$os"re 'ro*ee#in,s on the 4ort,a,e# 'ro'ert). There is so4e 4erit in the 'etition. The three *o44on t)'es of for*e# sa$es arisin, fro4 a fai$"re to 'a) a 4ort,a,e #e(t in*$"#e (a) an e;tra="#i*ia$ fore*$os"re sa$e, ,o erne# () A*t No. -5-&C (() a ="#i*ia$ fore*$os"re sa$e, re,"$ate# () R"$e 03 of the R"$es of Co"rtC an# (*) an or#inar) e;e*"tion sa$e, *o ere# () R"$e -1 of the R"$es of Co"rt.>9? Ea*h 4o#e, 'e*"$iar$), has its o!n reJ"ire4ents. In an e;tra="#i*ia$ fore*$os"re, s"*h as here, Se*tion - of A*t No. -5-&>3? is the $a! a''$i*a($eC>1? the 'ro ision rea#s: DSe*. -. Noti*e sha$$ (e ,i en () 'ostin, noti*es of the sa$e for not $ess than t!ent) #a)s in at $east three '"($i* '$a*es of the 4"ni*i'a$it) or *it) !here the 'ro'ert) is sit"ate#, an# if s"*h 'ro'ert) is !orth 4ore than fo"r h"n#re# 'esos, s"*h noti*e sha$$ a$so (e '"($ishe# on*e a !ee: for at $east three *onse*"ti e !ee:s in a ne!s'a'er of ,enera$ *ir*"$ation in the 4"ni*i'a$it) or *it).D The A*t on$) reJ"ires (5) the 'ostin, of noti*es of sa$e in three '"($i* '$a*es, an# (/) the '"($i*ation of the sa4e in a ne!s'a'er of ,enera$ *ir*"$ation.>5.? Persona$ noti*e to the 4ort,a,or is not ne*essar).>55? Ne erthe$ess, the 'arties to the 4ort,a,e *ontra*t are not 're*$"#e# fro4 e;a*tin, a##itiona$ reJ"ire4ents. In the *ase at (ar, the 4ort,a,e *ontra*t sti'"$ate# that DA$$ *orres'on#en*e re$ati e to this 8ort,a,e, in*$"#in, #e4an# $etters, s"44ons, s"('oenas, or notifi*ations of an) ="#i*ia$ or e;tra="#i*ia$ a*tions sha$$ (e sent to the 8ort,a,or at the a##ress ,i en a(o e or at the a##ress that 4a) hereafter (e ,i en in !ritin, () the 8ort,a,or to the 8ort,a,ee, an# the 4ere a*t of sen#in, an) *orres'on#en*e () 4ai$ or () 'ersona$ #e$i er) to the sai# a##ress sha$$ (e a$i# an# effe*ti e noti*e to the 8ort,a,or for a$$ $e,a$ '"r'oses, an# fa*t that an) *o44"ni*ation is not a*t"a$$) re*ei e# () the 8ort,a,or, or that it has (een ret"rne# "n*$ai4e# to the 8ort,a,ee, or that no 'erson !as fo"n# at the a##ress ,i en, or that the a##ress is fi*titio"s or *annot (e $o*ate#, sha$$ not e;*"se or re$ie e 8ort,a,or fro4 the effe*ts of s"*h noti*e.D>5/? The sti'"$ation, not (ein, *ontrar) to $a!, 4ora$s, ,oo# *"sto4s, '"($i* or#er or '"($i* 'o$i*), is the $a! (et!een the *ontra*tin, 'arties an# sho"$# (e faithf"$$) *o4'$ie# !ith.>5-? Pri ate res'on#ent (an: 4aintains that the sti'"$ation that Da$$ *orres'on#en*e re$ati e to (the) 8ort,a,e ; ; ; sha$$ (e sent to the 8ort,a,or at the a##ress ,i en a(o e or at the a##ress that 4a) hereafter (e ,i en in !ritin, () the 8ort,a,or to the 8ort,a,eeD>5%? ,i es the 4ort,a,ee an a$ternati e to sen# its *orres'on#en*e either at the o$# or the ne! a##ress ,i en.>5&? This stan# is i$$o,i*a$. It *o"$# not ha e (een the inten#4ent of the 'arties to #efeat the er) '"r'ose of the 'ro ision referre# to !hi*h is o( io"s$) to a''rise the 4ort,a,ors of the (an:Rs a*tion that 4i,ht affe*t the 'ro'ert) an# to a**or# to the4 an o''ort"nit) to safe,"ar# their ri,hts. The Co"rt fin#s the (an:Rs fai$"re to *o4'$) !ith its a,ree4ent !ith 'etitioners an ine;*"sa($e (rea*h of the 4ort,a,eeRs *o enant. Neither 'etitionersR s"(seJ"ent o''ort"nit) to re#ee4 the 'ro'ert) nor their fai$e# ne,otiations !ith the (an: for a ne! s*he#"$e of 'a)4ents,>50? *an (e a a$i# ="stifi*ation for the (rea*h. The fore,oin, not!ithstan#in,, 'etitioners 4a) no $on,er see: the re*on e)an*e of the 'ro'ert) fro4 'ri ate res'on#ent Asa=e Rea$t) Cor'oration, the $atter ha in, (een, e i#ent$), an inno*ent '"r*haser in ,oo# faith.>59? The rea$t) *or'oration '"r*hase# the 'ro'ert) !hen the tit$e !as a$rea#) in the na4e of the (an:. It !as "n#er no o($i,ation to in esti,ate the tit$e of the (an: or to $oo: (e)on# !hat *$ear$) a''eare# to (e on the fa*e of the *ertifi*ate.>53? Pri ate res'on#ent (an:, ho!e er, *an sti$$ (e he$# to a**o"nt for the (i# 'ri*e of Asa=e Rea$t) Cor'oration o er an# a(o e, if an), the a4o"nt #"e the (an: on the (asis of the ori,ina$ interest rate, the "ni$atera$ in*reases 4a#e () the (an: ha in, (een *orre*t$) in a$i#ate# () the Co"rt of A''ea$s. The a$i#it) of Des*a$ationD or Des*a$atorD *$a"ses in *ontra*ts, in ,enera$, !as "'he$# () the S"'re4e Co"rt in 2an*o <i$i'ino Sa in,s an# 8ort,a,e 2an: s. Hon. Na arro an# De$ Ia$$e.>51? Hen*e: DSo4e *ontra*ts *ontain !hat is :no!n as an Wes*a$ator *$a"se,R !hi*h is #efine# as one in !hi*h the *ontra*t fi;es a (ase 'ri*e ("t *ontains a 'ro ision that in the e ent of s'e*ifie# *ost in*reases, the se$$er or *ontra*tor 4a) raise the 'ri*e "' to a fi;e# 'er*enta,e of the (ase. Atta*:s on s"*h a *$a"se ha e "s"a$$) (een (ase# on the *$ai4 that, (e*a"se of the o'en 'ri*e'ro ision, the *ontra*t !as too in#efinite to (e enfor*ea($e an# #i# not e i#en*e an a*t"a$ 4eetin, of the 4in#s of the 'arties, or that the arran,e4ent $eft the 'ri*e to (e #eter4ine# ar(itrari$) () one 'art) so that the *ontra*t $a*:e# 4"t"a$it). In 4ost instan*es, ho!e er, these atta*:s ha e (een "ns"**essf"$. DThe Co"rt f"rther fin#s as a 4atter of $a! that the *ost of $i in, in#e; a#="st4ent, or es*a$ator *$a"se, is not s"(stanti e$) "n*ons*iona($e. DCost of $i in, in#e; a#="st4ent *$a"ses are !i#e$) "se# in *o44er*ia$ *ontra*ts in an effort to 4aintain fis*a$ sta(i$it) an# to retain Wrea$ #o$$arR a$"e to the 'ri*e ter4s of $on, ter4 *ontra*ts. The 'ro ision is a *o44on one, an# has (een "ni ersa$$) "'he$# an# enfor*e#. In#ee#, the <e#era$ ,o ern4ent has re*o,niKe# the effi*a*) of es*a$ator *$a"ses in t)in, So*ia$ Se*"rit) (enefits to the *ost of $i in, in#e;, %/ A.S.C.s %5&(i). Pension (enefits an# $a(or *ontra*ts ne,otiate# () 4ost of the 4a=or $a(or 14

"nions are other e;a4'$es. That inf$ation, e;'e*te# or other!ise, !i$$ *a"se a 'arti*"$ar (ar,ain to (e 4ore *ost$) in ter4s of tota$ #o$$ars than ori,ina$$) *onte4'$ate# *an (e of $itt$e so$a*e to the '$aintiffs.D>/.? In Phi$i''ine Nationa$ 2an: s. Co"rt of A''ea$s,>/5? the Co"rt f"rther e$"*i#ate#, as fo$$o!s: DIt is (asi* that there *an (e no *ontra*t in the tr"e sense in the a(sen*e of the e$e4ent of a,ree4ent, or of 4"t"a$ assent of the 'arties. If this assent is !antin, on the 'art of one !ho *ontra*ts, his a*t has no 4ore effi*a*) than if it ha# (een #one "n#er #"ress or () a 'erson of "nso"n# 4in#. DSi4i$ar$), *ontra*t *han,es 4"st (e 4a#e !ith the *onsent of the *ontra*tin, 'arties. The 4in#s of a$$ the 'arties 4"st 4eet as to the 'ro'ose# 4o#ifi*ation, es'e*ia$$) !hen it affe*ts an i4'ortant as'e*t of the a,ree4ent. In the *ase of $oan *ontra*ts, it *annot (e ,ainsai# that the rate of interest is a$!a)s a ita$ *o4'onent, for it *an 4a:e or (rea: a *a'ita$ ent"re. Th"s, an) *han,e 4"st (e 4"t"a$$) a,ree# "'on, other!ise, it is (ereft of an) (in#in, effe*t. DEe *annot *o"ntenan*e 'etitioner (an:Rs 'ost"rin, that the es*a$ation *$a"se at (en*h ,i es it "n(ri#$e# ri,ht to "ni$atera$$) "'!ar#$) a#="st the interest on 'ri ate res'on#entsR $oan. That !o"$# *o4'$ete$) ta:e a!a) fro4 'ri ate res'on#ents the ri,ht to assent to an i4'ortant 4o#ifi*ation in their a,ree4ent, an# !o"$# ne,ate the e$e4ent of 4"t"a$it) in *ontra*ts. In Phi$i''ine Nationa$ 2an: . Co"rt of A''ea$s, et a$., 510 SCRA &-0, &%%-&%& (5115) !e he$# DW; ; ; (T)he "ni$atera$ a*tion of the PN2 in in*reasin, the interest rate on the 'ri ate res'on#entRs $oan io$ate# the 4"t"a$it) of *ontra*ts or#aine# in Arti*$e 5-.3 of the Ci i$ Co#e: DWART. 5-.3. The *ontra*t 4"st (in# (oth *ontra*tin, 'artiesC its a$i#it) or *o4'$ian*e *annot (e $eft to the !i$$ of one of the4.R DIn or#er that o($i,ations arisin, fro4 *ontra*ts 4a) ha e the for*e or $a! (et!een the 'arties, there 4"st (e 4"t"a$it) (et!een the 'arties (ase# on their essentia$ eJ"a$it). A *ontra*t *ontainin, a *on#ition !hi*h 4a:es its f"$fi$$4ent #e'en#ent e;*$"si e$) "'on the "n*ontro$$e# !i$$ of one of the *ontra*tin, 'arties, is oi# ; ; ;. Hen*e, e en ass"4in, that the ; ; ; $oan a,ree4ent (et!een the PN2 an# the 'ri ate res'on#ent ,a e the PN2 a $i*ense (a$tho",h in fa*t there !as none) to in*rease the interest rate at !i$$ #"rin, the ter4 of the $oan, that $i*ense !o"$# ha e (een n"$$ an# oi# for (ein, io$ati e of the 'rin*i'$e of 4"t"a$it) essentia$ in *ontra*ts. It !o"$# ha e in este# the $oan a,ree4ent !ith the *hara*ter of a *ontra*t of a#hesion, !here the 'arties #o not (ar,ain on eJ"a$ footin,, the !ea:er 'art)Rs (the #e(tor) 'arti*i'ation (ein, re#"*e# to the a$ternati e Wto ta:e it or $ea e itR ; ; ;. S"*h a *ontra*t is a erita($e tra' for the !ea:er 'art) !ho4 the *o"rts of ="sti*e 4"st 'rote*t a,ainst a("se an# i4'osition. (Citations o4itte#.)D>//? E en if !e !ere to *onsi#er that 'etitioners !ere (o"n# () their a,ree4ent a$$o!in, an in*rease in the interest rate #es'ite the $a*: of a# an*e noti*e to the4, the es*a$ation sho"$# sti$$ (e s"(=e*t, as so *ontra*t"a$$) sti'"$ate#, to a *orres'on#in, in*rease () the Centra$ 2an: of its re#is*o"nt rate to 4e4(er (an:s, or of the interest rate on sa in,s an# ti4e #e'osit, or of the interest rate on s"*h $oans an# a# an*es. The noti*es sent to 'etitioners 4ere$) rea#: Fetter of 51 J"$) 513%: DP$ease (e infor4e# that the 2an: has in*rease# the interest rate of )o"r e;istin, $oan fro4 /5 to -.O 'er ann"4 (e,innin, O*to(er 59, 513%. This in*rease of interest rate is in a**or#an*e !ith the 'ro ision of Se*tion / of Presi#entia$ De*ree No. 503%>/-? a4en#in, A*t No. /0&&. This 'ro ision of the #e*ree is reiterate# "n#er 'ara,ra'h 5 of )o"r Pro4issor) Note. Go"r J"arter$) a4ortiKation has (een in*rease# to P5.%,005.5.. DEe tr"st that )o" !i$$ (e ,"i#e# a**or#in,$).D>/%? Fetter of 5% No e4(er 513%: DOn a**o"nt of the 're ai$in, ("siness an# e*ono4i* *on#ition, !e are *o4'e$$e# to in*rease the interest rate of )o"r e;istin, $oan fro4 -.O to -3O 'er ann"4 effe*ti e No e4(er 59, 513%. This in*rease is in a**or#an*e !ith )o"r a,ree4ent (es*a$ation *$a"se) in )o"r 'ro4issor) note@s. DIn ie! of this in*rease in the interest rate of )o"r $oan, )o"r 6"arter$) a4ortiKation *orres'on#in,$) in*rease# to P5/-,919..& *o44en*in, on A'ri$ 59, 513&. DEe tr"st that )o" !i$$ "n#erstan# o"r 'osition an# '$ease (e ,"i#e# a**or#in,$).D>/&? +i en the *ir*"4stan*es, the Co"rt sees no *o,ent reasons to fa"$t the a''e$$ate *o"rt in its fin#in, that there are no s"ffi*ient a$i# ="stifi*ations a't$) sho!n for the "ni$atera$ in*reases () 'ri ate res'on#ent (an: of the interest rates on the $oan. EHERE<ORE, the #e*ision of the a''e$$ate *o"rt is A<<IR8ED s"(=e*t to the 8ODI<ICATION that 'ri ate res'on#ent Ho4e Sa in,s 2an: an# Tr"st Co4'an) sha$$ 'a) to 'etitioners the e;*ess, if an), of the (i# 'ri*e it re*ei e# fro4 Asa=e Rea$t) Cor'oration for the fore*$ose# 'ro'ert) in J"estion o er an# a(o e the "n'ai# (a$an*e of the $oan *o4'"te# at the ori,ina$ interest rate. This *ase is RE8ANDED to the tria$ *o"rt for the a(o e #eter4ination. No *osts.

G.R. NO. 187678 : April 10, 2013 SPOUSES IGNACIO F. JUICO and A ICE P. JUICO, Petitioners, v. C!INA "AN#ING CORPORA$ION,Respondent. %ECISION
15

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the e!ruar" #$, #$$9 %ecision1 and &pril #7, #$$9 Resolution# of the Court of &ppeals 'C&( in C& ).R. C* +o. ,$--,. .he C& affirmed the &pril 14, #$$- %ecision- of the Regional .rial Court 'R.C( of /a0ati Cit", Branch 147. .he factual antecedents1
chanro!lesvirtualawli!rar"

2pouses 3gnacio . 4uico and &lice P. 4uico 'petitioners( o!tained a loan from China Ban0ing Corporation 'respondent( as evidenced !" two Promissor" +otes !oth dated 5cto!er 6, 199, and num!ered 5$77$$1$517- 4 and 5$77$$1$5#7$,5 for the sums of 886,#16,$$$ and P4, 1-9,$$$, respectivel". .he loan was secured !" a Real 9state /ortgage 'R9/( over petitioners: propert" located at 49 )reensville 2t., ;hite Plains, <ue=on Cit" covered !" .ransfer Certificate of .itle '.C.( +o. R.7 1$-56, '167-94( PR741#$,6 of the Register of %eeds of <ue=on Cit". ;hen petitioners failed to pa" the monthl" amorti=ations due, respondent demanded the full pa"ment of the outstanding !alance with accrued monthl" interests. 5n 2eptem!er 5, #$$$, petitioners received respondent:s last demand letter 7 dated &ugust #9, #$$$. &s of e!ruar" #-, #$$1, the amount due on the two promissor" notes totaled P19,#$1,776.6- representing the principal, interests, penalties and attorne":s fees. 5n the same da", the mortgaged propert" was sold at pu!lic auction, with respondent as highest !idder for the amount of P1$,-$$,$$$. 5n /a" ,, #$$1, petitioners received, a demand letter9 dated /a" #, #$$1 from respondent for the pa"ment of P,,9$1,776.6-, the amount of deficienc" after appl"ing the proceeds of the foreclosure sale to the mortgage de!t. &s its demand remained unheeded, respondent filed a collection suit in the trial court. 3n its Complaint, 1$ respondent pra"ed that >udgment !e rendered ordering the petitioners to pa" >ointl" and severall"1 '1( P,,9$1,776.6- representing the amount of deficienc", plus interests at the legal rate, from e!ruar" #-, #$$1 until full" paid? '#( an additional amount e@uivalent to 1A1$ of 1B per da" of the total amount, until full" paid, as penalt"? '-( an amount e@uivalent to 1$B of the foregoing amounts as attorne":s fees? and '4( eCpenses of litigation and costs of suit. 3n their &nswer,11 petitioners admitted the eCistence of the de!t !ut interposed, !" wa" of special and affirmative defense, that the complaint states no cause of action considering that the principal of the loan was alread" paid when the mortgaged propert" was eCtra>udiciall" foreclosed and sold for P1$,-$$,$$$. Petitioners contended that should the" !e held lia!le for an" deficienc", it should !e onl" for P55,$$$ representing the difference !etween the total outstanding o!ligation of P1$,-55,$$$ and the !id price ofP1$,-$$,$$$. Petitioners also argued that even assuming there is a cause of action, such deficienc" cannot !e enforced !" respondent !ecause it consists onl" of the penalt" andAor compounded interest on the accrued interest which is generall" not favored under the Civil Code. B" wa" of counterclaim, petitioners pra"ed that respondent !e ordered to pa" P1$$,$$$ in attorne":s fees and costs of suit. &t the trial, respondent presented /s. &nna!elle Co0ai Du, its 2enior Eoans &ssistant, as witness. 2he testified that she handled the account of petitioners and assisted them in processing their loan application. 2he called them monthl" to inform them of the prevailing rates to !e used in computing interest due on their loan. &s of the date of the pu!lic auction, petitioners: outstanding !alance was P19,#$1,776.6-1#!ased on the following statement of account which she prepared1
chanro!le svirtualawli!rar"

2.&.9/9+. 5 &CC5F+. &s of 9BRF&RD #-, #$$1 3)+&C35 . 4F3C5 P+G 5$77$$1$5#$ due on $47$77#$$4

Principal !alance of P+G 5$7$$1$5#$. . . . . . . . . . . . . . 3nterest on P4,1-9,$$$.$$ fr. $47+ov799 $47+ov7#$$$ -66 da"s H 15.$$B. . . . . . . . . . . . . . . . . 3nterest on P4,1-9,$$$.$$ fr. $47+ov7#$$$ $47%ec7#$$$ -$ da"s H #4.5$B. . . . . . . . . . . . . . . . . . 3nterest on P4,1-9,$$$.$$ fr. $47%ec7#$$$

4,1-9,$$$.$$

6##,55$.96

,-,-46.99

$474an7#$$1 -1 da"s H #1.5$B. . . . . . . . . . . . . . . . . . . 75,579.#7 3nterest on P4,1-9,$$$.$$ fr. $474an7#$$1 $47 e!7#$$1 -1 da"s H 19.5$B. . . . . . . . . . . . . . . . . . 3nterest on P4,1-9,$$$.$$ fr. $47 e!7#$$1 #-7 e!7#$$1 19 da"s H 1,.$$B. . . . . . . . . . . . . . . . . . Penalt" charge H 1A1$ of 1B of the total amount due 'P4,1-9,$$$.$$ from 117$4799 to $#7#-7#$$1 H 1A1$ of 1B per da"(. . . . . . . . . . . . . . . . . 2u!7total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P+G 5$77$$1$51- due on $47$77#$$4 Principal !alance of P+G 5$7$$1$51-. . . . . . . . . . . . . . 3nterest on P6,#16,$$$.$$ fr. $675ct799 -,,7,1.,6 6,,54,.64

1,974,-$-.$$ 7,$$#,11$.76,#16,$$$.$$ 1,$$9,$-5.6#

16

$47+ov7#$$$ -95 da"s H 15.$$B. . . . . . . . . . . . . . . . . 3nterest on P6,#16,$$$.$$ fr. $47+ov7#$$$ $47%ec7#$$$ -$ da"s H #4.5$B. . . . . . . . . . . . . . . . . . 1#5,171.51

3nterest on P6,#16,$$$.$$ fr. $47%ec7#$$$ $474an7#$$1 -1 da"s H #1.5$B. . . . . . . . . . . . . . . . . . . 11-,5$5.,6 3nterest on P6,#16,$$$.$$ fr. $474an7#$$1 $47 e!7#$$1 -1 da"s H 19.5$B. . . . . . . . . . . . . . . . . . 3nterest on P6,#16,$$$.$$ fr. $47 e!7#$$1 #-7 e!7#$$1 19 da"s H 1,.$$B. . . . . . . . . . . . . . . . . . Penalt" charge H 1A1$ of 1B of the total amount due 'P6,#16,$$$.$$ from 1$7$6799 to $#7#-7#$$1 H 1A1$ of 1B per da"(. . . . . . . . . . . . . . . . . 2u!total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .otal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eess1 &AP applied to !alance of principal Eess1 &ccounts pa"a!le E I % '#61,149.-9( &dd1 1$B &ttorne":s ee .otal amount due Eess1 Bid Price .5.&E %9 3C39+CD &/5F+. &2 5 9B. #-, #$$1 1$#,947.1, 5,,#4-.$7

-,145,#96.$$ 1$,77$,199.#17,77#,-$9.96 '55,$$$.$$( 17,456,16$.57 1,745,616.$6 19,#$1,776.61$,-$$,$$$.$$ ,,9$1,776.61-

Petitioners thereafter received a demand letter 14 dated /a" #, #$$1 from respondent:s counsel for the deficienc" amount of P,,9$1,776.6-. /s. Du further testified that !ased on the 2tatement of &ccount 15dated /arch 15, #$$# which she prepared, the outstanding !alance of petitioners wasP15,19$,961.4,.16
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5n cross7eCamination, /s. Du reiterated that the interest rate changes ever" month !ased on the prevailing mar0et rate and she notified petitioners of the prevailing rate !" calling them monthl" !efore their account !ecomes past due. ;hen as0ed if there was an" written authorit" from petitioners for respondent to increase the interest rate unilaterall", she answered that petitioners signed a promissor" note indicating that the" agreed to pa" interest at the prevailing rate. 17
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Petitioner 3gnacio . 4uico testified that prior to the release of the loan, he was re@uired to sign a !lan0 promissor" note and was informed that the interest rate on the loan will !e !ased on prevailing mar0et rates. 9ver" month, respondent informs him !" telephone of the prevailing interest rate. &t first, he was a!le to pa" his monthl" amorti=ations !ut when he started to incur dela" in his pa"ments due to the financial crisis, respondent pressured him to pa" in full, including charges and interests for the dela". Jis propert" was eventuall" foreclosed and was sold at pu!lic auction. 1,
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5n cross7eCamination, petitioner testified that he is a %octor of /edicine and also engaged in the !usiness of distri!uting medical supplies. Je admitted having read the promissor" notes and that he is aware of his o!ligation under them !efore he signed the same.19
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3n its decision, the R.C ruled in favor of respondent. .he fallo of the R.C decision reads1

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;J9R9 5R9, premises considered, the Complaint is here!" sustained, and 4udgment is rendered ordering herein defendants to pa" >ointl" and severall" to plaintiff, the following1
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1. P,,9$1,776.6- representing the amount of the deficienc" owing to the plaintiff, plus interest thereon at the legal rate after e!ruar" #-, #$$1?
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#. &n amount e@uivalent to 1$B of the total amount due as and for attorne":s fees, there !eing stipulation therefor in the promissor" notes?
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-. Costs of suit. 25 5R%9R9%.#$

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.he trial court agreed with respondent that when the mortgaged propert" was sold at pu!lic auction on e!ruar" #-, #$$1 for P1$,-$$,$$$ there remained a !alance of P,,9$1,776.6- since !efore foreclosure, the total amount due on the two promissor" notes aggregated to P19,#$1,776.6- inclusive of principal, interests, penalties and attorne":s fees. 3t ruled that the amount reali=ed at the auction sale was applied to the interest, conforma!l" with &rticle 1#5- of the Civil Code which provides that if the de!t produces interest, pa"ment of the principal shall not !e deemed to have !een made until the interests have !een covered. .his !eing the case, petitioners: principal o!ligation su!sists !ut at a reduced amount ofP,,9$1,776.6-. .he trial court further held that 3gnacio:s claim that he signed the promissor" notes in !lan0 cannot negate or mitigate his lia!ilit" since he admitted reading the promissor" notes !efore signing them. 3t also ruled that considering the su!stantial 17

amount involved, it is un!elieva!le that petitioners threw all caution to the wind and simpl" signed the documents without reading and understanding the contents thereof. 3t noted that the promissor" notes, including the terms and conditions, are pro forma and what appears to have !een left in !lan0 were the promissor" note num!er, date of the instrument, due date, amount of loan, and condition that interest will !e at the prevailing rates. &ll of these details, the trial court added, were within the 0nowledge of the petitioners. ;hen the case was elevated to the C&, the latter affirmed the trial court:s decision. .he C& recogni=ed respondent:s right to claim the deficienc" from the de!tor where the proceeds of the sale in an eCtra>udicial foreclosure of mortgage are insufficient to cover the amount of the de!t. &lso, it found as valid the stipulation in the promissor" notes that interest will !e !ased on the prevailing rate. 3t noted that the parties agreed on the interest rate which was not unilaterall" imposed !" the !an0 !ut was the rate offered dail" !" all commercial !an0s as approved !" the /onetar" Board. Javing signed the promissor" notes, the C& ruled that petitioners are !ound !" the stipulations contained therein. Petitioners are now !efore this Court raising the sole issue of whether the interest rates imposed upon them !" respondent are valid. Petitioners contend that the interest rates imposed !" respondent are not valid as the" were not !" virtue of an" law or Bang0o 2entral ng Pilipinas 'B2P( regulation or an" regulation that was passed !" an appropriate government entit". .he" insist that the interest rates were unilaterall" imposed !" the !an0 and thus violate the principle of mutualit" of contracts. .he" argue that the escalation clause in the promissor" notes does not give respondent the un!ridled authorit" to increase the interest rate unilaterall". &n" change must !e mutuall" agreed upon. Respondent, for its part, points out that petitioners failed to show that their case falls under an" of the eCceptions wherein findings of fact of the C& ma" !e reviewed !" this Court. 3t contends that an in@uir" as to whether the interest rates imposed on the loans of petitioners were supported !" appropriate regulations from a government agenc" or the Central Ban0 re@uires a reevaluation of the evidence on records. .hus, the Court would in effect, !e confronted with a factual and not a legal issue. .he appeal is partl" meritorious. .he principle of mutualit" of contracts is eCpressed in &rticle 1-$, of the Civil Code, which provides1
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&rticle 1-$,. .he contract must !ind !oth contracting parties? its validit" or compliance cannot !e left to the will of one of them. &rticle 1956 of the Civil Code li0ewise ordains that Kno interest shall !e due unless it has !een eCpressl" stipulated in writing.K .he !inding effect of an" agreement !etween parties to a contract is premised on two settled principles1 '1( that an" o!ligation arising from contract has the force of law !etween the parties? and '#( that there must !e mutualit" !etween the parties !ased on their essential e@ualit". &n" contract which appears to !e heavil" weighed in favor of one of the parties so as to lead to an unconsciona!le result is void. &n" stipulation regarding the validit" or compliance of the contract which is left solel" to the will of one of the parties, is li0ewise, invalid. #1
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9scalation clauses refer to stipulations allowing an increase in the interest rate agreed upon !" the contracting parties. .his Court has long recogni=ed that there is nothing inherentl" wrong with escalation clauses which are valid stipulations in commercial contracts to maintain fiscal sta!ilit" and to retain the value of mone" in long term contracts. ## Jence, such stipulations are not void per se.#chanro!lesvirtualawli!rar"

+evertheless, an escalation clause Kwhich grants the creditor an un!ridled right to ad>ust the interest independentl" and upwardl", completel" depriving the de!tor of the right to assent to an important modification in the agreementK is void. & stipulation of such nature violates the principle of mutualit" of contracts. #4 .hus, this Court has previousl" nullified the unilateral determination and imposition !" creditor !an0s of increases in the rate of interest provided in loan contracts. #5

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3n Banco ilipino 2avings I /ortgage Ban0 v. +avarro, #6 the escalation clause stated1 K3A;e here!" authori=e Banco ilipino to correspondingl" increase the interest rate stipulated in this contract without advance notice to meAus in the event a law should !e enacted increasing the lawful rates of interest that ma" !e charged on this particular 0ind of loan.K ;hile escalation clauses in general are considered valid, we ruled that Banco ilipino ma" not increase the interest on respondent !orrower:s loan, pursuant to Circular +o. 494 issued !" the /onetar" Board on 4anuar" #, 1976, !ecause said circular is not a law although it has the force and effect of law and the escalation clause has no provision for reduction of the stipulated interest Kin the event that the applica!le maCimum rate of interest is reduced !" law or !" the /onetar" BoardK 'de7 escalation clause(. 2u!se@uentl", in 3nsular Ban0 of &sia and &merica v. 2pouses 2ala=ar #7 we reiterated that escalation clauses are valid stipulations !ut their enforcea!ilit" are su!>ect to certain conditions. .he increase of interest rate from 19B to #1B per annum made !" petitioner !an0 was disallowed !ecause it did not compl" with the guidelines adopted !" the /onetar" Board to govern interest rate ad>ustments !" !an0s and non7!an0s performing @uasi7!an0ing functions. 3n the 1991 case of Philippine +ational Ban0 v. Court of &ppeals, #, the promissor" notes authori=ed P+B to increase the stipulated interest per annum Kwithin the limits allowed !" law at an" time depending on whatever polic" P+B ma" adopt in the future? Provided, that, the interest rate on this note shall !e correspondingl" decreased in the event that the applica!le maCimum interest rate is reduced !" law or !" the /onetar" Board.K .his Court declared the increases 'from 1,B to -#B, then to 41B and then to 4,B( unilaterall" imposed !" P+B to !e in violation of the principle of mutualit" essential in contracts.#9
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& similar ruling was made in a 1994 case-$ also involving P+B where the credit agreement provided that KP+B reserves the right to increase the interest rate within the limits allowed !" law at an" time depending on whatever polic" it ma" adopt in the future1 Provided, that the interest rate on this accommodation shall !e correspondingl" decreased in the event that the applica!le maCimum interest is reduced !" law or !" the /onetar" Board C C CK.
18

&gain, in 1996, the Court invalidated escalation clauses authori=ing P+B to raise the stipulated interest rate at an" time without notice, within the limits allowed !" law. .he Court o!served that there was no attempt made !" P+B to secure the conformit" of respondent !orrower to the successive increases in the interest rate. .he !orrower:s assent to the increases cannot !e implied from their lac0 of response to the letters sent !" P+B, informing them of the increases. -1
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3n the more recent case of Philippine 2avings Ban0 v. Castillo, -# we sustained the C& in declaring as unreasona!le the following escalation clause1 K.he rate of interest andAor !an0 charges herein stipulated, during the terms of this promissor" note, its eCtensions, renewals or other modifications, ma" !e increased, decreased or otherwise changed from time to time within the rate of interest and charges allowed under present or future law's( andAor government regulation's( as the P2Ban0 ma" prescri!e for its de!tors.K Clearl", the increase or decrease of interest rates under such clause hinges solel" on the discretion of petitioner as it does not re@uire the conformit" of the ma0er !efore a new interest rate could !e enforced. ;e also said that respondents: assent to the modifications in the interest rates cannot !e implied from their lac0 of response to the memos sent !" petitioner, informing them of the amendments, nor from the letters re@uesting for reduction of the rates. .hus1
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the validit" of the escalation clause did not give petitioner the un!ridled right to unilaterall" ad>ust interest rates. .he ad>ustment should have still !een su!>ected to the mutual agreement of the contracting parties. 3n light of the a!sence of consent on the part of respondents to the modifications in the interest rates, the ad>usted rates cannot !ind them notwithstanding the inclusion of a de7escalation clause in the loan agreement. -chanro!lesvirtualawli!rar"

3t is now settled that an escalation clause is void where the creditor unilaterall" determines and imposes an increase in the stipulated rate of interest without the eCpress conformit" of the de!tor. 2uch un!ridled right given to creditors to ad>ust the interest independentl" and upwardl" would completel" ta0e awa" from the de!tors the right to assent to an important modification in their agreement and would also negate the element of mutualit" in their contracts. -4 ;hile a ceiling on interest rates under the Fsur" Eaw was alread" lifted under Central Ban0 Circular +o. 9$5, nothing therein Kgrants lenders carte !lanche authorit" to raise interest rates to levels which will either enslave their !orrowers or lead to a hemorrhaging of their assets.K-5
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.he two promissor" notes signed !" petitioners provide1

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3A;e here!" authori=e the CJ3+& B&+L3+) C5RP5R&.35+ to increase or decrease as the case ma" !e, the interest rateAservice charge presentl" stipulated in this note without an" advance notice to meAus in the event a law or Central Ban0 regulation is passed or promulgated !" the Central Ban0 of the Philippines or appropriate government entities, increasing or decreasing such interest rate or service charge. -6
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2uch escalation clause is similar to that involved in the case of loirendo, 4r. v. /etropolitan Ban0 and .rust Compan"-7 where this Court ruled1
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.he provision in the promissor" note authori=ing respondent !an0 to increase, decrease or otherwise change from time to time the rate of interest andAor !an0 charges Kwithout advance noticeK to petitioner, Kin the event of change in the interest rate prescri!ed !" law or the /onetar" Board of the Central Ban0 of the Philippines,K does not give respondent !an0 unrestrained freedom to charge an" rate other than that which was agreed upon. Jere, the monthl" upwardAdownward ad>ustment of interest rate is left to the will of respondent !an0 alone. 3t violates the essence of mutualit" of the contract.-,
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/ore recentl" in 2olid!an0 Corporation v. Permanent Jomes, 3ncorporated, -9 we upheld as valid an escalation clause which re@uired a written notice to and conformit" !" the !orrower to the increased interest rate. .hus1
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.he Fsur" Eaw had !een rendered legall" ineffective !" Resolution +o. ##4 dated - %ecem!er 19,# of the /onetar" Board of the Central Ban0, and later !" Central Ban0 Circular +o. 9$5 which too0 effect on 1 4anuar" 19,-. .hese circulars removed the ceiling on interest rates for secured and unsecured loans regardless of maturit". .he effect of these circulars is to allow the parties to agree on an" interest that ma" !e charged on a loan. .he virtual repeal of the Fsur" Eaw is within the range of >udicial notice which courts are !ound to ta0e into account. &lthough interest rates are no longer su!>ect to a ceiling, the lender still does not have an un!ridled license to impose increased interest rates. .he lender and the !orrower should agree on the imposed rate, and such imposed rate should !e in writing. .he three promissor" notes !etween 2olid!an0 and Permanent all contain the following provisions1
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K5. ;eA3 irrevoca!l" authori=e 2olid!an0 to increase or decrease at an" time the interest rate agreed in this +ote or Eoan on the !asis of, among others, prevailing rates in the local or international capital mar0ets. or this purpose, ;eA3 authori=e 2olid!an0 to de!it an" deposit or placement account with 2olid!an0 !elonging to an" one of us. .he ad>ustment of the interest rate shall !e effective from the date indicated in the written notice sent to us !" the !an0, or if no date is indicated, from the time the notice was sent. 6. 2hould ;eA3 disagree to the interest rate ad>ustment, ;eA3 shall prepa" all amounts due under this +ote or Eoan within thirt" '-$( da"s from the receipt !" an"one of us of the written notice. 5therwise, ;eA3 shall !e deemed to have given our consent to the interest rate ad>ustment.K .he stipulations on interest rate repricing are valid !ecause '1( the parties mutuall" agreed on said stipulations? '#( repricing ta0es effect onl" upon 2olid!an0:s written notice to Permanent of the new interest rate? and '-( Permanent has the option to prepa" its loan if Permanent and 2olid!an0 do not agree on the new interest rate. .he phrases Kirrevoca!l" authori=e,K Kat an" timeK and Kad>ustment of the interest rate shall !e effective from the date indicated in the written notice sent to us !" the !an0, or if no date is indicated, from the time the notice was sent,K emphasi=e that Permanent should receive a written notice from 2olid!an0 as a condition for the ad>ustment of the interest rates. '9mphasis supplied.(

19

3n this case, the trial and appellate courts, in upholding the validit" of the escalation clause, underscored the fact that there was actuall" no fiCed rate of interest stipulated in the promissor" notes as this was made dependent on prevailing rates in the mar0et. .he su!>ect promissor" notes contained the following condition written after the first paragraph1
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;ith one "ear grace period on principal and thereafter pa"a!le in 54 e@ual monthl" instalments to start on the second "ear. 3nterest at the prevailing rates pa"a!le @uarterl" in arrears. 4$
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3n Polotan, 2r. v. C& '9leventh %iv.(, 41 petitioner cardholder assailed the trial and appellate courts in ruling for the validit" of the escalation clause in the Cardholder:s &greement. 5n petitioner:s contention that the interest rate was unilaterall" imposed and !ased on the standards and rate formulated solel" !" respondent credit card compan", we held1
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.he contractual provision in @uestion states that Kif there occurs an" change in the prevailing mar0et rates, the new interest rate shall !e the guiding rate in computing the interest due on the outstanding o!ligation without need of serving notice to the Cardholder other than the re@uired posting on the monthl" statement served to the Cardholder.K .his could not !e considered an escalation clause for the reason that it neither states an increase nor a decrease in interest rate. 2aid clause simpl" states that the interest rate should !e !ased on the prevailing mar0et rate. 3nterpreting it differentl", while said clause does not eCpressl" stipulate a reduction in interest rate, it nevertheless provides a leewa" for the interest rate to !e reduced in case the prevailing mar0et rates dictate its reduction. &dmittedl", the second paragraph of the @uestioned proviso which provides that Kthe Cardholder here!" authori=es 2ecurit" %iners to correspondingl" increase the rate of such interest in the event of changes in prevailing mar0et rates C C CK is an escalation clause. Jowever, it cannot !e said to !e dependent solel" on the will of private respondent as it is also dependent on the prevailing mar0et rates. 9scalation clauses are not !asicall" wrong or legall" o!>ectiona!le as long as the" are not solel" potestative !ut !ased on reasona!le and valid grounds. 5!viousl", the fluctuation in the mar0et rates is !e"ond the control of private respondent.4# '9mphasis supplied.( 3n interpreting a contract, its provisions should not !e read in isolation !ut in relation to each other and in their entiret" so as to render them effective, having in mind the intention of the parties and the purpose to !e achieved. .he various stipulations of a contract shall !e interpreted together, attri!uting to the dou!tful ones that sense which ma" result from all of them ta0en >ointl". 4chanro!lesvirtualawli!rar"

Jere, the escalation clause in the promissor" notes authori=ing the respondent to ad>ust the rate of interest on the !asis of a law or regulation issued !" the Central Ban0 of the Philippines, should !e read together with the statement after the first paragraph where no rate of interest was fiCed as it would !e !ased on prevailing mar0et rates. ;hile the latter is not strictl" an escalation clause, its clear import was that interest rates would var" as determined !" prevailing mar0et rates. 9videntl", the parties intended the interest on petitioners: loan, including an" upward or downward ad>ustment, to !e determined !" the prevailing mar0et rates and not dictated !" respondent:s polic". 3t ma" also !e mentioned that since the deregulation of !an0 rates in 19,-, the Central Ban0 has shifted to a mar0et7oriented interest rate polic". 44
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.here is no indication that petitioners were coerced into agreeing with the foregoing provisions of the promissor" notes. 3n fact, petitioner 3gnacio, a ph"sician engaged in the medical suppl" !usiness, admitted having understood his o!ligations !efore signing them. &t no time did petitioners protest the new rates imposed on their loan even when their propert" was foreclosed !" respondent. .his notwithstanding, we hold that the escalation clause is still void !ecause it grants respondent the power to impose an increased rate of interest without a written notice to petitioners and their written consent. Respondent:s monthl" telephone calls to petitioners advising them of the prevailing interest rates would not suffice. & detailed !illing statement !ased on the new imposed interest with corresponding computation of the total de!t should have !een provided !" the respondent to ena!le petitioners to ma0e an informed decision. &n appropriate form must also !e signed !" the petitioners to indicate their conformit" to the new rates. Compliance with these re@uisites is essential to preserve the mutualit" of contracts. or indeed, one7sided impositions do not have the force of law !etween the parties, !ecause such impositions are not !ased on the parties: essential e@ualit".45
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/odifications in the rate of interest for loans pursuant to an escalation clause must !e the result of an agreement !etween the parties. Fnless such important change in the contract terms is mutuall" agreed upon, it has no !inding effect. 46 3n the a!sence of consent on the part of the petitioners to the modifications in the interest rates, the ad>usted rates cannot !ind them. Jence, we consider as invalid the interest rates in eCcess of 15B, the rate charged for the first "ear. Based on the &ugust #9, #$$$ demand letter of China Ban0, petitioners: total principal o!ligation under the two promissor" notes which the" failed to settle is P1$,-55,$$$. Jowever, due to China Ban0:s unilateral increases in the interest rates from 15B to as high as #4.5$B and penalt" charge of 1A1$ of 1B per da" or -6.5B per annum for the period +ovem!er 4, 1999 to e!ruar" #-, #$$1, petitioners: !alance !allooned to P19,#$1,776.6-. +ote that the original amount of principal loan almost dou!led in onl" 16 months. .he Court also finds the penalt" charges imposed eCcessive and ar!itrar", hence the same is here!" reduced to 1B per month or 1#B per annum. Petitioners: 2tatement of &ccount, as of e!ruar" #-, #$$1, the date of the foreclosure proceedings, should thus !e modified as follows1
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Principal 3nterest at 15B per annum P1$,-55,$$$ C .15 C 477 da"sA-65 da"s Penalt" at 1#B per annum

P1$,-55,$$$.$$ #,$#9,,6-.7$ 1,6#- ,,9$. 96

20

P1$,-55,$$$ C .1# C 477da"sA-65 da"s 2u!7.otal Eess1 &AP applied to !alance of principal Eess1 &ccounts pa"a!le E I % 14,$$,,754.66 '55,$$$.$$( '#61,149.-9( 1-,69#,6$5.#7 &dd1 &ttorne":s ees .otal &mount %ue Eess1 Bid Price .5.&E %9 3C39+CD &/5F+. 1,-69,#6$.515,$61,,65.79 1$,-$$,$$$.$$ 4,761,,65.79

;J9R9 5R9, the petition for review on certiorari is P&R.ED )R&+.9%. .he e!ruar" #$, #$$9 %ecision and &pril #7, #$$9 Resolution of the Court of &ppeals in C& ).R. C* +o. ,$--, are here!" /5%3 39%. Petitioners 2pouses 3gnacio . 4uico and &lice P. 4uico are here!" 5R%9R9% to pa" >ointl" and severall" respondent China Ban0ing Corporation P4, 7 61 ,,65. 79 representing the amount of deficienc" inclusive of interest, penalt" charge and attorne":s fees. 2aid amount shall !ear interest at 1#B per annum, rec0oned from the time of the filing of the complaint until its full satisfaction. +o pronouncement as to costs. CONCURRING OPINION SERENO, J.: 3 full" concur with the ma>orit" that the increases in interest rates unilaterall" imposed !" China Ban0 without petitioners: assent violates the principle of mutualit" of contracts. .his principle renders void a contract containing a provision that ma0es its fulfillment eCclusivel" dependent upon the uncontrolled will of one of the contracting parties. 1 3n this case, the provision reads1
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3A;e here!" authori=e the CJ3+& B&+L3+) C5RP5R&.35+ to increase or decrease as the case ma" !e, the interest rateAservice charge presentl" stipulated in this note without an" advance notice to meAus in the event a law or Central Ban0 regulation is passed or promulgated !" the Central Ban0 of the Philippines or appropriate government entities, increasing or decreasing such interest rate or service charge. .his Court dealt with a similarl" worded provision in loirendo, 4r. v. /etropolitan Ban0 and .rust Compan". # 3t noted that the Kprovision in the promissor" note authori=ing respondent !an0 to increase, decrease or otherwise change from time to time the rate of interest andAor !an0 charges :without advance notice: to petitioner, :in the event of change in the interest rate prescri!ed !" law or the /onetar" Board of the Central Ban0 of the Philippines,: does not give respondent !an0 unrestrained freedom to charge an" rate other than that which was agreed upon.K Jowever, 3 write to clarif" that not all escalation clauses in loan agreements are void per se. - 3t is actuall" the rule that Kescalation clauses are valid stipulations in commercial contracts to maintain fiscal sta!ilit" and to retain the value of mone" in long term contracts.K 4 3n .he Consolidated Ban0 and .rust Corporation v. Court of &ppeals, 5 citing Polotan, 2r. v. Court of &ppeals,6 this Court alread" accepted that, given the fluctuating economic conditions, practical reasons allow !an0s to stipulate that interest rates on a loan will not !e fiCed and will instead depend on mar0et conditions. 3n ad>udging so, we differentiated a valid escalation clause from an otherwise invalid proviso in this wise1 7
chanro!lesvirtualawli!rar"

+either do we find error when the lower court and the Court of &ppeals set aside as invalid the floating rate of interest eChorted !" petitioner to !e applica!le. .he pertinent provision in the trust receipt agreement of the parties fiCing the interest rate states1
chanro!lesvirtualawli!rar"

3, ;9 >ointl" and severall" agree to an" increase or decrease in the interest rate which ma" occur after 4ul" 1, 19,1, when the Central Ban0 floated the interest rate, and to pa" additionall" the penalt" of 3B per month until the amountAs or installmentsAs due and unpaid under the trust receipt on the reverse side hereof isAare full" paid. ;e agree with respondent Court of &ppeals that the foregoing stipulation is invalid, there !eing no reference rate set either !" it or !" the Central Ban0, leaving the determination thereof at the sole will and control of petitioner. ;hile it ma" !e accepta!le, for practical reasons given the fluctuating economic conditions, for !an0s to stipulate that interest rates on a loan not !e fiCed and instead !e made dependent upon prevailing mar0et conditions, there should alwa"s !e a reference rate upon which to peg such varia!le interest rates. &n eCample of such a valid varia!le interest rate was found in Polotan, 2r. v. Court of &ppeals. 1$ 3n that case, the contractual provision stating that Kif there occurs an" change in the prevailing mar0et rates, the new interest rate shall !e the guiding rate in computing the interest due on the outstanding o!ligation without need of serving notice to the Cardholder other than the re@uired posting on the monthl" statement served to the CardholderK was considered valid. .he afore@uoted provision was upheld notwithstanding that it ma" parta0e of the nature of an escalation clause, !ecause at the same time it provides for the decrease in the interest rate in case the prevailing mar0et rates dictate its reduction. 3n other words, unli0e the stipulation su!>ect of the instant case, the interest rate involved in the Polotan case is designed to !e !ased on the prevailing mar0et rate. 5n the other hand, a stipulation ostensi!l" signif"ing an agreement to Kan" increase or decrease in the interest rate,K without more, cannot !e accepted !" this Court as valid for it leaves solel" to the creditor the determination of what interest rate to charge against an outstanding loan. '9mphasis in the original and underscoring supplied(
21

9videntl", the point of difference in the cited escalation clauses lies in the use of the phrase Kan" increase or decrease in the interest rateK without reference to the prevailing mar0et rate actuall" imposed !" the regulations of the Central Ban0. , 3t is thus not enough to state, as a0in to China Ban0:s provision, that the !an0 ma" increase or decrease the interest rate in the event a law or a Central Ban0 regulation is passed. .o adopt that stance will necessaril" involve a determination of the interest rate !" the creditor since the provision spells a vague condition 7 it onl" re@uires that an" change in the imposa!le interest must conform to the upward or downward movement of !orrowing rates. &nd if that determination is not su!>ected to the mutual agreement of the contracting parties, then the resulting interest rates to !e imposed !" the creditor would !e unilaterall" determined. Conse@uentl", the escalation clause violates the principle of mutualit" of contracts. Based on >urisprudence, therefore, these points must !e considered !" creditors and de!tors in the drafting of valid escalation clauses. irstl", as a matter of e@uit" and consistent with P.5. +o. 16,4, the escalation clause must !e paired with a de7escalation clause.9 2econdl", so as not to violate the principle of mutualit", the escalation must !e pegged to the prevailing mar0et rates, and not merel" ma0e a generali=ed reference to Kan" increase or decrease in the interest rateK in the event a law or a Central Ban0 regulation is passed. .hirdl", consistent with the nature of contracts, the proposed modification must !e the result of an agreement !etween the parties. 3n this wa", our credit s"stem would !e facilitated !" firm loan provisions that not onl" aid fiscal sta!ilit", !ut also avoid numerous disputes and litigations !etween creditors and de!tors.

&NITE- .O.ON&T PLANTERS *AN,,- %!$sus - SPO&SES SA)&EL '#( O-ETTE *EL&SO, R!s o#(!#ts. G.R. No. 15//12, August 17, 2007
This is a Petition for Re ie! on Certiorari "n#er R"$e %& of the R"$es of Co"rt, !hi*h see:s to ann"$ the Co"rt of A''ea$s De*ision>5? #ate# /5 Jan"ar) /..- an# its Reso$"tion>/? #ate# 1 Se'te4(er /..- in CA-+.R. CI No. 09-53. The assai$e# Co"rt of A''ea$s De*ision an# Reso$"tion affir4e# in t"rn the De*ision>-? #ate# /- 8ar*h /... an# Or#er>%? #ate# 3 8a) /... of the Re,iona$ Tria$ Co"rt (RTC), 2ran*h 0& of 8a:ati Cit), in Ci i$ Case No. 11--5%, #e*$arin, oi# the interest rate 'ro i#e# in the 'ro4issor) notes e;e*"te# () the res'on#ents S'o"ses Sa4"e$ an# O#ette 2e$"so (s'o"ses 2e$"so) in fa or of 'etitioner Anite# Co*on"t P$anters 2an: (ACP2). The 'ro*e#"ra$ an# fa*t"a$ ante*e#ents of this *ase are as fo$$o!s: On 50 A'ri$ 5110, ACP2 ,rante# the s'o"ses 2e$"so a Pro4issor) Notes Fine "n#er a Cre#it A,ree4ent !here() the $atter *o"$# a ai$ fro4 the for4er *re#it of "' to a 4a;i4"4 a4o"nt of P5./ 8i$$ion 'esos for a ter4 en#in, on -. A'ri$ 5119. The s'o"ses 2e$"so *onstit"te#, other than their 'ro4issor) notes, a rea$ estate 4ort,a,e o er 'ar*e$s of $an# in Ro;as Cit), *o ere# () Transfer Certifi*ates of Tit$e No. T--5&-1 an# T-/93/3, as a##itiona$ se*"rit) for the o($i,ation. The Cre#it A,ree4ent !as s"(seJ"ent$) a4en#e# to in*rease the a4o"nt of the Pro4issor) Notes Fine to a 4a;i4"4 of P/.-& 8i$$ion 'esos an# to e;ten# the ter4 thereof to /3 <e(r"ar) 5113. The s'o"ses 2e$"so a ai$e# the4se$ es of the *re#it $ine "n#er the fo$$o!in, Pro4issor) Notes:

PN X 3-5%-10-...3--3-5%-10-...3&-. 3-5%-10-.../1/-/

Date of PN /1 A'ri$ 5110 / 8a) 5110 /. No e4(er 5110

8at"rit) Date /9 A","st 5110 -. A","st 5110 /. 8ar*h 5119

A4o"nt Se*"re# P 9..,... P &..,... P

The three 'ro4issor) notes !ere rene!e# se era$ ti4es. On -. A'ri$ 5119, the 'a)4ent of the 'rin*i'a$ an# interest of the $atter t!o 'ro4issor) notes !ere #e(ite# fro4 the s'o"ses 2e$"so7s a**o"nt !ith ACP2C )et, a *onso$i#ate# $oan for P5.- 8i$$ion !as a,ain re$ease# to the s'o"ses 2e$"so "n#er one 'ro4issor) note !ith a #"e #ate of /3 <e(r"ar) 5113. To *o4'$ete$) a ai$ the4se$ es of the P/.-& 8i$$ion *re#it $ine e;ten#e# to the4 () ACP2, the s'o"ses 2e$"so e;e*"te# t!o 4ore 'ro4issor) notes for a tota$ of P-&.,......:
PN X 19-..-0--5 13-..../-% Date of PN 55 De*e4(er 5119 / Jan"ar) 5113 8at"rit) Date /3 <e(r"ar) 5113 /3 <e(r"ar) 5113 A4o"nt Se*"re# P /..,... P 5&.,...

Ho!e er, the s'o"ses 2e$"so a$$e,e# that the a4o"nts *o ere# () these $ast t!o 'ro4issor) notes !ere ne er re$ease# or *re#ite# to their a**o"nt an#, th"s, *$ai4e# that the 'rin*i'a$ in#e(te#ness !as on$) P/ 8i$$ion. In an) *ase, ACP2 a''$ie# interest rates on the #ifferent 'ro4issor) notes ran,in, fro4 53O to -%O. <ro4 5110 to <e(r"ar) 5113 the s'o"ses 2e$"so !ere a($e to 'a) the tota$ s"4 of P90-,01/..-. <ro4 /3 <e(r"ar) 5113 to 5. J"ne 5113, ACP2 *ontin"e# to *har,e interest an# 'ena$t) on the o($i,ations of the s'o"ses 2e$"so, as fo$$o!s:
PN X 19-..-0--5 19-..-00-0 A4o"nt Se*"re# P /..,... P 9..,... Interest -5O -..59O Pena$t) -0O -/.930O (5./ P P Tota$ //&,-5-./% 91&,/1%.9/

22

19-..-03-/ 13-..../-%

P 5,-..,... P 5&.,...

(9 #a)s) /3O (/ #a)s) --O (5./ #a)s)

#a)s) -..%5O (5./ #a)s) -0O

P 5,%0/,5/%.&% P 59.,.-%.9

The s'o"ses 2e$"so, ho!e er, fai$e# to 4a:e an) 'a)4ent of the fore,oin, a4o"nts. On / Se'te4(er 5113, ACP2 #e4an#e# that the s'o"ses 2e$"so 'a) their tota$ o($i,ation of P/,1-/,&%-... '$"s /&O attorne)7s fees, ("t the s'o"ses 2e$"so fai$e# to *o4'$) there!ith. On /3 De*e4(er 5113, ACP2 fore*$ose# the 'ro'erties 4ort,a,e# () the s'o"ses 2e$"so to se*"re their *re#it $ine, !hi*h, () that ti4e, a$rea#) (a$$oone# to P-,93%,0.-.... On 1 <e(r"ar) 5111, the s'o"ses 2e$"so fi$e# a Petition for Ann"$4ent, A**o"ntin, an# Da4a,es a,ainst ACP2 !ith the RTC of 8a:ati Cit). On /- 8ar*h /..., the RTC r"$e# in fa or of the s'o"ses 2e$"so, #is'osin, of the *ase as fo$$o!s: PRE8ISES CONSIDERED, ="#,4ent is here() ren#ere# #e*$arin, the interest rate "se# () >ACP2? oi# an# the fore*$os"re an# Sheriff7s Certifi*ate of Sa$e oi#. >ACP2? is here() or#ere# to ret"rn to >the s'o"ses 2e$"so? the 'ro'erties s"(=e*t of the fore*$os"reC to 'a) >the s'o"ses 2e$"so? the a4o"nt of P&.,...... () !a) of attorne)7s feesC an# to 'a) the *osts of s"it. >The s'o"ses 2e$"so? are here() or#ere# to 'a) >ACP2? the s"4 of P5,&0.,-.3....>&? On 3 8a) /..., the RTC #enie# ACP27s 8otion for Re*onsi#eration,>0? 'ro4'tin, ACP2 to a''ea$ the RTC De*ision !ith the Co"rt of A''ea$s. The Co"rt of A''ea$s affir4e# the RTC De*ision, to !it:

EHERE<ORE, 're4ises *onsi#ere#, the #e*ision #ate# 8ar*h /-, /... of the Re,iona$ Tria$ Co"rt, 2ran*h 0&, 8a:ati Cit) in Ci i$ Case No. 11--5% is here() A<<IR8ED s"(=e*t to the 4o#ifi*ation that #efen#ant-a''e$$ant ACP2 is not $ia($e for attorne)7s fees or the *osts of s"it.>9? On 1 Se'te4(er /..-, the Co"rt of A''ea$s #enie# ACP27s 8otion for Re*onsi#eration for $a*: of 4erit. ACP2 th"s fi$e# the 'resent 'etition, s"(4ittin, the fo$$o!in, iss"es for o"r reso$"tion: I EHETHER OR NOT THE HONORA2FE COART O< APPEAFS CO88ITTED SERIOAS AND REIERSI2FE ERROR EHEN IT A<<IR8ED THE DECISION O< THE TRIAF COART EHICH DECFARED IOID THE PROIISION ON INTEREST RATE A+REED APON 2ETEEEN PETITIONER AND RESPONDENTS II EHETHER OR NOT THE HONORA2FE COART O< APPEAFS CO88ITTED SERIOAS AND REIERSI2FE ERROR EHEN IT A<<IR8ED THE CO8PATATION 2G THE TRIAF COART O< RESPONDENTS7 INDE2TEDNESS AND ORDERED RESPONDENTS TO PAG PETITIONER THE A8OANT O< ONFG ONE 8IFFION <IIE HANDRED SIPTG THOASAND THREE HANDRED EI+HT PESOS (P5,&0.,-.3...) III EHETHER OR NOT THE HONORA2FE COART O< APPEAFS CO88ITTED SERIOAS AND REIERSI2FE ERROR EHEN IT A<<IR8ED THE DECISION O< THE TRIAF COART EHICH ANNAFFED THE <ORECFOSARE 2G PETITIONER O< THE SA2JECT PROPERTIES DAE TO AN AFFE+ED MINCORRECT CO8PATATIONN O< RESPONDENTS7 INDE2TEDNESS II EHETHER OR NOT THE HONORA2FE COART O< APPEAFS CO88ITTED SERIOAS AND REIERSI2FE ERROR EHEN IT A<<IR8ED THE DECISION O< THE TRIAF COART EHICH <OAND PETITIONER FIA2FE <OR IIOFATION O< THE TRATH IN FENDIN+ ACT I EHETHER OR NOT THE HONORA2FE COART O< APPEAFS CO88ITTED SERIOAS AND REIERSI2FE ERROR EHEN IT <AIFED TO ORDER THE DIS8ISSAF O< THE CASE 2ECAASE THE RESPONDENTS ARE +AIFTG O< <ORA8 SHOPPIN+>3? Ia$i#it) of the Interest Rates The Co"rt of A''ea$s he$# that the i4'osition of interest in the fo$$o!in, 'ro ision fo"n# in the 'ro4issor) notes of the s'o"ses 2e$"so is oi#, as the interest rates an# the (ases therefor !ere #eter4ine# so$e$) () 'etitioner ACP2: <OR IAFAE RECEIIED, I, an#@or Ee, on or (efore #"e #ate, SPS. SA8AEF AND ODETTE 2EFASO (2ORROEER), =oint$) an# se era$$) 'ro4ise to 'a) to ANITED COCONAT PFANTERS 2ANH (FENDER) or or#er at ACP2 2$#,., 8a:ati A en"e, 8a:ati Cit), Phi$i''ines, the s"4 of YYYYYYYYYYYYYY PESOS, (PYYYYY), Phi$i''ine C"rren*), !ith interest thereon at the rate in#i*ati e of D2D retai$ rate or as #eter4ine# () the 2ran*h Hea#.>1? ACP2 asserts that this is a re ersi($e error, an# *$ai4s that !hi$e the interest rate !as not n"4eri*a$$) J"antifie# in the fa*e of the 'ro4issor) notes, it !as nonethe$ess *ate,ori*a$$) fi;e#, at the ti4e of e;e*"tion thereof, at the Mrate in#i*ati e of the D2D retai$ rate.N ACP2 *onten#s that sai# 'ro ision 4"st (e rea# !ith another sti'"$ation in the 'ro4issor) notes s"(=e*tin, to re ie! the interest rate as fi;e#: The interest rate sha$$ (e s"(=e*t to re ie! an# 4a) (e in*rease# or #e*rease# () the FENDER *onsi#erin, a4on, others the 're ai$in, finan*ia$ an# 4onetar) *on#itionsC or the rate of interest an# *har,es !hi*h other (an:s or finan*ia$ instit"tions *har,e or offer to *har,e for si4i$ar a**o44o#ationsC an#@or the res"$tin, 'rofita(i$it) to the FENDER after #"e *onsi#eration of a$$ #ea$in,s !ith the 2ORROEER.>5.? In this re,ar#, ACP2 a ers that these are a$i# referen*e rates a:in to a M're ai$in, rateN or M'ri4e rateN a$$o!e# () this Co"rt in Po$otan . Co"rt of A''ea$s.>55? <"rther4ore, ACP2 ar,"es that e en if the 'ro iso Mas #eter4ine# () the (ran*h hea#N 23 is

*onsi#ere# oi#, s"*h a #e*$aration !o"$# not i'so fa*to ren#er the *onne*tin, *$a"se Min#i*ati e of D2D retai$ rateN oi# in ie! of the se'ara(i$it) *$a"se of the Cre#it A,ree4ent, !hi*h rea#s: Se*tion 1..3 Se'ara(i$it) C$a"se. If an) one or 4ore of the 'ro isions *ontaine# in this A+REE8ENT, or #o*"4ents e;e*"te# in *onne*tion here!ith sha$$ (e #e*$are# in a$i#, i$$e,a$ or "nenfor*ea($e in an) res'e*t, the a$i#it), $e,a$it) an# enfor*ea(i$it) of the re4ainin, 'ro isions hereof sha$$ not in an) !a) (e affe*te# or i4'aire#.>5/? A**or#in, to ACP2, the i4'osition of the J"estione# interest rates #i# not infrin,e on the 'rin*i'$e of 4"t"a$it) of *ontra*ts, (e*a"se the s'o"ses 2e$"so ha# the $i(ert) to *hoose !hether or not to rene! their *re#it $ine at the ne! interest rates 'e,,e# () 'etitioner.>5-? ACP2 a$so *$ai4s that ass"4in, there !as an) #efe*t in the 4"t"a$it) of the *ontra*t at the ti4e of its in*e'tion, s"*h #efe*t !as *"re# () the s"(seJ"ent *on#"*t of the s'o"ses 2e$"so in a ai$in, the4se$ es of the *re#it $ine fro4 A'ri$ 5110 to <e(r"ar) 5113 !itho"t airin, an) 'rotest !ith res'e*t to the interest rates i4'ose# () ACP2. A**or#in, to ACP2, therefore, the s'o"ses 2e$"so are in esto''e$.>5%? Ee a,ree !ith the Co"rt of A''ea$s, an# fin# no 4erit in the *ontentions of ACP2. Arti*$e 5-.3 of the Ci i$ Co#e 'ro i#es: Art. 5-.3. The *ontra*t 4"st (in# (oth *ontra*tin, 'artiesC its a$i#it) or *o4'$ian*e *annot (e $eft to the !i$$ of one of the4. Ee a''$ie# this 'ro ision in Phi$i''ine Nationa$ 2an: . Co"rt of A''ea$s,>5&? !here !e he$#: In or#er that o($i,ations arisin, fro4 *ontra*ts 4a) ha e the for*e of $a! (et!een the 'arties, there 4"st (e 4"t"a$it) (et!een the 'arties (ase# on their essentia$ eJ"a$it). A *ontra*t *ontainin, a *on#ition !hi*h 4a:es its f"$fi$$4ent #e'en#ent e;*$"si e$) "'on the "n*ontro$$e# !i$$ of one of the *ontra*tin, 'arties, is oi# (+ar*ia s. Rita Fe,ar#a, In*., /5 SCRA &&&). Hen*e, e en ass"4in, that the P5.3 4i$$ion $oan a,ree4ent (et!een the PN2 an# the 'ri ate res'on#ent ,a e the PN2 a $i*ense (a$tho",h in fa*t there !as none) to in*rease the interest rate at !i$$ #"rin, the ter4 of the $oan, that $i*ense !o"$# ha e (een n"$$ an# oi# for (ein, io$ati e of the 'rin*i'$e of 4"t"a$it) essentia$ in *ontra*ts. It !o"$# ha e in este# the $oan a,ree4ent !ith the *hara*ter of a *ontra*t of a#hesion, !here the 'arties #o not (ar,ain on eJ"a$ footin,, the !ea:er 'art)Rs (the #e(tor) 'arti*i'ation (ein, re#"*e# to the a$ternati e Dto ta:e it or $ea e itD (6"a s. Fa! Anion V Ro*: Ins"ran*e Co., 1& Phi$. 3&). S"*h a *ontra*t is a erita($e tra' for the !ea:er 'art) !ho4 the *o"rts of ="sti*e 4"st 'rote*t a,ainst a("se an# i4'osition. The 'ro ision statin, that the interest sha$$ (e at the Mrate in#i*ati e of D2D retai$ rate or as #eter4ine# () the 2ran*h Hea#N is in#ee# #e'en#ent so$e$) on the !i$$ of 'etitioner ACP2. An#er s"*h 'ro ision, 'etitioner ACP2 has t!o *hoi*es on !hat the interest rate sha$$ (e: (5) a rate in#i*ati e of the D2D retai$ rateC or (/) a rate as #eter4ine# () the 2ran*h Hea#. As ACP2 is ,i en this *hoi*e, the rate sho"$# (e *ate,ori*a$$) #eter4ina($e in (oth *hoi*es. If either of these t!o *hoi*es 'resents an o''ort"nit) for ACP2 to fi; the rate at !i$$, the (an: *an easi$) *hoose s"*h an o'tion, th"s 4a:in, the entire interest rate 'ro ision io$ati e of the 'rin*i'$e of 4"t"a$it) of *ontra*ts. Not ="st one, ("t rather (oth, of these *hoi*es are #e'en#ent so$e$) on the !i$$ of ACP2. C$ear$), a rate Mas #eter4ine# () the 2ran*h Hea#N ,i es the $atter "nfettere# #is*retion on !hat the rate 4a) (e. The 2ran*h Hea# 4a) *hoose an) rate he or she #esires. As re,ar#s the rate Min#i*ati e of the D2D retai$ rate,N the sa4e *annot (e *onsi#ere# as a$i# for (ein, a:in to a M're ai$in, rateN or M'ri4e rateN a$$o!e# () this Co"rt in Po$otan. The interest rate in Po$otan rea#s: The Car#ho$#er a,rees to 'a) interest 'er ann"4 at -O '$"s the 'ri4e rate of Se*"rit) 2an: an# Tr"st Co4'an). ; ; ;.>50? In this 'ro ision in Po$otan, there is a fi;e# 4ar,in o er the referen*e rate: -O. Th"s, the 'arties *an easi$) #eter4ine the interest rate () a''$)in, si4'$e arith4eti*. On the other han#, the 'ro ision in the *ase at (ar #oes not s'e*if) an) 4ar,in a(o e or (e$o! the D2D retai$ rate. ACP2 *an 'e, the interest at an) 'er*enta,e a(o e or (e$o! the D2D retai$ rate, a,ain ,i in, it "nfettere# #is*retion in #eter4inin, the interest rate. The sti'"$ation in the 'ro4issor) notes s"(=e*tin, the interest rate to re ie! #oes not ren#er the i4'osition () ACP2 of interest rates on the o($i,ations of the s'o"ses 2e$"so a$i#. A**or#in, to sai# sti'"$ation: The interest rate sha$$ (e s"(=e*t to re ie! an# 4a) (e in*rease# or #e*rease# () the FENDER *onsi#erin, a4on, others the 're ai$in, finan*ia$ an# 4onetar) *on#itionsC or the rate of interest an# *har,es !hi*h other (an:s or finan*ia$ instit"tions *har,e or offer to *har,e for si4i$ar a**o44o#ationsC an#@or the res"$tin, 'rofita(i$it) to the FENDER after #"e *onsi#eration of a$$ #ea$in,s !ith the 2ORROEER.>59? It sho"$# (e 'ointe# o"t that the a"thorit) to re ie! the interest rate !as ,i en ACP2 a$one as the $en#er. 8oreo er, ACP2 4a) a''$) the *onsi#erations en"4erate# in this 'ro ision as it !ishes. As !or#e# in the a(o e 'ro ision, ACP2 4a) ,i e as 4"*h !ei,ht as it #esires to ea*h of the fo$$o!in, *onsi#erations: (5) the 're ai$in, finan*ia$ an# 4onetar) *on#itionC (/) the rate of interest an# *har,es !hi*h other (an:s or finan*ia$ instit"tions *har,e or offer to *har,e for si4i$ar a**o44o#ationsC an#@or (-) the res"$tin, 'rofita(i$it) to the FENDER (ACP2) after #"e *onsi#eration of a$$ #ea$in,s !ith the 2ORROEER (the s'o"ses 2e$"so). A,ain, as in the *ase of the interest rate 'ro ision, there is no fi;e# 4ar,in a(o e or (e$o! these *onsi#erations. In ie! of the fore,oin,, the Se'ara(i$it) C$a"se *annot sa e either of the t!o o'tions of ACP2 as to the interest to (e i4'ose#, as (oth o'tions io$ate the 'rin*i'$e of 4"t"a$it) of *ontra*ts. ACP2 $i:e!ise fai$e# to *on in*e "s that the s'o"ses 2e$"so !ere in esto''e$. Esto''e$ *annot (e 're#i*ate# on an i$$e,a$ a*t. As (et!een the 'arties to a *ontra*t, a$i#it) *annot (e ,i en to it () esto''e$ if it is 'rohi(ite# () $a! or is a,ainst '"($i* 'o$i*).>53?

24

The interest rate 'ro isions in the *ase at (ar are i$$e,a$ not on$) (e*a"se of the 'ro isions of the Ci i$ Co#e on 4"t"a$it) of *ontra*ts, ("t a$so, as sha$$ (e #is*"sse# $ater, (e*a"se the) io$ate the Tr"th in Fen#in, A*t. Not #is*$osin, the tr"e finan*e *har,es in *onne*tion !ith the e;tensions of *re#it is, f"rther4ore, a for4 of #e*e'tion !hi*h !e *annot *o"ntenan*e. It is a,ainst the 'o$i*) of the State as state# in the Tr"th in Fen#in, A*t: Se*. /. De*$aration of Po$i*). L It is here() #e*$are# to (e the 'o$i*) of the State to 'rote*t its *itiKens fro4 a $a*: of a!areness of the tr"e *ost of *re#it to the "ser () ass"rin, a f"$$ #is*$os"re of s"*h *ost !ith a ie! of 're entin, the "ninfor4e# "se of *re#it to the #etri4ent of the nationa$ e*ono4).>51? 8oreo er, !hi$e the s'o"ses 2e$"so in#ee# a,ree# to rene! the *re#it $ine, the offen#in, 'ro isions are fo"n# in the 'ro4issor) notes the4se$ es, not in the *re#it $ine. In fi;in, the interest rates in the 'ro4issor) notes to *o er the rene!e# *re#it $ine, ACP2 sti$$ reser e# to itse$f the sa4e t!o o'tions L (5) a rate in#i*ati e of the D2D retai$ rateC or (/) a rate as #eter4ine# () the 2ran*h Hea#. Error in Co4'"tation ACP2 asserts that !hi$e (oth the RTC an# the Co"rt of A''ea$s oi#e# the interest rates i4'ose# () ACP2, (oth fai$e# to in*$"#e in their *o4'"tation of the o"tstan#in, o($i,ation of the s'o"ses 2e$"so the $e,a$ rate of interest of 5/O 'er ann"4. <"rther4ore, the 'ena$t) *har,es !ere a$so #e$ete# in the #e*isions of the RTC an# the Co"rt of A''ea$s. Se*tion /..%, Arti*$e II on MInterest an# other 2an: Char,esN of the s"(=e*t Cre#it A,ree4ent, 'ro i#es: Se*tion /..% Pena$t) Char,es. In a##ition to the interest 'ro i#e# for in Se*tion /..5 of this ARTICFE, an) 'rin*i'a$ o($i,ation of the CFIENT here"n#er !hi*h is not 'ai# !hen #"e sha$$ (e s"(=e*t to a 'ena$t) *har,e of one 'er*ent (5O) of the a4o"nt of s"*h o($i,ation 'er 4onth *o4'"te# fro4 #"e #ate "nti$ the o($i,ation is 'ai# in f"$$. If the (an: a**e$erates teh (si*) 'a)4ent of a ai$4ents here"n#er '"rs"ant to ARTICFE IIII hereof, the 'ena$t) *har,e sha$$ (e "se# on the tota$ 'rin*i'a$ a4o"nt o"tstan#in, an# "n'ai# *o4'"te# fro4 the #ate of a**e$eration "nti$ the o($i,ation is 'ai# in f"$$.>/.? Para,ra'h % of the 'ro4issor) notes a$so states: In *ase of non-'a)4ent of this Pro4issor) Note (Note) at 4at"rit), I@Ee, =oint$) an# se era$$), a,ree to 'a) an a##itiona$ s"4 eJ"i a$ent to t!ent)-fi e 'er*ent (/&O) of the tota$ #"e on the Note as attorne)7s fee, asi#e fro4 the e;'enses an# *osts of *o$$e*tion !hether a*t"a$$) in*"rre# or not, an# a 'ena$t) *har,e of one 'er*ent (5O) 'er 4onth on the tota$ a4o"nt #"e an# "n'ai# fro4 #ate of #efa"$t "nti$ f"$$) 'ai#.>/5? Petitioner f"rther *$ai4s that it is $i:e!ise entit$e# to attorne)7s fees, '"rs"ant to Se*tion 1..0 of the Cre#it A,ree4ent, th"s: If the 2ANH sha$$ reJ"ire the ser i*es of *o"nse$ for the enfor*e4ent of its ri,hts "n#er this A+REE8ENT, the Note(s), the *o$$atera$s an# other re$ate# #o*"4ents, the 2ANH sha$$ (e entit$e# to re*o er attorne)7s fees eJ"i a$ent to not $ess than t!ent)fi e 'er*ent (/&O) of the tota$ a4o"nts #"e an# o"tstan#in, e;*$"si e of *osts an# other e;'enses.>//? Another a$$e,e# *o4'"tationa$ error 'ointe# o"t () ACP2 is the ne,ation of the Co4'o"n#in, Interest a,ree# "'on () the 'arties "n#er Se*tion /../ of the Cre#it A,ree4ent: Se*tion /../ Co4'o"n#in, Interest. Interest not 'ai# !hen #"e sha$$ for4 'art of the 'rin*i'a$ an# sha$$ (e s"(=e*t to the sa4e interest rate as herein sti'"$ate#.>/-? an# 'ara,ra'h - of the s"(=e*t 'ro4issor) notes: Interest not 'ai# !hen #"e sha$$ (e a##e# to, an# (e*o4e 'art of the 'rin*i'a$ an# sha$$ $i:e!ise (ear interest at the sa4e rate. >/%? ACP2 $ast$) a ers that the a''$i*ation of the s'o"ses 2e$"so7s 'a)4ents in the #is'"te# *o4'"tation #oes not ref$e*t the 'arties7 a,ree4ent. The RTC #e#"*te# the 'a)4ent 4a#e () the s'o"ses 2e$"so a4o"ntin, to P90-,01-... fro4 the 'rin*i'a$ of P/,-&.,....... This !as a$$e,e#$) in*onsistent !ith the Cre#it A,ree4ent, as !e$$ as !ith the a,ree4ent of the 'arties as to the fa*ts of the *ase. In 'ara,ra'h 9 of the s'o"ses 2e$"so7s 8anifestation an# 8otion on Pro'ose# Sti'"$ation of <a*ts an# Iss"es is-Z- is ACP27s 8anifestation, the 'arties a,ree# that the a4o"nt of P90-,01-... !as a''$ie# to the interest an# not to the 'rin*i'a$, in a**or# !ith Se*tion -..-, Arti*$e II of the Cre#it A,ree4ent on MOr#er of the A''$i*ation of Pa)4ents,N !hi*h 'ro i#es: Se*tion -..- A''$i*ation of Pa)4ent. Pa)4ents 4a#e () the CFIENT sha$$ (e a''$ie# in a**or#an*e !ith the fo$$o!in, or#er of 'referen*e: 5. /. -. %. &. 0. 9. 3. A**o"nts re*ei a($e an# other o"t-of-'o*:et e;'enses <ront-en# <ee, Ori,ination <ee, Attorne)7s <ee an# other e;'enses of *o$$e*tionC Pena$t) *har,esC Past #"e interestC Prin*i'a$ a4ortiKation@Pa)4ent in arrearsC A# an*e interestC O"tstan#in, (a$an*eC an# A$$ other o($i,ations of CFIENT to the 2ANH, if an).>/&?

Th"s, a**or#in, to ACP2, the interest *har,es, 'ena$t) *har,es, an# attorne)7s fees ha# (een erroneo"s$) e;*$"#e# () the RTC an# the Co"rt of A''ea$s fro4 the *o4'"tation of the tota$ a4o"nt #"e an# #e4an#a($e fro4 s'o"ses 2e$"so. The s'o"ses 2e$"so7s #efense as to a$$ these iss"es is that the #e4an# 4a#e () ACP2 is for a *onsi#era($) (i,,er a4o"nt an#, therefore, the #e4an# sho"$# (e *onsi#ere# oi#. There (ein, no a$i# #e4an#, a**or#in, to the s'o"ses 2e$"so, there !o"$# (e no #efa"$t, an# therefore the interests an# 'ena$ties !o"$# not *o44en*e to r"n. As it !as $i:e!ise i4'ro'er to fore*$ose the 4ort,a,e# 'ro'erties or fi$e a *ase a,ainst the s'o"ses 2e$"so, attorne)7s fees !ere not !arrante#. 25

Ee a,ree !ith ACP2 on this s*ore. Defa"$t *o44en*es "'on ="#i*ia$ or e;tra="#i*ia$ #e4an#.>/0? The e;*ess a4o"nt in s"*h a #e4an# #oes not n"$$if) the #e4an# itse$f, !hi*h is a$i# !ith res'e*t to the 'ro'er a4o"nt. A *ontrar) r"$in, !o"$# '"t *o44er*ia$ transa*tions in #isarra), as a$i#it) of #e4an#s !o"$# (e #e'en#ent on the e;a*tness of the *o4'"tations thereof, !hi*h are too often *onteste#. There (ein, a a$i# #e4an# on the 'art of ACP2, a$(eit e;*essi e, the s'o"ses 2e$"so are *onsi#ere# in #efa"$t !ith res'e*t to the 'ro'er a4o"nt an#, therefore, the interests an# the 'ena$ties (e,an to r"n at that 'oint. As re,ar#s the a!ar# of 5/O $e,a$ interest in fa or of 'etitioner, the RTC a*t"a$$) re*o,niKe# that sai# $e,a$ interest sho"$# (e i4'ose#, th"s: MThere (ein, no a$i# sti'"$ation as to interest, the $e,a$ rate of interest sha$$ (e *har,e#.N>/9? It see4s that the RTC ina# ertent$) o er$oo:e# its non-in*$"sion in its *o4'"tation. The s'o"ses 2e$"so ha# e en ori,ina$$) as:e# for the RTC to i4'ose this $e,a$ rate of interest in (oth the (o#) an# the 'ra)er of its 'etition !ith the RTC: 5/. Sin*e the 'ro ision on the fi;in, of the rate of interest () the so$e !i$$ of the res'on#ent 2an: is n"$$ an# oi#, on$) the $e,a$ rate of interest !hi*h is 5/O 'er ann"4 *an (e $e,a$$) *har,e# an# i4'ose# () the (an:, !hi*h !o"$# a4o"nt to on$) a(o"t P&11,...... sin*e 5110 "' to A","st -5, 5113. ;;;; EHERE<ORE, in ie! of the fore,oin,, 'etiitoners 'ra) for ="#,4ent or or#er: ;;;; /. 2) !a) of e;a4'$e for the '"($i* ,oo# a,ainst the 2an:7s ta:in, "nfair a# anta,e of the !ea:er 'art) to their *ontra*t, #e*$arin, the $e,a$ rate of 5/O 'er ann"4, as the i4'osa($e rate of interest "' to <e(r"ar) /3, 5111 on the $oan of /.-&. 4i$$ion. >/3? A$$ these sho! that the s'o"ses 2e$"so ha# a*:no!$e#,e# (efore the RTC their o($i,ation to 'a) a 5/O $e,a$ interest on their $oans. Ehen the RTC fai$e# to in*$"#e the 5/O $e,a$ interest in its *o4'"tation, ho!e er, the s'o"ses 2e$"so 4ere$) #efen#e# in the a''e$$ate *o"rts this non-in*$"sion, as the sa4e !as (enefi*ia$ to the4. Ee see, ho!e er, s"ffi*ient (asis to i4'ose a 5/O $e,a$ interest in fa or of 'etitioner in the *ase at (ar, as !hat !e ha e oi#e# is 4ere$) the sti'"$ate# rate of interest an# not the sti'"$ation that the $oan sha$$ earn interest. Ee 4"st $i:e!ise "'ho$# the *ontra*t sti'"$ation 'ro i#in, the *o4'o"n#in, of interest. The 'ro isions in the Cre#it A,ree4ent an# in the 'ro4issor) notes 'ro i#in, for the *o4'o"n#in, of interest !ere neither n"$$ifie# () the RTC or the Co"rt of A''ea$s, nor assai$e# () the s'o"ses 2e$"so in their 'etition !ith the RTC. The *o4'o"n#in, of interests has f"rther4ore (een #e*$are# () this Co"rt to (e $e,a$. Ee ha e he$# in Tan . Co"rt of A''ea$s,>/1? that: Eitho"t 're="#i*e to the 'ro isions of Arti*$e //5/, interest #"e an# "n'ai# sha$$ not earn interest. Ho!e er, the *ontra*tin, 'arties 4a) () sti'"$ation *a'ita$iKe the interest #"e an# "n'ai#, !hi*h as a##e# 'rin*i'a$, sha$$ earn ne! interest. As re,ar#s the i4'osition of 'ena$ties, ho!e er, a$tho",h !e are $i:e!ise "'ho$#in, the i4'osition thereof in the *ontra*t, !e fin# the rate iniJ"ito"s. Fi:e in the *ase of ,ross$) e;*essi e interests, the 'ena$t) sti'"$ate# in the *ontra*t 4a) a$so (e re#"*e# () the *o"rts if it is iniJ"ito"s or "n*ons*iona($e.>-.? Ee fin# the 'ena$t) i4'ose# () ACP2, ran,in, fro4 -..%5O to -0O, to (e iniJ"ito"s *onsi#erin, the fa*t that this 'ena$t) is a$rea#) o er an# a(o e the *o4'o"n#e# interest $i:e!ise i4'ose# in the *ontra*t. If a -0O interest in itse$f has (een #e*$are# "n*ons*iona($e () this Co"rt,>-5? !hat 4ore a -..%5O to -0O 'ena$t), o er an# a(o e the 'a)4ent of *o4'o"n#e# interest[ ACP2 itse$f 4"st ha e rea$iKe# this, as it ,a e "s a sa4'$e *o4'"tation of the s'o"ses 2e$"so7s o($i,ation if (oth the interest an# the 'ena$t) *har,e are re#"*e# to 5/O. As re,ar#s the attorne)7s fees, the s'o"ses 2e$"so *an a*t"a$$) (e $ia($e therefor e en if there ha# (een no #e4an#. <i$in, a *ase in *o"rt is the ="#i*ia$ #e4an# referre# to in Arti*$e 5501>-/? of the Ci i$ Co#e, !hi*h !o"$# '"t the o($i,or in #e$a). The RTC, ho!e er, a$so he$# ACP2 $ia($e for attorne)7s fees in this *ase, as the s'o"ses 2e$"so !ere for*e# to $iti,ate the iss"e on the i$$e,a$it) of the interest rate 'ro ision of the 'ro4issor) notes. The a!ar# of attorne)7s fees, it 4"st (e re*a$$e#, fa$$s "n#er the so"n# #is*retion of the *o"rt.>--? Sin*e (oth 'arties !ere for*e# to $iti,ate to 'rote*t their res'e*ti e ri,hts, an# (oth are entit$e# to the a!ar# of attorne)7s fees fro4 the other, 'ra*ti*a$ reasons #i*tate that !e set off or *o4'ensate (oth 'arties7 $ia(i$ities for attorne)7s fees. Therefore, instea# of a!ar#in, attorne)7s fees in fa or of 'etitioner, !e sha$$ 4ere$) affir4 the #e$etion of the a!ar# of attorne)7s fees to the s'o"ses 2e$"so. In s"4, !e ho$# that s'o"ses 2e$"so sho"$# sti$$ (e he$# $ia($e for a *o4'o"n#e# $e,a$ interest of 5/O 'er ann"4 an# a 'ena$t) *har,e of 5/O 'er ann"4. Ee a$so ho$# that, instea# of a!ar#in, attorne)7s fees in fa or of 'etitioner, !e sha$$ 4ere$) affir4 the #e$etion of the a!ar# of attorne)7s fees to the s'o"ses 2e$"so. Ann"$4ent of the <ore*$os"re Sa$e Pro'erties of s'o"ses 2e$"so ha# (een fore*$ose#, tit$es to !hi*h ha# a$rea#) (een *onso$i#ate# on 51 <e(r"ar) /..5 an# /. 8ar*h /..5 in the na4e of ACP2, as the s'o"ses 2e$"so fai$e# to e;er*ise their ri,ht of re#e4'tion !hi*h e;'ire# on /& 8ar*h /.... The RTC, ho!e er, ann"$$e# the fore*$os"re of 4ort,a,e (ase# on an a$$e,e# in*orre*t *o4'"tation of the s'o"ses 2e$"so7s in#e(te#ness. ACP2 a$$e,es that none of the ,ro"n#s for the ann"$4ent of a fore*$os"re sa$e are 'resent in the *ase at (ar. <"rther4ore, the ann"$4ent of the fore*$os"re 'ro*ee#in,s an# the *ertifi*ates of sa$e !ere 4oote# () the s"(seJ"ent iss"an*e of ne! *ertifi*ates of tit$e in the na4e of sai# (an:. ACP2 *$ai4s that the s'o"ses 2e$"so7s a*tion for ann"$4ent of fore*$os"re *onstit"tes a *o$$atera$ atta*: on its *ertifi*ates of tit$e, an a*t 'ros*ri(e# () Se*tion %3 of Presi#entia$ De*ree No. 5&/1, other!ise :no!n as the Pro'ert) Re,istration De*ree, !hi*h 'ro i#es:
26

Se*tion %3. Certifi*ate not s"(=e*t to *o$$atera$ atta*:. L A *ertifi*ate of tit$e sha$$ not (e s"(=e*t to *o$$atera$ atta*:. It *annot (e a$tere#, 4o#ifie# or *an*e$$e# e;*e't in a #ire*t 'ro*ee#in, in a**or#an*e !ith $a!. The s'o"ses 2e$"so retort that sin*e the) ha# the ri,ht to ref"se 'a)4ent of an e;*essi e #e4an# on their a**o"nt, the) *annot (e sai# to (e in #efa"$t for ref"sin, to 'a) the sa4e. ConseJ"ent$), a**or#in, to the s'o"ses 2e$"so, the Menfor*e4ent of s"*h i$$e,a$ an# o er*har,e# #e4an# thro",h fore*$os"re of 4ort,a,eN sho"$# (e oi#e#. Ee a,ree !ith ACP2 an# affir4 the a$i#it) of the fore*$os"re 'ro*ee#in,s. Sin*e !e a$rea#) fo"n# that a a$i# #e4an# !as 4a#e () ACP2 "'on the s'o"ses 2e$"so, #es'ite (ein, e;*essi e, the s'o"ses 2e$"so are *onsi#ere# in #efa"$t !ith res'e*t to the 'ro'er a4o"nt of their o($i,ation to ACP2 an#, th"s, the 'ro'ert) the) 4ort,a,e# to se*"re s"*h a4o"nts 4a) (e fore*$ose#. ConseJ"ent$), 'ro*ee#s of the fore*$os"re sa$e sho"$# (e a''$ie# to the e;tent of the a4o"nts to !hi*h ACP2 is ri,htf"$$) entit$e#. As ar,"e# () ACP2, none of the ,ro"n#s for the ann"$4ent of a fore*$os"re sa$e are 'resent in this *ase. The ,ro"n#s for the 'ro'er ann"$4ent of the fore*$os"re sa$e are the fo$$o!in,: (5) that there !as fra"#, *o$$"sion, a**i#ent, 4"t"a$ 4ista:e, (rea*h of tr"st or 4is*on#"*t () the '"r*haserC (/) that the sa$e ha# not (een fair$) an# re,"$ar$) *on#"*te#C or (-) that the 'ri*e !as ina#eJ"ate an# the ina#eJ"a*) !as so ,reat as to sho*: the *ons*ien*e of the *o"rt.>-%? Fia(i$it) for Iio$ation of Tr"th in Fen#in, A*t The RTC, affir4e# () the Co"rt of A''ea$s, i4'ose# a fine of P/0,...... for ACP27s a$$e,e# io$ation of Re'"($i* A*t No. -90&, other!ise :no!n as the Tr"th in Fen#in, A*t. ACP2 *ha$$en,es this i4'osition, on the ar,"4ent that Se*tion 0(a) of the Tr"th in Fen#in, A*t !hi*h 4an#ates the fi$in, of an a*tion to re*o er s"*h 'ena$t) 4"st (e 4a#e "n#er the fo$$o!in, *ir*"4stan*es: Se*tion 0. (a) An) *re#itor !ho in *onne*tion !ith an) *re#it transa*tion fai$s to #is*$ose to an) 'erson an) infor4ation in io$ation of this A*t or an) re,"$ation iss"e# there"n#er sha$$ (e $ia($e to s"*h 'erson in the a4o"nt of P5.. or in an a4o"nt eJ"a$ to t!i*e the finan*e *har,e reJ"ire# () s"*h *re#itor in *onne*tion !ith s"*h transa*tion, !hi*he er is ,reater, e;*e't that s"*h $ia(i$it) sha$$ not e;*ee# P/,... on an) *re#it transa*tion. A*tion to re*o er s"*h 'ena$t) 4a) (e (ro",ht () s"*h 'erson !ithin one )ear fro4 the #ate of the o**"rren*e of the io$ation, in an) *o"rt of *o4'etent ="ris#i*tion. ; ; ; (E4'hasis o"rs.) A**or#in, to ACP2, the Co"rt of A''ea$s e en state# that M>a?#4itte#$) the ori,ina$ *o4'$aint #i# not e;'$i*it$) a$$e,e a io$ation of the BTr"th in Fen#in, A*t7 an# no a*tion to for4a$$) a#4it the a4en#e# 'etition >!hi*h e;'ress$) a$$e,es io$ation of the Tr"th in Fen#in, A*t? !as 4a#e either () >res'on#ents? s'o"ses 2e$"so an# the $o!er *o"rt. ; ; ;.N>-&? ACP2 f"rther *$ai4s that the a*tion to re*o er the 'ena$t) for the io$ation of the Tr"th in Fen#in, A*t ha# (een (arre# () the one-)ear 'res*ri'ti e 'erio# 'ro i#e# for in the A*t. ACP2 asserts that 'er the re*or#s of the *ase, the $atest of the s"(=e*t 'ro4issor) notes ha# (een e;e*"te# on / Jan"ar) 5113, ("t the ori,ina$ 'etition of the s'o"ses 2e$"so !as fi$e# (efore the RTC on 1 <e(r"ar) 5111, !hi*h !as after the e;'iration of the 'erio# to fi$e the sa4e on / Jan"ar) 5111. On the 4atter of a$$e,ation of the io$ation of the Tr"th in Fen#in, A*t, the Co"rt of A''ea$s r"$e#: A#4itte#$) the ori,ina$ *o4'$aint #i# not e;'$i*it$) a$$e,e a io$ation of the BTr"th in Fen#in, A*t7 an# no a*tion to for4a$$) a#4it the a4en#e# 'etition !as 4a#e either () >res'on#ents? s'o"ses 2e$"so an# the $o!er *o"rt. In s"*h transa*tions, the #e(tor an# the $en#in, instit"tions #o not #ea$ on an eJ"a$ footin, an# this $a! !as inten#e# to 'rote*t the '"($i* fro4 hi##en or "n#is*$ose# *har,es on their $oan o($i,ations, reJ"irin, a f"$$ #is*$os"re thereof () the $en#er. Ee fin# that its infrin,e4ent 4a) (e inferre# or i4'$ie# fro4 a$$e,ations that !hen >res'on#ents? s'o"ses 2e$"so e;e*"te# the 'ro4issor) notes, the interest rate *har,ea($e thereon !ere $eft ($an:. Th"s, >'etitioner? ACP2 fai$e# to #is*har,e its #"t) to #is*$ose in f"$$ to >res'on#ents? S'o"ses 2e$"so the *har,es a''$i*a($e on their $oans.>-0? Ee a,ree !ith the Co"rt of A''ea$s. The a$$e,ations in the *o4'$aint, 4"*h 4ore than the tit$e thereof, are *ontro$$in,. Other than that state# () the Co"rt of A''ea$s, !e fin# that the a$$e,ation of io$ation of the Tr"th in Fen#in, A*t *an a$so (e inferre# fro4 the sa4e a$$e,ation in the *o4'$aint !e #is*"sse# ear$ier: (.) In "ni$atera$$) i4'osin, an in*rease# interest rates (si*) res'on#ent (an: has re$ie# on the 'ro ision of their 'ro4issor) note ,rantin, res'on#ent (an: the 'o!er to "ni$atera$$) fi; the interest rates, !hi*h rate !as not #eter4ine# in the 'ro4issor) note ("t !as $eft so$e$) to the !i$$ of the 2ran*h Hea# of the res'on#ent 2an:, ; ; ;.>-9? The a$$e,ation that the 'ro4issor) notes ,rant ACP2 the 'o!er to "ni$atera$$) fi; the interest rates *ertain$) a$so 4eans that the 'ro4issor) notes #o not *ontain a M*$ear state4ent in !ritin,N of M(0) the finan*e *har,e e;'resse# in ter4s of 'esos an# *enta osC an# (9) the 'er*enta,e that the finan*e *har,e (ears to the a4o"nt to (e finan*e# e;'resse# as a si4'$e ann"a$ rate on the o"tstan#in, "n'ai# (a$an*e of the o($i,ation.N>-3? <"rther4ore, the s'o"ses 2e$"so7s 'ra)er Mfor s"*h other re$iefs ="st an# eJ"ita($e in the 're4isesN sho"$# (e #ee4e# to in*$"#e the *i i$ 'ena$t) 'ro i#e# for in Se*tion 0(a) of the Tr"th in Fen#in, A*t. ACP27s *ontention that this a*tion to re*o er the 'ena$t) for the io$ation of the Tr"th in Fen#in, A*t has a$rea#) 'res*ri(e# is $i:e!ise !itho"t 4erit. The 'ena$t) for the io$ation of the a*t is P5.. or an a4o"nt eJ"a$ to t!i*e the finan*e *har,e reJ"ire# () s"*h *re#itor in *onne*tion !ith s"*h transa*tion, !hi*he er is ,reater, e;*e't that s"*h $ia(i$it) sha$$ not e;*ee# P/,...... on an) *re#it transa*tion.>-1? As this 'ena$t) #e'en#s on the finan*e *har,e reJ"ire# of the (orro!er, the (orro!er7s *a"se of a*tion !o"$# on$) a**r"e !hen s"*h finan*e *har,e is reJ"ire#. In the *ase at (ar, the #ate of the #e4an# for 'a)4ent of the finan*e *har,e is / Se'te4(er 5113, !hi$e the fore*$os"re !as 4a#e on /3 De*e4(er 5113. The fi$in, of the *ase on 1 <e(r"ar) 5111 is therefore !ithin the one-)ear 'res*ri'ti e 'erio#. ACP2 ar,"es that a io$ation of the Tr"th in Fen#in, A*t, (ein, a *ri4ina$ offense, *annot (e inferre# nor i4'$ie# fro4 the a$$e,ations 4a#e in the *o4'$aint.>%.? Pertinent 'ro isions of the A*t rea#:
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Se*. 0. (a) An) *re#itor !ho in *onne*tion !ith an) *re#it transa*tion fai$s to #is*$ose to an) 'erson an) infor4ation in io$ation of this A*t or an) re,"$ation iss"e# there"n#er sha$$ (e $ia($e to s"*h 'erson in the a4o"nt of P5.. or in an a4o"nt eJ"a$ to t!i*e the finan*e *har,e reJ"ire# () s"*h *re#itor in *onne*tion !ith s"*h transa*tion, !hi*he er is the ,reater, e;*e't that s"*h $ia(i$it) sha$$ not e;*ee# P/,... on an) *re#it transa*tion. A*tion to re*o er s"*h 'ena$t) 4a) (e (ro",ht () s"*h 'erson !ithin one )ear fro4 the #ate of the o**"rren*e of the io$ation, in an) *o"rt of *o4'etent ="ris#i*tion. In an) a*tion "n#er this s"(se*tion in !hi*h an) 'erson is entit$e# to a re*o er), the *re#itor sha$$ (e $ia($e for reasona($e attorne)7s fees an# *o"rt *osts as #eter4ine# () the *o"rt. ;;;; (*) An) 'erson !ho !i$$f"$$) io$ates an) 'ro ision of this A*t or an) re,"$ation iss"e# there"n#er sha$$ (e fine# () not $ess than P5,... or 4ore than P&,... or i4'rison4ent for not $ess than 0 4onths, nor 4ore than one )ear or (oth. As *an (e ,$eane# fro4 Se*tion 0(a) an# (*) of the Tr"th in Fen#in, A*t, the io$ation of the sai# A*t ,i es rise to (oth *ri4ina$ an# *i i$ $ia(i$ities. Se*tion 0(*) *onsi#ers a *ri4ina$ offense the !i$$f"$ io$ation of the A*t, i4'osin, the 'ena$t) therefor of fine, i4'rison4ent or (oth. Se*tion 0(a), on the other han#, *$ear$) 'ro i#es for a *i i$ *a"se of a*tion for fai$"re to #is*$ose an) infor4ation of the reJ"ire# infor4ation to an) 'erson in io$ation of the A*t. The 'ena$t) therefor is an a4o"nt of P5.. or in an a4o"nt eJ"a$ to t!i*e the finan*e *har,e reJ"ire# () the *re#itor in *onne*tion !ith s"*h transa*tion, !hi*he er is ,reater, e;*e't that the $ia(i$it) sha$$ not e;*ee# P/,...... on an) *re#it transa*tion. The a*tion to re*o er s"*h 'ena$t) 4a) (e instit"te# () the a,,rie e# 'ri ate 'erson se'arate$) an# in#e'en#ent$) fro4 the *ri4ina$ *ase for the sa4e offense. In the *ase at (ar, therefore, the *i i$ a*tion to re*o er the 'ena$t) "n#er Se*tion 0(a) of the Tr"th in Fen#in, A*t ha# (een =oint$) instit"te# !ith (5) the a*tion to #e*$are the interests in the 'ro4issor) notes oi#, an# (/) the a*tion to #e*$are the fore*$os"re oi#. This =oin#er is a$$o!e# "n#er R"$e /, Se*tion & of the R"$es of Co"rt, !hi*h 'ro i#es: SEC. &. Join#er of *a"ses of a*tion.QA 'art) 4a) in one '$ea#in, assert, in the a$ternati e or other!ise, as 4an) *a"ses of a*tion as he 4a) ha e a,ainst an o''osin, 'art), s"(=e*t to the fo$$o!in, *on#itions: (a) The 'art) =oinin, the *a"ses of a*tion sha$$ *o4'$) !ith the r"$es on =oin#er of 'artiesC (() The =oin#er sha$$ not in*$"#e s'e*ia$ *i i$ a*tions or a*tions ,o erne# () s'e*ia$ r"$esC (*) Ehere the *a"ses of a*tion are (et!een the sa4e 'arties ("t 'ertain to #ifferent en"es or ="ris#i*tions, the =oin#er 4a) (e a$$o!e# in the Re,iona$ Tria$ Co"rt 'ro i#e# one of the *a"ses of a*tion fa$$s !ithin the ="ris#i*tion of sai# *o"rt an# the en"e $ies thereinC an# (#) Ehere the *$ai4s in a$$ the *a"ses of a*tion are 'rin*i'a$$) for re*o er) of 4one), the a,,re,ate a4o"nt *$ai4e# sha$$ (e the test of ="ris#i*tion. In atta*:in, the RTC7s #is'osition on the io$ation of the Tr"th in Fen#in, A*t sin*e the sa4e !as not a$$e,e# in the *o4'$aint, ACP2 is a*t"a$$) assertin, a io$ation of #"e 'ro*ess. In#ee#, #"e 'ro*ess 4an#ates that a #efen#ant sho"$# (e s"ffi*ient$) a''rise# of the 4atters he or she !o"$# (e #efen#in, hi4se$f or herse$f a,ainst. Ho!e er, in the 5 J"$) 5111 're-tria$ (rief fi$e# () the s'o"ses 2e$"so (efore the RTC, the *$ai4 for *i i$ san*tions for io$ation of the Tr"th in Fen#in, A*t !as e;'ress$) a$$e,e#, th"s: 8oreo er, sin*e fro4 the start, res'on#ent (an: io$ate# the Tr"th in Fen#in, A*t in not infor4in, the (orro!er in !ritin, (efore the e;e*"tion of the Pro4issor) Notes of the interest rate e;'resse# as a 'er*enta,e of the tota$ $oan, the res'on#ent (an: instea# is $ia($e to 'a) 'etitioners #o"($e the a4o"nt the (an: is *har,in, 'etitioners () !a) of san*tion for its io$ation.>%5? In the sa4e 're-tria$ (rief, the s'o"ses 2e$"so a$so e;'ress$) raise# the fo$$o!in, iss"e: (.) Does the e;'ression in#i*ati e rate of D2D retai$ (si*) *o4'$) !ith the Tr"th in Fen#in, A*t 'ro ision to e;'ress the interest rate as a si4'$e ann"a$ 'er*enta,e of the $oan[>%/? These assertions are so *$ear an# "neJ"i o*a$ that an) atte4't of ACP2 to fei,n i,noran*e of the assertion of this iss"e in this *ase as to 're ent it fro4 '"ttin, "' a #efense thereto is '$ain$) ho,!ash. Petitioner f"rther 'osits that it is the 8etro'o$itan Tria$ Co"rt !hi*h has ="ris#i*tion to tr) an# a#="#i*ate the a$$e,e# io$ation of the Tr"th in Fen#in, A*t, *onsi#erin, that the 'resent a*tion a$$e,e#$) in o$ e# a sin,$e *re#it transa*tion as there !as on$) one Pro4issor) Note Fine. Ee #isa,ree. Ee ha e a$rea#) r"$e# that the a*tion to re*o er the 'ena$t) "n#er Se*tion 0(a) of the Tr"th in Fen#in, A*t ha# (een =oint$) instit"te# !ith (5) the a*tion to #e*$are the interests in the 'ro4issor) notes oi#, an# (/) the a*tion to #e*$are the fore*$os"re oi#. There ha# (een no J"estion that the a(o e a*tions (e$on, to the ="ris#i*tion of the RTC. S"(se*tion (*) of the a(o e-J"ote# Se*tion & of the R"$es of Co"rt on Join#er of Ca"ses of A*tion 'ro i#es: (*) Ehere the *a"ses of a*tion are (et!een the sa4e 'arties ("t 'ertain to #ifferent en"es or ="ris#i*tions, the =oin#er 4a) (e a$$o!e# in the Re,iona$ Tria$ Co"rt 'ro i#e# one of the *a"ses of a*tion fa$$s !ithin the ="ris#i*tion of sai# *o"rt an# the en"e $ies therein. <"rther4ore, o'enin, a *re#it $ine #oes not *reate a *re#it transa*tion of $oan or 4"t""4, sin*e the for4er is 4ere$) a 're'arator) *ontra*t to the *ontra*t of $oan or 4"t""4. An#er s"*h *re#it $ine, the (an: is 4ere$) o($i,e#, for the *onsi#erations s'e*ifie# therefor, to $en# to the other 'art) a4o"nts not e;*ee#in, the $i4it 'ro i#e#. The *re#it transa*tion th"s o**"rre# not !hen the *re#it $ine !as o'ene#, ("t rather !hen the *re#it $ine !as a ai$e# of. In the *ase at (ar, the io$ation of the Tr"th in Fen#in, A*t a$$e,e#$) o**"rre# not !hen the 'arties e;e*"te# the Cre#it A,ree4ent, !here no interest rate !as 4entione#, ("t !hen the 'arties e;e*"te# the 'ro4issor) notes, !here the a$$e,e#$) offen#in, interest rate !as sti'"$ate#. ACP2 f"rther ar,"es that sin*e the s'o"ses 2e$"so !ere #"$) ,i en *o'ies of the s"(=e*t 'ro4issor) notes after their e;e*"tion, then the) !ere #"$) notifie# of the ter4s thereof, in s"(stantia$ *o4'$ian*e !ith the Tr"th in Fen#in, A*t.
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On*e 4ore, !e #isa,ree. Se*tion % of the Tr"th in Fen#in, A*t *$ear$) 'ro i#es that the #is*$os"re state4ent 4"st (e f"rnishe# 'rior to the *ons"44ation of the transa*tion: SEC. %. An) *re#itor sha$$ f"rnish to ea*h 'erson to !ho4 *re#it is e;ten#e#, 'rior to the *ons"44ation of the transa*tion, a *$ear state4ent in !ritin, settin, forth, to the e;tent a''$i*a($e an# in a**or#an*e !ith r"$es an# re,"$ations 'res*ri(e# () the 2oar#, the fo$$o!in, infor4ation: (5) the *ash 'ri*e or #e$i ere# 'ri*e of the 'ro'ert) or ser i*e to (e a*J"ire#C (/) the a4o"nts, if an), to (e *re#ite# as #o!n 'a)4ent an#@or tra#e-inC (-) the #ifferen*e (et!een the a4o"nts set forth "n#er *$a"ses (5) an# (/) (%) the *har,es, in#i i#"a$$) ite4iKe#, !hi*h are 'ai# or to (e 'ai# () s"*h 'erson in *onne*tion !ith the transa*tion ("t !hi*h are not in*i#ent to the e;tension of *re#itC (&) the tota$ a4o"nt to (e finan*e#C (0) the finan*e *har,e e;'resse# in ter4s of 'esos an# *enta osC an# (9) the 'er*enta,e that the finan*e (ears to the tota$ a4o"nt to (e finan*e# e;'resse# as a si4'$e ann"a$ rate on the o"tstan#in, "n'ai# (a$an*e of the o($i,ation. The rationa$e of this 'ro ision is to 'rote*t "sers of *re#it fro4 a $a*: of a!areness of the tr"e *ost thereof, 'ro*ee#in, fro4 the e;'erien*e that (an:s are a($e to *on*ea$ s"*h tr"e *ost () hi##en *har,es, "n*ertaint) of interest rates, #e#"*tion of interests fro4 the $oane# a4o"nt, an# the $i:e. The $a! there() see:s to 'rote*t #e(tors () 'er4ittin, the4 to f"$$) a''re*iate the tr"e *ost of their $oan, to ena($e the4 to ,i e f"$$ *onsent to the *ontra*t, an# to 'ro'er$) e a$"ate their o'tions in arri in, at ("siness #e*isions. A'ho$#in, ACP27s *$ai4 of s"(stantia$ *o4'$ian*e !o"$# #efeat these '"r'oses of the Tr"th in Fen#in, A*t. The (e$ate# #is*o er) of the tr"e *ost of *re#it !i$$ too often not (e a($e to re erse the i$$ effe*ts of an a$rea#) *ons"44ate# ("siness #e*ision. In a##ition, the 'ro4issor) notes, the *o'ies of !hi*h !ere 'resente# to the s'o"ses 2e$"so after e;e*"tion, are not s"ffi*ient notifi*ation fro4 ACP2. As ear$ier #is*"sse#, the interest rate 'ro ision therein #oes not s"ffi*ient$) in#i*ate !ith 'arti*"$arit) the interest rate to (e a''$ie# to the $oan *o ere# () sai# 'ro4issor) notes. <or"4 Sho''in, ACP2 ha# ear$ier 4o e# to #is4iss the 'etition (ori,ina$$) Case No. 11--5% in RTC, 8a:ati Cit)) on the ,ro"n# that the s'o"ses 2e$"so instit"te# another *ase (Ci i$ Case No. I-9//9) (efore the RTC of Ro;as Cit), in o$ in, the sa4e 'arties an# iss"es. ACP2 *$ai4s that !hi$e Ci i$ Case No. I-9//9 initia$$) a''ears to (e a #ifferent a*tion, as it 'ra)e# for the iss"an*e of a te4'orar) restrainin, or#er an#@or in="n*tion to sto' fore*$os"re of s'o"ses 2e$"so7s 'ro'erties, it 'oses iss"es !hi*h are si4i$ar to those of the 'resent *ase.>%-? To 'ro e its 'oint, ACP2 *ite# the s'o"ses 2e$"so7s A4en#e# Petition in Ci i$ Case No. I-9//9, !hi*h *ontains si4i$ar a$$e,ations as those in the 'resent *ase. The RTC of 8a:ati #enie# ACP27s 8otion to Dis4iss Case No. 11--5% for $a*: of 4erit. Petitioner ACP2 raise# the sa4e iss"e !ith the Co"rt of A''ea$s, an# is raisin, the sa4e iss"e !ith "s no!. The s'o"ses 2e$"so *$ai4 that the iss"e in Ci i$ Case No. I-9//9 (efore the RTC of Ro;as Cit), a Petition for In="n*tion A,ainst <ore*$os"re, is the 'ro'riet) of the fore*$os"re (efore the tr"e a**o"nt of s'o"ses 2e$"so is #eter4ine#. On the other han#, the iss"e in Case No. 11--5% (efore the RTC of 8a:ati Cit) is the a$i#it) of the interest rate 'ro ision. The s'o"ses 2e$"so *$ai4 that Ci i$ Case No. I-9//9 has (e*o4e 4oot (e*a"se, (efore the RTC of Ro;as Cit) *o"$# a*t on the restrainin, or#er, ACP2 'ro*ee#e# !ith the fore*$os"re an# a"*tion sa$e. As the a*t so",ht to (e restraine# () Ci i$ Case No. I-9//9 has a$rea#) (een a**o4'$ishe#, the s'o"ses 2e$"so ha# to fi$e a #ifferent a*tion, that of Ann"$4ent of the <ore*$os"re Sa$e, Case No. 11--5% !ith the RTC, 8a:ati Cit). E en if !e ass"4e for the sa:e of ar,"4ent, ho!e er, that on$) one *a"se of a*tion is in o$ e# in the t!o *i i$ a*tions, na4e$), the io$ation of the ri,ht of the s'o"ses 2e$"so not to ha e their 'ro'ert) fore*$ose# for an a4o"nt the) #o not o!e, the R"$es of Co"rt ne erthe$ess a$$o!s the fi$in, of the se*on# a*tion. Ci i$ Case No. I-9//9 !as #is4isse# () the RTC of Ro;as Cit) (efore the fi$in, of Case No. 11--5% !ith the RTC of 8a:ati Cit), sin*e the en"e of $iti,ation as 'ro i#e# for in the Cre#it A,ree4ent is in 8a:ati Cit). R"$e 50, Se*tion & (ars the refi$in, of an a*tion 're io"s$) #is4isse# on$) in the fo$$o!in, instan*es: SEC. &. Effe*t of #is4issa$.QS"(=e*t to the ri,ht of a''ea$, an or#er ,rantin, a 4otion to #is4iss (ase# on 'ara,ra'hs (f), (h) an# (i) of se*tion 5 hereof sha$$ (ar the refi$in, of the sa4e a*tion or *$ai4. (n) I4'ro'er en"e as a ,ro"n# for the #is4issa$ of an a*tion is fo"n# in 'ara,ra'h (*) of Se*tion 5, not in 'ara,ra'hs (f), (h) an# (i): SECTION 5. +ro"n#s.QEithin the ti4e for ("t (efore fi$in, the ans!er to the *o4'$aint or '$ea#in, assertin, a *$ai4, a 4otion to #is4iss 4a) (e 4a#e on an) of the fo$$o!in, ,ro"n#s: (a) That the *o"rt has no ="ris#i*tion o er the 'erson of the #efen#in, 'art)C (() That the *o"rt has no ="ris#i*tion o er the s"(=e*t 4atter of the *$ai4C (*) That en"e is i4'ro'er$) $ai#C (#) That the '$aintiff has no $e,a$ *a'a*it) to s"eC (e) That there is another a*tion 'en#in, (et!een the sa4e 'arties for the sa4e *a"seC (f) That the *a"se of a*tion is (arre# () a 'rior ="#,4ent or () the stat"te of $i4itationsC (,) That the '$ea#in, assertin, the *$ai4 states no *a"se of a*tionC (h) That the *$ai4 or #e4an# set forth in the '$aintiff7s '$ea#in, has (een 'ai#, !ai e#, a(an#one#, or other!ise e;tin,"ishe#C (i) That the *$ai4 on !hi*h the a*tion is fo"n#e# is "nenfor*ea($e "n#er the 'ro isions of the stat"te of fra"#sC an# (=) That a *on#ition 're*e#ent for fi$in, the *$ai4 has not (een *o4'$ie# !ith.>%%? (E4'hases s"''$ie#.)
29

Ehen an a*tion is #is4isse# on the 4otion of the other 'art), it is on$) !hen the ,ro"n# for the #is4issa$ of an a*tion is fo"n# in 'ara,ra'hs (f), (h) an# (i) that the a*tion *annot (e refi$e#. As re,ar#s a$$ the other ,ro"n#s, the *o4'$ainant is a$$o!e# to fi$e sa4e a*tion, ("t sho"$# ta:e *are that, this ti4e, it is fi$e# !ith the 'ro'er *o"rt or after the a**o4'$ish4ent of the erst!hi$e a(sent *on#ition 're*e#ent, as the *ase 4a) (e. ACP2, ho!e er, (rin,s to the attention of this Co"rt a 8otion for Re*onsi#eration fi$e# () the s'o"ses 2e$"so on 5& Jan"ar) 5111 !ith the RTC of Ro;as Cit), !hi*h 8otion ha# not )et (een r"$e# "'on !hen the s'o"ses 2e$"so fi$e# Ci i$ Case No. 11-5% !ith the RTC of 8a:ati. Hen*e, there !ere a$$e,e#$) t!o 'en#in, a*tions (et!een the sa4e 'arties on the sa4e iss"e at the ti4e of the fi$in, of Ci i$ Case No. 11--5% on 1 <e(r"ar) 5111 !ith the RTC of 8a:ati. This !i$$ sti$$ not *han,e o"r fin#in,s. It is in#ee# the ,enera$ r"$e that in *ases !here there are t!o 'en#in, a*tions (et!een the sa4e 'arties on the sa4e iss"e, it sho"$# (e the $ater *ase that sho"$# (e #is4isse#. Ho!e er, this r"$e is not a(so$"te. A**or#in, to this Co"rt in A$$ie# 2an:in, Cor'oration . Co"rt of A''ea$s>%&?: In these *ases, it is e i#ent that the first a*tion !as fi$e# in anti*i'ation of the fi$in, of the $ater a*tion an# the '"r'ose is to 'ree4't the $ater s"it or 'ro i#e a (asis for see:in, the #is4issa$ of the se*on# a*tion. E en if this is not the '"r'ose for the fi$in, of the first a*tion, it 4a) ne erthe$ess (e #is4isse# if the $ater a*tion is the 4ore a''ro'riate ehi*$e for the enti$ation of the iss"es (et!een the 'arties. Th"s, in Ra4os . Pera$ta, it !as he$#: >T?he r"$e on $itis 'en#entia #oes not reJ"ire that the $ater *ase sho"$# )ie$# to the ear$ier *ase. Ehat is reJ"ire# 4ere$) is that there (e another 'en#in, a*tion, not a 'rior 'en#in, a*tion. Consi#erin, the (roa#er s*o'e of inJ"ir) in o$ e# in Ci i$ Case No. %5./ an# the $o*ation of the 'ro'ert) in o$ e#, no error !as *o44itte# () the $o!er *o"rt in #eferrin, to the 2ataan *o"rtRs ="ris#i*tion. +i en, therefore, the 'en#en*) of t!o a*tions, the fo$$o!in, are the re$e ant *onsi#erations in #eter4inin, !hi*h a*tion sho"$# (e #is4isse#: (5) the #ate of fi$in,, !ith 'referen*e ,enera$$) ,i en to the first a*tion fi$e# to (e retaine#C (/) !hether the a*tion so",ht to (e #is4isse# !as fi$e# 4ere$) to 'ree4't the $ater a*tion or to anti*i'ate its fi$in, an# $a) the (asis for its #is4issa$C an# (-) !hether the a*tion is the a''ro'riate ehi*$e for $iti,atin, the iss"es (et!een the 'arties. In the *ase at (ar, Ci i$ Case No. I-9//9 (efore the RTC of Ro;as Cit) !as an a*tion for in="n*tion a,ainst a fore*$os"re sa$e that has a$rea#) (een he$#, !hi$e Ci i$ Case No. 11--5% (efore the RTC of 8a:ati Cit) in*$"#es an a*tion for the ann"$4ent of sai# fore*$os"re, an a*tion *ertain$) 4ore 'ro'er in ie! of the e;e*"tion of the fore*$os"re sa$e. The for4er *ase !as i4'ro'er$) fi$e# in Ro;as Cit), !hi$e the $atter !as fi$e# in 8a:ati Cit), the 'ro'er en"e of the a*tion as 4an#ate# () the Cre#it A,ree4ent. It is e i#ent, therefore, that Ci i$ Case No. 11--5% is the 4ore a''ro'riate ehi*$e for $iti,atin, the iss"es (et!een the 'arties, as *o4'are# to Ci i$ Case No. I-9//9. Th"s, !e r"$e that the RTC of 8a:ati Cit) !as not in error in not #is4issin, Ci i$ Case No. 11--5%. EHERE<ORE, the De*ision of the Co"rt of A''ea$s is here() A<<IR8ED !ith the fo$$o!in, 8ODI<ICATIONS: 5. In a##ition to the s"4 of P/,-&.,...... as #eter4ine# () the *o"rts a J"o, res'on#ent s'o"ses Sa4"e$ an# O#ette 2e$"so are a$so $ia($e for the fo$$o!in, a4o"nts: a. Pena$t) of 5/O 'er ann"4 on the a4o"nt #"e>%0? fro4 the #ate of #e4an#C an# (. Co4'o"n#e# $e,a$ interest of 5/O 'er ann"4 on the a4o"nt #"e>%9? fro4 #ate of #e4an#C /. The fo$$o!in, a4o"nts sha$$ (e #e#"*te# fro4 the $ia(i$it) of the s'o"ses Sa4"e$ an# O#ette 2e$"so:

a. Pa)4ents 4a#e () the s'o"ses in the a4o"nt of P90-,01/.... These 'a)4ents sha$$ (e a''$ie# to the #ate of a*t"a$ 'a)4ent of the fo$$o!in, in the or#er that the) are $iste#, to !it: i. 'ena$t) *har,es #"e an# #e4an#a($e as of the ti4e of 'a)4entC ii. interest #"e an# #e4an#a($e as of the ti4e of 'a)4entC iii. 'rin*i'a$ a4ortiKation@'a)4ent in arrears as of the ti4e of 'a)4entC i . o"tstan#in, (a$an*e. (. Pena$t) "n#er Re'"($i* A*t No. -90& in the a4o"nt of P/0,....... This a4o"nt sha$$ (e #e#"*te# fro4 the $ia(i$it) of the s'o"ses Sa4"e$ an# O#ette 2e$"so on 1 <e(r"ar) 5111 to the fo$$o!in, in the or#er that the) are $iste#, to !it: i. 'ena$t) *har,es #"e an# #e4an#a($e as of ti4e of 'a)4entC ii. interest #"e an# #e4an#a($e as of the ti4e of 'a)4entC iii. 'rin*i'a$ a4ortiKation@'a)4ent in arrears as of the ti4e of 'a)4entC i . o"tstan#in, (a$an*e. -. The fore*$os"re of 4ort,a,e is here() #e*$are# IAFID. ConseJ"ent$), the a4o"nts !hi*h the Re,iona$ Tria$ Co"rt an# the Co"rt of A''ea$s or#ere# res'on#ents to 'a), as 4o#ifie# in this De*ision, sha$$ (e #e#"*te# fro4 the 'ro*ee#s of the fore*$os"re sa$e. SO ORDERED.

G.R. No. 192986

January 15, 2013

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ADVOCATES FOR TRUT !N "END!NG, !NC. an# EDUARDO $. O"AGUER, Petitioners, vs. $ANG%O SENTRA" &ONETAR' $OARD, r()r(*(n+(# ,y -+* C.a-r/an, GOVERNOR AR&ANDO &. TETANGCO, JR., an# -+* -n0u/,(n+ /(/,(r*1 JUAN!TA D. A&ATONG, A"FREDO C. ANTON!O, 2ETER FA V!"A, NE""' F. V!""AFUERTE, !GNAC!O R. $UN'E an# CESAR V. 2UR!S!&A, Respondents.
Petitioners, claiming that they are raising issues of transcendental importance to the public, filed directly with this Court this Petition for Certiorari under Rule 65 of the 199 Rules of Court, see!ing to declare that the "ang!o #entral ng Pilipinas $onetary "oard %"#P&$"', replacing the Central "an! $onetary "oard %C"&$"' by virtue of Republic (ct %R.(.' )o. 65*, has no authority to continue enforcing Central "an! Circular )o. 9+5,1 issued by the C"&$" in 19,-, which .suspended. (ct )o. -655, or the /sury 0aw of 1916. 1actual (ntecedents Petitioner .(dvocates for 2ruth in 0ending, 3nc.. %(1230' is a non&profit, non&stoc! corporation organi4ed to engage in pro bono concerns and activities relating to money lending issues. 3t was incorporated on 5uly 9, -+1+,- and a month later, it filed this petition, 6oined by its founder and president, 7duardo ". 8laguer, suing as a ta9payer and a citi4en. R.(. )o. -65, which created the Central "an! %C"' of the Philippines on 5une 15, 19:,, empowered the C"&$" to, among others, set the ma9imum interest rates which ban!s may charge for all types of loans and other credit operations, within limits prescribed by the /sury 0aw. #ection 1+9 of R.(. )o. -65 reads; #ec. 1+9. 3nterest Rates, Commissions and Charges. < 2he $onetary "oard may fi9 the ma9imum rates of interest which ban!s may pay on deposits and on other obligations. 2he $onetary "oard may, within the limits prescribed in the /sury 0aw fi9 the ma9imum rates of interest which ban!s may charge for different types of loans and for any other credit operations, or may fi9 the ma9imum differences which may e9ist between the interest or rediscount rates of the Central "an! and the rates which the ban!s may charge their customers if the respective credit documents are not to lose their eligibility for rediscount or advances in the Central "an!. (ny modifications in the ma9imum interest rates permitted for the borrowing or lending operations of the ban!s shall apply only to future operations and not to those made prior to the date on which the modification becomes effective. 3n order to avoid possible evasion of ma9imum interest rates set by the $onetary "oard, the "oard may also fi9 the ma9imum rates that ban!s may pay to or collect from their customers in the form of commissions, discounts, charges, fees or payments of any sort. %/nderlining ours' 8n $arch 1 , 19,+, the /sury 0aw was amended by Presidential =ecree %P.=.' )o. 16,:, giving the C"&$" authority to prescribe different ma9imum rates of interest which may be imposed for a loan or renewal thereof or the forbearance of any money, goods or credits, provided that the changes are effected gradually and announced in advance. 2hus, #ection 1&a of (ct )o. -655 now reads; #ec. 1&a. 2he $onetary "oard is hereby authori4ed to prescribe the ma9imum rate or rates of interest for the loan or renewal thereof or the forbearance of any money, goods or credits, and to change such rate or rates whenever warranted by prevailing economic and social conditions; Provided, 2hat changes in such rate or rates may be effected gradually on scheduled dates announced in advance. 3n the e9ercise of the authority herein granted the $onetary "oard may prescribe higher ma9imum rates for loans of low priority, such as consumer loans or renewals thereof as well as such loans made by pawnshops, finance companies and other similar credit institutions although the rates prescribed for these institutions need not necessarily be uniform. 2he $onetary "oard is also authori4ed to prescribe different ma9imum rate or rates for different types of borrowings, including deposits and deposit substitutes, or loans of financial intermediaries. %/nderlining and emphasis ours' 3n its Resolution )o. ---: dated =ecember *, 19,-,* the C"&$" issued C" Circular )o. 9+5, #eries of 19,-, effective on 5anuary 1, 19,*. #ection 1 of the Circular, under its >eneral Provisions, removed the ceilings on interest rates on loans or forbearance of any money, goods or credits, to wit; #ec. 1. 2he rate of interest, including commissions, premiums, fees and other charges, on a loan or forbearance of any money, goods, or credits, regardless of maturity and whether secured or unsecured, that may be charged or collected by any person, whether natural or 6uridical, shall not be sub6ect to any ceiling prescribed under or pursuant to the /sury 0aw, as amended. %/nderscoring and emphasis ours' 2he Circular then went on to amend "oo!s 3 to 3? of the C"@s .$anual of Regulations for "an!s and 8ther 1inancial 31 3ntermediaries. %$anual of Regulations' by removing the applicable ceilings on specific interest rates. 2hus, #ections

5, 9 and 1+ of C" Circular )o. 9+5 amended "oo! 3, #ubsections 1*+*, 1*:9, 1*,,.1 of the $anual of Regulations, by removing the ceilings for interest and other charges, commissions, premiums, and fees applicable to commercial ban!sA #ections 1- and 1 removed the interest ceilings for thrift ban!s %"oo! 33, #ubsections -*+*, -*:9'A #ections 19 and -1 removed the ceilings applicable to rural ban!s %"oo! 333, #ubsection *15-.*&c'A and, #ections -6, -,, *+ and *- removed the ceilings for non&ban! financial intermediaries %"oo! 3?, #ubsections :*+*B.1 to :*+*B.9, :*+*).1, :*+*P'.: 8n 5une 1:, 199*, President 1idel ?. Ramos signed into law R.(. )o. 65* establishing the "ang!o #entral ng Pilipinas %"#P' to replace the C". 2he repealing clause thereof, #ection 1*5, reads; #ec. 1*5. Repealing Clause. < 79cept as may be provided for in #ections :6 and 1*- of this (ct, Republic (ct )o. -65, as amended, the provisions of any other law, special charters, rule or regulation issued pursuant to said Republic (ct )o. -65, as amended, or parts thereof, which may be inconsistent with the provisions of this (ct are hereby repealed. Presidential =ecree )o. 1 9- is li!ewise repealed. Petition for Certiorari 2o 6ustify their s!ipping the hierarchy of courts and going directly to this Court to secure a writ of certiorari, petitioners contend that the transcendental importance of their Petition can readily be seen in the issues raised therein, to wit;
a' Chether under R.(. )o. -65 andDor P.=. )o. 16,:, the C"&$" had the statutory or constitutional authority to prescribe the ma9imum rates of interest for all !inds of credit transactions and forbearance of money, goods or credit beyond the limits prescribed in the /sury 0awA b' 3f so, whether the C"&$" e9ceeded its authority when it issued C" Circular )o. 9+5, which removed all interest ceilings and thus suspended (ct )o. -655 as regards usurious interest ratesA c' Chether under R.(. )o. 65*, the new "#P&$" may continue to enforce C" Circular )o. 9+5. 5

Petitioners attached to their petition copies of several #enate "ills and Resolutions of the 1+th Congress, which held its sessions from 1995 to 199,, calling for investigations by the #enate Committee on "an!s and 1inancial 3nstitutions into alleged unconscionable commercial rates of interest imposed by these entities. #enate "ill %#"' )os. * 6 and 1,6+, filed by #enator ?icente C. #otto 333 and the late #enator "las 1. 8ple, respectively, sought to amend (ct )o. -655 by fi9ing the rates of interest on loans and forbearance of creditA Philippine #enate Resolution %#R' )o. 1+5*,, 1+ *9 and 11+-,1+ filed by #enators Ramon ". $agsaysay, 5r., >regorio ". Eonasan and 1ran!lin $. =rilon, respectively, urged the aforesaid #enate Committee to investigate ways to curb the high commercial interest rates then obtaining in the countryA #enator 7rnesto $aceda filed #" )o. 1151 to prohibit the collection of more than two months of advance interest on any loan of moneyA and #enator Raul Roco filed #R )o. 11::11 see!ing an investigation into an alleged cartel of commercial ban!s, called .Club 1,-1., reportedly behind the regime of high interest rates. 2he petitioners also attached news clippings1- showing that in 1ebruary 199, the ban!s@ prime lending rates, or interests on loans to their best borrowers, ranged from -6F to *1F. Petitioners contend that under #ection 1&a of (ct )o. -655, as amended by P.=. )o. 16,:, the C"&$" was authori4ed only to prescribe or set the ma9imum rates of interest for a loan or renewal thereof or for the forbearance of any money, goods or credits, and to change such rates whenever warranted by prevailing economic and social conditions, the changes to be effected gradually and on scheduled datesA that nothing in P.=. )o. 16,: authori4ed the C"&$" to lift or suspend the limits of interest on all credit transactions, when it issued C" Circular )o. 9+5. 2hey further insist that under #ection 1+9 of R.(. )o. -65, the authority of the C"&$" was clearly only to fi9 the ban!s@ ma9imum rates of interest, but always within the limits prescribed by the /sury 0aw. 2hus, according to petitioners, C" Circular )o. 9+5, which was promulgated without the benefit of any prior public hearing, is void because it violated (rticle 5 of the )ew Civil Code, which provides that .(cts e9ecuted against the provisions of mandatory or prohibitory laws shall be void, e9cept when the law itself authori4es their validity.. 2hey further claim that 6ust wee!s after the issuance of C" Circular )o. 9+5, the benchmar! 91&day 2reasury bills %2& bills',1* then !nown as .5obo. bills1: shot up to :+F per annum, as a result. 2he ban!s immediately followed suit and re&priced their loans to rates which were even higher than those of the .5obo. bills. Petitioners thus assert that C" Circular )o. 9+5 is also unconstitutional in light of #ection 1 of the "ill of Rights, which commands that .no person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the eGual protection of the laws.. 1inally, petitioners point out that R.(. )o. 65* did not re&enact a provision similar to #ection 1+9 of R.(. )o. -65, and therefore, in view of the repealing clause in #ection 1*5 of R.(. )o. 65*, the "#P&$" has been stripped of the power either to prescribe the ma9imum rates of interest which ban!s may charge for different !inds of loans and credit transactions, or to suspend (ct )o. -655 and continue enforcing C" Circular )o. 9+5. Ruling 2he petition must fail.
32

(. 2he Petition is procedurally infirm. 2he decision on whether or not to accept a petition for certiorari, as well as to grant due course thereto, is addressed to the sound discretion of the court.15 ( petition for certiorari being an e9traordinary remedy, the party see!ing to avail of the same must strictly observe the procedural rules laid down by law, and non&observance thereof may not be brushed aside as mere technicality.16 (s provided in #ection 1 of Rule 65, a writ of certiorari is directed against a tribunal e9ercising 6udicial or Guasi& 6udicial functions.1 5udicial functions are e9ercised by a body or officer clothed with authority to determine what the law is and what the legal rights of the parties are with respect to the matter in controversy. Buasi&6udicial function is a term that applies to the action or discretion of public administrative officers or bodies given the authority to investigate facts or ascertain the e9istence of facts, hold hearings, and draw conclusions from them as a basis for their official action using discretion of a 6udicial nature.1, 2he C"&$" %now "#P&$"' was created to perform e9ecutive functions with respect to the establishment, operation or liGuidation of ban!ing and credit institutions, and branches and agencies thereof.19 3t does not perform 6udicial or Guasi&6udicial functions. Certainly, the issuance of C" Circular )o. 9+5 was done in the e9ercise of an e9ecutive function. Certiorari will not lie in the instant case.-+ ". Petitioners have no locus standi to file the Petition 0ocus standi is defined as .a right of appearance in a court of 6ustice on a given Guestion.. 3n private suits, #ection -, Rule * of the 199 Rules of Civil Procedure provides that .every action must be prosecuted or defended in the name of the real party in interest,. who is .the party who stands to be benefited or in6ured by the 6udgment in the suit or the party entitled to the avails of the suit.. #uccinctly put, a party@s standing is based on his own right to the relief sought.-1 7ven in public interest cases such as this petition, the Court has generally adopted the .direct in6ury. test that the person who impugns the validity of a statute must have .a personal and substantial interest in the case such that he has sustained, or will sustain direct in6ury as a result..-- 2hus, while petitioners assert a public right to assail C" Circular )o. 9+5 as an illegal e9ecutive action, it is nonetheless reGuired of them to ma!e out a sufficient interest in the vindication of the public order and the securing of relief. 3t is significant that in this petition, the petitioners do not allege that they sustained any personal in6ury from the issuance of C" Circular )o. 9+5. Petitioners also do not claim that public funds were being misused in the enforcement of C" Circular )o. 9+5. 3n Hilosbayan, 3nc. v. $orato,-* involving the on&line lottery contract of the PC#8, there was no allegation that public funds were being misspent, which according to the Court would have made the action a public one, .and 6ustify rela9ation of the reGuirement that an action must be prosecuted in the name of the real party&in&interest.. 2he Court held, moreover, that the status of Hilosbayan as a people@s organi4ation did not give it the reGuisite personality to Guestion the validity of the contract. 2hus; Petitioners do not in fact show what particulari4ed interest they have for bringing this suit. 3t does not detract from the high regard for petitioners as civic leaders to say that their interest falls short of that reGuired to maintain an action under the Rule *, #ec. -.-: C. 2he Petition raises no issues of transcendental importance. 3n the 199* case of 5oya v. Presidential Commission on >ood >overnment,-5 it was held that no Guestion involving the constitutionality or validity of a law or governmental act may be heard and decided by the court unless there is compliance with the legal reGuisites for 6udicial inGuiry, namely; %a' that the Guestion must be raised by the proper partyA %b' that there must be an actual case or controversyA %c' that the Guestion must be raised at the earliest possible opportunityA and %d' that the decision on the constitutional or legal Guestion must be necessary to the determination of the case itself. 3n Prof. =avid v. Pres. $acapagal&(rroyo,-6 the Court summari4ed the reGuirements before ta9payers, voters, concerned citi4ens, and legislators can be accorded a standing to sue, vi4;
%1' the cases involve constitutional issuesA %-' for ta9payers, there must be a claim of illegal disbursement of public funds or that the ta9 measure is unconstitutionalA %*' for voters, there must be a showing of obvious interest in the validity of the election law in GuestionA %:' for concerned citi4ens, there must be a showing that the issues raised are of transcendental importance which must be settled earlyA and %5' for legislators, there must be a claim that the official action complained of infringes upon their prerogatives as legislators.

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Chile the Court may have shown in recent decisions a certain toughening in its attitude concerning the Guestion of legal standing, it has nonetheless always made an e9ception where the transcendental importance of the issues has been established, notwithstanding the petitioners@ failure to show a direct in6ury.- 3n CR7"( v. 7RC,-, the Court set out the following instructive guides as determinants on whether a matter is of transcendental importance, namely; %1' the character of the funds or other assets involved in the caseA %-' the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the governmentA and %*' the lac! of any other party with a more direct and specific interest in the Guestions being raised. 1urther, the Court stated in (na! $indanao Party&0ist >roup v. 2he 79ecutive #ecretary-9 that the rule on standing will not be waived where these determinants are not established. 3n the instant case, there is no allegation of misuse of public funds in the implementation of C" Circular )o. 9+5. )either were borrowers who were actually affected by the suspension of the /sury 0aw 6oined in this petition. (bsent any showing of transcendental importance, the petition must fail. $ore importantly, the Court notes that the instant petition adverted to the regime of high interest rates which obtained at least 15 years ago, when the ban!s@ prime lending rates ranged from -6F to *1F,*+ or even -9 years ago, when the 91&day 5obo bills reached :+F per annum. 3n contrast, according to the "#P, in the first two %-' months of -+1- the ban! lending rates averaged 5.91F, which implies that the ban!s@ prime lending rates were lowerA moreover, deposit interests on savings and long&term deposits have also gone very low, averaging 1. 5F and 1.6-F, respectively.*1 5udging from the most recent auctions of 2&bills, the savings rates must be approaching +F. 3n the auctions held on )ovember 1-, -+1-, the rates of *&month, 6&month and 1&year 2&bills have dropped to +.15+F, +.:5+F and +.6,+F, respectively.*- (ccording to $anila "ulletin, this very low interest regime has been attributed to .high liGuidity and strong investor demand amid positive economic indicators of the country..**
1wphi1

Chile the Court ac!nowledges that cases of transcendental importance demand that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure,*: the delay of at least 15 years in the filing of the instant petition has actually rendered moot and academic the issues it now raises. 1or its part, "#P&$" maintains that the petitioners@ allegations of constitutional and statutory violations of C" Circular )o. 9+5 are really mere challenges made by petitioners concerning the wisdom of the Circular. 3t e9plains that it was in view of the global economic downturn in the early 19,+@s that the e9ecutive department through the C"& $" had to formulate policies to achieve economic recovery, and among these policies was the establishment of a mar!et&oriented interest rate structure which would reGuire the removal of the government&imposed interest rate ceilings.*5 =. 2he C"&$" merely suspended the effectivity of the /sury 0aw when it issued C" Circular )o. 9+5. 2he power of the C" to effectively suspend the /sury 0aw pursuant to P.=. )o. 16,: has long been recogni4ed and upheld in many cases. (s the Court e9plained in the landmar! case of $edel v. C(,*6 citing several cases, C" Circular )o. 9+5 .did not repeal nor in anyway amend the /sury 0aw but simply suspended the latter@s effectivityA.* that .a C" Circular cannot repeal a law, IforJ only a law can repeal another lawA. *, that .by virtue of C" Circular )o. 9+5, the /sury 0aw has been rendered ineffectiveA.*9 and ./sury has been legally non&e9istent in our 6urisdiction. 3nterest can now be charged as lender and borrower may agree upon..:+ 3n 1irst $etro 3nvestment Corp. v. 7ste =el #ol $ountain Reserve, 3nc.:1 cited in ="P v. Pere4,:- we also belied the contention that the C" was engaged in self&legislation. 2hus; Central "an! Circular )o. 9+5 did not repeal nor in any way amend the /sury 0aw but simply suspended the latter@s effectivity. 2he illegality of usury is wholly the creature of legislation. ( Central "an! Circular cannot repeal a law. 8nly a law can repeal another law. 9 9 9.:* 3n P)" v. Court of (ppeals,:: an escalation clause in a loan agreement authori4ed the P)" to unilaterally increase the rate of interest to -5F per annum, plus a penalty of 6F per annum on past dues, then to *+F on 8ctober 15, 19,:, and to :-F on 8ctober -5, 19,:. 2he #upreme Court invalidated the rate increases made by the P)" and upheld the 1-F interest imposed by the C(, in this wise; P.=. )o. 16,: and C.". Circular )o. 9+5 no more than allow contracting parties to stipulate freely regarding any subseGuent ad6ustment in the interest rate that shall accrue on a loan or forbearance of money, goods or credits. 3n fine, they can agree to ad6ust, upward or downward, the interest previously stipulated. 9 9 9.:5 2hus, according to the Court, by lifting the interest ceiling, C" Circular )o. 9+5 merely upheld the parties@ freedom of contract to agree freely on the rate of interest. 3t cited (rticle 1*+6 of the )ew Civil Code, under which the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. 7. 2he "#P&$" has authority to enforce C" Circular )o. 9+5.
34

#ection 1 of C" Circular )o. 9+5 provides that .2he rate of interest, including commissions, premiums, fees and other charges, on a loan or forbearance of any money, goods, or credits, regardless of maturity and whether secured or unsecured, that may be charged or collected by any person, whether natural or 6uridical, shall not be sub6ect to any ceiling prescribed under or pursuant to the /sury 0aw, as amended.. 3t does not purport to suspend the /sury 0aw only as it applies to ban!s, but to all lenders. Petitioners contend that, granting that the C" had power to .suspend. the /sury 0aw, the new "#P&$" did not retain this power of its predecessor, in view of #ection 1*5 of R.(. )o. 65*, which e9pressly repealed R.(. )o. -65. 2he petitioners point out that R.(. )o. 65* did not reenact a provision similar to #ection 1+9 of R.(. )o. -65. ( closer perusal shows that #ection 1+9 of R.(. )o. -65 covered only loans e9tended by ban!s, whereas under #ection 1&a of the /sury 0aw, as amended, the "#P&$" may prescribe the ma9imum rate or rates of interest for all loans or renewals thereof or the forbearance of any money, goods or credits, including those for loans of low priority such as consumer loans, as well as such loans made by pawnshops, finance companies and similar credit institutions. 3t even authori4es the "#P&$" to prescribe different ma9imum rate or rates for different types of borrowings, including deposits and deposit substitutes, or loans of financial intermediaries. (ct )o. -655, an earlier law, is much broader in scope, whereas R.(. )o. -65, now R.(. )o. 65*, merely supplemented it as it concerns loans by ban!s and other financial institutions. Ead R.(. )o. 65* been intended to repeal #ection 1&a of (ct )o. -655, it would have so stated in uneGuivocal terms. $oreover, the rule is settled that repeals by implication are not favored, because laws are presumed to be passed with deliberation and full !nowledge of all laws e9isting pertaining to the sub6ect.:6 (n implied repeal is predicated upon the condition that a substantial conflict or repugnancy is found between the new and prior laws. 2hus, in the absence of an e9press repeal, a subseGuent law cannot be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy e9ists in the terms of the new and old laws.: Ce find no such conflict between the provisions of (ct -655 and R.(. )o. 65*. 1. 2he lifting of the ceilings for interest rates does not authori4e stipulations charging e9cessive, unconscionable, and iniGuitous interest. 3t is settled that nothing in C" Circular )o. 9+5 grants lenders a carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets.:, (s held in Castro v. 2an;:9 2he imposition of an unconscionable rate of interest on a money debt, even if !nowingly and voluntarily assumed, is immoral and un6ust. 3t is tantamount to a repugnant spoliation and an iniGuitous deprivation of property, repulsive to the common sense of man. 3t has no support in law, in principles of 6ustice, or in the human conscience nor is there any reason whatsoever which may 6ustify such imposition as righteous and as one that may be sustained within the sphere of public or private morals.5+ #tipulations authori4ing iniGuitous or unconscionable interests have been invariably struc! down for being contrary to morals, if not against the law.51 3ndeed, under (rticle 1:+9 of the Civil Code, these contracts are deemed ine9istent and void ab initio, and therefore cannot be ratified, nor may the right to set up their illegality as a defense be waived. )onetheless, the nullity of the stipulation of usurious interest does not affect the lender@s right to recover the principal of a loan, nor affect the other terms thereof.5- 2hus, in a usurious loan with mortgage, the right to foreclose the mortgage subsists, and this right can be e9ercised by the creditor upon failure by the debtor to pay the debt due. 2he debt due is considered as without the stipulated e9cessive interest, and a legal interest of 1-F per annum will be added in place of the e9cessive interest formerly imposed,5*following the guidelines laid down in the landmar! case of 7astern #hipping 0ines, 3nc. v. Court of (ppeals,5: regarding the manner of computing legal interest; 33. Cith regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows;
1. Chen the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. 1urthermore, the interest due shall itself earn legal interest from the time it is 6udicially demanded. 3n the absence of stipulation, the rate of interest shall be 1-F per annum to be computed from default, i.e., from 6udicial or e9tra6udicial demand under and sub6ect to the provisions of (rticle 1169 of the Civil Code. -. Chen an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6F per annum. )o interest, however, shall be ad6udged on unliGuidated claims or damages e9cept when or until the demand can be established with reasonable certainty. (ccordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made 6udicially or e9tra6udicially %(rt. 1169, Civil Code' but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the 6udgment of the court is made %at which time the Guantification of damages may be deemed to have been reasonably ascertained'. 2he actual base for the computation of legal interest shall, in any case, be on the amount finally ad6udged.
35

*. Chen the 6udgment of the court awarding a sum of money becomes final and e9ecutory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph -, above, shall be 1-F per annum from such finality until its satisfaction, this interim period being deemed to be by then an eGuivalent to a forbearance of credit. 55 %Citations omitted'

2he foregoing rules were further clarified in #unga&Chan v. Court of (ppeals,

56

as follows;

7astern #hipping 0ines, 3nc. synthesi4ed the rules on the imposition of interest, if proper, and the applicable rate, as follows; 2he 1-F per annum rate under C" Circular )o. :16 shall apply only to loans or forbearance of money, goods, or credits, as well as to 6udgments involving such loan or forbearance of money, goods, or credit, while the 6F per annum under (rt. --+9 of the Civil Code applies .when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general,. with the application of both rates rec!oned .from the time the complaint was filed until the Iad6udgedJ amount is fully paid.. 3n either instance, the rec!oning period for the commencement of the running of the legal interest shall be sub6ect to the condition .that the courts are vested with discretion, depending on the eGuities of each case, on the award of interest..5 %Citations omitted' CE7R718R7, premises considered, the Petition for certiorari is =3#$3##7=. #8 8R=7R7=.

G.R. No. "366826 Au4u*+ 19, 1988 $AN% OF T E 2 !"!22!NE !S"ANDS, )(+-+-on(r, 5*. T E !NTER&ED!ATE A22E""ATE COURT an# 6S ORNAC% r(*)on#(n+*. 2a0-* 7 R(y(* "a8 O99-0( 9or )(+-+-on(r.
The ori,ina$ 'arties to this *ase !ere RiKa$#) T. Zshorna*: an# the Co44er*ia$ 2an: an# Tr"st Co4'an) of the Phi$i''ines >hereafter referre# to as DCO8TRAST.D? In 513., the 2an: of the Phi$i''ine Is$an#s (hereafter referre# to as 2PI a(sor(e# CO8TRAST thro",h a *or'orate 4er,er, an# !as s"(stit"te# as 'art) to the *ase. RiKa$#) Zshorna*: initiate# 'ro*ee#in,s on J"ne /3,5190 () fi$in, in the Co"rt of <irst Instan*e of RiKa$ Q Ca$oo*an Cit) a *o4'$aint a,ainst CO8TRAST a$$e,in, fo"r *a"ses of a*tion. E;*e't for the thir# *a"se of a*tion, the C<I r"$e# in fa or of Zshorna*:. The (an: a''ea$e# to the Inter4e#iate A''e$$ate Co"rt !hi*h 4o#ifie# the C<I #e*ision a(so$ in, the (an: fro4 $ia(i$it) on the fo"rth *a"se of a*tion. The 'ertinent 'ortions of the ="#,4ent, as 4o#ifie#, rea#: IN IIEE O< THE <ORE+OIN+, the Co"rt ren#ers ="#,4ent as fo$$o!s: 5. Or#erin, the #efen#ant CO8TRAST to restore to the #o$$ar sa in,s a**o"nt of '$aintiff (No. /&-%5.1) the a4o"nt of A.S \5,...... as of O*to(er /9, 519& to earn interest to,ether !ith the re4ainin, (a$an*e of the sai# a**o"nt at the rate fi;e# () the (an: for #o$$ar #e'osits "n#er Centra$ 2an: Cir*"$ar -%-C /. Or#erin, #efen#ant CO8TRAST to ret"rn to the '$aintiff the a4o"nt of A.S. \-,...... i44e#iate$) "'on the fina$it) of this #e*ision, !itho"t interest for the reason that the sai# a4o"nt !as 4ere$) he$# in *"sto#) for safe:ee'in,, ("t !as not a*t"a$$) #e'osite# !ith the #efen#ant CO8TRAST (e*a"se (ein, *ash *"rren*), it *annot () $a! (e #e'osite# !ith '$aintiffs #o$$ar a**o"nt an# #efen#antRs on$) o($i,ation is to ret"rn the sa4e to '$aintiff "'on #e4an#C ;;; ;;; ;;; &. Or#erin, #efen#ant CO8TRAST to 'a) '$aintiff in the a4o"nt of P3,...... as #a4a,es in the *on*e't of $iti,ation e;'enses an# attorne)Rs fees s"ffere# () '$aintiff as a res"$t of the fai$"re of the #efen#ant (an: to restore to his ('$aintiffs) a**o"nt the a4o"nt of A.S. \5,...... an# to ret"rn to hi4 ('$aintiff) the A.S. \-,...... *ash $eft for safe:ee'in,. Costs a,ainst #efen#ant CO8TRAST. SO ORDERED. >Ro$$o, ''. %9-%3.? An#a"nte#, the (an: *o4es to this Co"rt 'ra)in, that it (e tota$$) a(so$ e# fro4 an) $ia(i$it) to Zshorna*:. The $atter not ha in, a''ea$e# the Co"rt of A''ea$s #e*ision, the iss"es fa*in, this Co"rt are $i4ite# to the (an:Rs $ia(i$it) !ith re,ar# to the first an# se*on# *a"ses of a*tion an# its $ia(i$it) for #a4a,es. 5. Ee first *onsi#er the first *a"se of a*tion, On the #ates 4ateria$ to this *ase, RiKa$#) Zshorna*: an# his !ife, Shir$e) +oros'e, 4aintaine# in CO8TRAST, 6"eKon Cit) 2ran*h, a #o$$ar sa in,s a**o"nt an# a 'eso *"rrent a**o"nt. On O*to(er /9, 519&, an a''$i*ation for a #o$$ar #raft !as a**o4'$ishe# () Iir,i$io I. +ar*ia, Assistant 2ran*h 8ana,er of CO8TRAST 6"eKon Cit), 'a)a($e to a *ertain Feo i,i$#a D. DiKon in the a4o"nt of \5,....... In the a''$i*ation, +ar*ia in#i*ate# that the a4o"nt !as to (e *har,e# to Do$$ar Sa in,s A**t. No. /&-%5.1, the sa in,s a**o"nt of the Zshorna*:sC the *har,es for *o44ission, #o*"4entar) sta4' ta; an# others tota$$in, P59.%0 !ere to (e *har,e# to C"rrent A**t. No. /5.%0&/1, a,ain, the *"rrent a**o"nt of the Zshorna*:s. There !as no in#i*ation of the na4e of the '"r*haser of the #o$$ar #raft. 36

On the sa4e #ate, O*to(er /9,519&, CO8TRAST, "n#er the si,nat"re of Iir,i$io I. +ar*ia, iss"e# a *he*: 'a)a($e to the or#er of Feo i,i$#a D. DiKon in the s"4 of AS \5,... #ra!n on the Chase 8anhattan 2an:, Ne! Gor:, !ith an in#i*ation that it !as to (e *har,e# to Do$$ar Sa in,s A**t. No. /&-%5.1. Ehen Zshorna*: noti*e# the !ith#ra!a$ of AS\5,...... fro4 his a**o"nt, he #e4an#e# an e;'$anation fro4 the (an:. In ans!er, CO8TRAST *$ai4e# that the 'eso a$"e of the !ith#ra!a$ !as ,i en to Att). Ernesto Zshorna*:, Jr., (rother of RiKa$#), on O*to(er /9, 519& !hen he (Ernesto) en*ashe# !ith CO8TRAST a *ashierRs *he*: for P3,%&.... iss"e# () the 8ani$a 2an:in, Cor'oration 'a)a($e to Ernesto. A'on *onsi#eration of the fore,oin, fa*ts, this Co"rt fin#s no reason to #ist"r( the r"$in, of (oth the tria$ *o"rt an# the A''e$$ate Co"rt on the first *a"se of a*tion. Petitioner 4"st (e he$# $ia($e for the "na"thoriKe# !ith#ra!a$ of AS\5,...... fro4 'ri ate res'on#entRs #o$$ar a**o"nt. In its #es'erate atte4't to ="stif) its a*t of !ith#ra!in, fro4 its #e'ositorRs sa in,s a**o"nt, the (an: has a#o'te# in*onsistent theories. <irst, it sti$$ 4aintains that the 'eso a$"e of the a4o"nt !ith#ra!n !as ,i en to Att). Ernesto Zshorna*:, Jr. !hen the $atter en*ashe# the 8ani$a(an: CashierRs Che*:. At the sa4e ti4e, the (an: *$ai4s that the !ith#ra!a$ !as 4a#e '"rs"ant to an a,ree4ent !here Zshorna*: a$$e,e#$) a"thoriKe# the (an: to !ith#ra! fro4 his #o$$ar sa in,s a**o"nt s"*h a4o"nt !hi*h, !hen *on erte# to 'esos, !o"$# (e nee#e# to f"n# his 'eso *"rrent a**o"nt. If in#ee# the 'eso eJ"i a$ent of the a4o"nt !ith#ra!n fro4 the #o$$ar a**o"nt !as *re#ite# to the 'eso *"rrent a**o"nt, !h) #i# the (an: sti$$ ha e to 'a) Ernesto[ At an) rate, (oth e;'$anations are "na ai$in,. Eith re,ar# to the first e;'$anation, 'etitioner (an: has not sho!n ho! the transa*tion in o$ in, the *ashierRs *he*: is re$ate# to the transa*tion in o$ in, the #o$$ar #raft in fa or of DiKon finan*e# () the !ith#ra!a$ fro4 RiKa$#)Rs #o$$ar a**o"nt. The t!o transa*tions a''ear entire$) in#e'en#ent of ea*h other. 8oreo er, Ernesto Zshorna*:, Jr., 'ossesses a 'ersona$it) #istin*t an# se'arate fro4 RiKa$#) Zshorna*:. Pa)4ent 4a#e to Ernesto *annot (e *onsi#ere# 'a)4ent to RiKa$#). As to the se*on# e;'$anation, e en if !e ass"4e that there !as s"*h an a,ree4ent, the e i#en*e #o not sho! that the !ith#ra!a$ !as 4a#e '"rs"ant to it. Instea#, the re*or# re ea$s that the a4o"nt !ith#ra!n !as "se# to finan*e a #o$$ar #raft in fa or of Feo i,i$#a D. DiKon, an# not to f"n# the *"rrent a**o"nt of the Zshorna*:s. There is no 'roof !hatsoe er that 'eso C"rrent A**o"nt No. /5.-%0&-/1 !as e er *re#ite# !ith the 'eso eJ"i a$ent of the AS\5,...... !ith#ra!n on O*to(er /9, 519& fro4 Do$$ar Sa in,s A**o"nt No. /&-%5.1. /. As for the se*on# *a"se of a*tion, the *o4'$aint fi$e# !ith the tria$ *o"rt a$$e,e# that on De*e4(er 3, 519&, Zshorna*: entr"ste# to CO8TRAST, thr" +ar*ia, AS \-,...... *ash ('o'"$ar$) :no!n as ,reen(a*:s) for safe:ee'in,, an# that the a,ree4ent !as e4(o#ie# in a #o*"4ent, a *o') of !hi*h !as atta*he# to an# 4a#e 'art of the *o4'$aint. The #o*"4ent rea#s: 8a:ati Ca($e A##ress: Phi$i''ines DCO8TRASTD CO88ERCIAF 2ANH AND TRAST CO8PANG of the Phi$i''ines 6"eKon Cit) 2ran*h De*e4(er 3, 519& 8R. RIZAFDG T. ZSHORNACH V@OR 8RS SHIRFEG E. ZSHORNACH Sir@8a#a4: Ee a*:no!$e#,e# (si*) ha in, re*ei e# fro4 )o" to#a) the s"4 of AS DOFFARS: THREE THOASAND ONFG (AS\-,......) for safe:ee'in,. Re*ei e# (): (S,#.) IIR+IFIO I. +ARCIA It !as a$so a$$e,e# in the *o4'$aint that #es'ite #e4an#s, the (an: ref"se# to ret"rn the 4one). In its ans!er, CO8TRAST a erre# that the AS\-,... !as *re#ite# to Zshorna*:Rs 'eso *"rrent a**o"nt at 're ai$in, *on ersion rates. It 4"st (e e4'hasiKe# that CO8TRAST #i# not #en) s'e*ifi*a$$) "n#er oath the a"thenti*it) an# #"e e;e*"tion of the a(o e instr"4ent. D"rin, tria$, it !as esta($ishe# that on De*e4(er 3, 519& Zshorna*: in#ee# #e$i ere# to the (an: AS \-,... for safe:ee'in,. Ehen he reJ"este# the ret"rn of the 4one) on 8a) 5., 5190, CO8TRAST e;'$aine# that the s"4 !as #is'ose# of in this 4anner: AS\/,...... !as so$# on De*e4(er /1, 519& an# the 'eso 'ro*ee#s a4o"ntin, to P5%,1/.... !ere #e'osite# to Zshorna*:Rs *"rrent a**o"nt 'er #e'osit s$i' a**o4'$ishe# () +ar*iaC the re4ainin, AS\5,...... !as so$# on <e(r"ar) -, 5190 an# the 'eso 'ro*ee#s a4o"ntin, to P3,-&.... !ere #e'osite# to his *"rrent a**o"nt 'er #e'osit s$i' a$so a**o4'$ishe# () +ar*ia.
37

Asi#e fro4 assertin, that the AS\-,...... !as 'ro'er$) *re#ite# to Zshorna*:Rs *"rrent a**o"nt at 're ai$in, *on ersion rates, 2PI no! 'osits another ,ro"n# to #efeat 'ri ate res'on#entRs *$ai4. It no! ar,"es that the *ontra*t e4(o#ie# in the #o*"4ent is the *ontra*t of #e'osit"4 (as #efine# in Arti*$e 510/, Ne! Ci i$ Co#e), !hi*h (an:s #o not enter into. The (an: a$$e,es that +ar*ia e;*ee#e# his 'o!ers !hen he entere# into the transa*tion. Hen*e, it is *$ai4e#, the (an: *annot (e $ia($e "n#er the *ontra*t, an# the o($i,ation is '"re$) 'ersona$ to +ar*ia. 2efore !e ,o into the nat"re of the *ontra*t entere# into, an i4'ortant 'oint !hi*h arises on the '$ea#in,s, 4"st (e *onsi#ere#. The se*on# *a"se of a*tion is (ase# on a #o*"4ent '"r'ortin, to (e si,ne# () CO8TRAST, a *o') of !hi*h #o*"4ent !as atta*he# to the *o4'$aint. In short, the se*on# *a"se of a*tion !as (ase# on an a*tiona($e #o*"4ent. It !as therefore in*"4(ent "'on the (an: to s'e*ifi*a$$) #en) "n#er oath the #"e e;e*"tion of the #o*"4ent, as 'res*ri(e# "n#er R"$e 3, Se*tion 3, if it #esire#: (5) to J"estion the a"thorit) of +ar*ia to (in# the *or'orationC an# (/) to #en) its *a'a*it) to enter into s"*h *ontra*t. >See, E.2. 8er*hant . Internationa$ 2an:in, Cor'oration, 0 Phi$. -5% (51.0).? No s!orn ans!er #en)in, the #"e e;e*"tion of the #o*"4ent in J"estion, or J"estionin, the a"thorit) of +ar*ia to (in# the (an:, or #en)in, the (an:Rs *a'a*it) to enter into the *ontra*t, !as e er fi$e#. Hen*e, the (an: is #ee4e# to ha e a#4itte# not on$) +ar*iaRs a"thorit), ("t a$so the (an:Rs 'o!er, to enter into the *ontra*t in J"estion. In the 'ast, this Co"rt ha# o**asion to e;'$ain the reason (ehin# this 'ro*e#"ra$ reJ"ire4ent. The reason for the r"$e en"n*iate# in the fore,oin, a"thorities !i$$, !e thin:, (e rea#i$) a''re*iate#. In #ea$in, !ith *or'orations the '"($i* at $ar,e is (o"n# to re$) to a $ar,e e;tent "'on o"t!ar# a''earan*es. If a 4an is fo"n# a*tin, for a *or'oration !ith the e;terna$ in#i*ia of a"thorit), an) 'erson, not ha in, noti*e of !ant of a"thorit), 4a) "s"a$$) re$) "'on those a''earan*esC an# if it (e fo"n# that the #ire*tors ha# 'er4itte# the a,ent to e;er*ise that a"thorit) an# there() he$# hi4 o"t as a 'erson *o4'etent to (in# the *or'oration, or ha# a*J"ies*e# in a *ontra*t an# retaine# the (enefit s"''ose# to ha e (een *onferre# () it, the *or'oration !i$$ (e (o"n#, not!ithstan#in, the a*t"a$ a"thorit) 4a) ne er ha e (een ,rante# ... Ehether a 'arti*"$ar offi*er a*t"a$$) 'ossesses the a"thorit) !hi*h he ass"4es to e;er*ise is freJ"ent$) :no!n to er) fe!, an# the 'roof of it "s"a$$) is not rea#i$) a**essi($e to the stran,er !ho #ea$s !ith the *or'oration on the faith of the ostensi($e a"thorit) e;er*ise# () so4e of the *or'orate offi*ers. It is therefore reasona($e, in a *ase !here an offi*er of a *or'oration has 4a#e a *ontra*t in its na4e, that the *or'oration sho"$# (e reJ"ire#, if it #enies his a"thorit), to state s"*h #efense in its ans!er. 2) this 4eans the '$aintiff is a''rise# of the fa*t that the a,entRs a"thorit) is *onteste#C an# he is ,i en an o''ort"nit) to a##"*e e i#en*e sho!in, either that the a"thorit) e;iste# or that the *ontra*t !as ratifie# an# a''ro e#. >Ra4ireK . Orienta$ist Co. an# <ernan#eK, -3 Phi$. 0-%, 0%&- 0%0 (5153).? PetitionerRs ar,"4ent 4"st a$so (e re=e*te# for another reason. The 'ra*ti*a$ effe*t of a(so$ in, a *or'oration fro4 $ia(i$it) e er) ti4e an offi*er enters into a *ontra*t !hi*h is (e)on# *or'orate 'o!ers, e en !itho"t the 'ro'er a$$e,ation or 'roof that the *or'oration has not a"thoriKe# nor ratifie# the offi*erRs a*t, is to *ast *or'orations in so 'erfe*t a 4o$# that trans,ressions an# !ron,s () s"*h artifi*ia$ (ein,s (e*o4e i4'ossi($e >2isse$$ . 8i*hi,an So"thern an# N.I.R. Cos // N.G /&3 (530.).? DTo sa) that a *or'oration has no ri,ht to #o "na"thoriKe# a*ts is on$) to '"t forth a er) '$ain tr"is4 ("t to sa) that s"*h (o#ies ha e no 'o!er or *a'a*it) to err is to i4'"te to the4 an e;*e$$en*e !hi*h #oes not (e$on, to an) *reate# e;isten*e !ith !hi*h !e are a*J"ainte#. The #istin*tion (et!een 'o!er an# ri,ht is no 4ore to (e $ost si,ht of in res'e*t to artifi*ia$ than in res'e*t to nat"ra$ 'ersons.D >I(i#.? Ha in, #eter4ine# that +ar*iaRs a*t of enterin, into the *ontra*t (in#s the *or'oration, !e no! #eter4ine the *orre*t nat"re of the *ontra*t, an# its $e,a$ *onseJ"en*es, in*$"#in, its enfor*ea(i$it). The #o*"4ent !hi*h e4(o#ies the *ontra*t states that the AS\-,...... !as re*ei e# () the (an: for safe:ee'in,. The s"(seJ"ent a*ts of the 'arties a$so sho! that the intent of the 'arties !as rea$$) for the (an: to safe$) :ee' the #o$$ars an# to ret"rn it to Zshorna*: at a $ater ti4e, Th"s, Zshorna*: #e4an#e# the ret"rn of the 4one) on 8a) 5., 5190, or o er fi e 4onths $ater. The a(o e arran,e4ent is that *ontra*t #efine# "n#er Arti*$e 510/, Ne! Ci i$ Co#e, !hi*h rea#s: Art. 510/. A #e'osit is *onstit"te# fro4 the 4o4ent a 'erson re*ei es a thin, (e$on,in, to another, !ith the o($i,ation of safe$) :ee'in, it an# of ret"rnin, the sa4e. If the safe:ee'in, of the thin, #e$i ere# is not the 'rin*i'a$ '"r'ose of the *ontra*t, there is no #e'osit ("t so4e other *ontra*t. Note that the o(=e*t of the *ontra*t (et!een Zshorna*: an# CO8TRAST !as forei,n e;*han,e. Hen*e, the transa*tion !as *o ere# () Centra$ 2an: Cir*"$ar No. /., Restri*tions on +o$# an# <orei,n E;*han,e Transa*tions, 'ro4"$,ate# on De*e4(er 1, 51%1, !hi*h !as in for*e at the ti4e the 'arties entere# into the transa*tion in o$ e# in this *ase. The *ir*"$ar 'ro i#es: ;;; ;;; ;;; /. Transa*tions in the assets #es*ri(e# (e$o! an# a$$ #ea$in,s in the4 of !hate er nat"re, in*$"#in,, !here a''$i*a($e their e;'ortation an# i4'ortation, sha$$ NOT (e effe*te#, e;*e't !ith res'e*t to #e'osit a**o"nts in*$"#e# in s"(-'ara,ra'hs (() an# (*) of this 'ara,ra'h, !hen s"*h #e'osit a**o"nts are o!ne# () an# in the na4e of, (an:s. (a) An) an# a$$ assets, 'ro i#e# the) are he$# thro",h, in, or !ith (an:s or (an:in, instit"tions $o*ate# in the Phi$i''ines, in*$"#in, 4one), *he*:s, #rafts, ("$$ions (an: #rafts, #e'osit a**o"nts (#e4an#, ti4e an# sa in,s), a$$ #e(ts, in#e(te#ness or o($i,ations, finan*ia$ (ro:ers an# in est4ent ho"ses, notes, #e(ent"res, sto*:s, (on#s, *o"'ons, (an: a**e'tan*es, 4ort,a,es, '$e#,es, $iens or other ri,hts in the nat"re of se*"rit), e;'resse# in forei,n *"rren*ies, or if 'a)a($e a(roa#, irres'e*ti e of the *"rren*) in !hi*h the) are e;'resse#, an# (e$on,in, to an) 'erson, fir4, 'artnershi', asso*iation, (ran*h offi*e, a,en*), *o4'an) or other "nin*or'orate# (o#) or *or'oration resi#in, or $o*ate# !ithin the Phi$i''inesC (() An) an# a$$ assets of the :in#s in*$"#e# an#@or #es*ri(e# in s"('ara,ra'h (a) a(o e, !hether or not he$# thro",h, in, or !ith (an:s or (an:in, instit"tions, an# e;istent !ithin the Phi$i''ines, !hi*h (e$on, to an) 'erson, fir4, 'artnershi', asso*iation, (ran*h offi*e, a,en*), *o4'an) or other "nin*or'orate# (o#) or *or'oration not resi#in, or $o*ate# !ithin the Phi$i''inesC 38

(*) An) an# a$$ assets e;istent !ithin the Phi$i''ines in*$"#in, 4one), *he*:s, #rafts, ("$$ions, (an: #rafts, a$$ #e(ts, in#e(te#ness or o($i,ations, finan*ia$ se*"rities *o44on$) #ea$t in () (an:ers, (ro:ers an# in est4ent ho"ses, notes, #e(ent"res, sto*:, (on#s, *o"'ons, (an: a**e'tan*es, 4ort,a,es, '$e#,es, $iens or other ri,hts in the nat"re of se*"rit) e;'resse# in forei,n *"rren*ies, or if 'a)a($e a(roa#, irres'e*ti e of the *"rren*) in !hi*h the) are e;'resse#, an# (e$on,in, to an) 'erson, fir4, 'artnershi', asso*iation, (ran*h offi*e, a,en*), *o4'an) or other "nin*or'orate# (o#) or *or'oration resi#in, or $o*ate# !ithin the Phi$i''ines. ;;; ;;; ;;; %. (a) A$$ re*ei'ts of forei,n e;*han,e sha$$ (e so$# #ai$) to the Centra$ 2an: () those a"thoriKe# to #ea$ in forei,n e;*han,e. A$$ re*ei'ts of forei,n e;*han,e () an) 'erson, fir4, 'artnershi', asso*iation, (ran*h offi*e, a,en*), *o4'an) or other "nin*or'orate# (o#) or *or'oration sha$$ (e so$# to the a"thoriKe# a,ents of the Centra$ 2an: () the re*i'ients !ithin one ("siness #a) fo$$o!in, the re*ei't of s"*h forei,n e;*han,e. An) 'erson, fir4, 'artnershi', asso*iation, (ran*h offi*e, a,en*), *o4'an) or other "nin*or'orate# (o#) or *or'oration, resi#in, or $o*ate# !ithin the Phi$i''ines, !ho a*J"ires on an# after the #ate of this Cir*"$ar forei,n e;*han,e sha$$ not, "n$ess $i*ense# () the Centra$ 2an:, #is'ose of s"*h forei,n e;*han,e in !ho$e or in 'art, nor re*ei e $ess than its f"$$ a$"e, nor #e$a) ta:in, o!nershi' thereof e;*e't as s"*h #e$a) is *"sto4ar)C Pro i#e#, f"rther, That !ithin one #a) "'on ta:in, o!nershi', or re*ei in, 'a)4ent, of forei,n e;*han,e the afore4entione# 'ersons an# entities sha$$ se$$ s"*h forei,n e;*han,e to #esi,nate# a,ents of the Centra$ 2an:. ;;; ;;; ;;; 3. Stri*t o(ser an*e of the 'ro isions of this Cir*"$ar is en=oine#C an# an) 'erson, fir4 or *or'oration, forei,n or #o4esti*, !ho (ein, (o"n# to the o(ser an*e thereof, or of s"*h other r"$es, re,"$ations or #ire*ti es as 4a) hereafter (e iss"e# in i4'$e4entation of this Cir*"$ar, sha$$ fai$ or ref"se to *o4'$) !ith, or a(i#e (), or sha$$ io$ate the sa4e, sha$$ (e s"(=e*t to the 'ena$ san*tions 'ro i#e# in the Centra$ 2an: A*t. ;;; ;;; ;;; Para,ra'h % (a) a(o e !as 4o#ifie# () Se*tion 0 of Centra$ 2an: Cir*"$ar No. /35, Re,"$ations on <orei,n E;*han,e, 'ro4"$,ate# on No e4(er /0, 5101 () $i4itin, its *o era,e to Phi$i''ine resi#ents on$). Se*tion 0 'ro i#es: SEC. 0. A$$ re*ei'ts of forei,n e;*han,e () an) resi#ent 'erson, fir4, *o4'an) or *or'oration sha$$ (e so$# to a"thoriKe# a,ents of the Centra$ 2an: () the re*i'ients !ithin one ("siness #a) fo$$o!in, the re*ei't of s"*h forei,n e;*han,e. An) resi#ent 'erson, fir4, *o4'an) or *or'oration resi#in, or $o*ate# !ithin the Phi$i''ines, !ho a*J"ires forei,n e;*han,e sha$$ not, "n$ess a"thoriKe# () the Centra$ 2an:, #is'ose of s"*h forei,n e;*han,e in !ho$e or in 'art, nor re*ei e $ess than its f"$$ a$"e, nor #e$a) ta:in, o!nershi' thereof e;*e't as s"*h #e$a) is *"sto4ar)C Pro i#e#, That, !ithin one ("siness #a) "'on ta:in, o!nershi' or re*ei in, 'a)4ent of forei,n e;*han,e the afore4entione# 'ersons an# entities sha$$ se$$ s"*h forei,n e;*han,e to the a"thoriKe# a,ents of the Centra$ 2an:. As ear$ier state#, the #o*"4ent an# the s"(seJ"ent a*ts of the 'arties sho! that the) inten#e# the (an: to safe:ee' the forei,n e;*han,e, an# ret"rn it $ater to Zshorna*:, !ho a$$e,e# in his *o4'$aint that he is a Phi$i''ine resi#ent. The 'arties #i# not inten#e# to se$$ the AS #o$$ars to the Centra$ 2an: !ithin one ("siness #a) fro4 re*ei't. Other!ise, the *ontra*t of #e'osit"4 !o"$# ne er ha e (een entere# into at a$$. Sin*e the 4ere safe:ee'in, of the ,reen(a*:s, !itho"t se$$in, the4 to the Centra$ 2an: !ithin one ("siness #a) fro4 re*ei't, is a transa*tion !hi*h is not a"thoriKe# () C2 Cir*"$ar No. /., it 4"st (e *onsi#ere# as one !hi*h fa$$s "n#er the ,enera$ *$ass of 'rohi(ite# transa*tions. Hen*e, '"rs"ant to Arti*$e & of the Ci i$ Co#e, it is oi#, ha in, (een e;e*"te# a,ainst the 'ro isions of a 4an#ator)@'rohi(itor) $a!. 8ore i4'ortant$), it affor#s neither of the 'arties a *a"se of a*tion a,ainst the other. DEhen the n"$$it) 'ro*ee#s fro4 the i$$e,a$it) of the *a"se or o(=e*t of the *ontra*t, an# the a*t *onstit"tes a *ri4ina$ offense, (oth 'arties (ein, in 'ari #e$i*to, the) sha$$ ha e no *a"se of a*tion a,ainst ea*h other. . .D >Art. 5%55, Ne! Ci i$ Co#e.? The on$) re4e#) is one on (eha$f of the State to 'rose*"te the 'arties for io$atin, the $a!. Ee th"s r"$e that Zshorna*: *annot re*o er "n#er the se*on# *a"se of a*tion. -. Fast$), !e fin# the P3,...... a!ar#e# () the *o"rts a J"o as #a4a,es in the *on*e't of $iti,ation e;'enses an# attorne)Rs fees to (e reasona($e. The a!ar# is s"staine#. EHERE<ORE, the #e*ision a''ea$e# fro4 is here() 8ODI<IED. Petitioner is or#ere# to restore to the #o$$ar sa in,s a**o"nt of 'ri ate res'on#ent the a4o"nt of AS\5,...... as of O*to(er /9, 519& to earn interest at the rate fi;e# () the (an: for #o$$ar sa in,s #e'osits. Petitioner is f"rther or#ere# to 'a) 'ri ate res'on#ent the a4o"nt of P3,...... as #a4a,es. The other *a"ses of a*tion of 'ri ate res'on#ent are or#ere# #is4isse#. SO ORDERED.

9G.R. No. 160544. F!1$u'$4 21, 2005: TRIPLE-3 %s. FILIPINO )ER.HANTS 6"ote# here"n#er, for )o"r infor4ation, is a reso$"tion of this Co"rt #ate# <E2 /5 /..&. +.R. No. 50.&%% (Tri'$e-I <oo# Ser i*es, In*. s. <i$i'ino 8er*hants Ins"ran*e Co4'an), In*.)
Assai$e# in this 'etition for re ie! on *ertiorari is the #e*ision>5? #ate# O*to(er /5, /..- of the Co"rt of A''ea$s in CA-+.R. CI 39 No. 95//-, affir4in, an ear$ier #e*ision of the Re,iona$ Tria$ Co"rt at 8a:ati Cit), 2ran*h 5%3, in its Ci i$ Case No. 13-3-3, an

a*tion for #a4a,es thereat fi$e# () res'on#ent <i$i'ino 8er*hants Ins"ran*e, Co4'an), In*., a,ainst the herein 'etitioner, Tri'$e-I <oo# Ser i*es, In*. On 8ar*h /, 5119, at aro"n# /:5& oR*$o*: in the afternoon, a *ertain 8ar) Jo-Anne De Asis (De Asis) #ine# at 'etitionerRs Ha4a)an Resta"rant at 5& Eest A en"e, 6"eKon Cit). De Asis !as "sin, a 8its"(ishi +a$ant S"'er Sa$oon 8o#e$ 511& !ith '$ate n"4(er A2A 1&&, assi,ne# to her () her e4'$o)er Cris'a Te;ti$e In*. (Cris'a). On sai# #ate, De Asis a ai$e# of the a$et 'ar:in, ser i*e of 'etitioner an# entr"ste# her *ar :e) to 'etitionerRs a$et *o"nter. A *orres'on#in, 'ar:in, ti*:et !as iss"e# as re*ei't for the *ar. The *ar !as then 'ar:e# () 'etitionerRs a$et atten#ant, a *ertain 8a#ri#ano, at the #esi,nate# 'ar:in, area. <e! 4in"tes $ater, 8a#ri#ano noti*e# that the *ar !as not in its 'ar:in, s$ot an# its :e) no $on,er in the (o; !here a$et atten#ants "s"a$$) :ee' the :e)s of *ars entr"ste# to the4. The *ar !as ne er re*o ere#. Thereafter, Cris'a fi$e# a *$ai4 a,ainst its ins"rer, herein res'on#ent <i$i'ino 8er*hants Ins"ran*e Co4'an), In*. (<8ICI). Ha in, in#e4nifie# Cris'a in the a4o"nt of P001.&.. for the $oss of the s"(=e*t ehi*$e, <8ICI, as s"(ro,ee to Cris'aRs ri,hts, fi$e# !ith the RTC at 8a:ati Cit) an a*tion for #a4a,es a,ainst 'etitioner Tri'$e-I <oo# Ser i*es, In*., thereat #o*:ete# as Ci i$ Case No. 13-3-3 !hi*h !as raff$e# to 2ran*h 5%3. In its ans!er, 'etitioner ar,"e# that the *o4'$aint fai$e# to a er fa*ts to s"''ort the a$$e,ations of re*:$essness an# ne,$i,en*e *o44itte# in the safe:ee'in, an# *"sto#) of the s"(=e*t ehi*$e, *$ai4in, that it an# its e4'$o)ees !aste# no ti4e in as*ertainin, the $oss of the *ar an# in infor4in, De Asis of the #is*o er) of the $oss. Petitioner f"rther ar,"e# that in a**e'tin, the *o4'$i4entar) a$et 'ar:in, ser i*e, De Asis re*ei e# a 'ar:in, ti*:et !here"n#er it is so 'ro i#e# that D>8ana,e4ent an# staff !i$$ not (e res'onsi($e for an) $oss of or #a4a,e in*"rre# on the ehi*$e nor of a$"a($es *ontaine# thereinD, a 'ro ision !hi*h, to 'etitionerRs 4in#, is an e;'$i*it !ai er of an) ri,ht to *$ai4 in#e4nit) for the $oss of the *arC an# that De Asis :no!in,$) ass"4e# the ris: of $oss !hen she a$$o!e# 'etitioner to 'ar: her ehi*$e, a##in, that its a$et 'ar:in, ser i*e #i# not in*$"#e e;ten#in, a *ontra*t of ins"ran*e or !arrant) for the $oss of the ehi*$e. D"rin, tria$, 'etitioner *ha$$en,e# <8ICIRs s"(ro,ation to Cris'aRs ri,ht to fi$e a *$ai4 for the $oss of the *ar, ar,"in, that theft is not a ris: ins"re# a,ainst "n#er <8ICIRs Ins"ran*e Po$i*) No. PC-&19& for the s"(=e*t ehi*$e. In a #e*ision #ate# J"ne //, /..5, the tria$ *o"rt ren#ere# ="#,4ent for res'on#ent <8ICI, th"s: EHERE<ORE, 're4ises *onsi#ere#, ="#,4ent is here() ren#ere# in fa or of the '$aintiff (<8ICI) an# a,ainst the #efen#ant Tri'$e I (herein 'etitioner) an# the $atter is here() or#ere# to 'a) '$aintiff the fo$$o!in,: 5. The a4o"nt of P001,&....., re'resentin, a*t"a$ #a4a,es '$"s *o4'o"n#e# (si*)C /. The a4o"nt of P-.,...... as a**e'tan*e fee '$"s the a4o"nt eJ"a$ to /&O of the tota$ a4o"nt #"e as attorne)Rs feesC -. The a4o"nt of P&.,...... as e;e4'$ar) #a4a,esC %. P$"s, *ost of s"it. Defen#ant Tri'$e I is not therefore 're*$"#e# fro4 ta:in, a''ro'riate a*tion a,ainst #efen#ant Ar4an#o 8a#ri#ano. SO ORDERED. O( io"s$) #is'$ease#, 'etitioner a''ea$e# to the Co"rt of A''ea$s reiteratin, its ar,"4ent that it !as not a #e'ositar) of the s"(=e*t *ar an# that it e;er*ise# #"e #i$i,en*e an# 'r"#en*e in the safe :ee'in, of the ehi*$e, in han#$in, the *ar-na''in, in*i#ent an# in the s"'er ision of its e4'$o)ees. It f"rther ar,"e# that there !as no a$i# s"(ro,ation of ri,hts (et!een Cris'a an# res'on#ent <8ICI. In a #e*ision #ate# O*to(er /5, /..-,>/? the Co"rt of A''ea$s #is4isse# 'etitionerRs a''ea$ an# affir4e# the a''ea$e# #e*ision of the tria$ *o"rt, th"s: EHERE<ORE, (ase# on the fore,oin, 're4ises, the instant a''ea$ is here() DIS8ISSED. A**or#in,$), the assai$e# J"ne //, /..5 De*ision of the RTC of 8a:ati Cit) - 2ran*h 5%3 in Ci i$ Case No. 13-3-3 is A<<IR8ED. SO ORDERED. In so #is4issin, the a''ea$ an# affir4in, the a''ea$e# #e*ision, the a''e$$ate *o"rt a,ree# !ith the fin#in,s an# *on*$"sions of the tria$ *o"rt that: (a) 'etitioner !as a #e'ositar) of the s"(=e*t ehi*$eC (() 'etitioner !as ne,$i,ent in its #"ties as a #e'ositar) thereof an# as an e4'$o)er of the a$et atten#antC an# (*) there !as a a$i# s"(ro,ation of ri,hts (et!een Cris'a an# res'on#ent <8ICI. Hen*e, 'etitionerRs 'resent re*o"rse. Ee a,ree !ith the t!o (/) *o"rts (e$o!. Ehen De Asis entr"ste# the *ar in J"estion to 'etitioners a$et atten#ant !hi$e eatin, at 'etitionerRs Ha4a)an Resta"rant, the for4er e;'e*te# the *arRs safe ret"rn at the en# of her 4ea$. Th"s, 'etitioner !as *onstit"te# as a #e'ositar) of the sa4e *ar. Petitioner *annot e a#e $ia(i$it) () ar,"in, that neither a *ontra*t of #e'osit nor that of ins"ran*e, ,"arant) or s"ret) for the $oss of the *ar !as *onstit"te# !hen De Asis a ai$e# of its free a$et 'ar:in, ser i*e. In a *ontra*t of #e'osit, a 'erson re*ei es an o(=e*t (e$on,in, to another !ith the o($i,ation of safe$) :ee'in, it an# ret"rnin, the sa4e.>-? A #e'osit 4a) (e *onstit"te# e en !itho"t an) *onsi#eration. It is not ne*essar) that the #e'ositar) re*ei es a fee (efore it (e*o4es o($i,ate# to :ee' the ite4 entr"ste# for safe:ee'in, an# to ret"rn it $ater to the #e'ositor. S'e*io"s is 'etitionerRs insisten*e that the a$et 'ar:in, *$ai4 st"( it iss"e# to De Asis *ontains a *$ear e;*$"sion of its $ia(i$it) an# o'erates as an e;'$i*it !ai er () the *"sto4er of an) ri,ht to *$ai4 in#e4nit) for an) $oss of or #a4a,e to the ehi*$e. 40

The 'ar:in, *$ai4 st"( e4(o#)in, the ter4s an# *on#itions of the 'ar:in,, in*$"#in, that of re$ie in, 'etitioner fro4 an) $oss or #a4a,e to the *ar, is essentia$$) a *ontra*t of a#hesion, #rafte# an# 're'are# as it is () the 'etitioner a$one !ith no 'arti*i'ation !hatsoe er on the 'art of the *"sto4ers, $i:e De Asis, !ho 4ere$) a#heres to the 'rinte# sti'"$ations therein a''earin,. Ehi$e *ontra*ts of a#hesion are not oi# in the4se$ es, )et this Co"rt !i$$ not hesitate to r"$e o"t ($in# a#heren*e thereto if the) 'ro e to (e one-si#e# "n#er the atten#ant fa*ts an# *ir*"4stan*es.>%? Hen*e, an# as a't$) 'ointe# o"t () the Co"rt of A''ea$s, 'etitioner 4"st not (e a$$o!e# to "se its 'ar:in, *$ai4 st"(Rs e;*$"sionar) sti'"$ation as a shie$# fro4 an) res'onsi(i$it) for an) $oss or #a4a,e to ehi*$es or to the a$"a($es *ontaine# therein. Here, it is e i#ent that De Asis #e'osite# the *ar in J"estion !ith the 'etitioner as 'art of the $atterRs enti*e4ent for *"sto4ers () 'ro i#in, the4 a safe 'ar:in, s'a*e !ithin the i*init) of its resta"rant. In a er) rea$ sense, a safe 'ar:in, s'a*e is an a##e# attra*tion to 'etitionerRs resta"rant ("siness (e*a"se *"sto4ers are there() so4eho! ass"re# that their ehi*$e are safe$) :e't, rather than 'ar:in, the4 e$se!here at their o!n ris:. Ha in, entr"ste# the s"(=e*t *ar to 'etitionerRs a$et atten#ant, *"sto4er De Asis, $i:e a$$ of 'etitionerRs *"sto4ers, f"$$) e;'e*ts the se*"rit) of her *ar !hi$e at 'etitionerRs 're4ises@#esi,nate# 'ar:in, areas an# its safe ret"rn at the en# of her isit at 'etitionerRs resta"rant. PetitionerRs ar,"4ent that there !as no a$i# s"(ro,ation of ri,hts (et!een Cris'a an# <8ICI (e*a"se theft !as not a ris: ins"re# a,ainst "n#er <8ICIRs Ins"ran*e Po$i*) No. PC-&19& ho$#s no !ater. Ins"ran*e Po$i*) No. PC-&19& !hi*h res'on#ent <8ICI iss"e# to Cris'a *ontains, a4on, others thin,s, the fo$$o!in, ite4: DIns"re#Rs Esti4ate of Ia$"e of S*he#"$e# Iehi*$e- P3......D.>&? On the (asis of s"*h ite4, the tria$ *o"rt *on*$"#e# that the *o era,e in*$"#es a f"$$ *o4'rehensi e ins"ran*e of the ehi*$e in *ase of #a4a,e or $oss. 2esi#es, Cris'a 'ai# a 're4i"4 of P5.,-.% to *o er theft. This is *$ear$) sho!n in the (rea:#o!n of 're4i"4s in the sa4e 'o$i*).>0? Th"s, ha in, in#e4nifie# CRISPA for the sto$en *ar, <8ICI, as *orre*t$) r"$e# () the tria$ *o"rt an# the Co"rt of A''ea$s, !as 'ro'er$) s"(ro,ate# to Cris'aRs ri,hts a,ainst 'etitioner, '"rs"ant to Arti*$e //.9 of the Ne! Ci i$ Co#e>9?. Anent the tria$ *o"rtRs fin#in,s of ne,$i,en*e on the 'art of the 'etitioner, !hi*h fin#in,s !ere affir4e# () the a''e$$ate *o"rt, !e ha e *onsistent$) r"$e# that fin#in,s of fa*ts of tria$ *o"rts, 4ore so !hen affir4e#, as here, () the Co"rt of A''ea$s, are *on*$"si e on this Co"rt "n$ess the tria$ *o"rt itse$f i,nore#, o er$oo:e# or 4is*onstr"e# fa*ts an# *ir*"4stan*es !hi*h, if *onsi#ere#, !arrant a re ersa$ of the o"t*o4e of the *ase.>3? This is not so in the *ase at (ar. <or, !e ha e o"rse$ es re ie!e# the re*or#s an# fin# no ="stifi*ation to #e iate fro4 the tria$ *o"rtRs fin#in,s. EHERE<ORE, 'etition is here() DENIED DAE COARSE. SO ORDERED.

G.R. No. 9002: &ar0. 3, 1993 CA AGRO3!NDUSTR!A" DEVE"O2&ENT COR2., petitioner, vs. T E ONORA$"E COURT OF A22EA"S an# SECUR!T' $AN% AND TRUST CO&2AN', respondents.
3s the contractual relation between a commercial ban! and another party in a contract of rent of a safety deposit bo9 with respect to its contents placed by the latter one of bailor and bailee or one of lessor and lesseeK 2his is the cru9 of the present controversy. 8n * 5uly 19 9, petitioner %through its President, #ergio (guirre' and the spouses Ramon and Paula Pugao entered into an agreement whereby the former purchased from the latter two %-' parcels of land for a consideration of P*5+,6-5.++. 8f this amount, P 5, -5.++ was paid as downpayment while the balance was covered by three %*' postdated chec!s. (mong the terms and conditions of the agreement embodied in a $emorandum of 2rue and (ctual (greement of #ale of 0and were that the titles to the lots shall be transferred to the petitioner upon full payment of the purchase price and that the ownerLs copies of the certificates of titles thereto, 2ransfer Certificates of 2itle %2C2' )os. -,:655 and -9-:*:, shall be deposited in a safety deposit bo9 of any ban!. 2he same could be withdrawn only upon the 6oint signatures of a representative of the petitioner and the Pugaos upon full payment of the purchase price. Petitioner, through #ergio (guirre, and the Pugaos then rented #afety =eposit "o9 )o. 1::, of private respondent #ecurity "an! and 2rust Company, a domestic ban!ing corporation hereinafter referred to as the respondent "an!. 1or this purpose, both signed a contract of lease %79hibit .-.' which contains, inter alia, the following conditions; 1*. 2he ban! is not a depositary of the contents of the safe and it has neither the possession nor control of the same. 1:. 2he ban! has no interest whatsoever in said contents, e9cept herein e9pressly provided, and it assumes absolutely no liability in connection therewith. 1 (fter the e9ecution of the contract, two %-' renterLs !eys were given to the renters < one to (guirre %for the petitioner' and the other to the Pugaos. ( guard !ey remained in the possession of the respondent "an!. 41

2he safety deposit bo9 has two %-' !eyholes, one for the guard !ey and the other for the renterLs !ey, and can be opened only with the use of both !eys. Petitioner claims that the certificates of title were placed inside the said bo9. 2hereafter, a certain $rs. $argarita Ramos offered to buy from the petitioner the two %-' lots at a price of P--5.++ per sGuare meter which, as petitioner alleged in its complaint, translates to a profit of P1++.++ per sGuare meter or a total of P-,+,5++.++ for the entire property. $rs. Ramos demanded the e9ecution of a deed of sale which necessarily entailed the production of the certificates of title. 3n view thereof, (guirre, accompanied by the Pugaos, then proceeded to the respondent "an! on : 8ctober 19 9 to open the safety deposit bo9 and get the certificates of title. Eowever, when opened in the presence of the "an!Ls representative, the bo9 yielded no such certificates. "ecause of the delay in the reconstitution of the title, $rs. Ramos withdrew her earlier offer to purchase the lotsA as a conseGuence thereof, the petitioner allegedly failed to reali4e the e9pected profit of P-,+,5++.++. Eence, the latter filed on 1 #eptember 19,+ a complaint 2 for damages against the respondent "an! with the Court of 1irst 3nstance %now Regional 2rial Court' of Pasig, $etro $anila which doc!eted the
same as Civil Case )o. *,*,-.

3n its (nswer with Counterclaim, 3 respondent "an! alleged that the petitioner has no cause of action because of paragraphs 1* and 1: of the
contract of lease %79hibit .-.'A corollarily, loss of any of the items or articles contained in the bo9 could not give rise to an action against it. 3t then interposed a ; counterclaim for e9emplary damages as well as attorneyLs fees in the amount of P-+,+++.++. Petitioner subseGuently filed an answer to the counterclaim.

3n due course, the trial court, now designated as "ranch 161 of the Regional 2rial Court %R2C' of Pasig, $etro $anila, rendered a decision 5 adverse to the petitioner on , =ecember 19,6, the dispositive portion of which reads; CE7R718R7, premises considered, 6udgment is hereby rendered dismissing plaintiffLs complaint. 8n defendantLs counterclaim, 6udgment is hereby rendered ordering plaintiff to pay defendant the amount of 13?7 2E8/#()= %P5,+++.++' P7#8# as attorneyLs fees. Cith costs against plaintiff. 6 2he unfavorable verdict is based on the trial courtLs conclusion that under paragraphs 1* and 1: of the contract of lease, the "an! has no liability for the loss of the certificates of title. 2he court declared that the said provisions are binding on the parties. 3ts motion for reconsideration : having been denied, petitioner appealed from the adverse decision to the respondent Court of (ppeals which
doc!eted the appeal as C(&>.R. C? )o. 1515+. Petitioner urged the respondent Court to reverse the challenged decision because the trial court erred in %a' absolving the respondent "an! from liability from the loss, %b' not declaring as null and void, for being contrary to law, public order and public policy, the provisions in the contract for lease of the safety deposit bo9 absolving the "an! from any liability for loss, %c' not concluding that in this 6urisdiction, as well as under (merican 6urisprudence, the liability of the "an! is settled and %d' awarding attorneyLs fees to the "an! and denying the petitionerLs prayer for nominal and 8 e9emplary damages and attorneyLs fees.

3n its =ecision promulgated on : 5uly 19,9, 9 respondent Court affirmed the appealed decision principally on the theory that the contract
%79hibit .-.' e9ecuted by the petitioner and respondent "an! is in the nature of a contract of lease by virtue of which the petitioner and its co&renter were given control over the safety deposit bo9 and its contents while the "an! retained no right to open the said bo9 because it had neither the possession nor control over 10 it and its contents. (s such, the contract is governed by (rticle 16:* of the Civil Code which provides;

(rt. 16:*. 3n the lease of things, one of the parties binds himself to give to another the en6oyment or use of a thing for a price certain, and for a period which may be definite or indefinite. Eowever, no lease for more than ninety&nine years shall be valid. 3t invo!ed Tolentino vs. Gonzales 11 which held that the owner of the property loses his control over the property leased during the
period of the contract < and (rticle 19 5 of the Civil Code which provides;

(rt. 19 5. 2he depositary holding certificates, bonds, securities or instruments which earn interest shall be bound to collect the latter when it becomes due, and to ta!e such steps as may be necessary in order that the securities may preserve their value and the rights corresponding to them according to law. 2he above provision shall not apply to contracts for the rent of safety deposit bo9es. and then concluded that .IcJlearly, the defendant&appellee is not under any duty to maintain the contents of the bo9. 2he stipulation absolving the defendant&appellee from liability is in accordance with the nature of the contract of lease and cannot be regarded as contrary to law, public order and public policy.. 122he appellate court was Guic! to add, however, that under the contract of lease of the safety deposit bo9, respondent "an! is
not completely free from liability as it may still be made answerable in case unauthori4ed persons enter into the vault area or when the rented bo9 is forced open. 2hus, as e9pressly provided for in stipulation number , of the contract in Guestion; 42

,. 2he "an! shall use due diligence that no unauthori4ed person shall be admitted to any rented safe and beyond this, the "an! will not be responsible for the contents of any safe rented from it.13 3ts motion for reconsideration
having been denied in the respondent CourtLs Resolution of -, (ugust 19,9, petitioner too! this recourse under Rule :5 of the Rules of Court and urges /s to review and set aside the respondent CourtLs ruling. Petitioner avers that both the respondent Court and the trial court %a' did not properly and legally apply the correct law in this case, %b' acted with grave abuse of discretion or in e9cess of 6urisdiction amounting to lac! thereof and %c' set a precedent that is contrary to, or is a departure from precedents adhered to and affirmed by decisions of this Court and precepts in (merican 6urisprudence adopted in the Philippines. 3t reiterates the arguments it had raised in its motion to reconsider the trial courtLs decision, the brief submitted to the respondent Court and the motion to reconsider the latterLs decision. 3n a nutshell, petitioner maintains that regardless of nomenclature, the contract for the rent of the safety deposit bo9 %79hibit .-.' is actually a contract of deposit governed by 2itle M33, "oo! 3? of the Civil Code of the 16 Philippines. (ccordingly, it is claimed that the respondent "an! is liable for the loss of the certificates of title pursuant to (rticle 19 - of the said Code which provides;
1; 15

(rt. 19 -. 2he depositary is obliged to !eep the thing safely and to return it, when reGuired, to the depositor, or to his heirs and successors, or to the person who may have been designated in the contract. Eis responsibility, with regard to the safe!eeping and the loss of the thing, shall be governed by the provisions of 2itle 3 of this "oo!. 3f the deposit is gratuitous, this fact shall be ta!en into account in determining the degree of care that the depositary must observe. Petitioner then Guotes a passage from (merican 5urisprudence
in the /nited #tates, to wit;
1:

which is supposed to e9pound on the prevailing rule

2he prevailing rule appears to be that where a safe&deposit company leases a safe&deposit bo9 or safe and the lessee ta!es possession of the bo9 or safe and places therein his securities or other valuables, the relation of bailee and bail or is created between the parties to the transaction as to such securities or other valuablesA the fact that the safe&deposit company does not !now, and that it is not e9pected that it shall !now, the character or description of the property which is deposited in such safe&deposit bo9 or safe does not change that relation. 2hat access to the contents of the safe&deposit bo9 can be had only by the use of a !ey retained by the lessee % whether it is the sole !ey or one to be used in connection with one retained by the lessor' does not operate to alter the foregoing rule. 2he argument that there is not, in such a case, a delivery of e9clusive possession and control to the deposit company, and that therefore the situation is entirely different from that of ordinary bailment, has been generally re6ected by the courts, usually on the ground that as possession must be either in the depositor or in the company, it should reasonably be considered as in the latter rather than in the former, since the company is, by the nature of the contract, given absolute control of access to the property, and the depositor cannot gain access thereto without the consent and active participation of the company. . . . %citations omitted'. and a segment from Cords and Phrases
of a fi9ed amount at stated periods is a bailment for hire.
18

which states that a contract for the rental of a ban! safety deposit bo9 in consideration

Petitioner further argues that conditions 1* and 1: of the Guestioned contract are contrary to law and public policy and should be declared null and void. 3n support thereof, it cites (rticle 1*+6 of the Civil Code which provides that parties to a contract may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. (fter the respondent "an! filed its comment, this Court gave due course to the petition and reGuired the parties to simultaneously submit their respective $emoranda. 2he petition is partly meritorious. Ce agree with the petitionerLs contention that the contract for the rent of the safety deposit bo9 is not an ordinary contract of lease as defined in (rticle 16:* of the Civil Code. Eowever, Ce do not fully subscribe to its view that the same is a contract of deposit that is to be strictly governed by the provisions in the Civil Code on depositA 19 the contract in the case at bar is a special !ind of deposit. 3t cannot be characteri4ed as an ordinary contract of lease under (rticle
16:* because the full and absolute possession and control of the safety deposit bo9 was not given to the 6oint renters < the petitioner and the Pugaos. 2he guard !ey of the bo9 remained with the respondent "an!A without this !ey, neither of the renters could open the bo9. 8n the other hand, the respondent "an! could not li!ewise open the bo9 without the renterLs !ey. 3n this case, the said !ey had a duplicate which was made so that both renters could have access to the bo9.

Eence, the authorities cited by the respondent Court

on this point do not apply. )either could (rticle 19 5, also relied upon by the respondent Court, be invo!ed as an argument against the deposit theory. 8bviously, the first paragraph of such provision cannot apply to a depositary of 43

20

certificates, bonds, securities or instruments which earn interest if such documents are !ept in a rented safety deposit bo9. 3t is clear that the depositary cannot open the bo9 without the renter being present.

Ce observe, however, that the deposit theory itself does not altogether find unanimous support even in (merican 6urisprudence. Ce agree with the petitioner that under the latter, the prevailing rule is that the relation between a ban! renting out safe&deposit bo9es and its customer with respect to the contents of the bo9 is that of a bail or and bailee, the bailment being for hire and mutual benefit. 21 2his is 6ust the prevailing view
because;

2here is, however, some support for the view that the relationship in Guestion might be more properly characteri4ed as that of landlord and tenant, or lessor and lessee. 3t has also been suggested that it should be characteri4ed as that of licensor and licensee. 2he relation between a ban!, safe&deposit company, or storage company, and the renter of a safe&deposit bo9 therein, is often described as contractual, e9press or implied, oral or written, in whole or in part. "ut there is apparently no 6urisdiction in which any rule other than that applicable to bailments governs Guestions of the liability and rights of the parties in respect of loss of the contents of safe&deposit bo9es. 22 %citations omitted' 3n the conte9t of our laws which authori4e ban!ing institutions to rent out safety deposit bo9es, it is clear that in this 6urisdiction, the prevailing rule in the /nited #tates has been adopted. #ection - of the >eneral "an!ing (ct23 pertinently provides; #ec. -. 3n addition to the operations specifically authori4ed elsewhere in this (ct, ban!ing institutions other than building and loan associations may perform the following services; %a' Receive in custody funds, documents, and valuable ob6ects, and rent safety deposit bo9es for the safeguarding of such effects. 999 999 999 2he ban!s shall perform the services permitted under subsections %a', %b' and %c' of this section asdepositories or as agents. . . . 2; %emphasis supplied' )ote that the primary function is still found within the parameters of a contract of deposit, i.e., the receiving in custody of funds, documents and other valuable ob6ects for safe!eeping. 2he renting out of the safety deposit bo9es is not independent from, but related to or in con6unction with, this principal function. ( contract of deposit may be entered into orally or in writing 25 and, pursuant to (rticle 1*+6 of the Civil Code, the parties thereto may
establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. 2he depositaryLs responsibility for the safe!eeping of the ob6ects deposited in the case at bar is governed by 2itle 3, "oo! 3? of the Civil Code. (ccordingly, the depositary would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the 26 2: agreement. 3n the absence of any stipulation prescribing the degree of diligence reGuired, that of a good father of a family is to be observed. Eence, any stipulation e9empting the depositary from any liability arising from the loss of the thing deposited on account of fraud, negligence or delay would be void for being contrary to law and public policy. 3n the instant case, petitioner maintains that conditions 1* and 1: of the Guestioned contract of lease of the safety deposit bo9, which read;

1*. 2he ban! is not a depositary of the contents of the safe and it has neither the possession nor control of the same. 1:. 2he ban! has no interest whatsoever in said contents, e9cept herein e9pressly provided, and it assumes absolutely no liability in connection therewith. 28 are void as they are contrary to law and public policy. Ce find 8urselves in agreement with this proposition for indeed, said provisions are inconsistent with the respondent "an!Ls responsibility as a depositary under #ection -%a' of the >eneral "an!ing (ct. "oth e9empt the latter from any liability e9cept as contemplated in condition , thereof which limits its duty to e9ercise reasonable diligence only with respect to who shall be admitted to any rented safe, to wit; ,. 2he "an! shall use due diligence that no unauthori4ed person shall be admitted to any rented safe and beyond this, the "an! will not be responsible for the contents of any safe rented from it.29 1urthermore, condition 1* stands on a wrong premise and is contrary to the actual practice of the "an!. 3t is not correct to assert that the "an! has neither the possession nor control of the contents of the bo9 since in fact, the safety deposit bo9 itself is located in its premises and is under its absolute controlA moreover, the respondent "an! !eeps the guard !ey to the said bo9. (s stated earlier, renters cannot open their respective bo9es unless the "an! cooperates by presenting and
44

using this guard !ey. Clearly then, to the e9tent above stated, the foregoing conditions in the contract in Guestion are void and ineffective. 3t has been said; Cith respect to property deposited in a safe&deposit bo9 by a customer of a safe&deposit company, the parties, since the relation is a contractual one, may by special contract define their respective duties or provide for increasing or limiting the liability of the deposit company, provided such contract is not in violation of law or public policy. 3t must clearly appear that there actually was such a special contract, however, in order to vary the ordinary obligations implied by law from the relationship of the partiesA liability of the deposit company will not be enlarged or restricted by words of doubtful meaning. 2he company, in renting safe&deposit bo9es, cannot e9empt itself from liability for loss of the contents by its own fraud or negligence or that of its agents or servants, and if a provision of the contract may be construed as an attempt to do so, it will be held ineffective for the purpose. (lthough it has been held that the lessor of a safe&deposit bo9 cannot limit its liability for loss of the contents thereof through its own negligence, the view has been ta!en that such a lessor may limits its liability to some e9tent by agreement or stipulation. 30 %citations omitted' 2hus, we reach the same conclusion which the Court of (ppeals arrived at, that is, that the petition should be dismissed, but on grounds Guite different from those relied upon by the Court of (ppeals. 3n the instant case, the respondent "an!Ls e9oneration cannot, contrary to the holding of the Court of (ppeals, be based on or proceed from a characteri4ation of the impugned contract as a contract of lease, but rather on the fact that no competent proof was presented to show that respondent "an! was aware of the agreement between the petitioner and the Pugaos to the effect that the certificates of title were withdrawable from the safety deposit bo9 only upon both partiesL 6oint signatures, and that no evidence was submitted to reveal that the loss of the certificates of title was due to the fraud or negligence of the respondent "an!. 2his in turn flows from this CourtLs determination that the contract involved was one of deposit. #ince both the petitioner and the Pugaos agreed that each should have one %1' renterLs !ey, it was obvious that either of them could as! the "an! for access to the safety deposit bo9 and, with the use of such !ey and the "an!Ls own guard !ey, could open the said bo9, without the other renter being present. #ince, however, the petitioner cannot be blamed for the filing of the complaint and no bad faith on its part had been established, the trial court erred in condemning the petitioner to pay the respondent "an! attorneyLs fees. 2o this e9tent, the =ecision %dispositive portion' of public respondent Court of (ppeals must be modified. CE7R718R7, the Petition for Review is partially >R()27= by deleting the award for attorneyLs fees from the : 5uly 19,9 =ecision of the respondent Court of (ppeals in C(&>.R. C? )o. 1515+. (s modified, and sub6ect to the pronouncement Ce made above on the nature of the relationship between the parties in a contract of lease of safety deposit bo9es, the dispositive portion of the said =ecision is hereby (113R$7= and the instant Petition for Review is otherwise =7)37= for lac! of merit. )o pronouncement as to costs. #8 8R=7R7=.

G.R. No. "36913 No5(/,(r 21, 1913 T E RO&AN CAT O"!C $!S O2 OF JARO, plaintiff&appellee, vs. GREGOR!O DE "A 2E<A, a#/-n-*+ra+or o9 +.( (*+a+( o9 Fa+.(r A4u*+-n #( =a 2(>a, defendant& appellant.
2his is an appeal by the defendant from a 6udgment of the Court of 1irst 3nstance of 3loilo, awarding to the plaintiff the sum of P6,6:1, with interest at the legal rate from the beginning of the action. 3t is established in this case that the plaintiff is the trustee of a charitable beGuest made for the construction of a leper hospital and that father (gustin de la PeNa was the duly authori4ed representative of the plaintiff to receive the legacy. 2he defendant is the administrator of the estate of 1ather =e la PeNa. 3n the year 1,9, the boo!s 1ather =e la PeNa, as trustee, showed that he had on hand as such trustee the sum of P6,6:1, collected by him for the charitable purposes aforesaid. 3n the same year he deposited in his personal account P19,+++ in the Eong!ong and #hanghai "an! at 3loilo. #hortly thereafter and during the war of the revolution, 1ather =e la PeNa was arrested by the military authorities as a political prisoner, and while thus detained made an order on said ban! in favor of the /nited #tates (rmy officer under whose charge he then was for the sum thus deposited in said ban!. 2he arrest of 1ather =e la PeNa and the confiscation of the funds in the ban! were the result of the claim of the military authorities that he was an insurgent and that the funds thus deposited had been 45

collected by him for revolutionary purposes. 2he money was ta!en from the ban! by the military authorities by virtue of such order, was confiscated and turned over to the >overnment. Chile there is considerable dispute in the case over the Guestion whether the P6,6:1 of trust funds was included in the P19,+++ deposited as aforesaid, nevertheless, a careful e9amination of the case leads us to the conclusion that said trust funds were a part of the funds deposited and which were removed and confiscated by the military authorities of the /nited #tates. 2hat branch of the law !nown in 7ngland and (merica as the law of trusts had no e9act counterpart in the Roman law and has none under the #panish law. 3n this 6urisdiction, therefore, 1ather =e la PeNaLs liability is determined by those portions of the Civil Code which relate to obligations. %"oo! :, 2itle 1.' (lthough the Civil Code states that .a person obliged to give something is also bound to preserve it with the diligence pertaining to a good father of a family. %art. 1+9:', it also provides, following the principle of the Roman law, major casus est, cui humana infirmitas resistere non potest, that .no one shall be liable for events which could not be foreseen, or which having been foreseen were inevitable, with the e9ception of the cases e9pressly mentioned in the law or those in which the obligation so declares.. %(rt. 11+5.' "y placing the money in the ban! and mi9ing it with his personal funds =e la PeNa did not thereby assume an obligation different from that under which he would have lain if such deposit had not been made, nor did he thereby ma!e himself liable to repay the money at all ha4ards. 3f the had been forcibly ta!en from his poc!et or from his house by the military forces of one of the combatants during a state of war, it is clear that under the provisions of the Civil Code he would have been e9empt from responsibility. 2he fact that he placed the trust fund in the ban! in his personal account does not add to his responsibility. #uch deposit did not ma!e him a debtor who must respond at all ha4ards. Ce do not enter into a discussion for the purpose of determining whether he acted more or less negligently by depositing the money in the ban! than he would if he had left it in his homeA or whether he was more or less negligent by depositing the money in his personal account than he would have been if he had deposited it in a separate account as trustee. Ce regard such discussion as substantially fruitless, inasmuch as the precise Guestion is not one of negligence. 2here was no law prohibiting him from depositing it as he did and there was no law which changed his responsibility be reason of the deposit. Chile it may be true that one who is under obligation to do or give a thing is in duty bound, when he sees events approaching the results of which will be dangerous to his trust, to ta!e all reasonable means and measures to escape or, if unavoidable, to temper the effects of those events, we do not feel constrained to hold that, in choosing between two means eGually legal, he is culpably negligent in selecting one whereas he would not have been if he had selected the other. 2he court, therefore, finds and declares that the money which is the sub6ect matter of this action was deposited by 1ather =e la PeNa in the Eong!ong and #hanghai "an!ing Corporation of 3loiloA that said money was forcibly ta!en from the ban! by the armed forces of the /nited #tates during the war of the insurrectionA and that said 1ather =e la PeNa was not responsible for its loss. 2he 6udgment is therefore reversed, and it is decreed that the plaintiff shall ta!e nothing by his complaint. Arellano, C.J., Torres and Carson, JJ., concur.

S()ara+( O)-n-on* TRENT, J., dissenting; 3 dissent. 2echnically spea!ing, whether 1ather =e la PeNa was a trustee or an agent of the plaintiff his boo!s showed that in 1,9, he had in his possession as trustee or agent the sum of P6,6:1 belonging to the plaintiff as the head of the church. 2his money was then clothed with all the immunities and protection with which the law see!s to invest trust funds. "ut when =e la PeNa mi9ed this trust fund with his own and deposited the whole in the ban! to his personal account or credit, he by this act stamped on the said fund his own private mar!s and unclothed it of all the protection it had. 3f this money had been deposited in the name of =e la PeNa as trustee or agent of the plaintiff, 3 thin! that it may be presumed that the military authorities would not have confiscated it for the reason that they were loo!ing for insurgent funds only. (gain, the plaintiff had no reason to suppose that =e la PeNa would attempt to strip the fund of its identity, nor had he said or done anything which tended to relieve =e la PeNa from the legal reponsibility which pertains to the care and custody of trust funds. 2he #upreme Court of the /nited #tates in the /nited #tate vs. 2homas %,- /. #., ** ', at page *:*, said; .2rustees are only bound to e9ercise the same care and solicitude with regard to the trust property which they would e9ercise with regard to their own. 7Guity will not e9act more of them. 2hey are not liable for a loss by theft without their fault.

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"ut this e9emption ceases when they mi9 the trust&money with their own, whereby it loses its identity, and they become mere debtors.. 3f this proposition is sound and is applicable to cases arising in this 6urisdiction, and 3 entertain no doubt on this point, the liability of the estate of =e la PeNa cannot be doubted. "ut this court in the ma6ority opinion says; .2he fact that he %(gustin de la PeNa' placed the trust fund in the ban! in his personal account does not add to his responsibility. #uch deposit did not ma!e him a debtor who must respond at all ha4ards. . . . 2here was no law prohibiting him from depositing it as he did, and there was no law which changed his responsibility, by reason of the deposit.. 3 assume that the court in using the language which appears in the latter part of the above Guotation meant to say that there was no statutory law regulating the Guestion. Buestions of this character are not usually governed by statutory law. 2he law is to be found in the very nature of the trust itself, and, as a general rule, the courts say what facts are necessary to hold the trustee as a debtor. 3f =e la PeNa, after depositing the trust fund in his personal account, had used this money for speculative purposes, such as the buying and selling of sugar or other products of the country, thereby becoming a debtor, there would have been no doubt as to the liability of his estate. Chether he used this money for that purpose the record is silent, but it will be noted that a considerable length of time intervened from the time of the deposit until the funds were confiscated by the military authorities. 3n fact the record shows that =e la PeNa deposited on 5une - , 1,9,, P5,-59, on 5une -, of that year P*,-,+, and on (ugust 5 of the same year P6,+++. 2he record also shows that these funds were withdrawn and again deposited all together on the -9th of $ay, 19++, this last deposit amounting to P1,,9 +. 2hese facts strongly indicate that =e la PeNa had as a matter of fact been using the money in violation of the trust imposed in him.
lawph 1.net

3f the doctrine announced in the ma6ority opinion be followed in cases hereafter arising in this 6urisdiction trust funds will be placed in precarious condition. 2he position of the trustee will cease to be one of trust.

?G.R. No. 126:80. F(,ruary 1:, 2005@ ' T REA"T' COR2ORAT!ON, ER"!NDA "A!NE6 an# AN!C!A 2A'A&, petitioners, vs. T E COURT OF A22EA"S an# &AUR!CE &0"OUG "!N, respondents.
2he primary Guestion of interest before this Court is the only legal issue in the case; 3t is whether a hotel may evade liability for the loss of items left with it for safe!eeping by its guests, by having these guests e9ecute written waivers holding the establishment or its employees free from blame for such loss in light of (rticle -++* of the Civil Code which voids such waivers. "efore this Court is a Rule :5 petition for review of the !ecision dated 19 8ctober 1995 of the Court of (ppeals which affirmed the !ecision dated 16 =ecember 1991 of the Regional 2rial Court %R2C', "ranch 1*, of $anila, finding OE2 Realty Corporation, "runhilda $ata&2an %2an', 7rlinda 0aine4 %0aine4' and (nicia Payam %Payam' 6ointly and solidarily liable for damages in an action filed by $aurice $c0oughlin %$c0oughlin' for the loss of his (merican and (ustralian dollars deposited in the safety deposit bo9 of 2ropicana Copacabana (partment Eotel, owned and operated by OE2 Realty Corporation.
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2he factual bac!drop of the case follow. Private respondent $c0oughlin, an (ustralian businessman&philanthropist, used to stay at #heraton Eotel during his trips to the Philippines prior to 19,: when he met 2an. 2an befriended $c0oughlin by showing him around, introducing him to important people, accompanying him in visiting impoverished street children and assisting him in buying gifts for the children and in distributing the same to charitable institutions for poor children. 2an convinced $c0oughlin to transfer from #heraton Eotel to 2ropicana where 0aine4, Payam and =anilo 0ope4 were employed. 0ope4 served as manager of the hotel while 0aine4 and Payam had custody of the !eys for the safety deposit bo9es of 2ropicana. 2an too! care of $c0oughlin@s boo!ing at the 2ropicana where he started staying during his trips to the Philippines from =ecember 19,: to #eptember 19, .
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8n *+ 8ctober 19, , $c0oughlin arrived from (ustralia and registered with 2ropicana. Ee rented a safety deposit bo9 as it was his practice to rent a safety deposit bo9 every time he registered at 2ropicana in previous trips. (s a tourist, $c0oughlin was aware of the procedure observed by 2ropicana relative to its safety deposit bo9es. 2he safety deposit bo9 could only be opened through the use of two !eys, one of which is given to the registered guest, and the other remaining in the possession of the management of the hotel. Chen a registered guest wished to open his safety deposit bo9, he alone could personally reGuest the management who then would assign one of its employees to accompany the guest and assist him in opening the safety deposit bo9 with the two !eys.
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$c0oughlin allegedly placed the following in his safety deposit bo9; 1ifteen 2housand /# =ollars %/#P15,+++.++' which he placed in two envelopes, one envelope containing 2en 2housand /# =ollars %/#P1+,+++.++' and the other envelope 1ive 2housand /# =ollars %/#P5,+++.++'A 2en 2housand (ustralian =ollars %(/#P1+,+++.++' which he also placed in another envelopeA two %-' other envelopes containing letters and credit cardsA two %-' ban!boo!sA and a chec!boo!, arranged side by side inside the safety deposit bo9.
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8n 1- =ecember 19, , before leaving for a brief trip to Eong!ong, $c0oughlin opened his safety deposit bo9 with his !ey and with the !ey of the management and too! therefrom the envelope containing 1ive 2housand /# =ollars %/#P5,+++.++', the envelope containing 2en 2housand (ustralian =ollars %(/#P1+,+++.++', his passports and his credit cards. $c0oughlin left the other items in the bo9 as he did not chec! out of his room at the 2ropicana during his short visit to Eong!ong. Chen he arrived in Eong!ong, he opened the envelope which contained 1ive 2housand /# =ollars %/#P5,+++.++' and discovered upon counting that only 2hree 2housand /# =ollars %/#P*,+++.++' were enclosed therein. #ince he had no idea whether somebody else had tampered with his safety deposit bo9, he thought that it was 6ust a result of bad accounting since he did not spend anything from that envelope.
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(fter returning to $anila, he chec!ed out of 2ropicana on 1, =ecember 19, and left for (ustralia. Chen he arrived in (ustralia, he discovered that the envelope with 2en 2housand /# =ollars %/#P1+,+++.++' was short of 1ive 2housand /# =ollars %/#P5,+++'. Ee also noticed that the 6ewelry which he bought in Eong!ong and stored in the safety deposit bo9 upon his return to 2ropicana was li!ewise missing, e9cept for a diamond bracelet.
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Chen $c0oughlin came bac! to the Philippines on : (pril 19,,, he as!ed 0aine4 if some money andDor 6ewelry which he had lost were found and returned to her or to the management. Eowever, 0aine4 told him that no one in the hotel found such things and none were turned over to the management. Ee again registered at 2ropicana and rented a safety deposit bo9. Ee placed therein one %1' envelope containing 1ifteen 2housand /# =ollars %/#P15,+++.++', another envelope containing 2en 2housand (ustralian =ollars %(/#P1+,+++.++' and other envelopes containing his traveling papersDdocuments. 8n 16 (pril 19,,, $c0oughlin reGuested 0aine4 and Payam to open his safety deposit bo9. Ee noticed that in the envelope containing 1ifteen 2housand /# =ollars %/#P15,+++.++', 2wo 2housand /# =ollars %/#P-,+++.++' were missing and in the envelope previously containing 2en 2housand (ustralian =ollars %(/#P1+,+++.++', 1our 2housand 1ive Eundred (ustralian =ollars %(/#P:,5++.++' were missing.
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Chen $c0oughlin discovered the loss, he immediately confronted 0aine4 and Payam who admitted that 2an opened the safety deposit bo9 with the !ey assigned to him. $c0oughlin went up to his room where 2an was staying and confronted her. 2an admitted that she had stolen $c0oughlin@s !ey and was able to open the safety deposit bo9 with the assistance of 0ope4, Payam and 0aine4. 0ope4 also told $c0oughlin that 2an stole the !ey assigned to $c0oughlin while the latter was asleep.
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$c0oughlin reGuested the management for an investigation of the incident. 0ope4 got in touch with 2an and arranged for a meeting with the police and $c0oughlin. Chen the police did not arrive, 0ope4 and 2an went to the room of $c0oughlin at 2ropicana and thereat, 0ope4 wrote on a piece of paper a promissory note dated -1 (pril 19,,. 2he promissory note reads as follows; I promise to pay Mr. Maurice McLoughlin the amount o !"#$4%000.00 an& "#$2%000.00 or its e'ui(alent in )hilippine currency on or *e ore May 5% 1988.
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0ope4 reGuested 2an to sign the promissory note which the latter did and 0ope4 also signed as a witness. =espite the e9ecution of promissory note by 2an, $c0oughlin insisted that it must be the hotel who must assume responsibility for the loss he suffered. Eowever, 0ope4 refused to accept the responsibility relying on the conditions for renting the safety deposit bo9 entitled "#nderta$in% &or the #se 'f (afet) !eposit *o+ ,, specifically paragraphs %-' and %:' thereof, to wit;
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2. +o release an& hol& ree an& *lameless +,-)I.!/! !)!,+M0/+ 1-+0L rom any lia*ility arising rom any loss in the contents an&2or use o the sai& &eposit *o3 or any cause 4hatsoe(er% inclu&ing *ut not limite& to the presentation or use thereo *y any other person shoul& the 5ey *e lost6
. . .

4. +o return the 5ey an& e3ecute the ,0L0!#0 in a(or o +,-)I.!/! !)!,+M0/+ 1-+0L upon gi(ing up the use o the *o3.
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8n 1 $ay 19,,, $c0oughlin went bac! to (ustralia and he consulted his lawyers as to the validity of the abovementioned stipulations. 2hey opined that the stipulations are void for being violative of universal hotel practices and customs. Eis lawyers prepared a letter dated *+ $ay 19,, which was signed by $c0oughlin and sent to President Cora4on (Guino. 2he 8ffice of the President referred the letter to the =epartment of 5ustice %=85' which forwarded the same to the Cestern Police =istrict %CP='.
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(fter receiving a copy of the indorsement in (ustralia, $c0oughlin came to the Philippines and registered again as a hotel guest of 2ropicana. $c0oughlin went to $alacaQang to follow up on his letter but he was instructed to go to the =85. 2he =85 directed him to proceed to the CP= for documentation. "ut $c0oughlin went bac! to (ustralia as he had an urgent business matter to attend to. 1or several times, $c0oughlin left for (ustralia to attend to his business and came bac! to the Philippines to follow up on his letter to the President but he failed to obtain any concrete assistance.
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$c0oughlin left again for (ustralia and upon his return to the Philippines on -5 (ugust 19,9 to pursue his claims against petitioners, the CP= conducted an investigation which resulted in the preparation of an affidavit which was forwarded to the $anila City 1iscal@s 8ffice. #aid affidavit became the basis of preliminary investigation. Eowever, 48 $c0oughlin left again for (ustralia without receiving the notice of the hearing on -: )ovember 19,9. 2hus, the case

at the 1iscal@s 8ffice was dismissed for failure to prosecute. $cloughlin reGuested the reinstatement of the criminal charge for theft. 3n the meantime, $c0oughlin and his lawyers wrote letters of demand to those having responsibility to pay the damage. 2hen he left again for (ustralia. /pon his return on -- 8ctober 199+, he registered at the 7chelon 2owers at $alate, $anila. $eetings were held between $c0oughlin and his lawyer which resulted to the filing of a complaint for damages on * =ecember 199+ against OE2 Realty Corporation, 0ope4, 0aine4, Payam and 2an %defendants' for the loss of $c0oughlin@s money which was discovered on 16 (pril 19,,. (fter filing the complaint, $c0oughlin left again for (ustralia to attend to an urgent business matter. 2an and 0ope4, however, were not served with summons, and trial proceeded with only 0aine4, Payam and OE2 Realty Corporation as defendants. (fter defendants had filed their Pre&2rial "rief admitting that they had previously allowed and assisted 2an to open the safety deposit bo9, $c0oughlin filed an Amended-(upplemental Complaint dated 1+ 5une 1991 which included another incident of loss of money and 6ewelry in the safety deposit bo9 rented by $c0oughlin in the same hotel which too! place prior to 16 (pril 19,,. 2he trial court admitted theAmended-(upplemental Complaint.
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=uring the trial of the case, $c0oughlin had been in and out of the country to attend to urgent business in (ustralia, and while staying in the Philippines to attend the hearing, he incurred e9penses for hotel bills, airfare and other transportation e9penses, long distance calls to (ustralia, $eralco power e9penses, and e9penses for food and maintenance, among others.
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(fter trial, the R2C of $anila rendered 6udgment in favor of $c0oughlin, the dispositive portion of which reads; 710,08-,0% a*o(e premises consi&ere&% 9u&gment is here*y ren&ere& *y this .ourt in a(or o plainti an& against the &e en&ants% to 4it:
1. 8rdering defendants, 6ointly and severally, to pay plaintiff the sum of /#P11,:++.++ or its eGuivalent in Philippine Currency of P*:-,+++.++, more or less, and the sum of (/#P:,5++.++ or its eGuivalent in Philippine Currency of P99,+++.++, or a total of P::1,+++.++, more or less, with 1-F interest from (pril 16 19,, until said amount has been paid to plaintiff %3tem 1, 79hibit CC'A 8rdering defendants, 6ointly and severally to pay plaintiff the sum of P*,6 :,-*,.++ as actual and conseGuential damages arising from the loss of his (ustralian and (merican dollars and 6ewelries complained against and in prosecuting his claim and rights administratively and 6udicially %3tems 33, 333, 3?, ?, ?3, ?33, ?333, and 3M, 79h. RCCS'A 8rdering defendants, 6ointly and severally, to pay plaintiff the sum of P5++,+++.++ as moral damages %3tem M, 79h. RCCS'A 8rdering defendants, 6ointly and severally, to pay plaintiff the sum of P*5+,+++.++ as e9emplary damages %3tem M3, 79h. RCCS'A (nd ordering defendants, 6ointly and severally, to pay litigation e9penses in the sum ofP-++,+++.++ %3tem M33, 79h. RCCS'A 8rdering defendants, 6ointly and severally, to pay plaintiff the sum of P-++,+++.++ as attorney@s fees, and a fee of P*,+++.++ for every appearanceA and

-.

*. :. 5. 6.

. Plus costs of suit.

#- -,;0,0;.

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2he trial court found that $c0oughlin@s allegations as to the fact of loss and as to the amount of money he lost were sufficiently shown by his direct and straightforward manner of testifying in court and found him to be credible and worthy of belief as it was established that $c0oughlin@s money, !ept in 2ropicana@s safety deposit bo9, was ta!en by 2an without $c0oughlin@s consent. 2he ta!ing was effected through the use of the master !ey which was in the possession of the management. Payam and 0aine4 allowed 2an to use the master !ey without authority from $c0oughlin. 2he trial court added that if $c0oughlin had not lost his dollars, he would not have gone through the trouble and personal inconvenience of see!ing aid and assistance from the 8ffice of the President, =85, police authorities and the City 1iscal@s 8ffice in his desire to recover his losses from the hotel management and 2an.
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(s regards the loss of #even 2housand /# =ollars %/#P ,+++.++' and 6ewelry worth appro9imately 8ne 2housand 2wo Eundred /# =ollars %/#P1,-++.++' which allegedly occurred during his stay at 2ropicana previous to : (pril 19,,, no claim was made by $c0oughlin for such losses in his complaint dated -1 )ovember 199+ because he was not sure how they were lost and who the responsible persons were. "ut considering the admission of the defendants in their pre&trial brief that on three previous occasions they allowed 2an to open the bo9, the trial court opined that it was logical and reasonable to presume that his personal assets consisting of #even 2housand /# =ollars %/#P ,+++.++' and 6ewelry were ta!en by 2an from the safety deposit bo9 without $c0oughlin@s consent through the cooperation of Payam and 0aine4.
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2he trial court also found that defendants acted with gross negligence in the performance and e9ercise of their duties and obligations as inn!eepers and were therefore liable to answer for the losses incurred by $c0oughlin.
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$oreover, the trial court ruled that paragraphs %-' and %:' of the R #nderta$in% &or The #se 'f (afet) !eposit *o+S are not valid for being contrary to the e9press mandate of (rticle -++* of the )ew Civil Code and against public policy. 2hus, there being fraud or wanton conduct on the part of defendants, they should be responsible for all damages which may be attributed to the non&performance of their contractual obligations.
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2he Court of (ppeals affirmed the disGuisitions made by the lower court e9cept as to the amount of damages awarded. 2he decretal te9t of the appellate court@s decision reads; +10 8-,0<-I/< .-/#I;0,0;% the appeale& ;ecision is here*y !88I,M0; *ut mo&i ie& as ollo4s:
49

+he appellants are &irecte& 9ointly an& se(erally to pay the plainti 2appellee the ollo4ing amounts: 1= 2= 3= 4= 5= 6= 7= 8= 9= 10= 7ith costs. #- -,;0,0;.
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)153%200.00 representing the peso e'ui(alent o "#$2%000.00 an& !"#$4%500.006 )308%880.80% representing the peso (alue or the air ares rom #i&ney >sic? to Manila an& *ac5 or a total o ele(en @11= trips6 -neAhal o )336%207.05 or )168%103.52 representing payment to +ropicana !partment 1otel6 -neAhal o )152%683.57 or )76%341.785 representing payment to 0chelon +o4er6 -neAhal o )179%863.20 or )89%931.60 or the ta3i 333 transportation rom the resi&ence to #i&ney >sic? !irport an& rom MI! to the hotel here in Manila% or the ele(en @11= trips6 -neAhal o )7%801.94 or )3%900.97 representing Meralco po4er e3penses6 -neAhal o )356%400.00 or )178%000.00 representing e3penses or oo& an& maintenance6 )50%000.00 or moral &amages6 )10%000.00 as e3emplary &amages6 an& )200%000 representing attorneyBs ees.

/nperturbed, OE2 Realty Corporation, 0aine4 and Payam went to this Court in this appeal by certiorari. Petitioners submit for resolution by this Court the following issues; %a' whether the appellate court@s conclusion on the alleged prior e9istence and subseGuent loss of the sub6ect money and 6ewelry is supported by the evidence on recordA %b' whether the finding of gross negligence on the part of petitioners in the performance of their duties as inn!eepers is supported by the evidence on recordA %c' whether the R/nderta!ing 1or 2he /se of #afety =eposit "o9S admittedly e9ecuted by private respondent is null and voidA and %d' whether the damages awarded to private respondent, as well as the amounts thereof, are proper under the circumstances.
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2he petition is devoid of merit. 3t is worthy of note that the thrust of Rule :5 is the resolution only of Guestions of law and any peripheral factual Guestion addressed to this Court is beyond the bounds of this mode of review. Petitioners point out that the evidence on record is insufficient to prove the fact of prior e9istence of the dollars and the 6ewelry which had been lost while deposited in the safety deposit bo9es of 2ropicana, the basis of the trial court and the appellate court being the sole testimony of $c0oughlin as to the contents thereof. 0i!ewise, petitioners dispute the finding of gross negligence on their part as not supported by the evidence on record. Ce are not persuaded. Ce adhere to the findings of the trial court as affirmed by the appellate court that the fact of loss was established by the credible testimony in open court by $c0oughlin. #uch findings are factual and therefore beyond the ambit of the present petition. 2he trial court had the occasion to observe the demeanor of $c0oughlin while testifying which reflected the veracity of the facts testified to by him. 8n this score, we give full credence to the appreciation of testimonial evidence by the trial court especially if what is at issue is the credibility of the witness. 2he oft&repeated principle is that where the credibility of a witness is an issue, the established rule is that great respect is accorded to the evaluation of the credibility of witnesses by the trial court. 2he trial court is in the best position to assess the credibility of witnesses and their testimonies because of its uniGue opportunity to observe the witnesses firsthand and note their demeanor, conduct and attitude under grilling e9amination.
I*1J I*-J

Ce are also not impressed by petitioners@ argument that the finding of gross negligence by the lower court as affirmed by the appellate court is not supported by evidence. 2he evidence reveals that two !eys are reGuired to open the safety deposit bo9es of 2ropicana. 8ne !ey is assigned to the guest while the other remains in the possession of the management. 3f the guest desires to open his safety deposit bo9, he must reGuest the management for the other !ey to open the same. 3n other words, the guest alone cannot open the safety deposit bo9 without the assistance of the management or its employees. Cith more reason that access to the safety deposit bo9 should be denied if the one reGuesting for the opening of the safety deposit bo9 is a stranger. 2hus, in case of loss of any item deposited in the safety deposit bo9, it is inevitable to conclude that the management had at least a hand in the consummation of the ta!ing, unless the reason for the loss is force majeure. )oteworthy is the fact that Payam and 0aine4, who were employees of 2ropicana, had custody of the master !ey of the management when the loss too! place. 3n fact, they even admitted that they assisted 2an on three separate occasions in opening $c0oughlin@s safety deposit bo9. 2his only proves that 2ropicana had prior 50
I**J

!nowledge that a person aside from the registered guest had access to the safety deposit bo9. Oet the management failed to notify $c0oughlin of the incident and waited for him to discover the ta!ing before it disclosed the matter to him. 2herefore, 2ropicana should be held responsible for the damage suffered by $c0oughlin by reason of the negligence of its employees. 2he management should have guarded against the occurrence of this incident considering that Payam admitted in open court that she assisted 2an three times in opening the safety deposit bo9 of $c0oughlin at around 6;*+ (.$. to ;*+ (.$. while the latter was still asleep. 3n light of the circumstances surrounding this case, it is undeniable that without the acGuiescence of the employees of 2ropicana to the opening of the safety deposit bo9, the loss of $c0oughlin@s money could and should have been avoided.
I*:J

2he management contends, however, that $c0oughlin, by his act, made its employees believe that 2an was his spouse for she was always with him most of the time. 2he evidence on record, however, is bereft of any showing that $c0oughlin introduced 2an to the management as his wife. #uch an inference from the act of $c0oughlin will not e9culpate the petitioners from liability in the absence of any showing that he made the management believe that 2an was his wife or was duly authori4ed to have access to the safety deposit bo9. $ere close companionship and intimacy are not enough to warrant such conclusion considering that what is involved in the instant case is the very safety of $c0oughlin@s deposit. 3f only petitioners e9ercised due diligence in ta!ing care of $c0oughlin@s safety deposit bo9, they should have confronted him as to his relationship with 2an considering that the latter had been observed opening $c0oughlin@s safety deposit bo9 a number of times at the early hours of the morning. 2an@s acts should have prompted the management to investigate her relationship with $c0oughlin. 2hen, petitioners would have e9ercised due diligence reGuired of them. 1ailure to do so warrants the conclusion that the management had been remiss in complying with the obligations imposed upon hotel&!eepers under the law. /nder (rticle 11 + of the )ew Civil Code, those who, in the performance of their obligations, are guilty of negligence, are liable for damages. (s to who shall bear the burden of paying damages, (rticle -1,+, paragraph %:' of the same Code provides that the owners and managers of an establishment or enterprise are li!ewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. (lso, this Court has ruled that if an employee is found negligent, it is presumed that the employer was negligent in selecting andDor supervising him for it is hard for the victim to prove the negligence of such employer. 2hus, given the fact that the loss of $c0oughlin@s money was consummated through the negligence of 2ropicana@s employees in allowing 2an to open the safety deposit bo9 without the guest@s consent, both the assisting employees and OE2 Realty Corporation itself, as owner and operator of 2ropicana, should be held solidarily liable pursuant to (rticle -19*.
I*5J I*6J

2he issue of whether the R#nderta$in% &or The #se of (afet) !eposit *o+S e9ecuted by $c0oughlin is tainted with nullity presents a legal Guestion appropriate for resolution in this petition. )otably, both the trial court and the appellate court found the same to be null and void. Ce find no reason to reverse their common conclusion. (rticle -++* is controlling, thus; !rt. 2003. +he hotelA5eeper cannot ree himsel rom responsi*ility *y posting notices to the e ect that he is not lia*le or the articles *rought *y the guest. !ny stipulation *et4een the hotelA5eeper an& the guest 4here*y the responsi*ility o the ormer as set orth in !rticles 1998 to 2001 is suppresse& or &iminishe& shall *e (oi&.
I* J

(rticle -++* was incorporated in the )ew Civil Code as an e9pression of public policy precisely to apply to situations such as that presented in this case. 2he hotel business li!e the common carrier@s business is imbued with public interest. Catering to the public, hotel!eepers are bound to provide not only lodging for hotel guests and security to their persons and belongings. 2he twin duty constitutes the essence of the business. 2he law in turn does not allow such duty to the public to be negated or diluted by any contrary stipulation in so&called Runderta!ingsS that ordinarily appear in prepared forms imposed by hotel !eepers on guests for their signature. 3n an early case, the Court of (ppeals through its then Presiding 5ustice %later (ssociate 5ustice of the Court' 5ose P. "eng4on, ruled that to hold hotel!eepers or inn!eeper liable for the effects of their guests, it is not necessary that they be actually delivered to the inn!eepers or their employees. 3t is enough that such effects are within the hotel or inn. Cith greater reason should the liability of the hotel!eeper be enforced when the missing items are ta!en without the guest@s !nowledge and consent from a safety deposit bo9 provided by the hotel itself, as in this case.
I*,J I*9J

Paragraphs %-' and %:' of the Runderta!ingS manifestly contravene (rticle -++* of the )ew Civil Code for they allow 2ropicana to be released from liability arising from any loss in the contents andDor use of the safety deposit bo9 for any cause whatsoever. 7vidently, the underta!ing was intended to bar any claim against 2ropicana for any loss of the contents of the safety deposit bo9 whether or not negligence was incurred by 2ropicana or its employees. 2he )ew Civil Code is e9plicit that the responsibility of the hotel&!eeper shall e9tend to loss of, or in6ury to, the personal property of the guests even if caused by servants or employees of the !eepers of hotels or inns as well as by strangers, e9cept as it may proceed from any force majeure. 3t is the loss through force majeure that may spare the hotel&!eeper from liability. 3n the case at bar, there is no showing that the act of the thief or robber was done with the use of arms or through an irresistible force to Gualify the same asforce majeure.
I:+J I:1J I:-J

Petitioners li!ewise anchor their defense on (rticle -++- which e9empts the hotel&!eeper from liability if the loss is due to the acts of his guest, his family, or visitors. 7ven a cursory reading of the provision would lead us to re6ect petitioners@ contention. 2he 6ustification they raise would render nugatory the public interest sought to be protected by the provision. Chat if the negligence of the employer or its employees facilitated the consummation of a crime committed by the registered guest@s relatives or visitorK #hould the law e9culpate the hotel from liability since the loss was due to the act of the visitor of the registered guest of the hotelK Eence, this provision presupposes 51
I:*J

that the hotel&!eeper is not guilty of concurrent negligence or has not contributed in any degree to the occurrence of the loss. ( depositary is not responsible for the loss of goods by theft, unless his actionable negligence contributes to the loss.
I::J

3n the case at bar, the responsibility of securing the safety deposit bo9 was shared not only by the guest himself but also by the management since two !eys are necessary to open the safety deposit bo9. Cithout the assistance of hotel employees, the loss would not have occurred. 2hus, 2ropicana was guilty of concurrent negligence in allowing 2an, who was not the registered guest, to open the safety deposit bo9 of $c0oughlin, even assuming that the latter was also guilty of negligence in allowing another person to use his !ey. 2o rule otherwise would result in undermining the safety of the safety deposit bo9es in hotels for the management will be given imprimatur to allow any person, under the pretense of being a family member or a visitor of the guest, to have access to the safety deposit bo9 without fear of any liability that will attach thereafter in case such person turns out to be a complete stranger. 2his will allow the hotel to evade responsibility for any liability incurred by its employees in conspiracy with the guest@s relatives and visitors. Petitioners contend that $c0oughlin@s case was mounted on the theory of contract, but the trial court and the appellate court upheld the grant of the claims of the latter on the basis of tort. 2here is nothing anomalous in how the lower courts decided the controversy for this Court has pronounced a 6urisprudential rule that tort liability can e9ist even if there are already contractual relations. 2he act that brea!s the contract may also be tort.
I:5J I:6J

(s to damages awarded to $c0oughlin, we see no reason to modify the amounts awarded by the appellate court for the same were based on facts and law. 3t is within the province of lower courts to settle factual issues such as the proper amount of damages awarded and such finding is binding upon this Court especially if sufficiently proven by evidence and not unconscionable or e9cessive. 2hus, the appellate court correctly awarded $c0oughlin 2wo 2housand /# =ollars %/#P-,+++.++' and 1our 2housand 1ive Eundred (ustralian dollars %(/#P:,5++.++' or their peso eGuivalent at the time of payment, being the amounts duly proven by evidence. 2he alleged loss that too! place prior to 16 (pril 19,, was not considered since the amounts alleged to have been ta!en were not sufficiently established by evidence. 2he appellate court also correctly awarded the sum ofP*+,,,,+.,+, representing the peso value for the air fares from #ydney to $anila and bac! for a total of eleven %11' tripsA one&half of P**6,-+ .+5 or P16,,1+*.5- representing payment to 2ropicanaA one&half of P15-,6,*.5 or P 6,*:1. ,5 representing payment to 7chelon 2owerA one&half of P1 9,,6*.-+ or P,9,9*1.6+ for the ta9i or transportation e9penses from $c0oughlin@s residence to #ydney (irport and from $3( to the hotel here in $anila, for the eleven %11' tripsA one&half of P ,,+1.9: or P*,9++.9 representing $eralco power e9pensesA one&half of P*56,:++.++ or P1 ,,+++.++ representing e9penses for food and maintenance.
I: J I:,J I:9J I5+J I51J I5-J I5*J I5:J

2he amount of P5+,+++.++ for moral damages is reasonable. (lthough trial courts are given discretion to determine the amount of moral damages, the appellate court may modify or change the amount awarded when it is palpably and scandalously e9cessive. $oral damages are not intended to enrich a complainant at the e9pense of a defendant. 2hey are awarded only to enable the in6ured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of defendants@ culpable action.
I55J

2he awards of P1+,+++.++ as e9emplary damages and P-++,+++.++ representing attorney@s fees are li!ewise sustained. A EREFORE, foregoing premises considered, the !ecision of the Court of (ppeals dated 19 8ctober 1995 is hereby (113R$7=. Petitioners are directed, 6ointly and severally, to pay private respondent the following amounts; @1= @2= @3= @4= @5= @6= @7= @8= @9= @10= 7ith costs.
52

"#$2%000.00 an& !"#$4%500.00 or their peso e'ui(alent at the time o payment6 )308%880.80% representing the peso (alue or the air ares rom #y&ney to Manila an& *ac5 or a total o ele(en @11= trips6 -neAhal o )336%207.05 or )168%103.52 representing payment to +ropicana .opaca*ana !partment 1otel6 -neAhal o )152%683.57 or )76%341.785 representing payment to 0chelon +o4er6 -neAhal o )179%863.20 or )89%931.60 or the ta3i or transportation e3pense rom McLoughlinBs resi&ence to #y&ney !irport an& rom MI! to the hotel here in Manila% or the ele(en @11= trips6 -neAhal o )7%801.94 or )3%900.97 representing Meralco po4er e3penses6 -neAhal o )356%400.00 or )178%200.00 representing e3penses or oo& an& maintenance6 )50%000.00 or moral &amages6 )10%000.00 as e3emplary &amages6 an& )200%000 representing attorneyBs ees.

SO ORDERED. .uno, /Chairman0, Callejo, (r., and Chico12azario, JJ., concur. Austria13artinez, J., no part.

?G.R. No. 119231. A)r-= 18, 1996@ 2 !"!22!NE NAT!ONA" BANK, petitioner, vs. ON. 2RES. JUDGE $EN!TO C. SE, JR., RTC, $R. 45, &AN!"AB NOA CS AR% SUGAR REF!NER'B A"$ERTO T. "OO'U%O, J!&&' T. GO an# A!"SON T. GO,respondents. S'""A$US 1. CO&&ERC!A" "AAB AARE OUSE RECE!2TS "AAB T E UNCOND!T!ONA" 2RESENT&ENT OF T E RECE!2TS FOR 2A'&ENT CARR!ED A!T !T T E AD&!SS!ONS OF T E ED!STENCE AND VA"!D!T' OF T E TER&S, COND!T!ONS AND ST!2U"AT!ONS AR!TTEN ON T E FACE OF T E AARE OUSE RECE!2TS, !NC"UD!NG T E UNEUA"!F!ED RECOGN!T!ON OF T E 2A'&ENT OF AARE OUSE&ANCS "!EN FOR STORAGE FEES AND 2RESERVAT!ON ED2ENSESB CASE AT $AR. 3 Petitioner is in estoppel in disclaiming liability for the payment of storage fees due the private respondents as warehouseman while claiming to be entitled to the sugar stoc!s covered by the sub6ect Carehouse Receipts on the basis of which it anchors its claim for payment or delivery of the sugar stoc!s. 2he unconditional presentment of the receipts by the petitioner for payment against private respondents on the strength of the provisions of the Carehouse Receipts 0aw %R.(. -1* ' carried with it the admission of the e9istence and validity of the terms, conditions and stipulations written on the face of the Carehouse Receipts, including the unGualified recognition of the payment of warehouseman@s lien for storage fees and preservation e9penses. Petitioner may not now retrieve the sugar stoc!s without paying the lien due private respondents as warehouseman. !D.B !D.B !D.B AARE OUSE&ANCS "!ENB 2OSSESSOR' !N NATURE. 3 Chile the P)" is entitled to the stoc!s of sugar as the endorsee of the Guedans, delivery to it shall be effected only upon payment of the storage fees. 3mperative is the right of the warehouseman to demand payment of his lien at this 6uncture, because, in accordance with #ection -9 of the Carehouse Receipts 0aw, the warehouseman loses his lien upon goods by surrendering possession thereof. 3n other words, the lien may be lost where the warehouseman surrenders the possession of the goods without reGuiring payment of his lien, because a warehouseman@s lien is possessory in nature.

2.

DEC!S!ON
ER&OS!S!&A, JR., J.:

2he source of conflict herein is the Guestion as to whether the Philippine )ational "an! should pay storage fees for sugar stoc!s covered by five %5' Carehouse Receipts stored in the warehouse of private respondents in the face of the Court of (ppeals@ decision %affirmed by the #upreme Court' declaring the Philippine )ational "an! as the owner of the said sugar stoc!s and ordering their delivery to the said ban!. 1rom the same facts but on a different perspective, it can be said that the issue is; Can the warehouseman enforce his warehouseman@s lien before delivering the sugar stoc!s as ordered by the Court of (ppeals or need he file a separate action to enforce payment of storage feesK 2he herein petition see!s to annul; %1' the Resolution of respondent 5udge "enito C. #e, 5r. of the Regional 2rial Court of $anila, "ranch :5, dated =ecember -+, 199:, in Civil Case )o. 9+&5*+-*, authori4ing reception of evidence to establish the claim of respondents )oah@s (r! #ugar Refinery, et al., for storage fees and preservation e9penses over sugar stoc!s covered by five /40 Carehouse Receipts which is in the nature of a warehouseman@s lienA and %-' the Resolution of the said respondent 5udge, dated $arch 1, 1995, declaring the validity of private respondents@ warehouseman@s lien under #ection - of Republic (ct )o -1* and ordering that e9ecution of the Court of (ppeals@ decision, dated =ecember 1*, 1991, be in effect held in abeyance until the full amount of the warehouseman@s lien on the sugar stoc!s covered by five /40 Guedans sub6ect of the action shall have been satisfied conformably with the provisions of #ection *1 of Republic (ct -1* . (lso prayed for by the petition is a Crit of Prohibition to reGuire respondent R2C 5udge to desist from further proceeding with Civil Case )o. 9+&5*+-*, e9cept order the e9ecution of the #upreme Court 6udgmentA and a Crit of $andamus to compel respondent R2C 5udge to issue a Crit of 79ecution in accordance with the said e9ecutory #upreme Court decision.

T E FACTS

53

3n accordance with (ct )o. -1* , the Carehouse Receipts 0aw, )oah@s (r! #ugar Refinery issued on several dates, the following Carehouse Receipts %Buedans'; %a' $arch 1, 19,9, Receipt )o. 1,+6-, covering sugar deposited by Rosa #yA %b' $arch , 19,9, Receipt )o. 1,+,+, covering sugar deposited by R)# $erchandising %Rosa )g #y'A %c' $arch -1, 19,9, Receipt )o. 1,+,1, covering sugar deposited by #t. 2herese $erchandisingA %d'$arch *1, 19,9, Receipt )o. 1,+,6, covering sugar deposited by #t. 2herese $erchandisingA and %e' (pril 1, 19,9, Receipt )o. 1,+, , covering sugar deposited by R)# $erchandising. 2he receipts are substantially in the form, and contains the terms, prescribed for negotiable warehouse receipts by #ection - of the law. #ubseGuently, Carehouse Receipts )os. 1,+,+ and 1,+,1 were negotiated and endorsed to 0uis 2. RamosA and Receipts )os. 1,+,6, 1,+, and 1,+6- were negotiated and endorsed to Cresencia H. Toleta. Ramos and Toleta then used the Guedans as security for two loan agreements & one for P15.6 million and the other for P-*.5 million & obtained by them from the Philippine )ational "an!. 2he aforementioned Guedans were endorsed by them to the Philippine )ational "an!. 0uis 2. Ramos and Cresencia H. Toleta failed to pay their loans upon maturity on5anuary 9, 199+. ConseGuently, on $arch 16, 199+, the Philippine )ational "an! wrote to )oah@s (r! #ugar Refinery demanding delivery of the sugar stoc!s covered by the Guedans endorsed to it by Toleta and Ramos. )oah@s (r! #ugar Refinery refused to comply with the demand alleging ownership thereof, for which reason the Philippine )ational "an! filed with the Regional 2rial Court of $anila a verified complaint for R#pecific Performance with =amages and (pplication for Crit of (ttachmentS against )oah@s (r! #ugar Refinery, (lberto 2. 0ooyu!o, 5immy 2. >o and Cilson 2. >o, the last three being identified as the sole proprietor, managing partner, and 79ecutive ?ice President of )oah@s (r!, respectively. Respondent 5udge "enito C. #e, 5r., in whose sala the case was raffled, denied the (pplication for Preliminary (ttachment. Reconsideration therefor was li!ewise denied. )oah@s (r! and its co&defendants filed an (nswer with Counterclaim and 2hird&Party Complaint in which they claimed that they are the owners of the sub6ect Guedans and the sugar represented therein, averring as they did that; 9.*** In an agreement &ate& !pril 1% 1989% &e en&ants agree& to sell to ,osa /g #y o ,/# Merchan&ising an& +eresita /g o #t. +herese Merchan&ising the total (olume of sugar indicated in the quedans stored at Noahs Ark Sugar Refinery for a total consideration of P63 !!! !!!.!! CCC +he correspon&ing payments in the orm o chec5s issue& *y the (en&ees in a(or o &e en&ants 4ere su*se'uently &ishonore& *y the &ra4ee *an5s *y reason o Dpayment stoppe&B an& D&ra4n against insu icient un&s%B CCC "pon proper noti ication to sai& (en&ees an& plainti in &ue course% &e en&ants re use& to &eli(er to (en&ees therein the 'uantity o sugar co(ere& *y the su*9ect 'ue&ans. 10. CCC .onsi&ering that the (en&ees an& irst en&orsers o su*9ect 'ue&ans &i& not ac'uire o4nership thereo % the su*se'uent en&orsers an& plainti itsel &i& not ac'uire a *etter right o o4nership than the original (en&ees2 irst en&orsers. E 1 2he (nswer incorporated a 2hird&Party Complaint by (lberto 2. 0ooyu!o, 5immy 2. >o and Cilson 2. >o, doing business under the trade name and style )oah@s (r! #ugar Refinery against Rosa )g #y and 2eresita )g, praying that the latter be ordered to deliver or return to them the Guedans %previously endorsed to P)" and the sub6ect of the suit' and pay damages and litigation e9penses. 2he (nswer of Rosa )g #y and 2eresita )g, dated #eptember 6, 199+, one of avoidance, is essentially to the effect that the transaction between them, on the one hand, and 5immy 2. >o, on the other, concerning the Guedans and the sugar stoc!s covered by them was merely a simulated one being part of the latter@s comple9 ban!ing schemes and financial maneuvers, and thus, they are not answerable in damages to him. 8n 5anuary *1, 1991, the Philippine )ational "an! filed a $otion for #ummary 5udgment in favor of the plaintiff as against the defendants for the reliefs prayed for in the complaint. 8n $ay -, 1991, the Regional 2rial Court issued an order denying the $otion for #ummary 5udgment. 2hereupon, the Philippine )ational "an! filed a Petition for Certiorari with the Court of (ppeals, doc!eted as C(& >.R. #P. )o. -59*, on =ecember 1*, 1991. Pertinent portions of the decision of the Court of (ppeals read; "n issuing the questioned #rders the res$ondent %ourt ruled that &questions of la' should (e resol)ed after and not (efore the questions of fact are $ro$erly litigated. A scrutiny of defendants affir*ati)e defenses does not sho' *aterial questions of fact as to the alleged non$ay*ent of $urchase $rice (y the )endees+first endorsers and 'hich non$ay*ent is not dis$uted (y PN, as it does not *aterially affect PN,s title to the sugar stocks as holder of the negotia(le quedans. -hat is deter*inati)e of the $ro$riety of su**ary .udg*ent is not the e/istence of conflicting clai*s fro* $rior $arties (ut 'hether fro* an e/a*ination of the $leadings de$ositions ad*issions and docu*ents on file the defenses as to the *ain issue do not tender *aterial questions of fact 0see 1arcia )s. %ourt of A$$eals 263 S%RA 4256 or the issues thus tendered are in fact sha* fictitious contri)ed set u$ in (ad faith or so unsu(stantial as not to constitute genuine issues for trial. 0See 7ergara )s. Suelto et al. 256 S%RA 3538 9ercado et al. )s. %ourt of A$$eals 26: S%RA 356. ;he questioned #rders the*sel)es do not s$ecify 'hat *aterial facts are in issue. 0See Sec. < Rule 3< Rules of %ourt6.
54

;o require a trial not'ithstanding $ertinent allegations of the $leadings and other facts a$$earing on the record 'ould constitute a 'aste of ti*e and an in.ustice to the PN, 'hose rights to relief to 'hich it is $lainly entitled 'ould (e further delayed to its $re.udice. "n issuing the questioned #rders -e find the res$ondent %ourt to ha)e acted in gra)e a(use of discretion 'hich .ustify holding null and )oid and setting aside the #rders dated 9ay : and =uly < 299! of res$ondent %ourt and that a su**ary .udg*ent (e rendered forth'ith in fa)or of the PN, against Noahs Ark Sugar Refinery et al. as $rayed for in $etitioners 9otion for Su**ary =udg*ent.: 8n =ecember 1*, 1991, the Court of (ppeals nullified and set aside the orders of $ay - and 5uly :, 199+ of the Regional 2rial Court and ordered the trial court to render summary 6udgment in favor of the P)". 8n 5une 1,, 199-, the trial court rendered 6udgment dismissing plaintiffs complaint against private respondents for lac! of cause of action and li!ewise dismissed private respondents@ counterclaim against P)" and of the 2hird&Party Complaint and the 2hird&Party =efendant@s Counterclaim. 8n #eptember :, 199-, the trial court denied P)"@s $otion for Reconsideration. 8n 5une 9, 199-, the P)" filed an appeal from the R2C decision with the #upreme Court, >.R. )o. 1+ -:*, by way of a Petition for Review on Certiorari under Rule :5 of the Rules of Court. 2his Court rendered 6udgment on #eptember 1, 199*, the dispositive portion of which reads; ->?R?@#R? the trial .udges decision in %i)il %ase No. 9!A53!:3 dated =une 24 299: is re)ersed and set aside and a ne' one rendered confor*a(ly 'ith the final and e/ecutory decision of the %ourt of A$$eals in %AA1.R SP. No. :5934 ordering the $ri)ate res$ondents Noahs Ark Sugar Refinery Al(erto ;. Booyuko =i**y ;. 1o and -ilson ;. 1o .ointly and se)erallyC
/a0 to deliver to the petitioner .hilippine 2ational *an$, 5the su%ar stoc$s covered 6) the 7arehouse 8eceipts- 9uedans which are now in the latter:s possession as holder for value and in due course; or alternativel), to pa) /said0 plaintiff actual dama%es in the amount of .<=.1 million,: with le%al interest thereon from the filin% of the complaint until full pa)ment; and to pa) plaintiff .hilippine 2ational *an$ attorne):s fees, liti%ation e+penses and judicial costs here6) fi+ed at the amount of 'ne >undred &ift) Thousand .esos /.14?,???.??0 as well as the costs.

/60

S# #RD?R?D.F3 8n #eptember -9, 199*, private respondents moved for reconsideration of this decision. ( #upplementalD#econd $otion for Reconsideration with leave of court was filed by private respondents on )ovember ,, 199*. Ce denied private respondents@ motion on 5anuary 1+, 199:. . Private respondents filed a $otion #ee!ing Clarification of the =ecision, dated#eptember 1, 199*. Ce denied this motion in this manner; "t (ears stressing that the relief granted in this %ourts decision of Se$te*(er 2 2993 is $recisely that set out in the final and e/ecutory decision of the %ourt of A$$eals in %AA1.R. SP No. :5934 dated Dece*(er 23 2992 'hich 'as affir*ed in toto (y this %ourt and 'hich (eca*e unaltera(le u$on (eco*ing final and e/ecutory. 4 Private respondents thereupon filed before the trial court an 8mnibus $otion see!ing among others the deferment of the proceedings until private respondents are heard on their claim for warehouseman@s lien. 8n the other hand, on (ugust --, 199:, the Philippine )ational "an! filed a $otion for the 3ssuance of a Crit of 79ecution and an 8pposition to the 8mnibus $otion filed by private respondents. 2he trial court granted private respondents@ 8mnibus $otion on =ecember -+, 199: and set reception of evidence on their claim for warehouseman@s lien. 2he resolution of the P)"@s $otion for 79ecution was ordered deferred until the determination of private respondents@ claim. 8n 1ebruary -1, 1995, private respondents@ claim for lien was heard and evidence was received in support thereof. 2he trial court thereafter gave both parties five /40 days to file respective memoranda. 8n 1ebruary -,, 1995, the Philippine )ational "an! filed a $anifestation with /rgent $otion to )ullify Court Proceedings. 3n ad6udication thereof, the trial court issued the following order on $arch 1, 1995; E->?R?@#R? this court here(y finds that there e/ists in fa)or of the defendants a )alid 'arehouse*ans lien under Section :3 of Re$u(lic Act :233 and accordingly e/ecution of the .udg*ent is here(y ordered stayed and+ or $recluded until the full a*ount of defendants lien on the sugar stocks co)ered (y the fi)e 056 quedans su(.ect of this action shall ha)e (een satisfied confor*a(ly 'ith the $ro)isions of Section 32 of Re$u(lic Act :233. E5 ConseGuently, the Philippine )ational "an! filed the herein petition to see! the nullification of the above&assailed orders of respondent 6udge. 2he P)" submits that;
"@

PN,s R"1>; ;# A -R"; #@ ?E?%F;"#N "S SFPP#R;?D ,G ;-# @"NAB AND ?E?%F;#RG D?%"S"#NSC ;>? D?%?9,?R 23 2992 %#FR; #@ APP?ABS D?%"S"#N "N %AA1.R. SP. N#. :59348 AND ;>? N#7?9,?R 9 55 299: SFPR?9? %#FR; D?%"S"#N "N 1.R N#. 2!3:<3. R?SP#ND?N; R;%S 9"N"S;?R"AB AND 9ANDA;#RG DF;G "S

;# "SSF? ;>? -R"; #@ ?E?%F;"#N ;# "9PB?9?N; ;>? D?%R?;AB P#R;"#N #@ SA"D SFPR?9? %#FR; D?%"S"#N
@@

R?SP#ND?N; R;% "S -";>#F; =FR"SD"%;"#N ;# >?AR PR"7A;? R?SP#ND?N;S #9N",FS 9#;"#N. ;>? %BA"9S S?; @#R;> "N SA"D 9#;"#NC 026 -?R? ABR?ADG R?=?%;?D ,G ;>? SFPR?9? %#FR; "N ";S 9AR%> 9 299< R?S#BF;"#N D?NG"N1 PR"7A;? R?SP#ND?N;S &9#;"#N @#R %BAR"@"%A;"#N #@ D?%"S"#N "N .1.R. N#. 2!3:<38 AND 0:6 AR? ,ARR?D @#R?7?R ,G PR"7A;? R?SP#ND?N;S @A"BFR? ;# "N;?RP#S? ;>?9 "N ;>?"R ANS-?R AND @A"BFR? ;# APP?AB @R#9 ;>? =FN? 24 299: R;% D?%"S"#N "N %"7"B %AS? N#. 9!A5:!:3
@@@

R?SP#ND?N; R;%S #NBG =FR"SD"%;"#N "S ;# "SSF? ;>? -R"; ;# ?E?%F;? ;>? SFPR?9? %#FR; D?%"S"#N. ;>FS PN, "S ?N;";B?D ;#C 026 A -R"; #@ %?R;"#RAR" ;# ANNFB ;>? R;% R?S#BF;"#N DA;?D D?%?9,?R :! 299< AND ;>? #RD?R DA;?D@?,RFARG 3 2995 AND ABB PR#%??D"N1S ;AH?N ,G ;>? R;% ;>?R?A@;?R8 0:6 A -R"; #@ PR#>",";"#N ;# PR?7?N; R?SP#ND?N; R;% @R#9 @FR;>?R PR#%??D"N1 -";> %"7"B %AS? N#. 9!A 53!:3 AND %#99";;"N1 #;>?R A%;S 7"#BA;"7? #@ ;>? SFPR?9? %#FR; D?%"S"#N "N 1.R. N#. 2!3:<38 AND 036 A -R"; #@ 9ANDA9FS ;# %#9P?B R?SP#ND?N; R;% ;# "SSF? ;>? -R"; ;# ?E?%F;? ;>? SFPR?9? %#FR; =FD19?N; "N @A7#R #@ PN,I 2he issues presented before us in this petition revolve around the legality of the Guestioned orders of respondent 6udge, issued as they were after we had denied with finality private respondents@ contention that the P)" could not compel them to deliver the stoc!s of sugar in their warehouse covered by the endorsed Guedans or pay the value of the said stoc!s of sugar. Petitioner@s submission is on a technicality, that is, that private respondents have lost their right to recover warehouseman@s lien on the sugar stoc!s covered by the five %5' Carehouse Receipts for the reason that they failed to set up said claim in their (nswer before the trial court and that private respondents did not appeal from the decision in this regard, dated 5une 1,, 199-. Petitioner asseverates that the denial by this Court on $arch 9, 199: of the motion see!ing clarification of our decision, dated #eptember 1, 199*, has foreclosed private respondents@ right to enforce their warehouseman@s lien for storage fees and preservation e9penses under the Carehouse Receipts (ct. 8n the other hand, private respondents maintain that they could not have claimed the right to a warehouseman@ s lien in their (nswer to the complaint before the trial court as it would have been inconsistent with their stand that they claim ownership of the stoc!s covered by the Guedans since the chec!s issued for payment thereof were dishonored. 3f they were still the owners, it would have been absurd for them to as! payment for storage fees and preservation e9penses. 2hey further contend that our resolution, dated $arch 9, 199:, denying their motion for clarification did not preclude their right to claim their warehouseman@s lien under #ections - and *1 of Republic (ct -1* , as our resolution merely affirmed and adopted the earlier decision, dated =ecember 1*, 1991, of the Court of (ppeals %6th =ivision' in C(&>.R. #P. )o. -59*, and did not ma!e any finding on the matter of the warehouseman@ s lien. Ce find for private respondents on the foregoing issue and so the petition necessarily must fail. Ce have carefully e9amined our resolution, dated $arch 9, 199:, which denied )oah@s(r!@s motion for clarification of our decision, dated #eptember 1, 199*, wherein we affirmed in full and adopted the Court of (ppeals@ earlier decision, dated =ecember 1*, 1991, in C(&>.R. #P. )o. -59*,. Ce are not persuaded by the petitioner@s argument that our said resolution carried with it the denial of the warehouseman@s lien over the sugar stoc!s covered by the sub6ect Carehouse Receipts. Ce have simply resolved and upheld in our decision, dated #eptember 1, 199*, the propriety of summary 6udgment which was then assailed by private respondents. 3n effect, we ruled therein that, considering the circumstances obtaining before the trial court, the issuance of the Carehouse Receipts not being disputed by the private respondents, a summary 6udgment in favor of P)" was proper. Ce in effect further affirmed the finding that )oah@s (r! is a warehouseman which was obliged to deliver the sugar stoc!s covered by the Carehouse Receipts pledged by Cresencia H. Toleta and 0uis 2. Ramos to the petitioner pursuant to the pertinent provisions of Republic (ct -1* . 3n disposing of the private respondents@ motion for clarification, we could not contemplate the matter of warehouseman@s lien because the issue to be finally resolved then was the claim of private respondents for retaining ownership of the stoc!s of sugar covered by the endorsed Guedans. #tated otherwise, there was no point in ta!ing up the issue of warehouseman@s lien since the matter of ownership was as yet being determined. )either could storage fees be due then while no one has been declared the owner of the sugar stoc!s in Guestion. 8f considerable relevance is the pertinent stipulation in the sub6ect Carehouse Receipts which provides for respondent )oah@s (r!@s right to impose and collect warehouseman@s lien; Storage of the refined sugar quantities *entioned herein shall (e free u$ to one 026 'eek fro* the date of the quedans co)ering said sugar and thereafter storage fees shall (e charged in accordance 'ith the Refining %ontract under 'hich the refined sugar co)ered (y this Juedan 'as $roduced. 6 3t is not disputed, therefore, that, under the sub6ect Carehouse Receipts provision, storage fees are chargeable.
56

Petitioner anchors its claim against private respondents on the five %5' Carehouse Receipts issued by the latter to third&party defendants Rosa )g #y of R)# $erchandising and 2eresita )g of #t. 2herese $erchandising, which found their way to petitioner after they were negotiated to them by 0uis 2. Ramos and Cresencia H. Toleta for a loan of P*9.1 $illion. (ccordingly, petitioner P)" is legally bound to stand by the e9press terms and conditions on the face of the Carehouse Receipts as to the payment of storage fees. 7ven in the absence of such a provision, law and eGuity dictate the payment of the warehouseman@ s lien pursuant to #ections - and *1 of the Carehouse Receipts 0aw %R.(. -1* ', to wit; S?%;"#N :3. -hat clai*s are included in the 'arehouse*ans lien. A Su(.ect to the $ro)isions of section thirty a 'arehouse*an shall ha)e lien on goods de$osited or on the $roceeds thereof in his hands for all la'ful charges for storage and $reser)ation of the goods8 also for all la'ful clai*s for *oney ad)anced interest insurance trans$ortation la(or 'eighing coo$ering and other charges and e/$enses in relation to such goods8 also for all reasona(le charges and e/$enses for notice and ad)ertise*ent of sale and for sale of the goods 'here default has (een *ade in satisfying the 'arehouse*ans lien. 999 999 999

S?%;"#N 32. -arehouse*an need not deli)er until lien is satisfied. A A 'arehouse*an ha)ing a lien )alid against the $erson de*anding the goods *ay refuse to deli)er the goods to hi* until the lien is satisfied.I (fter being declared not the owner, but the warehouseman, by the Court of (ppeals on=ecember 1*, 1991 in C(&>.R. #P. )o. -59*,, the decision having been affirmed by us on=ecember 1, 199*, private respondents cannot legally be deprived of their right to enforce their claim for warehouseman@s lien, for reasonable storage fees and preservation e9penses. Pursuant to #ection *1 which we Guote hereunder, the goods under storage may not be delivered until said lien is satisfied. S?%;"#N 32. -arehouse*an need not deli)er until lien is satisfied. A A 'arehouse*an ha)ing a lien )alid against the $erson de*anding the goods *ay refuse to deli)er the goods to hi* until the lien is satisfied.I Considering that petitioner does not deny the e9istence, validity and genuineness of the Carehouse Receipts on which it anchors its claim for payment against private respondents, it cannot disclaim liability for the payment of the storage fees stipulated therein. (s contracts, the receipts must be respected by authority of (rticle 1159 of the Civil Code, to wit; AR;. 2259. #(ligations arising fro* contracts ha)e the force of la' (et'een the contracting $arties and should (e co*$lied 'ith in good faith.I Petitioner is in estoppel in disclaiming liability for the payment of storage fees due the private respondents as warehouseman while claiming to be entitled to the sugar stoc!s covered by the sub6ect Carehouse Receipts on the basis of which it anchors its claim for payment or delivery of the sugar stoc!s. 2he unconditional presentment of the receipts by the petitioner for payment against private respondents on the strength of the provisions of the Carehouse Receipts 0aw %R.(. -1* ' carried with it the admission of the e9istence and validity of the terms, conditions and stipulations written on the face of the Carehouse Receipts, including the unGualified recognition of the payment of warehouseman@s lien for storage fees and preservation e9penses. Petitioner may not now retrieve the sugar stoc!s without paying the lien due private respondents as warehouseman. 3n view of the foregoing, the rule may be simplified thus; Chile the P)" is entitled to the stoc!s of sugar as the endorsee of the Guedans, delivery to it shall be effected only upon payment of the storage fees. 3mperative is the right of the warehouseman to demand payment of his lien at this 6uncture, because, in accordance with #ection -9 of the Carehouse Receipts 0aw, the warehouseman loses his lien upon goods by surrendering possession thereof. 3n other words, the lien may be lost where the warehouseman surrenders the possession of the goods without reGuiring payment of his lien, because a warehouseman@s lien is possessory in nature. Ce, therefore, uphold and sustain the validity of the assailed orders of public respondent, dated =ecember -+, 199: and $arch 1, 1995. 3n fine, we fail to see any taint of abuse of discretion on the part of the public respondent in issuing the Guestioned orders which recogni4ed the legitimate right of )oah@s (r!, after being declared as warehouseman, to recover storage fees before it would release to the P)" sugar stoc!s covered by the five %5' Carehouse Receipts. 8ur resolution, dated $arch 9, 199:, did not preclude private respondents@ unGualified right to establish its claim to recover storage fees which is recogni4ed under Republic (ct )o. -1* . )either did the Court of (ppeals@ decision, dated =ecember 1*, 1991, restrict such right. 8ur Resolution@s reference to the decision by the Court of (ppeals, dated =ecember 1*, 1991, in C(&>.R. #P. )o. -59*,, was intended to guide the parties in the subseGuent disposition of the case to its final end. Ce certainly did not foreclose private respondents@ inherent right as warehouseman to collect storage fees and preservation e9penses as stipulated n the face of each of the Carehouse Receipts and as provided for in the Carehouse Receipts 0aw %R.(. -1* '. A EREFORE, the petition should be, as it is, hereby dismissed for lac! of merit. 2he Guestioned orders issued 57 by public respondent 6udge are affirmed.

Costs against the petitioner. SO ORDERED. .adilla /Chairman0, *ellosillo, Aitu%, and Bapunan, Jr., JJ., concur.

58