ARELLANO UNIVERSITY SCHOOL OF LAW

Taft Avenue Corner Menlo St. Pasay City, Philippines

S/Y 2016-2017, 2ND Semester

CIVIL LAW REVIEW 2

Atty. Crisostomo A. Uribe

January 20, 2017

CASE COMPILATION
PART 1: OBLICON

Contributors:

Glenn Chua
Katrina Ongoco
Hannah Matti Espinosa
Dominick Botor
1.

OBLIGATIONS
(Art. 1156-1304)
G.R. No. L-47362
December 19, 1940
JUAN F. VILLARROEL, recurrente-apelante,
vs.
BERNARDINO ESTRADA, recurrido-apelado.

AVANCEÑA, Pres.:

On May 9, 1912, Alejandro F. Callao, the mother of

the
defendant Juan F. Villarroel, obtained from the spouses Mariano
Estrada and Severina a loan of P1,000 payable after seven
years
(Exhibit A). Alejandra died, leaving as sole heir to the
defendant.
The spouses Mariano Estrada and Severina also died,
leaving as
sole heir the plaintiff Bernardino Estrada. On August 9, 1930,
the
defendant signed a document (Exhibit B) by which it
declares the
applicant to owe the amount of P1,000, with an interest
of 12
percent per year. This action deals with the collection
of this
amount.

The Court of First Instance of Laguna, in which this action

was filed, ordered the defendant to pay the claimant the
claimed
amount of P1,000 with his legal interests of 12
percent a year
from August 9, 1930 until its full payment. This sentence
is
appealed.

It will be noted that the parties to the present case

are,
respectively, the sole heirs of the original creditors and
debtor.
This action is exercised by virtue of the obligation that
the
defendant as the only child of the original debtor
contracted in
favor of the plaintiff, sole heir of the primitive creditors. It
is
admitted that the amount of P1,000 to which this
obligation is

contracted is the same debt of the defendant's mother to

the
parents of the plaintiff.

Although the action to recover the original debt has

already been prescribed when the claim was filed in this case, the
question that arises in this appeal is mainly whether,
notwithstanding such a requirement, the action filed.
However,
the present action is not based on the original
obligation
contracted by the defendant's mother, which has already
been
prescribed, but in which the defendant contracted on August
9,
1930 (Exhibit B) upon assuming the fulfillment of that obligation,
Already prescribed. Since the defendant is the sole
inheritor of
the primitive debtor, with the right to succeed in his
inheritance,
that debt, brought by his mother legally, although it
has lost its
effectiveness by prescription, is now, however, for a moral
obligation, which is consideration Sufficient to create and render
effective and enforceable its obligation voluntarily contracted on
August 9, 1930 in Exhibit B.

The rule that a new promise to pay a pre-paid debt must

be made by the same obligated person or by another
legally
authorized by it, is not applicable to the present case in
which it
is not required to fulfill the obligation of the obligee
originally,
but Of which he voluntarily wanted to assume this obligation.

The judgment appealed against is upheld, with costs being

paid to the appellant. That is how it is commanded.

2.
G.R. No. L-13667
April 29, 1960

PRIMITIVO ANSAY, ETC., ET AL., plaintiffs-appellants,

vs.

1 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
THE BOARD OF DIRECTORS OF THE NATIONAL
DEVELOPMENT COMPANY, ET AL., defendantsappellees.

PARAS, C. J.:
On July 25, 1956, appellants filed against appellees in the
Court of First Instance of Manila a complaint praying
for a 20%
Christmas bonus for the years 1954 and 1955. The court a quo on
appellees' motion to dismiss, issued the following order:
Considering the motion to dismiss filed on 15 August,
1956, set for this morning; considering that at the hearing
thereof, only respondents appeared thru counsel and
there was no appearance for the plaintiffs although the
court waited for sometime for them; considering,
however, that petitioners have submitted an opposition
which the court will consider together with the arguments
presented by respondents and the Exhibits marked and
presented, namely, Exhibits 1 to 5, at the hearing of
the
motion to dismiss; considering that the action in brief
is
one to compel respondents to declare a Christmas bonus
for petitioners workers in the National Development
Company; considering that the Court does not see how
petitioners may have a cause of action to secure such
bonus because:
(a) A bonus is an act of liberality and the court
takes it
that it is not within its judicial powers to command
respondents to be liberal;
(b) Petitioners admit that respondents are not under legal
duty to give such bonus but that they had only ask that
such bonus be given to them because it is a moral
obligation of respondents to give that but as this Court

understands, it has no power to compel a party to comply

with a moral obligation (Art. 142, New Civil Code.).
IN VIEW WHEREOF, dismissed. No pronouncement as to
costs.
A motion for reconsideration of the afore-quoted order
was
denied. Hence this appeal.
Appellants contend that there exists a cause of
action in their
complaint because their claim rests on moral grounds or what in
brief is defined by law as a natural obligation.
Since appellants admit that appellees are not under legal
obligation to give such claimed bonus; that the grant arises
only
from a moral obligation or the natural obligation that they
discussed in their brief, this Court feels it urgent to
reproduce at
this point, the definition and meaning of natural obligation.
Article 1423 of the New Civil Code classifies obligations into civil
or natural. "Civil obligations are a right of action to
compel their
performance. Natural obligations, not being based on
positive
law but on equity and natural law, do not grant a right
 of action
to enforce their performance, but after voluntary
fulfillment by
the obligor, they authorize the retention of what has been
delivered or rendered by reason thereof".
It is thus readily seen that an element of natural
obligation before
it can be cognizable by the court is voluntary fulfillment
by the
obligor. Certainly retention can be ordered but only after
there
has been voluntary performance. But here there has been no
voluntary performance. In fact, the court cannot order
the
performance.
At this point, we would like to reiterate what we said in
the case
of Philippine Education Co. vs. CIR and the Union of
Philippine

2 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
Education Co., Employees (NUL) (92 Phil., 381; 48 Off. Gaz., 5278)
—

THE HONORABLE MIDPAINTAO L. ADIL, Judge of the

Second Branch of the Court of First Instance of
Iloilo
and SPOUSES PATRICIO CONFESOR and JOVITA
VILLAFUERTE, respondents.

x x x x
x x x
x x
From the legal point of view a bonus is not a demandable
and enforceable obligation. It is so when it is made a part
of the wage or salary compensation.
And while it is true that the subsequent case of H. E.
Heacock vs. National Labor Union, et al., 95 Phil., 553;
50 Off. Gaz.,
4253, we stated that:
Even if a bonus is not demandable for not forming part of
the wage, salary or compensation of an employee, the
same may nevertheless, be granted on equitable
consideration as when it was given in the past,
though
withheld in succeeding two years from low salaried
employees due to salary increases.
still the facts in said Heacock case are not the same as
in the
instant one, and hence the ruling applied in said case
cannot be
considered in the present action.
Premises considered, the order appealed from is hereby affirmed,
without pronouncement as to costs.

3.

G.R. No. L-48889

May 11, 1989

DEVELOPMENT BANK OF THE PHILIPPINES (DBP),

petitioner, vs.

GANCAYCO, J.:

The issue posed in this petition for review on

certiorari is the
validity of a promissory note which was executed in
consideration of a previous promissory note the enforcement of
which had been barred by prescription.
On February 10, 1940 spouses Patricio Confesor and
Jovita Villafuerte obtained an agricultural loan from the
Agricultural and Industrial Bank (AIB), now the Development of
the Philippines (DBP), in the sum of P2,000.00, Philippine
Currency, as evidenced by a promissory note of said date
whereby they bound themselves jointly and severally to pay the
account in ten (10) equal yearly amortizations. As the
obligation
remained outstanding and unpaid even after the lapse
of the
aforesaid ten-year period, Confesor, who was by then a member
of the Congress of the Philippines, executed a second
promissory
note on April 11, 1961 expressly acknowledging said loan and
promising to pay the same on or before June 15, 1961. The
new
promissory note reads as follows —
I hereby promise to pay the amount covered by my
promissory note on or before June 15, 1961. Upon
my failure to do so, I hereby agree to the
foreclosure of my mortgage. It is understood that if
I can secure a certificate of indebtedness from the
government of my back pay I will be allowed to pay
the amount out of it.

3 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
Said spouses not having paid the obligation on the specified
date,
the DBP filed a complaint dated September 11, 1970 in
the City
Court of Iloilo City against the spouses for the payment
of the
loan.
After trial on the merits a decision was rendered by the
inferior
court on December 27, 1976, the dispositive part of which reads
as follows:
WHEREFORE, premises considered, this Court
renders judgment, ordering the defendants Patricio
Confesor and Jovita Villafuerte Confesor to pay the
plaintiff Development Bank of the Philippines,
jointly and severally, (a) the sum of P5,760.96 plus
additional daily interest of P l.04 from September
17, 1970, the date Complaint was filed, until said
amount is paid; (b) the sum of P576.00 equivalent
to ten (10%) of the total claim by way of attorney's
fees and incidental expenses plus interest at the
legal rate as of September 17,1970, until fully paid;
and (c) the costs of the suit.
Defendants-spouses appealed therefrom to the Court of First
Instance of Iloilo wherein in due course a decision
was rendered
on April 28, 1978 reversing the appealed decision and dismissing
the complaint and counter-claim with costs against the plaintiff.
A motion for reconsideration of said decision filed by
plaintiff
was denied in an order of August 10, 1978. Hence
this petition
wherein petitioner alleges that the decision of respondent judge
is contrary to law and runs counter to decisions of this
Court
when respondent judge (a) refused to recognize the law that the
right to prescription may be renounced or waived; and (b)
that in
signing the second promissory note respondent Patricio Confesor
can bind the conjugal partnership; or otherwise said respondent
became liable in his personal capacity. The petition is
impressed

with merit. The right to prescription may be waived

or
renounced. Article 1112 of Civil Code provides:
Art. 1112. Persons with capacity to alienate
property may renounce prescription already
obtained, but not the right to prescribe in the
future.
Prescription is deemed to have been tacitly
renounced when the renunciation results from acts
which imply the abandonment of the right
acquired.
There is no doubt that prescription has set in as to
the first
promissory note of February 10, 1940. However, when
respondent Confesor executed the second promissory note on
April 11, 1961 whereby he promised to pay the amount
 covered
by the previous promissory note on or before June 15, 1961,
and
upon failure to do so, agreed to the foreclosure of the
mortgage,
said respondent thereby effectively and expressly renounced and
waived his right to the prescription of the action
covering the
first promissory note.
This Court had ruled in a similar case that –
... when a debt is already barred by prescription, it
cannot be enforced by the creditor. But a new
contract recognizing and assuming the prescribed
debt would be valid and enforceable ... . 1
Thus, it has been held —
Where, therefore, a party acknowledges the
correctness of a debt and promises to pay it after
the same has prescribed and with full knowledge of

4 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
the prescription he thereby waives the benefit of
prescription. 2
This is not a mere case of acknowledgment of a debt that
has
prescribed but a new promise to pay the debt. The
consideration
of the new promissory note is the pre-existing obligation under
the first promissory note. The statutory limitation bars the
remedy but does not discharge the debt.
A new express promise to pay a debt barred ... will
take the case from the operation of the statute of
limitations as this proceeds upon the ground that
as a statutory limitation merely bars the remedy
and does not discharge the debt, there is something
more than a mere moral obligation to support a
promise, to wit a – pre-existing debt which is a
sufficient consideration for the new the new
promise; upon this sufficient consideration
constitutes, in fact, a new cause of action. 3
... It is this new promise, either made in express
terms or deduced from an acknowledgement as a
legal implication, which is to be regarded as
reanimating the old promise, or as imparting
vitality to the remedy (which by lapse of time had
become extinct) and thus enabling the creditor to
recover upon his original contract. 4
However, the court a quo held that in signing the promissory
note
alone, respondent Confesor cannot thereby bind his wife,
respondent Jovita Villafuerte, citing Article 166 of the
New Civil
Code which provides:
Art. 166. Unless the wife has been declared a non
compos mentis or a spend thrift, or is under
civil
interdiction or is confined in a leprosarium, the

husband cannot alienate or encumber any real

property of the conjugal partnership without, the
wife's consent. If she ay compel her to refuses
unreasonably to give her consent, the court m
grant the same.
We disagree. Under Article 165 of the Civil Code, the husband
is
the administrator of the conjugal partnership. As such
administrator, all debts and obligations contracted by the
husband for the benefit of the conjugal partnership, are
chargeable to the conjugal partnership. 5 No doubt, in
this case,
respondent Confesor signed the second promissory note for the
benefit of the conjugal partnership. Hence the conjugal
partnership is liable for this obligation.
WHEREFORE, the decision subject of the petition is reversed
and
set aside and another decision is hereby rendered reinstating
the
decision of the City Court of Iloilo City of December
27, 1976,
without pronouncement as to costs in this instance. This
 decision
is immediately executory and no motion for extension of time
to
file motion for reconsideration shall be granted.

4.

G.R. No. L-3756

June 30, 1952
SAGRADA ORDEN DE PREDICADORES DEL SANTISMO
ROSARIO DE FILIPINAS, plaintiff-appellee,
vs.
NATIONAL COCONUT CORPORATION, defendantappellant.

First Assistant Corporate Counsel Federico C. Alikpala

and Assistant Attorney Augusto Kalaw for appellant.

5 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
Ramirez and Ortigas for appellee.

LABRADOR, J.:

This is an action to recover the possession of a piece

of real
property (land and warehouses) situated in Pandacan
Manila,
and the rentals for its occupation and use. The land belongs
to the
plaintiff, in whose name the title was registered before
the war.
On January 4, 1943, during the Japanese military occupation,
the
land was acquired by a Japanese corporation by the name
of
Taiwan Tekkosho for the sum of P140,00, and thereupon title
thereto issued in its name (transfer certificate of title No.
64330,
Register of Deeds, Manila). After liberation, more
specifically on
April 4, 1946, the Alien Property Custodian of the United States
of
America took possession, control, and custody thereof under
section 12 of the Trading with the Enemy Act, 40
Stat., 411, for
the reason that it belonged to an enemy national. During
the year
1946 the property was occupied by the Copra Export
Management Company under a custodianship agreement with
United States Alien Property Custodian (Exhibit G), and
when it
vacated the property it was occupied by the defendant
herein.
The Philippine Government made representations with the Office
Alien Property Custodian for the use of property by the
Government (see Exhibits 2, 2-A, 2-B, and 1). On March 31, 1947,
the defendant was authorized to repair the warehouse on the
land, and actually spent thereon the repairs the sum of
P26,898.27. In 1948, defendant leased one-third of the
warehouse to one Dioscoro Sarile at a monthly rental
of P500,
which was later raised to P1,000 a month. Sarile did
not pay the
rents, so action was brought against him. It is not
shown,
however, if the judgment was ever executed.

Plaintiff made claim to the property before the Alien

Property
Custodian of the United States, but as this was denied,
it brought
an action in court (Court of First Instance of Manila,
civil case No.
5007, entitled "La Sagrada Orden Predicadores de la
Provinicia

del Santisimo Rosario de Filipinas," vs. Philippine Alien Property

Administrator, defendant, Republic of the Philippines,
intervenor) to annul the sale of property of Taiwan
Tekkosho,
and recover its possession. The Republic of the Philippines
was
allowed to intervene in the action. The case did not come
for trial
because the parties presented a joint petition in which
it is
claimed by plaintiff that the sale in favor of the Taiwan
Tekkosho
was null and void because it was executed under threats,
duress,
and intimidation, and it was agreed that the title
issued in the
name of the Taiwan Tekkosho be cancelled and the original
title
of plaintiff re-issued; that the claims, rights, title, and
interest of
the Alien Property Custodian be cancelled and held for
naught;
that the occupant National Coconut Corporation has until
February 28, 1949, to recover its equipment from the
property
and vacate the premises; that plaintiff, upon entry of
judgment,
pay to the Philippine Alien Property Administration the sum
of
P140,000; and that the Philippine Alien Property Administration
be free from responsibility or liability for any act of the
National
Coconut Corporation, etc. Pursuant to the agreement the court
rendered judgment releasing the defendant and the intervenor
from liability, but reversing to the plaintiff the right to
recover
from the National Coconut Corporation reasonable rentals for the
use and occupation of the premises. (Exhibit A-1.)

The present action is to recover the reasonable rentals

from
August, 1946, the date when the defendant began to occupy the
premises, to the date it vacated it. The defendant does not
contest
its liability for the rentals at the rate of P3,000 per
month from
February 28, 1949 (the date specified in the judgment in civil
case No. 5007), but resists the claim therefor prior to this
date. It
interposes the defense that it occupied the property in good
faith,
under no obligation whatsoever to pay rentals for the use and
occupation of the warehouse. Judgment was rendered for the
plaintiff to recover from the defendant the sum of P3,000
a
month, as reasonable rentals, from August, 1946, to the date
the
defendant vacates the premises. The judgment declares that

6 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
plaintiff has always been the owner, as the sale of
Japanese
purchaser was void ab initio; that the Alien Property
Administration never acquired any right to the property, but that
it held the same in trust until the determination as to
whether or
not the owner is an enemy citizen. The trial court
further
declares that defendant can not claim any better rights
than its
predecessor, the Alien Property Administration, and that as
defendant has used the property and had subleased portion
thereof, it must pay reasonable rentals for its occupation.

Against this judgment this appeal has been interposed, the

following assignment of error having been made on
defendantappellant's behalf:

The trial court erred in holding the defendant liable for

rentals or
compensation for the use and occupation of the property from
the middle of August, 1946, to December 14, 1948.

1. Want to "ownership rights" of the Philippine Alien

Property
Administration did not render illegal or invalidate its grant
to the
defendant of the free use of property.

2. the decision of the Court of First Instance of Manila

declaring
the sale by the plaintiff to the Japanese purchaser null and
void
ab initio and that the plaintiff was and has remained as
the legal
owner of the property, without legal interruption, is not
conclusive.

3. Reservation to the plaintiff of the right to

recover from the
defendant corporation not binding on the later;

4. Use of the property for commercial purposes in itself

alone
does not justify payment of rentals.

5. Defendant's possession was in good faith.

6. Defendant's possession in the nature of usufruct.

In reply, plaintiff-appellee's counsel contends that the

Philippine
Allien Property Administration (PAPA) was a mere
administrator
of the owner (who ultimately was decided to be plaintiff),
and
that as defendant has used it for commercial purposes and has
leased portion of it, it should be responsible
therefore to the
owner, who had been deprived of the possession for so many
years. (Appellee's brief, pp. 20, 23.)

We can not understand how the trial court, from the mere
fact
that plaintiff-appellee was the owner of the property and
the
defendant-appellant the occupant, which used for its own benefit
but by the express permission of the Alien Property Custodian
of
the United States, so easily jumped to the conclusion
that the
occupant is liable for the value of such use and
occupation. If
defendant-appellant is liable at all, its obligations, must
arise
from any of the four sources of obligations, namley, law,
contract
or quasi-contract, crime, or negligence. (Article 1089,
Spanish
Civil Code.) Defendant-appellant is not guilty of any
offense at all,
because it entered the premises and occupied it with the
permission of the entity which had the legal control
and
administration thereof, the Allien Property Administration.
Neither was there any negligence on its part. There was also no
privity (of contract or obligation) between the Alien
Property
Custodian and the Taiwan Tekkosho, which had secured the
possession of the property from the plaintiff-appellee by the
use
of duress, such that the Alien Property Custodian or its
permittee
(defendant-appellant) may be held responsible for the supposed
illegality of the occupation of the property by the said
Taiwan
Tekkosho. The Allien Property Administration had the control
and administration of the property not as successor to the
interests of the enemy holder of the title, the
Taiwan Tekkosho,
but by express provision of law (Trading with the Enemy Act
of
the United States, 40 Stat., 411; 50 U.S.C.A., 189).
Neither is it a
trustee of the former owner, the plaintiff-appellee
herein, but a

7 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
trustee of then Government of the United States (32 Op.
Atty.
Gen. 249; 50 U.S.C.A. 283), in its own right, to the
exclusion of,
and against the claim or title of, the enemy owner. (Youghioheny
& Ohio Coal Co. vs. Lasevich [1920], 179 N.W., 355; 171 Wis.,
347;
U.S.C.A., 282-283.) From August, 1946, when defendant-appellant
took possession, to the late of judgment on February 28,
1948,
Allien Property Administration had the absolute control of
the
property as trustee of the Government of the United
States, with
power to dispose of it by sale or otherwise, as though
it were the
absolute owner. (U.S vs. Chemical Foundation [C.C.A. Del. 1925],
5
F. [2d], 191; 50 U.S.C.A., 283.) Therefore, even if
defendantappellant were liable to the Allien Property
Administration for
rentals, these would not accrue to the benefit of
the plaintiffappellee, the owner, but to the United States
Government.

But there is another ground why the claim or rentals can

not be
made against defendant-appellant. There was no agreement
between the Alien Property Custodian and the
defendantappellant for the latter to pay rentals on the
property. The
existence of an implied agreement to that effect is
contrary to the
circumstances. The copra Export Management Company, which
preceded the defendant-appellant, in the possession and use of
the property, does not appear to have paid rentals therefor,
as it
occupied it by what the parties denominated a
"custodianship
agreement," and there is no provision therein for the payment
of
rentals or of any compensation for its custody and or
occupation
and the use. The Trading with the Enemy Act, as originally
enacted, was purely a measure of conversation, hence,
it is very
unlikely that rentals were demanded for the use of the
property.
When the National coconut Corporation succeeded the Copra
Export Management Company in the possession and use of the
property, it must have been also free from payment of rentals,
especially as it was Government corporation, and steps where
then being taken by the Philippine Government to secure
the
property for the National Coconut Corporation. So that the
circumstances do not justify the finding that there was an
implied

agreement that the defendant-appellant was to pay for the use

and occupation of the premises at all.

The above considerations show that plaintiff-appellee's claim for

rentals before it obtained the judgment annulling the sale
of the
Taiwan Tekkosho may not be predicated on any negligence or
offense of the defendant-appellant, or any contract, express
or
implied, because the Allien Property Administration was
neither
a trustee of plaintiff-appellee, nor a privy to the
obligations of the
Taiwan Tekkosho, its title being based by legal
provision of the
seizure of enemy property. We have also tried in vain
to find a
law or provision thereof, or any principle in quasi
contracts or
equity, upon which the claim can be supported. On the contrary,
as defendant-appellant entered into possession without any
expectation of liability for such use and occupation, it is only
fair
and just that it may not be held liable therefor. And as
to the rents
it collected from its lessee, the same should accrue to
it as a
possessor in good faith, as this Court has already expressly
held.
(Resolution, National Coconut Corporation vs. Geronimo, 83 Phil.
467.)

Lastly, the reservation of this action may not be

considered as
vesting a new right; if no right to claim for rentals
existed at the
time of the reservation, no rights can arise or
accrue from such
reservation alone.

Wherefore, the part of the judgment appealed from, which

sentences defendant-appellant to pay rentals from August, 1946,
to February 28, 1949, is hereby reversed. In all other
respects the
judgment is affirmed. Costs of this appeal shall be
against the
plaintiff-appellee.

5.
G.R. No. 183204
January 13, 2014

8 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
THE METROPOLITAN BANK AND TRUST COMPANY,
Petitioner,
vs.
ANA GRACE ROSALES AND YO YUK TO, Respondents.

D E C I S I O N

DEL CASTILLO, J.:

Bank deposits, which are in the nature of a simple

loan or
mutuum,1 must be paid upon demand by the depositor.2

This Petition for Review on Certiorari3 under Rule 45

of the
Rules of Court assails the April 2, 2008 Decision4 and the May
30,
2008 Resolution5 of he Court of Appeals CA) in CA-
G.R. CV No.
89086.

Factual Antecedents

Petitioner Metropolitan Bank and Trust Company is a

domestic
banking corporation duly organized and existing under the laws
of the Philippines.6 Respondent Ana Grace Rosales (Rosales)
is
the owner of China Golden Bridge Travel Services,7
a travel
agency.8 Respondent Yo Yuk To is the mother of respondent
Rosales.9

In 2000, respondents opened a Joint Peso Account10

with
petitioner’s Pritil-Tondo Branch.11 As of August 4, 2004,
respondents’ Joint Peso Account showed a balance of
P2,515,693.52.12

In May 2002, respondent Rosales accompanied her client

Liu
Chiu Fang, a Taiwanese National applying for a retiree’s visa
from
the Philippine Leisure and Retirement Authority (PLRA), to
petitioner’s branch in Escolta to open a savings
account, as

required by the PLRA.13 Since Liu Chiu Fang could speak only in
Mandarin, respondent Rosales acted as an interpreter for her.14

On March 3, 2003, respondents opened with

petitioner’s PritilTondo Branch a Joint Dollar Account15
with an initial deposit of
US$14,000.00.16

On July 31, 2003, petitioner issued a "Hold Out" order

against
respondents’ accounts.17

On September 3, 2003, petitioner, through its Special

Audit
Department Head Antonio Ivan Aguirre, filed before the Office
of
the Prosecutor of Manila a criminal case for Estafa
through False
Pretences, Misrepresentation, Deceit, and Use of Falsified
Documents, docketed as I.S. No. 03I-25014,18 against respondent
Rosales.19 Petitioner accused respondent Rosales and an
unidentified woman as the ones responsible for the unauthorized
and fraudulent withdrawal of US$75,000.00 from Liu Chiu Fang’s
dollar account with petitioner’s Escolta Branch.20 Petitioner
alleged that on February 5, 2003, its branch in
Escolta received
from the PLRA a Withdrawal Clearance for the dollar account
of
Liu Chiu Fang;21 that in the afternoon of the same day,
respondent Rosales went to petitioner’s Escolta Branch to
inform
its Branch Head, Celia A. Gutierrez (Gutierrez), that Liu Chiu
Fang
was going to withdraw her dollar deposits in cash;22
that
Gutierrez told respondent Rosales to come back the following
day because the bank did not have enough dollars;23 that on
February 6, 2003, respondent Rosales accompanied an
unidentified impostor of Liu Chiu Fang to the bank;24 that
the
impostor was able to withdraw Liu Chiu Fang’s dollar
deposit in
the amount of US$75,000.00;25 that on March 3, 2003,
respondents opened a dollar account with petitioner; and
that
the bank later discovered that the serial numbers of the
dollar
notes deposited by respondents in the amount of
US$11,800.00
were the same as those withdrawn by the impostor.26

9 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n
Respondent Rosales, however, denied taking part in the
fraudulent and unauthorized withdrawal from the dollar account
of Liu Chiu Fang.27 Respondent Rosales claimed that she did
not
go to the bank on February 5, 2003.28 Neither did she
inform
Gutierrez that Liu Chiu Fang was going to close her
account.29
Respondent Rosales further claimed that after Liu Chiu Fang
opened an account with petitioner, she lost track of
her.30
Respondent Rosales’ version of the events that transpired
thereafter is as follows:

On February 6, 2003, she received a call from Gutierrez

informing her that Liu Chiu Fang was at the bank to close
her
account.31 At noon of the same day, respondent Rosales went to
the bank to make a transaction.32 While she was transacting
with the teller, she caught a glimpse of a woman
seated at the
desk of the Branch Operating Officer, Melinda Perez
(Perez).33
After completing her transaction, respondent Rosales
approached Perez who informed her that Liu Chiu Fang had
closed her account and had already left.34 Perez then gave
a copy
of the Withdrawal Clearance issued by the PLRA to respondent
Rosales.35 On June 16, 2003, respondent Rosales received a call
from Liu Chiu Fang inquiring about the extension of her PLRA
Visa and her dollar account.36 It was only then that Liu Chiu
Fang
found out that her account had been closed without her
knowledge.37 Respondent Rosales then went to the bank to
inform Gutierrez and Perez of the unauthorized
withdrawal.38
On June 23, 2003, respondent Rosales and Liu Chiu Fang went to
the PLRA Office, where they were informed that the Withdrawal
Clearance was issued on the basis of a Special Power of
Attorney
(SPA) executed by Liu Chiu Fang in favor of a certain
Richard
So.39 Liu Chiu Fang, however, denied executing the SPA.40
The
following day, respondent Rosales, Liu Chiu Fang, Gutierrez, and
Perez met at the PLRA Office to discuss the unauthorized
withdrawal.41 During the conference, the bank officers
assured
Liu Chiu Fang that the money would be returned to her.42

On December 15, 2003, the Office of the City Prosecutor of

Manila
issued a Resolution dismissing the criminal case for lack of
probable cause.43 Unfazed, petitioner moved for
reconsideration.

On September 10, 2004, respondents filed before the

Regional
Trial Court (RTC) of Manila a Complaint44 for
Breach of
Obligation and Contract with Damages, docketed as Civil Case No.
04110895 and raffled to Branch 21, against petitioner.
Respondents alleged that they attempted several times to
withdraw their deposits but were unable to because
petitioner
had placed their accounts under "Hold Out" status.45
No
explanation, however, was given by petitioner as to why it
issued
the "Hold Out" order.46 Thus, they prayed that the "Hold
Out"
order be lifted and that they be allowed to withdraw their
deposits.47 They likewise prayed for actual, moral, and
exemplary damages, as well as attorney’s fees.48

Petitioner alleged that respondents have no cause of

action
because it has a valid reason for issuing the "Hold Out"
order.49
It averred that due to the fraudulent scheme of respondent
Rosales, it was compelled to reimburse Liu Chiu Fang the amount
of US$75,000.0050 and to file a criminal complaint for
Estafa
against respondent Rosales.51

While the case for breach of contract was being tried,

the City
Prosecutor of Manila issued a Resolution dated February
18,
2005, reversing the dismissal of the criminal complaint.52 An
Information, docketed as Criminal Case No. 05-236103,53 was
then filed charging respondent Rosales with Estafa before Branch
14 of the RTC of Manila.54

Ruling of the Regional Trial Court

On January 15, 2007, the RTC rendered a Decision55

finding
petitioner liable for damages for breach of contract.56
The RTC

10 | P a g e G l e n n C h u a . K
a t r i n a O n g o c o . H a n n a h M a t t i E s p i n o s a .
D o m i n i c k B o t o r C o l l a b o r a t i o n