Yam et al. v. CA et al.

G.R. No. 104726, February 11, 1999 (Decision)

Mendoza, J.:

FACTS:
Petitioners obtained an IGLF (Industrial Guarantee and Loan Fund) loan, of
P300,000.00 evidenced by two promissory notes, dated July 3, 1981 and September
30, 1981. The loan agreement, with Assumption of Solidary Liability, entered by the
parties were 14% annual interest rate, 2% monthly penalty, 1% annual service charge
and 10% attorney’s fee. The loan was secured by a chattel mortgage on the printing
machinery in petitioners' establishment.

On November 4, 1985, private respondent was placed under receivership by the

Central Bank and Ricardo Lirio and Cristina Destajo were appointed as receiver and in-
house examiner, respectively.

On May 17, 1986, petitioners made a partial payment of P50,000.00 on the

second loan. As of July 31, 1986, petitioners' total liability to private respondent was
P727,001.35, broken down as follows:

Principal — P295,469.47

Interest — 165,385.00

Penalties — 254,820.55

Service Charges — 11,326.33

—————

TOTAL — P727,001.35

On this date(July 31, 1986), petitioners paid P410,854.47(sum of principal, interest, less
the partial payment) by means of a Pilipinas Bank check, receipt of which was
acknowledged by Destajo. The corresponding voucher for the check bears the
following notation: "full payment of IGLF LOAN.”

Two demand letters dated September 4, 1986 and September 5, 1986 were sent
by private respondent seeking payment of the balance of P266,146.88. As petitioners
did not respond, private respondent filed this case in the Regional Trial Court of Metro
Manila for the collection of P266,146.88 plus interests, penalties, and service charges
or, in the alternative, for the foreclosure of the mortgaged machineries.

Petitioners answered that by paying the P410,854.47, they had fully paid their
obligation to private respondent because, they contended, that some time after
receiving private respondent's letter of July 25, 1986 (concerning the conditional offer
to reduce their penalty charges), petitioner Victor Yam and his wife, Elena Yam, met
with Carlos Sobrepeñas, president of respondent corporation, and the latter agreed to
waive the penalties and service charges, provided petitioners paid the principal and
interest, computed as of July 31, 1986, less the earlier payment of P50,000.00. So in
the Pilipinas Bank check they issued, it bore the notation "full payment of IGLF loan."

The RTC decided in favour of private respondent. CA affirmed the decision of

the trial court in toto.

ISSUE: Whether or not petitioners are liable for the payment of the penalties and
service charges on their loan which, as of July 31,1986, amounted to P266,146.88.

RULING:
Yes. The petitioners are liable for the payment of the penalties and service
charges on their loan.

The alleged agreement to condone P266,196.88 of the second IGLF loan was
not reduced in writing. Art. 1270, par. 2 of the Civil Code provides that express
condonation must comply with the forms of donation. Art. 748, par. 3 provides that the
donation and acceptance of a movable, the value of which exceeds P5,000,00, must
be made in writing, otherwise the same shall be void.

The notation in "full payment of IGLF loan" merely states petitioners' intention in
making the payment, but in no way does it bind private respondent. The notation is not
on a receipt issued by respondent corporation, through its receiver, because then it
would be an admission against interest. Nor was notation on a certificate of full
payment from respondent corporation.

Destajo, by countersigning the voucher, did no more than acknowledge receipt

of the payment. She cannot be held to have assented thereby to the payment in full of
petitioners' indebtedness to private respondent. It was obvious she had no authority to
condone any indebtedness, since, in a receivership, her authority is limited to "issuing
official receipts, preparing check vouchers and documentation.”

Sobrepeñas had no authority to condone the debt since respondent corporation

had been placed under receivership. From Villanueva v. Court of Appeals, “the
appointment of a receiver operates to suspend the authority of a [corporation] and of
its directors and officers over its property and effects, such authority being reposed in
the receiver:"

Union Bank of the Philippines v. Development Bank of the Philippines

G.R. 191555, January 20, 2014(Decision)

PERLAS-BERNABE, J.:

FACTS:

On May 21, 1979, by a Deed of Cession of Property In Payment of Debt (dacion en

pago), Foodmasters, Inc. (FI) ceded properties to DBP for a) full and complete
satisfaction of FI’s loan obligations to DBP; and (b) the direct assumption by DBP of
FI’s obligations to Bancom in the amount of ₱17,000,000.00 (assumed obligations).

DBP, as the new owner of the processing plant, leased back for 20 years the said
property to FI (Lease Agreement) which was, in turn, obliged to pay monthly rentals to
be shared by DBP and Bancom.

DBP also entered into a separate agreement with Bancom (Assumption Agreement)
whereby the former: (a) confirmed its assumption of FI’s obligations to Bancom; and (b)
undertook to remit up to 30% of any and all rentals due from FI to Bancom (subject
rentals) which would serve as payment of the assumed obligations, to be paid in
monthly installments.

On May 23, 1979, FI assigned its leasehold rights under the Lease Agreement to
Foodmasters Worldwide, Inc. (FW); while on May 9, 1984, Bancom conveyed all its
receivables, including, among others, DBP’s assumed obligations, to Union Bank.

Starting on on June 20, 1984, when Union bank filed before the RTC a collection case
against DBP on the rental payments made by FI, Union Bank and DBP have been filing
and appealing suits against each other. The latest ruling by the Court on January 13,
2004 included an order to Union Bank to return to DBP the amounts it received
pursuant to a writ of execution on a previous decision where DBP had to fully pay its
obligation to Union Bank under the Assumption Agreement.

Thereafter, DBP moved for the execution of the said decision before the RTC. The RTC
issued a writ of execution (September 6, 2005 Writ of Execution), ordering Union Bank
to return to DBP all funds it received pursuant to the October 15, 2001 Writ of
Execution.

On September 13, 2005, Union Bank filed a Manifestation and Motion to Affirm Legal
Compensation praying that the RTC apply legal compensation between itself and DBP
in order to offset the return of the funds it previously received from DBP. On November
9, 2005, the RTC issued an Order denying the above-mentioned motion for lack of
merit. On an appeal, the CA affirmed the denial of legal compensation considering that
(a) the RTC only implemented the Court’s January 13, 2004 Decision in G.R. No.
155838 which by then had already attained finality; (b) DBP is not a debtor of Union
Bank; and (c) there is neither a demandable nor liquidated debt from DBP to Union
Bank.

ISSUE: Whether or not the CA correctly upheld the denial of Union Bank’s motion to
affirm legal compensation.

RULING:

The petition is bereft of merit. Compensation is defined as a mode of extinguishing

obligations whereby two persons in their capacity as principals are mutual debtors and
creditors of each other with respect to equally liquidated and demandable obligations
to which no retention or controversy has been timely commenced and communicated
by third parties. The requisites therefor are provided under Article 1279 of the Civil
Code which reads as follows:

Art. 1279. In order that compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;

(2) That both debts consist in a sum of money, or if the things due are consumable,
they be of the same kind, and also of the same quality if the latter has been
stated;

(3) That the two debts be due;

(4) That they be liquidated and demandable.

(5) That over neither of them there be any retention or controversy, commenced by
third persons and communicated in due time to the debtor.

The rule on legal compensation is stated in Article 1290 of the Civil Code which
provides that "[w]hen all the requisites mentioned in Article 1279 are present,
compensation takes effect by operation of law, and extinguishes both debts to the
concurrent amount, even though the creditors and debtors are not aware of the
compensation.”

Therefore, compensation could not take place between these debts for the apparent
reason that requisites 3 and 4 under Article 1279 of the Civil Code are not present.
Since DBP’s assumed obligations to Union Bank for remittance of the lease payments
are – in the Court’s words – “contingent on the prior payment thereof by FW to DBP," it
cannot be said that both debts are due (requisite 3 of Article 1279 of the Civil Code).
Also, the Court observed that any deficiency that DBP had to make up for the full
satisfaction of the assumed obligations "cannot be determined until after the
satisfaction of FW’s obligation to DBP." In this regard, it cannot be concluded that the
same debt had already been liquidated, and thereby became demandable (requisite 4
of Article 1279 of the Civil Code). Thus, CA correctly upheld the denial of Union Bank’s
motion to affirm legal compensation.