COMSAVINGS BANK v SPS CAPISTRANO these photos, released the loan to GCB, and turned over the pictures
ed the loan to GCB, and turned over the pictures to the NHMFC
The Catch-Alls | Aug 28, 2013|Bersamin
Digest maker: Zoe
SUMMARY: In order to obtain a mortgage loan from the National Home Mortgage Finance
Corporation (NHMFC) in the name of Spouses Capistrano, Comsavings bank had Estrella
Capistrano pre-sign a certificate of house completion and acceptance, despite the fact that
their house was not being constructed yet. They also submitted false loan documents in
order to secure reimbursement from the NHMFC. The SC held them liable for their
misrepresentations.
DOCTRINE: A banking institution serving as an originating bank for the Unified Home
Lending Program (UHLP) of the Government owes a duty to observe the highest degree of
diligence and a high standard of integrity and performance in all its transactions with its
clients because its business is imbued with public interest.
FACTS:
● Spouses Capistrano wanted to build a house on their residential lot in Bacoor, Cavite
so they availed themselves of the Unified Home Lending Program (UHLP) of the
National Home Mortgage Finance Corporation (NHFMC). They entered into a
construction contract with GCB Builders for a contract price of P265,000 with GCB
undertaking to complete the construction of the house within 75 days.
● To finance the construction, spouses Capistrano applied for a loan (under the UHLP)
with Comsavings Bank which was an NHFMC-accredited originator.
● Comsavings Bank told Estrella Capistrano that she would have to sign various
documents as part of the requirements to release the loan from NHFMC.
Particularly, they had her pre-sign a certificate of house completion and
acceptance, despite the fact that the house wasn’t even being constructed yet.
[IMPORTANT FACT]
● By October 1992, Comsavings Bank had released P265, 000 to GCB Builders, such
amount was paid out of the proceeds of the loan from NHMFC. The spouses
inquired when their house would be completed but GCB Builders kept giving
excuses.
● In February 1993, respondent spouses went to the construction site and were
dismayed to find that it was still unfinished. (there were no doorknobs; that the
toilet bath floor was not even constructed yet because the portion of the house was
still soil; that there were no toilet and bathroom fixtures, etc.)
● In May, 1993, NHMFC advised the spouses that they should start paying their
monthly amortizations of P4,278 because their loan had already been released
directly to Comsavings Bank. Spouses protested because they claim not to have
signed the completion certificate and acceptance (requisite for release of loan).
● Spouses Capistrano filed a case for breach of contract and damages against GCB
Builders and Comsavings Bank.
● Comsavings claims that respondents are estopped from assailing their signing of
the certificate of house acceptance/completion on July 2, 1992 considering they had
the option to not pre-sign the certificate.
● It turns out that Comsavings had submitted false documents to the NHMFC in order
to receive the loan. One requirement for the release of the loan and reimbursement
from NHMFC was the submission of pictures of the fully constructed house bearing
the signatures of the respondents. GCB has submitted photos of a different house,
without signatures of respondents. Despite the irregularity, Comsavings accepted
for reimbursement.
● RTC and CA both held Comsavings to be jointly and severally liable with GCB
Builders since it committed misrepresentations in obtaining the mortgage loan from
the NHMFC in the name of the respondents.
ISSUE/S & RATIO:
WON Comsavings Bank should be held jointly and severally liable with GCB - YES
 Comsavings’s liability was not based on breach of warranties in its purchase of loan
agreement with the NHMFC but on Article 20 and 1170 of the Civil Code (see
notes).
 A banking institution like Comsavings is obliged to exercise the highest degree of
diligence as well as high standards of integrity and performance in all its
transactions because its business is imbued with public interest. The stability of
banks largely depends on the confidence of the people in the honesty and efficiency
of banks
 Comsavings was grossly negligent in its dealings with respondents. As an originator
under the UHLP it was fully aware that the purpose of the signed certificate of
completion/acceptance was to affirm that the house had been completely
constructed according to the approved plans and specifications, and that respondents
had thereby accepted the delivery of the complete house. Given the purpose of the
certificate, Comsavings should have desisted from presenting the certificate to
respondents for their signature without such conditions having been fulfilled.
 Respondents were prejudiced by Comsavings acts because NHMFC demanded
payment of their monthly amortizations despite the non-completion of the house.
 Contrary to the claim of Comsavings Bank, the records contain no showing that
respondents had been given the option not to pre-sign the certificate of
acceptance/completion
 Comsavings was also negligent in submitting pictures which were unsigned by
respondents and thus unauthenticated to the NHMFC for the reimbursement of the
loan. They should have checked first whether the pictures carried the signatures of
respondents on their dorsal sides, and whether the house depicted on the pictures
was really the house of respondents, before releasing the proceeds of the loan to GCB
Builders and before submitting the pictures to NHMFC for the reimbursement.
RULING: WHEREFORE, we AFFIRM the decision promulgated by the Court of Appeals on
November 30, 2005, subject to the MODIFICATIONS that Comsavings Bank and GCB Builders
are further ordered to pay, jointly and severally, to the Spouses Danilo and Estrella Capistrano
the following amounts: (1) ₱25,000.00 as temperate damages; (2) ₱30,000.00 as attorney’s fees;
(3) interest of 6% per annum on all the amounts of damages reckoned from the finality of this
decision; and (4) the costs of suit
Notes:
Article 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof, are liable for damages.