[G.R. No. 115324. February 19, 2003] PRODUCERS B N! OF "#E P#$%$PP$NES &'o( F$RS" $N"ERN "$ON % B N!

) , Petitioner, v. HON. COURT OF APPEALS AND FRANKLIN VIVES, respondents. DECISION CALLEJO, SR., J.: This is a petition o! !e"ie# on certiorari o the De$ision% o the Co&!t o Appea's (ate( J&ne )*, %++% in CA,-.R. CV No. %%.+% an( o its Reso'&tion) (ate( /a0 *, %++1, (en0in2 the 3otion o! !e$onsi(e!ation o sai( (e$ision i'e( 40 petitione! P!o(&$e!s 5an6 o the Phi'ippines. So3eti3e in %+.+, p!i"ate !espon(ent F!an6'in Vi"es #as as6e( 40 his nei2h4o! an( !ien( An2e'es San$he7 to he'p he! !ien( an( to#n3ate, Co'. A!t&!o Do!oni''a, in in$o!po!atin2 his 4&siness, the Ste!e'a /a!6etin2 an( Se!"i$es 8Ste!e'a o! 4!e"it09. Spe$i i$a''0, San$he7 as6e( p!i"ate !espon(ent to (eposit in a 4an6 a $e!tain a3o&nt o 3one0 in the 4an6 a$$o&nt o Ste!e'a o! p&!poses o its in$o!po!ation. She ass&!e( p!i"ate !espon(ent that he $o&'( #ith(!a# his 3one0 !o3 sai( a$$o&nt #ithin a 3onths ti3e. P!i"ate !espon(ent as6e( San$he7 to 4!in2 Do!oni''a to thei! ho&se so that the0 $o&'( (is$&ss San$he7s !e:&est. ; On /a0 +, %+.+, p!i"ate !espon(ent, San$he7, Do!oni''a an( a $e!tain Est!e''a D&3a2pi, Do!oni''as p!i"ate se$!eta!0, 3et an( (is$&sse( the 3atte!. The!ea te!, !e'0in2 on the ass&!an$es an( !ep!esentations o San$he7 an( Do!oni''a, p!i"ate !espon(ent iss&e( a $he$6 in the a3o&nt o T#o H&n(!e( Tho&san( Pesos 8P)<<,<<<.<<9 in a"o! o Ste!e'a. P!i"ate !espon(ent inst!&$te( his #i e, /!s. Ino$en$ia Vi"es, to a$$o3pan0 Do!oni''a an( San$he7 in openin2 a sa"in2s a$$o&nt in the na3e o Ste!e'a in the 5&en(ia, /a6ati 4!an$h o P!o(&$e!s 5an6 o the Phi'ippines. Ho#e"e!, on'0 San$he7, /!s. Vi"es an( D&3a2pi #ent to the 4an6 to (eposit the $he$6. The0 ha( #ith the3 an a&tho!i7ation 'ette! !o3 Do!oni''a a&tho!i7in2 San$he7 an( he! $o3panions, in $oo!(ination #ith /!. R& o Atien7a, to open an a$$o&nt o! Ste!e'a /a!6etin2 Se!"i$es in the a3o&nt o P)<<,<<<.<<. In openin2 the a$$o&nt, the a&tho!i7e( si2nato!ies #e!e Ino$en$ia Vi"es an(=o! An2e'es San$he7. A pass4oo6 o! Sa"in2s A$$o&nt No. %<,%*>. #as the!ea te! iss&e( to /!s. Vi"es.?1 S&4se:&ent'0, p!i"ate !espon(ent 'ea!ne( that Ste!e'a #as no 'on2e! ho'(in2 o i$e in the a((!ess p!e"io&s'0 2i"en to hi3. A'a!3e(, he an( his #i e #ent to the 5an6 to "e!i 0 i thei! 3one0 #as sti'' inta$t. The 4an6 3ana2e! !e e!!e( the3 to /!. R& o Atien7a, the assistant 3ana2e!, #ho in o!3e( the3 that pa!t o the 3one0 in Sa"in2s A$$o&nt No. %<,%*>. ha( 4een #ith(!a#n 40 Do!oni''a, an( that on'0 P+<,<<<.<< !e3aine( the!ein. He 'i6e#ise to'( the3 that /!s. Vi"es $o&'( not #ith(!a# sai( !e3ainin2 a3o&nt 4e$a&se it ha( to ans#e! o! so3e post(ate( $he$6s iss&e( 40 Do!oni''a. A$$o!(in2 to Atien7a, a te! /!s. Vi"es an( San$he7 opene( Sa"in2s A$$o&nt No. %<,%*>., Do!oni''a opene( C&!!ent A$$o&nt No. %<,<;)< o! Ste!e'a an( a&tho!i7e( the 5an6 to (e4it Sa"in2s A$$o&nt No. %<,%*>. o! the a3o&nts ne$essa!0 to $o"e! o"e!(!a#in2s in C&!!ent A$$o&nt No. %<,<;)<. In openin2 sai( $&!!ent a$$o&nt, Ste!e'a, th!o&2h Do!oni''a, o4taine( a 'oan o P%.*,<<<.<< !o3 the 5an6. To $o"e! pa03ent the!eo , Do!oni''a iss&e( th!ee post(ate( $he$6s, a'' o #hi$h #e!e (ishono!e(. Atien7a a'so sai( that Do!oni''a $o&'( assi2n o! #ith(!a# the 3one0 in Sa"in2s A$$o&nt No. %<,%*>. 4e$a&se he #as the so'e p!op!ieto! o Ste!e'a. * P!i"ate !espon(ent t!ie( to 2et in to&$h #ith Do!oni''a th!o&2h San$he7. On J&ne )+, %+.+, he !e$ei"e( a 'ette! !o3 Do!oni''a, ass&!in2 hi3 that his 3one0 #as inta$t an( #o&'( 4e !et&!ne( to hi3. On A&2&st %;, %+.+, Do!oni''a iss&e( a post(ate( $he$6 o! T#o H&n(!e( T#e'"e Tho&san( Pesos 8P)%),<<<.<<9 in a"o! o p!i"ate !espon(ent. Ho#e"e!, &pon p!esent3ent the!eo 40 p!i"ate !espon(ent to the (!a#ee 4an6, the $he$6 #as (ishono!e(. Do!oni''a !e:&este( p!i"ate !espon(ent to p!esent the sa3e $he$6 on Septe34e! %*, %+.+ 4&t #hen the 'atte! p!esente( the $he$6, it #as a2ain (ishono!e(. > P!i"ate !espon(ent !e e!!e( the 3atte! to a 'a#0e!, #ho 3a(e a #!itten (e3an( &pon Do!oni''a o! the !et&!n o his $'ients 3one0. Do!oni''a iss&e( anothe! $he$6 o! P)%),<<<.<< in p!i"ate !espon(ents a"o! 4&t the $he$6 #as a2ain (ishono!e( o! ins& i$ien$0 o &n(s.?. P!i"ate !espon(ent instit&te( an a$tion o! !e$o"e!0 o s&3 o 3one0 in the Re2iona' T!ia' Co&!t 8RTC9 in Pasi2, /et!o /ani'a a2ainst Do!oni''a, San$he7, D&3a2pi an( petitione!. The $ase #as (o$6ete( as Ci"i' Case No. 111@*. He a'so i'e( $!i3ina' a$tions a2ainst Do!oni''a, San$he7 an( D&3a2pi in the RTC. Ho#e"e!, San$he7 passe( a#a0 on /a!$h %>, %+@* #hi'e the $ase #as pen(in2 4e o!e the t!ia' $o&!t. On O$to4e! ;, %++*, the RTC o Pasi2, 5!an$h %*., p!o3&'2ate( its De$ision in Ci"i' Case No. 111@*, the (ispositi"e po!tion o #hi$h !ea(s:

IN VIEA OF THE FORE-OIN-, B&(23ent is he!e40 !en(e!e( senten$in2 (e en(ants A!t&!o J. Do!oni'a, Est!e''a D&3a2pi an( P!o(&$e!s 5an6 o the Phi'ippines to pa0 p'ainti F!an6'in Vi"es Boint'0 an( se"e!a''0 8a9 the a3o&nt o P)<<,<<<.<<, !ep!esentin2 the 3one0 (eposite(, #ith inte!est at the 'e2a' !ate !o3 the i'in2 o the $o3p'aint &nti' the sa3e is &''0 pai(C 849 the s&3 o P*<,<<<.<< o! 3o!a' (a3a2es an( a si3i'a! a3o&nt o! eDe3p'a!0 (a3a2esC 8$9 the a3o&nt o P1<,<<<.<< o! atto!ne0s eesC an( 8(9 the $osts o the s&it. SO ORDERED.?@ Petitione! appea'e( the t!ia' $o&!ts (e$ision to the Co&!t o Appea's. In its De$ision (ate( J&ne )*, %++%, the appe''ate $o&!t a i!3e( in toto the (e$ision o the RTC.?+ It 'i6e#ise (enie( #ith ina'it0 petitione!s 3otion o! !e$onsi(e!ation in its Reso'&tion (ate( /a0 *, %++1.%< On J&ne ;<, %++1, petitione! i'e( the p!esent petition, a!2&in2 that I. THE HONORA5LE COURT OF APPEALS ERRED IN UPHOLDIN- THAT THE TRANSACTION 5ETAEEN THE DEFENDANT DORONILLA AND RESPONDENT VIVES AAS ONE OF SI/PLE LOAN AND NOT ACCO//ODATIONC II. THE HONORA5LE COURT OF APPEALS ERRED IN UPHOLDIN- THAT PETITIONERS 5ANK /ANA-ER, /R. RUFO ATIENEA, CONNIVED AITH THE OTHER DEFENDANTS IN DEFRAUDIN- PETITIONER 8Si$. Sho&'( 4e PRIVATE RESPONDENT9 AND AS A CONSEFUENCE, THE PETITIONER SHOULD 5E HELD LIA5LE UNDER THE PRINCIPLE OF NATURAL JUSTICEC III. THE HONORA5LE COURT OF APPEALS ERRED IN ADOPTIN- THE ENTIRE RECORDS OF THE RE-IONAL TRIAL COURT AND AFFIR/IN- THE JUD-/ENT APPEALED FRO/, AS THE FINDIN-S OF THE RE-IONAL TRIAL COURT AERE 5ASED ON A /ISAPPREHENSION OF FACTSC IV. THE HONORA5LE COURT OF APPEALS ERRED IN DECLARIN- THAT THE CITED DECISION IN SALUDARES VS. /ARTINEE, )+ SCRA .1*, UPHOLDIN- THE LIA5ILITG OF AN E/PLOGER FOR ACTS CO//ITTED 5G AN E/PLOGEE IS APPLICA5LEC V. THE HONORA5LE COURT OF APPEALS ERRED IN UPHOLDIN- THE DECISION OF THE LOAER COURT THAT HEREIN PETITIONER 5ANK IS JOINTLG AND SEVERALLG LIA5LE AITH THE OTHER DEFENDANTS FOR THE A/OUNT OF P)<<,<<<.<< REPRESENTIN- THE SAVIN-S ACCOUNT DEPOSIT, P*<,<<<.<< FOR /ORAL DA/A-ES, P*<,<<<.<< FOR EHE/PLARG DA/A-ES, P1<,<<<.<< FOR ATTORNEGS FEES AND THE COSTS OF SUIT.?%% P!i"ate !espon(ent i'e( his Co33ent on Septe34e! );, %++1. Petitione! i'e( its Rep'0 the!eto on Septe34e! )*, %++*. The Co&!t then !e:&i!e( p!i"ate !espon(ent to s&43it a !eBoin(e! to the !ep'0. Ho#e"e!, sai( !eBoin(e! #as i'e( on'0 on Ap!i' )%,

%++., (&e to petitione!s (e'a0 in &!nishin2 p!i"ate !espon(ent #ith $op0 o the !ep'0?%) an( se"e!a' s&4stit&tions o $o&nse' on the pa!t o p!i"ate !espon(ent.%; On Jan&a!0 %., )<<%, the Co&!t !eso'"e( to 2i"e (&e $o&!se to the petition an( !e:&i!e( the pa!ties to s&43it thei! !espe$ti"e 3e3o!an(a. %1 Petitione! i'e( its 3e3o!an(&3 on Ap!i' %>, )<<% #hi'e p!i"ate !espon(ent s&43itte( his 3e3o!an(&3 on /a!$h )), )<<%. Petitione! $onten(s that the t!ansa$tion 4et#een p!i"ate !espon(ent an( Do!oni''a is a si3p'e 'oan 8mutuum9 sin$e a'' the e'e3ents o a mutuum a!e p!esent: i!st, #hat #as (e'i"e!e( 40 p!i"ate !espon(ent to Do!oni''a #as 3one0, a $ons&3a4'e thin2C an( se$on(, the t!ansa$tion #as one!o&s as Do!oni''a #as o4'i2e( to pa0 inte!est, as e"i(en$e( 40 the $he$6 iss&e( 40 Do!oni''a in the a3o&nt o P)%),<<<.<<, o! P%),<<< 3o!e than #hat p!i"ate !espon(ent (eposite( in Ste!e'as 4an6 a$$o&nt.?%* /o!eo"e!, the a$t that p!i"ate !espon(ent s&e( his 2oo( !ien( San$he7 o! his ai'&!e to !e$o"e! his 3one0 !o3 Do!oni''a sho#s that the t!ansa$tion #as not 3e!e'0 2!at&ito&s 4&t ha( a 4&siness an2'e to it. Hen$e, petitione! a!2&es that it $annot 4e he'( 'ia4'e o! the !et&!n o p!i"ate !espon(ents P)<<,<<<.<< 4e$a&se it is not p!i"0 to the t!ansa$tion 4et#een the 'atte! an( Do!oni''a.%> It a!2&es &!the! that petitione!s Assistant /ana2e!, /!. R& o Atien7a, $o&'( not 4e a&'te( o! a''o#in2 Do!oni''a to #ith(!a# !o3 the sa"in2s a$$o&nt o Ste!e'a sin$e the 'atte! #as the so'e p!op!ieto! o sai( $o3pan0. Petitione! asse!ts that Do!oni''as /a0 @, %+.+ 'ette! a((!esse( to the 4an6, a&tho!i7in2 /!s. Vi"es an( San$he7 to open a sa"in2s a$$o&nt o! Ste!e'a, (i( not $ontain an0 a&tho!i7ation o! these t#o to #ith(!a# !o3 sai( a$$o&nt. Hen$e, the a&tho!it0 to #ith(!a# the!e !o3 !e3aine( eD$'&si"e'0 #ith Do!oni''a, #ho #as the so'e p!op!ieto! o Ste!e'a, an( #ho a'one ha( 'e2a' tit'e to the sa"in2s a$$o&nt.%. Petitione! points o&t that no e"i(en$e othe! than the testi3onies o p!i"ate !espon(ent an( /!s. Vi"es #as p!esente( (&!in2 t!ia' to p!o"e that p!i"ate !espon(ent (eposite( hisP)<<,<<<.<< in Ste!e'as a$$o&nt o! p&!poses o its in$o!po!ation. ?%@ Hen$e, petitione! sho&'( not 4e he'( 'ia4'e o! a''o#in2 Do!oni''a to #ith(!a# !o3 Ste!e'as sa"in2s a$$o&nt. Petitione! a'so asse!ts that the Co&!t o Appea's e!!e( in a i!3in2 the t!ia' $o&!ts (e$ision sin$e the in(in2s o a$t the!ein #e!e not a$$o!( #ith the e"i(en$e p!esente( 40 petitione! (&!in2 t!ia' to p!o"e that the t!ansa$tion 4et#een p!i"ate !espon(ent an( Do!oni''a #as a mutuum, an( that it $o33itte( no #!on2 in a''o#in2 Do!oni''a to #ith(!a# !o3 Ste!e'as sa"in2s a$$o&nt. %+ Fina''0, petitione! $'ai3s that sin$e the!e is no #!on2 &' a$t o! o3ission on its pa!t, it is not 'ia4'e o! the a$t&a' (a3a2es s& e!e( 40 p!i"ate !espon(ent, an( neithe! 3a0 it 4e he'( 'ia4'e o! 3o!a' an( eDe3p'a!0 (a3a2es as #e'' as atto!ne0s ees.?)< P!i"ate !espon(ent, on the othe! han(, a!2&es that the t!ansa$tion 4et#een hi3 an( Do!oni''a is not a mutuum 4&t an a$$o33o(ation,?)% sin$e he (i( not a$t&a''0 pa!t #ith the o#ne!ship o his P)<<,<<<.<< an( in a$t as6e( his #i e to (eposit sai( a3o&nt in the a$$o&nt o Ste!e'a so that a $e!ti i$ation $an 4e iss&e( to the e e$t that Ste!e'a ha( s& i$ient &n(s o! p&!poses o its in$o!po!ation 4&t at the sa3e ti3e, he !etaine( so3e (e2!ee o $ont!o' o"e! his 3one0 th!o&2h his #i e #ho #as 3a(e a si2nato!0 to the sa"in2s a$$o&nt an( in #hose possession the sa"in2s a$$o&nt pass4oo6 #as 2i"en.)) He 'i6e#ise asse!ts that the t!ia' $o&!t (i( not e!! in in(in2 that petitione!, Atien7as e3p'o0e!, is 'ia4'e o! the !et&!n o his 3one0. He insists that Atien7a, petitione!s assistant 3ana2e!, $onni"e( #ith Do!oni''a in (e !a&(in2 p!i"ate !espon(ent sin$e it #as Atien7a #ho a$i'itate( the openin2 o Ste!e'as $&!!ent a$$o&nt th!ee (a0s a te! /!s. Vi"es an( San$he7 opene( a sa"in2s a$$o&nt #ith petitione! o! sai( $o3pan0, as #e'' as the app!o"a' o the a&tho!it0 to (e4it Ste!e'as sa"in2s a$$o&nt to $o"e! an0 o"e!(!a#in2s in its $&!!ent a$$o&nt.); The!e is no 3e!it in the petition. At the o&tset, it 3&st 4e e3phasi7e( that on'0 :&estions o 'a# 3a0 4e !aise( in a petition o! !e"ie# i'e( #ith this Co&!t. The Co&!t has !epeate('0 he'( that it is not its &n$tion to ana'07e an( #ei2h a'' o"e! a2ain the e"i(en$e p!esente( 40 the pa!ties (&!in2 t!ia'.?)1 The Co&!ts B&!is(i$tion is in p!in$ip'e 'i3ite( to !e"ie#in2 e!!o!s o 'a# that 3i2ht ha"e 4een $o33itte( 40 the Co&!t o Appea's.)* /o!eo"e!, a$t&a' in(in2s o $o&!ts, #hen a(opte( an( $on i!3e( 40 the Co&!t o Appea's, a!e ina' an( $on$'&si"e on this Co&!t &n'ess these in(in2s a!e not s&ppo!te( 40 the e"i(en$e on !e$o!(.?)> The!e is no sho#in2 o an0 3isapp!ehension o a$ts on the pa!t o the Co&!t o Appea's in the $ase at 4a! that #o&'( !e:&i!e this Co&!t to !e"ie# an( o"e!t&!n the a$t&a' in(in2s o that $o&!t, espe$ia''0 sin$e the $on$'&sions o a$t o the Co&!t o Appea's an( the t!ia' $o&!t a!e not on'0 $onsistent 4&t a!e a'so a3p'0 s&ppo!te( 40 the e"i(en$e on !e$o!(. No e!!o! #as $o33itte( 40 the Co&!t o Appea's #hen it !&'e( that the t!ansa$tion 4et#een p!i"ate !espon(ent an( Do!oni''a #as a commodatum an( not a mutuum. A $i!$&3spe$t eDa3ination o the !e$o!(s !e"ea's that the t!ansa$tion 4et#een the3 #as a commodatum. A!ti$'e %+;; o the Ci"i' Co(e (istin2&ishes 4et#een the t#o 6in(s o 'oans in this #ise:

50 the $ont!a$t o 'oan, one o the pa!ties (e'i"e!s to anothe!, eithe! so3ethin2 not $ons&3a4'e so that the 'atte! 3a0 &se the sa3e o! a $e!tain ti3e an( !et&!n it, in #hi$h $ase the $ont!a$t is $a''e( a $o33o(at&3C o! 3one0 o! othe! $ons&3a4'e thin2, &pon the $on(ition that the sa3e a3o&nt o the sa3e 6in( an( :&a'it0 sha'' 4e pai(, in #hi$h $ase the $ont!a$t is si3p'0 $a''e( a 'oan o! 3&t&&3. Co33o(at&3 is essentia''0 2!at&ito&s. Si3p'e 'oan 3a0 4e 2!at&ito&s o! #ith a stip&'ation to pa0 inte!est. In $o33o(at&3, the 4ai'o! !etains the o#ne!ship o the thin2 'oane(, #hi'e in si3p'e 'oan, o#ne!ship passes to the 4o!!o#e!. The o!e2oin2 p!o"ision see3s to i3p'0 that i the s&4Be$t o the $ont!a$t is a $ons&3a4'e thin2, s&$h as 3one0, the $ont!a$t #o&'( 4e a mutuum. Ho#e"e!, the!e a!e so3e instan$es #he!e a commodatum 3a0 ha"e o! its o4Be$t a $ons&3a4'e thin2. A!ti$'e %+;> o the Ci"i' Co(e p!o"i(es: Cons&3a4'e 2oo(s 3a0 4e the s&4Be$t o $o33o(at&3 i the p&!pose o the $ont!a$t is not the $ons&3ption o the o4Be$t, as #hen it is 3e!e'0 o! eDhi4ition. Th&s, i $ons&3a4'e 2oo(s a!e 'oane( on'0 o! p&!poses o eDhi4ition, o! #hen the intention o the pa!ties is to 'en( $ons&3a4'e 2oo(s an( to ha"e the "e!0 sa3e 2oo(s !et&!ne( at the en( o the pe!io( a2!ee( &pon, the 'oan is acommodatum an( not a mutuum. The !&'e is that the intention o the pa!ties the!eto sha'' 4e a$$o!(e( p!i3o!(ia' $onsi(e!ation in (ete!3inin2 the a$t&a' $ha!a$te! o a $ont!a$t.). In $ase o (o&4t, the $onte3po!aneo&s an( s&4se:&ent a$ts o the pa!ties sha'' 4e $onsi(e!e( in s&$h (ete!3ination.?)@ As $o!!e$t'0 pointe( o&t 40 4oth the Co&!t o Appea's an( the t!ia' $o&!t, the e"i(en$e sho#s that p!i"ate !espon(ent a2!ee( to (eposit his 3one0 in the sa"in2s a$$o&nt o Ste!e'a spe$i i$a''0 o! the p&!pose o 3a6in2 it appea! that sai( i!3 ha( s& i$ient $apita'i7ation o! in$o!po!ation, #ith the p!o3ise that the a3o&nt sha'' 4e !et&!ne( #ithin thi!t0 8;<9 (a0s. )+ P!i"ate !espon(ent 3e!e'0 a$$o33o(ate( Do!oni''a 40 'en(in2 his 3one0 #itho&t $onsi(e!ation, as a a"o! to his 2oo( !ien( San$he7. It #as ho#e"e! $'ea! to the pa!ties to the t!ansa$tion that the 3one0 #o&'( not 4e !e3o"e( !o3 Ste!e'as sa"in2s a$$o&nt an( #o&'( 4e !et&!ne( to p!i"ate !espon(ent a te! thi!t0 8;<9 (a0s. Do!oni''as atte3pts to !et&!n to p!i"ate !espon(ent the a3o&nt o P)<<,<<<.<< #hi$h the 'atte! (eposite( in Ste!e'as a$$o&nt to2ethe! #ith an a((itiona' P%),<<<.<<, a''e2e('0 !ep!esentin2 inte!est on the mutuum, (i( not $on"e!t the t!ansa$tion !o3 a commodatum into a mutuum 4e$a&se s&$h #as not the intent o the pa!ties an( 4e$a&se the a((itiona' P%),<<<.<< $o!!espon(s to the !&its o the 'en(in2 o the P)<<,<<<.<<. A!ti$'e %+;* o the Ci"i' Co(e eDp!ess'0 states that ?tIhe 4ai'ee in commodatum a$:&i!es the &se o the thin2 'oane( 4&t not its !&its. Hen$e, it #as on'0 p!ope! o! Do!oni''a to !e3it to p!i"ate !espon(ent the inte!est a$$!&in2 to the 'atte!s 3one0 (eposite( #ith petitione!. Neithe! (oes the Co&!t a2!ee #ith petitione!s $ontention that it is not so'i(a!i'0 'ia4'e o! the !et&!n o p!i"ate !espon(ents 3one0 4e$a&se it #as not p!i"0 to the t!ansa$tion 4et#een Do!oni''a an( p!i"ate !espon(ent. The nat&!e o sai( t!ansa$tion, that is, #hethe! it is a mutuum o! a commodatum, has no 4ea!in2 on the :&estion o petitione!s 'ia4i'it0 o! the !et&!n o p!i"ate !espon(ents 3one0 4e$a&se the a$t&a' $i!$&3stan$es o the $ase $'ea!'0 sho# that petitione!, th!o&2h its e3p'o0ee /!. Atien7a, #as pa!t'0 !esponsi4'e o! the 'oss o p!i"ate !espon(ents 3one0 an( is 'ia4'e o! its !estit&tion. Petitione!s !&'es o! sa"in2s (eposits #!itten on the pass4oo6 it iss&e( /!s. Vi"es on 4eha' o Ste!e'a o! Sa"in2s A$$o&nt No. %<,%*>. eDp!ess'0 states that ). Deposits an( #ith(!a#a's 3&st 4e 3a(e 40 the (eposito! pe!sona''0 o! &pon his #!itten a&tho!it0 (&'0 a&thenti$ate(, an( 'e*+,er a -e.o/*+ 'or a (*+,-ra(a0 (*00 be .er1*++e- e23e.+ u.o' +,e .ro-u3+*o' o4 +,e -e.o/*+or /a5*'6/ ba'7 boo7 in #hi$h #i'' 4e ente!e( 40 the 5an6 the a3o&nt (eposite( o! #ith(!a#n.?;< Sai( !&'e not#ithstan(in2, Do!oni''a #as pe!3itte( 40 petitione!, th!o&2h Atien7a, the Assistant 5!an$h /ana2e! o! the 5&en(ia 5!an$h o petitione!, to #ith(!a# the!e !o3 e"en #itho&t p!esentin2 the pass4oo6 8#hi$h Atien7a "e!0 #e'' 6ne# #as

in the possession o /!s. Vi"es9, not B&st on$e, 4&t se"e!a' ti3es. 5oth the Co&!t o Appea's an( the t!ia' $o&!t o&n( that Atien7a a''o#e( sai( #ith(!a#a's 4e$a&se he #as pa!t0 to Do!oni''as s$he3e o (e !a&(in2 p!i"ate !espon(ent: HHH 5&t the s$he3e $o&'( not ha"e 4een eDe$&te( s&$$ess &''0 #itho&t the 6no#'e(2e, he'p an( $oope!ation o R& o Atien7a, assistant 3ana2e! an( $ashie! o the /a6ati 85&en(ia9 4!an$h o the (e en(ant 4an6. In(ee(, the e"i(en$e in(i$ates that Atien7a ha( not on'0 a$i'itate( the $o33ission o the !a&( 4&t he 'i6e#ise he'pe( in (e"isin2 the 3eans 40 #hi$h it $an 4e (one in s&$h 3anne! as to 3a6e it appea! that the t!ansa$tion #as in a$$o!(an$e #ith 4an6in2 p!o$e(&!e. To 4e2in #ith, the (eposit #as 3a(e in (e en(ants 5&en(ia 4!an$h p!e$ise'0 4e$a&se Atien7a #as a 6e0 o i$e! the!ein. The !e$o!(s sho# that p'ainti ha( s&22este( that the P)<<,<<<.<< 4e (eposite( in his 4an6, the /ani'a 5an6in2 Co!po!ation, 4&t Do!oni''a an( D&3a2pi insiste( that it 3&st 4e in (e en(ants 4!an$h in /a6ati o! it #i'' 4e easie! o! the3 to 2et a $e!ti i$ation. In a$t 4e o!e he #as int!o(&$e( to p'ainti , Do!oni''a ha( a'!ea(0 p!epa!e( a 'ette! a((!esse( to the 5&en(ia 4!an$h 3ana2e! a&tho!i7in2 An2e'es 5. San$he7 an( $o3pan0 to open a sa"in2s a$$o&nt o! Ste!e'a in the a3o&nt o P)<<,<<<.<<, as pe! $oo!(ination #ith /!. R& o Atien7a, Assistant /ana2e! o the 5an6 D D D 8EDh. %9. This is a $'ea! 3ani estation that the othe! (e en(ants ha( 4een in $ons&'tation #ith Atien7a !o3 the in$eption o the s$he3e. Si2ni i$ant'0, the!e #e!e testi3onies an( a(3ission that Atien7a is the 4!othe!,in,'a# o a $e!tain Ro3eo /i!aso', a !ien( an( 4&siness asso$iate o Do!oni''a. Then the!e is the 3atte! o the o#ne!ship o the &n(. 5e$a&se o the $oo!(ination 4et#een Do!oni''a an( Atien7a, the 'atte! 6ne# 4e o!e han( that the 3one0 (eposite( (i( not 4e'on2 to Do!oni''a no! to Ste!e'a. Asi(e !o3 s&$h o!e6no#'e(2e, he #as eDp'i$it'0 to'( 40 Ino$en$ia Vi"es that the 3one0 4e'on2e( to he! an( he! h&s4an( an( the (eposit #as 3e!e'0 to a$$o33o(ate Do!oni''a. Atien7a e"en (e$'a!e( that the 3one0 $a3e !o3 /!s. Vi"es. A'tho&2h the sa"in2s a$$o&nt #as in the na3e o Ste!e'a, the 4an6 !e$o!(s (is$'ose that the on'0 ones e3po#e!e( to #ith(!a# the sa3e #e!e Ino$en$ia Vi"es an( An2e'es 5. San$he7. In the si2nat&!e $a!( pe!tainin2 to this a$$o&nt 8EDh. J9, the a&tho!i7e( si2nato!ies #e!e Ino$en$ia Vi"es J=o! An2e'es 5. San$he7. Atien7a state( that it is the &s&a' 4an6in2 p!o$e(&!e that #ith(!a#a's o sa"in2s (eposits $o&'( on'0 4e 3a(e 40 pe!sons #hose a&tho!i7e( si2nat&!es a!e in the si2nat&!e $a!(s on i'e #ith the 4an6. He, ho#e"e!, sai( that this p!o$e(&!e #as not o''o#e( he!e 4e$a&se Ste!e'a #as o#ne( 40 Do!oni''a. He eDp'aine( that Do!oni''a ha( the &'' a&tho!it0 to #ith(!a# 40 "i!t&e o s&$h o#ne!ship. The Co&!t is not in$'ine( to a2!ee #ith Atien7a. In the i!st p'a$e, he #as a'' the ti3e a#a!e that the 3one0 $a3e !o3 Vi"es an( (i( not 4e'on2 to Ste!e'a. He #as a'so to'( 40 /!s. Vi"es that the0 #e!e on'0 a$$o33o(atin2 Do!oni''a so that a $e!ti i$ation $an 4e iss&e( to the e e$t that Ste!e'a ha( a (eposit o so 3&$h a3o&nt to 4e s&e( in the in$o!po!ation o the i!3. In the se$on( p'a$e, the si2nat&!e o Do!oni''a #as not a&tho!i7e( in so a! as that a$$o&nt is $on$e!ne( inas3&$h as he ha( not si2ne( the si2nat&!e $a!( p!o"i(e( 40 the 4an6 #hene"e! a (eposit is opene(. In the thi!( p'a$e, neithe! /!s. Vi"es no! San$he7 ha( 2i"en Do!oni''a the a&tho!it0 to #ith(!a#. /o!eo"e!, the t!ans e! o &n( #as (one #itho&t the pass4oo6 ha"in2 4een p!esente(. It is an a$$epte( p!a$ti$e that #hene"e! a #ith(!a#a' is 3a(e in a sa"in2s (eposit, the 4an6 !e:&i!es the p!esentation o the pass4oo6. In this $ase, s&$h !e$o2ni7e( p!a$ti$e #as (ispense( #ith. The t!ans e! !o3 the sa"in2s a$$o&nt to the $&!!ent a$$o&nt #as #itho&t the s&43ission o the pass4oo6 #hi$h Atien7a ha( 2i"en to /!s. Vi"es. Instea(, it #as 3a(e to appea! in a $e!ti i$ation si2ne( 40 Est!e''a D&3a2pi that a (&p'i$ate pass4oo6 #as iss&e( to Ste!e'a 4e$a&se the o!i2ina' pass4oo6 ha( 4een s&!!en(e!e( to the /a6ati 4!an$h in "ie# o a 'oan a$$o33o(ation assi2nin2 the sa"in2s a$$o&nt 8EDh. C9. Atien7a, #ho &n(o&4te('0 ha( a han( in the eDe$&tion o this $e!ti i$ation, #as a#a!e that the $ontents o the sa3e a!e not t!&e. He 6ne# that the pass4oo6 #as in the han(s o /!s. Vi"es o! he #as the one #ho 2a"e it to he!. 5esi(es, as assistant 3ana2e! o the 4!an$h an( the 4an6 o i$ia' se!"i$in2 the sa"in2s an( $&!!ent a$$o&nts in :&estion, he a'so #as a#a!e that the o!i2ina' pass4oo6 #as ne"e! s&!!en(e!e(. He #as a'so $o2ni7ant that Est!e''a D&3a2pi #as not a3on2 those a&tho!i7e( to #ith(!a# so he! $e!ti i$ation ha( no e e$t #hatsoe"e!. The $i!$&3stan$e s&!!o&n(in2 the openin2 o the $&!!ent a$$o&nt a'so (e3onst!ate that Atien7as a$ti"e pa!ti$ipation in the pe!pet!ation o the !a&( an( (e$eption that $a&se( the 'oss. The !e$o!(s in(i$ate that this a$$o&nt #as opene( th!ee (a0s 'ate! a te! the P)<<,<<<.<< #as (eposite(. In spite o his (is$'ai3e!, the Co&!t 4e'ie"es that Atien7a #as 3in( &' an( poste( !e2a!(in2 the openin2 o the $&!!ent a$$o&nt $onsi(e!in2 that Do!oni''a #as a'' the #hi'e in $oo!(ination #ith hi3. That it #as he #ho a$i'itate( the app!o"a' o the a&tho!it0 to (e4it the sa"in2s a$$o&nt to $o"e! an0 o"e!(!a#in2s in the $&!!ent a$$o&nt 8EDh. )9 is not ha!( to $o3p!ehen(. C'ea!'0 Atien7a ha( $o33itte( #!on2 &' a$ts that ha( !es&'te( to the 'oss s&4Be$t o this $ase. D D D. ;%

Un(e! A!ti$'e )%@< o the Ci"i' Co(e, e3p'o0e!s sha'' 4e he'( p!i3a!i'0 an( so'i(a!i'0 'ia4'e o! (a3a2es $a&se( 40 thei! e3p'o0ees a$tin2 #ithin the s$ope o thei! assi2ne( tas6s. To ho'( the e3p'o0e! 'ia4'e &n(e! this p!o"ision, it 3&st 4e sho#n that an e3p'o0e!,e3p'o0ee !e'ationship eDists, an( that the e3p'o0ee #as a$tin2 #ithin the s$ope o his assi2ne( tas6 #hen the a$t $o3p'aine( o #as $o33itte(.;) Case 'a# in the Unite( States o A3e!i$a has it that a $o!po!ation that ent!&sts a 2ene!a' (&t0 to its e3p'o0ee is !esponsi4'e to the inB&!e( pa!t0 o! (a3a2es 'o#in2 !o3 the e3p'o0ees #!on2 &' a$t (one in the $o&!se o his 2ene!a' a&tho!it0, e"en tho&2h in (oin2 s&$h a$t, the e3p'o0ee 3a0 ha"e ai'e( in its (&t0 to the e3p'o0e! an( (iso4e0e( the 'atte!s inst!&$tions.?;; The!e is no (isp&te that Atien7a #as an e3p'o0ee o petitione!. F&!the!3o!e, petitione! (i( not (en0 that Atien7a #as a$tin2 #ithin the s$ope o his a&tho!it0 as Assistant 5!an$h /ana2e! #hen he assiste( Do!oni''a in #ith(!a#in2 &n(s !o3 Ste!e'as Sa"in2s A$$o&nt No. %<,%*>., in #hi$h a$$o&nt p!i"ate !espon(ents 3one0 #as (eposite(, an( in t!ans e!!in2 the 3one0 #ith(!a#n to Ste!e'as C&!!ent A$$o&nt #ith petitione!. Atien7as a$ts o he'pin2 Do!oni''a, a $&sto3e! o the petitione!, #e!e o4"io&s'0 (one in &!the!an$e o petitione!s inte!ests?;1 e"en tho&2h in the p!o$ess, Atien7a "io'ate( so3e o petitione!s !&'es s&$h as those stip&'ate( in its sa"in2s a$$o&nt pass4oo6.;* It #as esta4'ishe( that the t!ans e! o &n(s !o3 Ste!e'as sa"in2s a$$o&nt to its $&!!ent a$$o&nt $o&'( not ha"e 4een a$$o3p'ishe( 40 Do!oni''a #itho&t the in"a'&a4'e assistan$e o Atien7a, an( that it #as thei! $onni"an$e #hi$h #as the $a&se o p!i"ate !espon(ents 'oss. The o!e2oin2 sho#s that the Co&!t o Appea's $o!!e$t'0 he'( that &n(e! A!ti$'e )%@< o the Ci"i' Co(e, petitione! is 'ia4'e o! p!i"ate !espon(ents 'oss an( is so'i(a!i'0 'ia4'e #ith Do!oni''a an( D&3a2pi o! the !et&!n o theP)<<,<<<.<< sin$e it is $'ea! that petitione! ai'e( to p!o"e that it eDe!$ise( (&e (i'i2en$e to p!e"ent the &na&tho!i7e( #ith(!a#a's !o3 Ste!e'as sa"in2s a$$o&nt, an( that it #as not ne2'i2ent in the se'e$tion an( s&pe!"ision o Atien7a. A$$o!(in2'0, no e!!o! #as $o33itte( 40 the appe''ate $o&!t in the a#a!( o a$t&a', 3o!a' an( eDe3p'a!0 (a3a2es, atto!ne0s ees an( $osts o s&it to p!i"ate !espon(ent. 8#EREFORE, the petition is he!e40 DENIED. The assai'e( De$ision an( Reso'&tion o the Co&!t o Appea's a!e AFFIR/ED. SO ORDERED. G.R. No. %94:240 No5e1ber 3, 1939

; RG R$" <U$N"OS a'- NGE% . NS %DO, Plaintiffs-Appellants, "s. BEC!, Defendant-Appellee.

$;PER$ %, J.: $han!o4'es "i!t&a' 'a# 'i4!a!0 The p'ainti 4!o&2ht this a$tion to $o3pe' the (e en(ant to !et&!n he! $e!tain &!nit&!e #hi$h she 'ent hi3 o! his &se. She appea'e( !o3 the B&(23ent o the Co&!t o Fi!st Instan$e o /ani'a #hi$h o!(e!e( that the (e en(ant !et&!n to he! the th!ee has heate!s an( the o&! e'e$t!i$ 'a3ps o&n( in the possession o the She!i o sai( $it0, that she $a'' o! the othe! &!nit&!e !o3 the sai( she!i o /ani'a at he! o#n eDpense, an( that the ees #hi$h the She!i 3a0 $ha!2e o! the (eposit o the &!nit&!e 4e pai( pro rata 40 4oth pa!ties, #itho&t p!ono&n$e3ent as to the $osts.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The (e en(ant #as a tenant o the p'ainti an( as s&$h o$$&pie( the 'atte!Ks ho&se on /. H. (e' Pi'a! st!eet, No. %%.*. On Jan&a!0 %1, %+;>, &pon the no"ation o the $ont!a$t o 'ease 4et#een the p'ainti an( the (e en(ant, the o!3e! 2!at&ito&s'0 2!ante( to the 'atte! the &se o the &!nit&!e (es$!i4e( in the thi!( pa!a2!aph o the stip&'ation o a$ts, s&4Be$t to the $on(ition that the (e en(ant #o&'( !et&!n the3 to the p'ainti &pon the 'atte!Ks (e3an(. The p'ainti so'( the p!ope!t0 to /a!ia Lope7 an( Rosa!io Lope7 an( on Septe34e! %1, %+;>, these th!ee noti ie( the (e en(ant o the $on"e0an$e, 2i"in2 hi3 siDt0 (a0s to "a$ate the p!e3ises &n(e! one o the $'a&ses o the $ont!a$t o 'ease. The!e a te! the p'ainti !e:&i!e( the (e en(ant to !et&!n a'' the &!nit&!e t!ans e!!e( to hi3 o! the3 in the ho&se #he!e the0 #e!e o&n(. On No"e34e! *, %+;>, the (e en(ant, th!o&2h anothe! pe!son, #!ote to the p'ainti !eite!atin2 that she 3a0 $a'' o! the &!nit&!e in the 2!o&n( 'oo! o the ho&se. On the .th o the sa3e 3onth, the (e en(ant #!ote anothe! 'ette! to the p'ainti in o!3in2 he! that he $o&'( not 2i"e &p the th!ee 2as heate!s an( the o&! e'e$t!i$ 'a3ps 4e$a&se he #o&'( &se the3 &nti' the %*th o the sa3e 3onth #hen the 'ease in (&e to eDpi!e. The p'ainti !e &se( to 2et the &!nit&!e in "ie# o the a$t that the (e en(ant ha( (e$'ine( to 3a6e (e'i"e!0 o a'' o the3. On No"e34e! %*th, 4e o!e "a$atin2 the ho&se, the (e en(ant (eposite( #ith the She!i a'' the &!nit&!e 4e'on2in2 to the p'ainti an( the0 a!e no# on (eposit in the #a!eho&se sit&ate( at No. %*)%, Ri7a' A"en&e, in the $&sto(0 o the sai( she!i .$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0

In thei! se"en assi2ne( e!!o!s the p'ainti s $onten( that the t!ia' $o&!t in$o!!e$t'0 app'ie( the 'a#: in ho'(in2 that the0 "io'ate( the $ont!a$t 40 not $a''in2 o! a'' the &!nit&!e on No"e34e! *, %+;>, #hen the (e en(ant p'a$e( the3 at thei! (isposa'C in not o!(e!in2 the (e en(ant to pa0 the3 the "a'&e o the &!nit&!e in $ase the0 a!e not (e'i"e!e(C in ho'(in2 that the0 sho&'( 2et a'' the &!nit&!e !o3 the She!i at thei! eDpensesC in o!(e!in2 the3 to pa0,ha' o the eDpenses $'ai3e( 40 the She!i o! the (eposit o the &!nit&!eC in !&'in2 that 4oth pa!ties sho&'( pa0 thei! !espe$ti"e 'e2a' eDpenses o! the $ostsC an( in (en0in2 pa0 thei! !espe$ti"e 'e2a' eDpenses o! the $ostsC an( in (en0in2 the 3otions o! !e$onsi(e!ation an( ne# t!ia'. To (ispose o the $ase, it is on'0 ne$essa!0 to (e$i(e #hethe! the (e en(ant $o3p'ie( #ith his o4'i2ation to !et&!n the &!nit&!e &pon the p'ainti Ks (e3an(C #hethe! the 'atte! is 4o&n( to 4ea! the (eposit ees the!eo , an( #hethe! she is entit'e( to the $osts o 'iti2ation.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The $ont!a$t ente!e( into 4et#een the pa!ties is one o commadatum, 4e$a&se &n(e! it the p'ainti 2!at&ito&s'0 2!ante( the &se o the &!nit&!e to the (e en(ant, !ese!"in2 o! he!se' the o#ne!ship the!eo C 40 this $ont!a$t the (e en(ant 4o&n( hi3se' to !et&!n the &!nit&!e to the p'ainti , &pon the 'atte!s (e3an( 8$'a&se . o the $ont!a$t, EDhi4it AC a!ti$'es %.1<, pa!a2!aph %, an( %.1% o the Ci"i' Co(e9. The o4'i2ation "o'&nta!i'0 ass&3e( 40 the (e en(ant to !et&!n the &!nit&!e &pon the p'ainti Ks (e3an(, 3eans that he sho&'( !et&!n a'' o the3 to the p'ainti at the 'atte!Ks !esi(en$e o! ho&se. The (e en(ant (i( not $o3p'0 #ith this o4'i2ation #hen he 3e!e'0 p'a$e( the3 at the (isposa' o the p'ainti , !etainin2 o! his 4ene it the th!ee 2as heate!s an( the o&! e'et!i$ 'a3ps. The p!o"isions o a!ti$'e %%>+ o the Ci"i' Co(e $ite( 40 $o&nse' o! the pa!ties a!e not s:&a!e'0 app'i$a4'e. The t!ia' $o&!t, the!e o!e, e!!e( #hen it $a3e to the 'e2a' $on$'&sion that the p'ainti ai'e( to $o3p'0 #ith he! o4'i2ation to 2et the &!nit&!e #hen the0 #e!e o e!e( to he!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 As the (e en(ant ha( "o'&nta!i'0 &n(e!ta6en to !et&!n a'' the &!nit&!e to the p'ainti , &pon the 'atte!Ks (e3an(, the Co&!t $o&'( not 'e2a''0 $o3pe' he! to 4ea! the eDpenses o$$asione( 40 the (eposit o the &!nit&!e at the (e en(antKs 4ehest. The 'atte!, as 4ai'ee, #as not entit'e( to p'a$e the &!nit&!e on (epositC no! #as the p'ainti &n(e! a (&t0 to a$$ept the o e! to !et&!n the &!nit&!e, 4e$a&se the (e en(ant #ante( to !etain the th!ee 2as heate!s an( the o&! e'e$t!i$ 'a3ps.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 As to the "a'&e o the &!nit&!e, #e (o not 4e'ie"e that the p'ainti is entit'e( to the pa03ent the!eo 40 the (e en(ant in $ase o his ina4i'it0 to !et&!n so3e o the &!nit&!e 4e$a&se &n(e! pa!a2!aph > o the stip&'ation o a$ts, the (e en(ant has neithe! a2!ee( to no! a(3itte( the $o!!e$tness o the sai( "a'&e. Sho&'( the (e en(ant ai' to (e'i"e! so3e o the &!nit&!e, the "a'&e the!eo sho&'( 4e 'atte! (ete!3ine( 40 the t!ia' Co&!t th!o&2h e"i(en$e #hi$h the pa!ties 3a0 (esi!e to p!esent.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The $osts in 4oth instan$es sho&'( 4e 4o!ne 40 the (e en(ant 4e$a&se the p'ainti is the p!e"ai'in2 pa!t0 8se$tion 1@. o the Co(e o Ci"i' P!o$e(&!e9. The (e en(ant #as the one #ho 4!ea$he( the $ont!a$t o commodatum, an( #itho&t an0 !eason he !e &se( to !et&!n an( (e'i"e! a'' the &!nit&!e &pon the p'ainti Ks (e3an(. In these $i!$&3stan$es, it is B&st an( e:&ita4'e that he pa0 the 'e2a' eDpenses an( othe! B&(i$ia' $osts #hi$h the p'ainti #o&'( not ha"e othe!#ise (e !a0e(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The appea'e( B&(23ent is 3o(i ie( an( the (e en(ant is o!(e!e( to !et&!n an( (e'i"e! to the p'ainti , in the !esi(en$e to !et&!n an( (e'i"e! to the p'ainti , in the !esi(en$e o! ho&se o the 'atte!, a'' the &!nit&!e (es$!i4e( in pa!a2!aph ; o the stip&'ation o a$ts EDhi4it A. The eDpenses #hi$h 3a0 4e o$$asione( 40 the (e'i"e!0 to an( (eposit o the &!nit&!e #ith the She!i sha'' 4e o! the a$$o&nt o the (e en(ant. the (e en(ant sha'' pa0 the $osts in 4oth instan$es. So o!(e!e(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Avancea, C.J., Villa-Real, Laurel, Concepcio G.R. No. =0294 ;ar3, 23, 1990 C "#O%$C >$C R POS"O%$C OF "#E ;OUN" $N PRO>$NCE, Petitioner, "s. COUR" OF PPE %S, #E$RS OF EG;$D$O OC" >$ NO a'- ?U N > %DE@, Respondents.

G NC ACO, J.:

5e o!e the Co&!t a!e a 3otion o! !e$onsi(e!ation an( a s&pp'e3enta' 3otion o! !e$onsi(e!ation i'e( 40 petitione! !e'atin2 to the (e$ision o the Co&!t (ate( Septe34e! )%, %+@@. The $o33ent an( opposition the!eto ha"e 4een i'e( 40 the p!i"ate !espon(ents an( a !ep'0 #as i'e( 40 petitione!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Petitione! a!2&es that the in(in2s o a$ts o the Co&!t o Appea's in CA,-.R. No. ;@@;<,R a!e: 8%9 $ont!a!0 to the 'a#C 8)9 $ont!a!0 to the in(in2s o the t!ia' $o&!tC 8;9 $ont!a!0 to the in(in2s o the Co&!t o Appea's in CA,-.R. No. <@@+<,RC 819 $ont!a!0 to the a(3issions o the pa!tiesC an( 8*9 4ase( on a $'ea! 3isapp!ehension o histo!i$a' an( e$$'esiasti$a' a$ts 3a(e o B&(i$ia' noti$e, #hi$h a!e #e'' #ithin the eD$eptions $onsistent'0 a(he!e( to 40 this Co&!t as in Republic vs. Court of Appeals. 1 $han!o4'es "i!t&a' 'a# 'i4!a!0 The Co&!t in(s no 3e!it in this $ontention. The sai( (e$ision o the Co&!t o Appea's (ate( /a0 1, %+.. in CA,-.R. No. ;@@;<, R #as a'!ea(0 e'e"ate( to this Co&!t 40 petitione! th!o&2h a petition o! !e"ie# in -.R. No. L,1>@;) entit'e( Catholic Vicar Apostolic of the ountain Province vs. Court of Appeals and !eirs of "#midio $ctaviano, %hile the heirs of Juan Valde& and Pacita Valde& a'so i'e( a petition o! !e"ie# o the sa3e (e$ision in this Co&!t (o$6ete( as -.R. No. L,1>@.) entit'e( !eirs of Juan Valde& and Pacita Valde& vs. CA, et al. In a 3in&te !eso'&tion (ate( Jan&a!0 %;, %+.@, this Co&!t (enie( 4oth petitions o! 'a$6 o 3e!it.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 It is in pai( petition o! !e"ie# #he!ein the petitione! sho&'( ha"e :&estione( the in(in2s o a$ts o the appe''ate $o&!t in CA, -.R. No. ;@@;<,R 4&t sin$e sai( petition ha( 4een (enie( o&t!i2ht, the a o!estate( (e$ision o the appe''ate $o&!t #hi$h has 'on2 4e$o3e ina' an( eDe$&to!0, is res 'udicata as 4et#een the pa!ties an( the in(in2s o a$ts the!ein a!e $on$'&si"e. Th&s, the a$t&a' in(in2s in sai( ina' B&(23ent $annot 4e !e"ie#e( ane# in the p!esent p!o$ee(in2s.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The !e'e"ant :&estion that sho&'( no# 4e as6e( is, $onsi(e!in2 the a o!estate( (e$ision o the appe''ate $o&!t an( 2&i(e( 40 the in(in2s o a$ts the!ein, #ho is entit'e( to the possession o the 'ots in :&estionL Aho o#ns these 'otsL $han!o4'es "i!t&a' 'a# 'i4!a!0 CA,-.R. No. ;@@;<,R #as a 'an( !e2ist!ation $ase #he!e petitione! an( p!i"ate !espon(ents #e!e as6in2 o! $on i!3ation o thei! a''e2e( i3pe! e$t tit'es to the 'ots in :&estion &n(e! Se$tion 1+ 849 o the P&4'i$ Lan( A$t. 2 $han!o4'es "i!t&a' 'a# 'i4!a!0 In the sai( (e$ision, the appe''ate $o&!t o&n( that the petitione! #as not entit'e( to $on i!3ation o its i3pe! e$t tit'e to Lots ) an( ;. In sepa!ate 3otions o! !e$onsi(e!ation i'e( 40 p!i"ate !espon(ents Hei!s o O$ta"iano an( Hei!s o J&an Va'(e7 !e'atin2 to the sa3e (e$ision, the0 a'so as6e( that sai( t#o 'ots 4e !e2iste!e( in thei! na3es. On A&2&st %), %+.., the Co&!t o Appea's (enie( 4oth 3otions. E e$ti"e'0, the!e o!e, in the sai( (e$ision the appe''ate $o&!t !&'e( that neithe! the petitione! no! the p!i"ate !espon(ents a!e entit'e( to the $on i!3ation o i3pe! e$t tit'e o"e! sai( t#o 'ots. That is no# res 'udicata.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ahat is the nat&!e o these t#o 'otsL P&!s&ant to the sai( (e$ision in CA,-.R. No. ;@@;<,R, the t#o 'ots in :&estion !e3aine( pa!t o the p&4'i$ 'an(s. This is the on'0 'o2i$a' $on$'&sion #hen the appe''ate $o&!t o&n( that neithe! the petitione! no! p!i"ate !espon(ents a!e entit'e( to $on i!3ation o i3pe! e$t tit'e o"e! sai( 'ots.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Hen$e, the Co&!t in(s the $ontention o petitione! to 4e #e'' ta6en in that the t!ia' $o&!t an( the appe''ate $o&!t ha"e no 'a# &' 4asis in o!(e!in2 petitione! to !et&!n an( s&!!en(e! possession o sai( 'ots to p!i"ate !espon(ents. Sai( p!ope!t0 4ein2 a p&4'i$ 'an( its (isposition is s&4Be$t to the p!o"ision o the P&4'i$ Lan( A$t, as a3en(e(. 3 $han!o4'es "i!t&a' 'a# 'i4!a!0 The p!esent a$tions that #e!e instit&te( in the Re2iona' T!ia' Co&!t 40 p!i"ate !espon(ents a!e a$tions o! !e$o"e!0 o possession 8accion publiciana9 an( not o! !e$o"e!0 o o#ne!ship 8accion reivindicatoria9.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In the a o!estate( (e$ision o the appe''ate $o&!t in CA,-.R. No. ;@@;<,R, the o''o#in2 a!e a3on2 the in(in2s o a$ts: +th. The tota'it0 o o!e2oin2 to2ethe! #ith e"i(en$e o opposito!s 3&st $on"in$e this Co&!t that as to 'ots ) an( ;, it #as opposito!s #ho #e!e possesso!s &n(e! bona fide $'ai3 o o#ne!ship th!& thei! p!e(e$esso!s sin$e a!o&n( %+<>C an( that appe''ee $a3e in on'0 in the $on$ept o a 4o!!o#e! in commodatum, 4&t that appe''ee too6 it &pon itse' to $'ai3 an( !ep&(iate the t!&st so3eti3e in %+*%, an( sin$e !o3 that ti3e at 'east, possession o opposito!s ha( 4een inte!!&pte(, neithe! $an the0 $'ai3 !e2ist!ation &n(e! Se$. 1@, pa!. 4 o the P&4'i$ Lan( La#, Co3. A$t %1%, as a3en(e( 40 R.A. %+1)C this 3&st 4e the ina' !es&'t,

an( the!e #o&'( 4e no 3o!e nee( to !&'e on the e!!o!s i3p&2nin2 the pe!sona'it0 o appe''ee to se$&!e !e2ist!ationC 4 $han!o4'es "i!t&a' 'a# 'i4!a!0 F!o3 the o!e2oin2, it appea!s that the petitione! #as in possession o the sai( p!ope!t0 as 4o!!o#e! in $o33o(at&3 !o3 p!i"ate !espon(ents sin$e %+<> 4&t in %+*% petitione! !ep&(iate( the t!&st #hen it (e$'a!e( the p!ope!t0 o! taD p&!poses &n(e! its na3e. Ahen it i'e( its app'i$ation o! !e2ist!ation o the sai( p!ope!t0 in %+>), petitione! ha( 4een in a("e!se possession o the sa3e o! at 'east %% 0ea!s. A!ti$'e *** o the Ci"i' Co(e p!o"i(es as o''o#s: A!t. ***. A possesso! 3a0 'ose his possession: 8%9 50 the a4an(on3ent o the thin2C $han!o4'es "i!t&a' 'a# 'i4!a!0 8)9 50 an assi2n3ent 3a(e to anothe! eithe! 40 one!o&s o! 2!at&ito&s tit'eC $han!o4'es "i!t&a' 'a# 'i4!a!0 8;9 50 the (est!&$tion o! tota' 'oss o the thin2 o! 4e$a&se it 2oes o&t o $o33e!$eC $han!o4'es "i!t&a' 'a# 'i4!a!0 819 50 the possession o anothe!, s&4Be$t to the p!o"isions o A!ti$'e *;., i the ne# possession has 'aste( 'on2e! than one 0ea!. (ut the real ri#ht of possession is not lost till after the lapse of ten )ears . 81><a9 8E3phasis s&pp'ie(.9 F!o3 the o!e2oin2 p!o"ision o the 'a#, pa!ti$&'a!'0 pa!a2!aph 1 the!eo , it is $'ea! that the !ea' !i2ht o possession o p!i"ate !espon(ents o"e! the p!ope!t0 #as 'ost o! no 'on2e! eDists a te! the 'apse o %< 0ea!s that petitione! ha( 4een in a("e!se possession the!eo . Th&s, the a$tion o! !e$o"e! o possession o sai( p!ope!t0 i'e( 40 p!i"ate !espon(ents a2ainst petitione! 3&st ai'.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The Co&!t, the!e o!e, in(s that the t!ia' $o&!t an( the Co&!t o Appea's e!!e( in (e$'a!in2 the p!i"ate !espon(ents to 4e entit'e( to the possession the!eo . /&$h 'ess $an the0 p!eten( to 4e o#ne!s the!eo . Sai( 'ots a!e pa!t o the p&4'i$ (o3ain.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 AHEREFORE, the 3otion o! !e$onsi(e!ation is -RANTED an( the (e$ision o this Co&!t (ate( Septe34e! )%, %+@@ is he!e40 set asi(e an( anothe! B&(23ent is he!e40 !en(e!e( !e"e!sin2 an( settin2 asi(e the (e$ision o the appe''ate $o&!t in CA,-.R. Nos. <*%1@,1+ (ate( A&2&st ;%, %+@. an( (is3issin2 the $o3p'aints o! !e$o"e!0 o possession, #itho&t p!ono&n$e3ent as to $osts.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 SO ORDERED. G.R. No. %91B4B4 O3+ober 25, 19:2

REPUB%$C OF "#E P#$%$PP$NES, Plaintiff-Appellee, "s. ?OSE >. B G" S, (e en(ant, FE%$C$D D ;. B G" S, -1*'*/+ra+r*2 o4 +,e $'+e/+a+e E/+a+e 0e4+ by +,e 0a+e ?o/e >. Ba6+a/, petitione!,appe''ant. P D$%% , J.: $han!o4'es "i!t&a' 'a# 'i4!a!0 The Co&!t o Appea's $e!ti ie( this $ase to this Co&!t 4e$a&se on'0 :&estions o 'a# a!e !aise(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 On @ /a0 %+1@ Jose V. 5a2tas 4o!!o#e( !o3 the Rep&4'i$ o the Phi'ippines th!o&2h the 5&!ea& o Ani3a' In(&st!0 th!ee 4&''s: a Re( Sin(hi #ith a 4oo6 "a'&e o P%,%.>.1>, a 5ha2na!i, o P%,;)<.*> an( a Sahini#a', o P.11.1>, o! a pe!io( o one 0ea! !o3 @ /a0 %+1@ to . /a0 %+1+ o! 4!ee(in2 p&!poses s&4Be$t to a 2o"e!n3ent $ha!2e o 4!ee(in2 ee o %<M o the 4oo6 "a'&e o the 4&''s. Upon the eDpi!ation on . /a0 %+1+ o the $ont!a$t, the 4o!!o#e! as6e( o! a !ene#a' o! anothe! pe!io( o one 0ea!. Ho#e"e!, the Se$!eta!0 o A2!i$&'t&!e an( Nat&!a' Reso&!$es app!o"e( a !ene#a' the!eo o on'0 one 4&'' o! anothe! 0ea! !o3 @ /a0 %+1+ to . /a0 %+*< an( !e:&este( the !et&!n o the othe! t#o. On )* /a!$h %+*< Jose V. 5a2tas #!ote to the Di!e$to! o Ani3a' In(&st!0 that he #o&'( pa0 the "a'&e o the th!ee 4&''s. On %. O$to4e! %+*< he !eite!ate( his (esi!e to 4&0 the3 at a "a'&e #ith a (e(&$tion o 0ea!'0 (ep!e$iation to 4e app!o"e( 40 the A&(ito! -ene!a'. On %+ O$to4e! %+*< the Di!e$to! o Ani3a' In(&st!0 a("ise( hi3 that the 4oo6 "a'&e o the th!ee 4&''s $o&'( not 4e !e(&$e( an( that the0 eithe! 4e !et&!ne( o! thei! 4oo6 "a'&e pai( not 'ate! than ;% O$to4e! %+*<. Jose V. 5a2tas ai'e( to pa0 the 4oo6 "a'&e o the th!ee 4&''s o! to !et&!n

the3. So, on )< De$e34e! %+*< in the Co&!t o Fi!st Instan$e o /ani'a the Rep&4'i$ o the Phi'ippines $o33en$e( an a$tion a2ainst hi3 p!a0in2 that he 4e o!(e!e( to !et&!n the th!ee 4&''s 'oane( to hi3 o! to pa0 thei! 4oo6 "a'&e in the tota' s&3 o P;,)1%.1* an( the &npai( 4!ee(in2 ee in the s&3 o P%++.>), 4oth #ith inte!ests, an( $ostsC an( that othe! B&st an( e:&ita4'e !e'ie 4e 2!ante( in 8$i"i' No. %)@%@9.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 On * J&'0 %+*% Jose V. 5a2tas, th!o&2h $o&nse' Na"a!!o, Rosete an( /ana'o, ans#e!e( that 4e$a&se o the 4a( pea$e an( o!(e! sit&ation in Ca2a0an Va''e0, pa!ti$&'a!'0 in the 4a!!io o 5a22ao, an( o the pen(in2 appea' he ha( ta6en to the Se$!eta!0 o A2!i$&'t&!e an( Nat&!a' Reso&!$es an( the P!esi(ent o the Phi'ippines !o3 the !e &sa' 40 the Di!e$to! o Ani3a' In(&st!0 to (e(&$t !o3 the 4oo6 "a'&e o the 4&''s $o!!espon(in2 0ea!'0 (ep!e$iation o @M !o3 the (ate o a$:&isition, to #hi$h (ep!e$iation the A&(ito! -ene!a' (i( not o4Be$t, he $o&'( not !et&!n the ani3a's no! pa0 thei! "a'&e an( p!a0e( o! the (is3issa' o the $o3p'aint.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 A te! hea!in2, on ;< J&'0 %+*> the t!ia' $o&!t !en(e! B&(23ent , . . . senten$in2 the 'atte! 8(e en(ant9 to pa0 the s&3 o P;,>)*.<+ the tota' "a'&e o the th!ee 4&''s p'&s the 4!ee(in2 ees in the a3o&nt o P>)>.%. #ith inte!est on 4oth s&3s o 8at9 the 'e2a' !ate !o3 the i'in2 o this $o3p'aint an( $osts. On + O$to4e! %+*@ the p'ainti 3o"e( eD pa!te o! a #!it o eDe$&tion #hi$h the $o&!t 2!ante( on %@ O$to4e! an( iss&e( on %% No"e34e! %+*@. On ) De$e34e! %+*@ 2!ante( an eD,pa!te 3otion i'e( 40 the p'ainti on No"e34e! %+*@ o! the appoint3ent o a spe$ia' she!i to se!"e the #!it o&tsi(e /ani'a. O this o!(e! appointin2 a spe$ia' she!i , on > De$e34e! %+*@, Fe'i$i(a( /. 5a2tas, the s&!"i"in2 spo&se o the (e en(ant Jose 5a2tas #ho (ie( on ); O$to4e! %+*% an( as a(3inist!at!iD o his estate, #as noti ie(. On . Jan&a!0 %+*+ she i'e a 3otion a''e2in2 that on )> J&ne %+*) the t#o 4&'' Sin(hi an( 5ha2na!i #e!e !et&!ne( to the 5&!ea& Ani3a' o In(&st!0 an( that so3eti3e in No"e34e! %+*@ the thi!( 4&'', the Sahini#a', (ie( !o3 2&nshot #o&n( in 'i$te( (&!in2 a H&6 !ai( on Ha$ien(a Fe'i$i(a( Inta', an( p!a0in2 that the #!it o eDe$&tion 4e :&ashe( an( that a #!it o p!e'i3ina!0 inB&n$tion 4e iss&e(. On ;% Jan&a!0 %+*+ the p'ainti o4Be$te( to he! 3otion. On > Fe4!&a!0 %+*+ she i'e( a !ep'0 the!eto. On the sa3e (a0, > Fe4!&a!0, the Co&!t (enie( he! 3otion. Hen$e, this appea' $e!ti ie( 40 the Co&!t o Appea's to this Co&!t as state( at the 4e2innin2 o this opinion.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 It is t!&e that on )> J&ne %+*) Jose /. 5a2tas, J!., son o the appe''ant 40 the 'ate (e en(ant, !et&!ne( the Sin(hi an( 5ha2na!i 4&''s to Ro3an Re3o!in, S&pe!inten(ent o the NV5 Station, 5&!ea& o Ani3a' In(&st!0, 5a0o34on2, N&e"a Vi7$a0a, as e"i(en$e( 40 a 3e3o!an(&3 !e$eipt si2ne( 40 the 'atte! 8EDhi4it )9. That is #h0 in its o4Be$tion o ;% Jan&a!0 %+*+ to the appe''antKs 3otion to :&ash the #!it o eDe$&tion the appe''ee p!a0s Nthat anothe! #!it o eDe$&tion in the s&3 o P@*+.*; 4e iss&e( a2ainst the estate o (e en(ant (e$ease( Jose V. 5a2tas.N She $annot 4e he'( 'ia4'e o! the t#o 4&''s #hi$h a'!ea(0 ha( 4een !et&!ne( to an( !e$ei"e( 40 the appe''ee.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The appe''ant $onten(s that the Sahini#a' 4&'' #as a$$i(enta''0 6i''e( (&!in2 a !ai( 40 the H&6 in No"e34e! %+*; &pon the s&!!o&n(in2 4a!!ios o Ha$ien(a Fe'i$i(a( Inta', 5a22ao, Ca2a0an, #he!e the ani3a' #as 6ept, an( that as s&$h (eath #as (&e to force ma'eure she is !e'ie"e( !o3 the (&t0 o !et&!nin2 the 4&'' o! pa0in2 its "a'&e to the appe''ee. The $ontention is #itho&t 3e!it. The 'oan 40 the appe''ee to the 'ate (e en(ant Jose V. 5a2tas o the th!ee 4&''s o! 4!ee(in2 p&!poses o! a pe!io( o one 0ea! !o3 @ /a0 %+1@ to . /a0 %+1+, 'ate! on !ene#e( o! anothe! 0ea! as !e2a!(s one 4&'', #as s&4Be$t to the pa03ent 40 the 4o!!o#e! o 4!ee(in2 ee o %<M o the 4oo6 "a'&e o the 4&''s. The appe''ant $onten(s that the $ont!a$t #as commodatum an( that, o! that !eason, as the appe''ee !etaine( o#ne!ship o! tit'e to the 4&'' it sho&'( s& e! its 'oss (&e to force ma'eure. A $ont!a$t o commodatum is essentia''0 2!at&ito&s.1 I the 4!ee(in2 ee 4e $onsi(e!e( a $o3pensation, then the $ont!a$t #o&'( 4e a 'ease o the 4&''. Un(e! a!ti$'e %>.% o the Ci"i' Co(e the 'essee #o&'( 4e s&4Be$t to the !esponsi4i'ities o a possesso! in 4a( aith, 4e$a&se she ha( $ontin&e( possession o the 4&'' a te! the eDpi!0 o the $ont!a$t. An( e"en i the $ont!a$t 4ecommodatum, sti'' the appe''ant is 'ia4'e, 4e$a&se a!ti$'e %+1) o the Ci"i' Co(e p!o"i(es that a 4ai'ee in a $ont!a$t o commodatum , . . . is 'ia4'e o! 'oss o the thin2s, e"en i it sho&'( 4e th!o&2h a o!t&ito&s e"ent: $han!o4'es "i!t&a' 'a# 'i4!a!0 8)9 I he 6eeps it 'on2e! than the pe!io( stip&'ate( . . .$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 8;9 I the thin2 'oane( has 4een (e'i"e!e( #ith app!aisa' o its "a'&e, &n'ess the!e is a stip&'ation eDe3ptin2 the 4ai'ee !o3 !esponsi4i'it0 in $ase o a o!t&ito&s e"entC The o!i2ina' pe!io( o the 'oan #as !o3 @ /a0 %+1@ to . /a0 %+1+. The 'oan o one 4&'' #as !ene#e( o! anothe! pe!io( o one 0ea! to en( on @ /a0 %+*<. 5&t the appe''ant 6ept an( &se( the 4&'' &nti' No"e34e! %+*; #hen (&!in2 a H&6 !ai( it #as 6i''e(

40 st!a0 4&''ets. F&!the!3o!e, #hen 'ent an( (e'i"e!e( to the (e$ease( h&s4an( o the appe''ant the 4&''s ha( ea$h an app!aise( 4oo6 "a'&e, to #ith: the Sin(hi, at P%,%.>.1>, the 5ha2na!i at P%,;)<.*> an( the Sahini#a' at P.11.1>. It #as not stip&'ate( that in $ase o 'oss o the 4&'' (&e to o!t&ito&s e"ent the 'ate h&s4an( o the appe''ant #o&'( 4e eDe3pt !o3 'ia4i'it0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The appe''antKs $ontention that the (e3an( o! p!a0e! 40 the appe''ee o! the !et&!n o the 4&'' o! the pa03ent o its "a'&e 4ein2 a 3one0 $'ai3 sho&'( 4e p!esente( o! i'e( in the intestate p!o$ee(in2s o the (e en(ant #ho (ie( on ); O$to4e! %+*%, is not a'to2ethe! #itho&t 3e!it. Ho#e"e!, the $'ai3 that his $i"i' pe!sona'it0 ha"in2 $ease( to eDist the t!ia' $o&!t 'ost B&!is(i$tion o"e! the $ase a2ainst hi3, is &ntena4'e, 4e$a&se se$tion %. o R&'e ; o the R&'es o Co&!t p!o"i(es that , A te! a pa!t0 (ies an( the $'ai3 is not the!e40 eDtin2&ishe(, the $o&!t sha'' o!(e!, &pon p!ope! noti$e, the 'e2a' !ep!esentati"e o the (e$ease( to appea! an( to 4e s&4stit&te( o! the (e$ease(, #ithin a pe!io( o thi!t0 8;<9 (a0s, o! #ithin s&$h ti3e as 3a0 4e 2!ante(. . . . an( a te! the (e en(antKs (eath on ); O$to4e! %+*% his $o&nse' ai'e( to $o3p'0 #ith se$tion %> o R&'e ; #hi$h p!o"i(es that , Ahene"e! a pa!t0 to a pen(in2 $ase (ies . . . it sha'' 4e the (&t0 o his atto!ne0 to in o!3 the $o&!t p!o3pt'0 o s&$h (eath . . . an( to 2i"e the na3e an( !esi(en$e o the eDe$&to!0 a(3inist!ato!, 2&a!(ian, o! othe! 'e2a' !ep!esentati"e o the (e$ease( . . . . The noti$e 40 the p!o4ate $o&!t an( its p&4'i$ation in the Vo& de anila that Fe'i$i(a( /. 5a2tas ha( 4een iss&e 'ette!s o a(3inist!ation o the estate o the 'ate Jose 5a2tas an( that Na'' pe!sons ha"in2 $'ai3s o! 3onopo'0 a2ainst the (e$ease( Jose V. 5a2tas, a!isin2 !o3 $ont!a$t eDp!ess o! i3p'ie(, #hethe! the sa3e 4e (&e, not (&e, o! $ontin2ent, o! &ne!a' eDpenses an( eDpenses o the 'ast si$6ness o the sai( (e$e(ent, an( B&(23ent o! 3onopo'0 a2ainst hi3, to i'e sai( $'ai3s #ith the C'e!6 o this Co&!t at the Cit0 Ha'' 5'(2., Hi2h#a0 *1, F&e7on Cit0, #ithin siD 8>9 3onths !o3 the (ate o the i!st p&4'i$ation o this o!(e!, se!"in2 a $op0 the!eo &pon the a o!e3entione( Fe'i$i(a( /. 5a2tas, the appointe( a(3inist!at!iD o the estate o the sai( (e$ease(,N is not a noti$e to the $o&!t an( the appe''ee #ho #e!e to 4e noti ie( o the (e en(antKs (eath in a$$o!(an$e #ith the a4o"e,:&ote( !&'e, an( the!e #as no !eason o! s&$h ai'&!e to noti 0, 4e$a&se the atto!ne0 #ho appea!e( o! the (e en(ant #as the sa3e #ho !ep!esente( the a(3inist!at!iD in the spe$ia' p!o$ee(in2s instit&te( o! the a(3inist!ation an( sett'e3ent o his estate. The appe''ee o! its atto!ne0 o! !ep!esentati"e $o&'( not 4e eDpe$te( to 6no# o the (eath o the (e en(ant o! o the a(3inist!ation p!o$ee(in2s o his estate instit&te( in anothe! $o&!t that i the atto!ne0 o! the (e$ease( (e en(ant (i( not noti 0 the p'ainti o! its atto!ne0 o s&$h (eath as !e:&i!e( 40 the !&'e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 As the appe''ant a'!ea(0 ha( !et&!ne( the t#o 4&''s to the appe''ee, the estate o the 'ate (e en(ant is on'0 'ia4'e o! the s&3 o P@*+.>;, the "a'&e o the 4&'' #hi$h has not 4een !et&!ne( to the appe''ee, 4e$a&se it #as 6i''e( #hi'e in the $&sto(0 o the a(3inist!at!iD o his estate. This is the a3o&nt p!a0e( o! 40 the appe''ee in its o4Be$tion on ;% Jan&a!0 %+*+ to the 3otion i'e( on . Jan&a!0 %+*+ 40 the appe''ant o! the :&ashin2 o the #!it o eDe$&tion.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Spe$ia' p!o$ee(in2s o! the a(3inist!ation an( sett'e3ent o the estate o the (e$ease( Jose V. 5a2tas ha"in2 4een instit&te( in the Co&!t o Fi!st Instan$e o Ri7a' 8F,)<<9, the 3one0 B&(23ent !en(e!e( in a"o! o the appe''ee $annot 4e en o!$e( 40 3eans o a #!it o eDe$&tion 4&t 3&st 4e p!esente( to the p!o4ate $o&!t o! pa03ent 40 the appe''ant, the a(3inist!at!iD appointe( 40 the $o&!t.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 ACCORDIN-LG, the #!it o eDe$&tion appea'e( !o3 is set asi(e, #itho&t p!ono&n$e3ent as to $osts.$ G.R. No. 1322=4 C February 2=, 200: "E%ENG" N BRO"#ERS D SONS, $NC., Petitioner, v. UN$"ED S" "ES %$NES, $NC. a'- +,e COUR" OF PPE %S,Respondents. DECISION G RC$ , J.:

Th!& this petition o! !e"ie# on certiorari &n(e! R&'e 1* o the R&'es o Co&!t, petitione! Te'en2tan 5!othe!s J Sons, In$. 8Te'en2tan9 see6s the !e"e!sa' an( settin2 asi(e o the (e$ision% (ate( Jan&a!0 @, %++@ o the Co&!t o Appea's 8CA9 in CA-*.R. CV +o. ,-./0 #hi$h a i!3e( in toto the (e$ision (ate( Jan&a!0 %<, %+@*) o the Re2iona' T!ia' Co&!t o /ani'a, 5!an$h ;@, in(in2 petitione! 'ia4'e to !espon(ent Unite( States Lines, In$. 8U.S. Lines9 o! (e3&!!a2e an( (a3a2es. Petitione! Te'en2tan is a (o3esti$ $o!po!ation (oin2 4&siness &n(e! the na3e an( st0'e La S&e!te Ci2a! J Ci2a!ette Fa$to!0, #hi'e !espon(ent U.S. Lines is a o!ei2n $o!po!ation en2a2e( in the 4&siness o o"e!seas shippin2. D&!in2 the pe!io( 3ate!ia', the p!o"isions o the 1ar "ast Conference 2ariff +o. ,3 %ere spe$i i$a''0 3a(e app'i$a4'e to Phi'ippine $ontaine!i7e( $a!2o !o3 the U.S. an( -&' Po!ts, e e$ti"e #ith "esse's a!!i"in2 at Phi'ippine po!ts on an( a te! De$e34e! %*, %+.@. A te! that (ate, $onsi2nees #ho ai' to ta6e (e'i"e!0 o thei! $ontaine!i7e( $a!2o #ithin the %<,(a0 !ee pe!io( a!e 'ia4'e to pa0 (e3&!!a2e $ha!2es. As !e$ite( in the (e$ision &n(e! !e"ie#, the a$t&a' ante$e(ents 3a0 4e s&33a!i7e( as o''o#s:$!a:na( On J&ne )), %+@%, !espon(ent U.S. Lines i'e( a s&it a2ainst petitione! Te'en2tan see6in2 pa03ent o (e3&!!a2e $ha!2es p'&s inte!est an( (a3a2es. Do$6ete( as Ci"i' Case No. R,@%,%%+> o the Re2iona' T!ia' Co&!t o /ani'a an( !a 'e( to 5!an$h ;@ the!eo , the $o3p'aint a''e2e( that 4et#een the 0ea!s %+.+ an( %+@<, 2oo(s 4e'on2in2 to petitione! 'oa(e( on $ontaine!s a4oa!( its 8!espon(entKs9 "esse's a!!i"e( in /ani'a !o3 U.S. po!ts. A te! the %<,(a0 !ee pe!io(, petitione! sti'' ai'e( to #ith(!a# its 2oo(s !o3 the $ontaine!s #he!ein the 2oo(s ha( 4een shippe(. Contin&in2, !espon(ent U.S. Lines a''e2e( that petitione! in$&!!e( on a'' those ship3ents a (e3&!!a2e in the tota' a3o&nt o P+1,<<<.<< #hi$h the 'atte! !e &se( to pa0 (espite !epeate( (e3an(s. In its a3en(e( ans#e! #ith $o3p&'so!0 $o&nte!$'ai3, petitione! Te'en2tan, as (e en(ant a 4uo, (is$'ai3s 'ia4i'it0 o! the (e3an(e( (e3&!!a2e, a''e2in2 that it has ne"e! ente!e( into a $ont!a$t no! si2ne( an a2!ee3ent to 4e 4o&n( 40 an0 !&'e on (e3&!!a2e. It 'i6e#ise 3aintains that, a4sent an o4'i2ation to pa0 !espon(ent #ho 3a(e no p!ope! o! 'e2a' (e3an(s in the i!st p'a$e, the!e is B&sti ia4'e !eason to !e &se pa03ent o the 'atte!Ks &n#a!!ante( $'ai3s. 50 #a0 o $o&nte!$'ai3, petitione! states that, &pon a!!i"a' o the $on"e0in2 "esse's, it p!esente( the 5i''s o La(in2 85=Ls9 an( a'' othe! pe!tinent (o$&3ents $o"e!in2 se"en 8.9 ship3ents an( (e3an(e( !o3 !espon(ent (e'i"e!0 o a'' the 2oo(s $o"e!e( 40 the a o!esai( 5=Ls, on'0 to 4e in o!3e( that !espon(ent ha( a'!ea(0 &n'oa(e( the 2oo(s !o3 the $ontaine! "ans, st!ippe( the3 o thei! $ontents #hi$h $ontents #e!e then sto!e( in #a!eho&ses. Petitione! &!the! states that !espon(ent ha( !e &se( to (e'i"e! the 2oo(s $o"e!e( 40 the 5=Ls an( !e:&i!e( petitione! to pa0 the a3o&nt o P%);,.;@.<1 4e o!e the 2oo(s $an 4e !e'ease(. It th&s p!a0s that !espon(ent 4e o!(e!e( to pa0 the a o!estate( a3o&nt #ith inte!est. A te! (&e p!o$ee(in2s, the t!ia' $o&!t o&n( o! !espon(ent U.S. Lines, as p'ainti the!ein, an( a$$o!(in2'0 !en(e!e( B&(23ent, as o''o#s:$!a:na( AHEREFORE, in "ie# o a'' the o!e2oin2, the Co&!t in(s ?petitione!I 'ia4'e to ?!espon(entI o! (e3&!!a2e in$&!!e( in the a3o&nt o P++,1<@.<< #hi$h s&3 #i'' 4ea! inte!est at the 'e2a' !ate !o3 the (ate o the i'in2 o the $o3p'aint ti'' &'' pa03ent the!eo p'&s atto!ne0Ks ees in the a3o&nt o )<M o the tota' s&3 (&e, a'' o #hi$h sha'' 4e !e$o3p&te( as o the (ate o pa03ent in a$$o!(an$e #ith the p!o"isions o A!ti$'e %)*< o the Ci"i' Co(e. EDe3p'a!0 (a3a2es in the a3o&nt o P@<,<<<.<< a!e a'so 2!ante(. The $o&nte!$'ai3 is (is3isse(. Costs a2ainst ?petitione!I. 8Ao!(s in 4!a$6et o&!s9 ; $han!o4'es"i!t&a''a#'i4a!0 Pa!t0 eDp'ains the t!ia' $o&!t in its (e$ision:1 $!a In othe! #o!(s, $ont!a!0 to ?petitione!KsI $ontentions, 4oth the p!o"isions o the $ont!a$t 4et#een the pa!ties, in this $ase the 4i'' o 'a(in2, an( the inte!p!etation 2i"en 40 the hi2he! $o&!ts to these p!o"isions a!e to the e e$t that (e3&!!a2e 3a0 4e 'a# &''0 $o''e$te(. As a 3atte! o a$t, ?!espon(ent U.S. LinesI has s&43itte( o i$ia' !e$eipts sho#in2 that on 3an0 othe! an( p!e"io&s o$$asions, ?petitione!I pai( (e3&!!a2e to ?!espon(entI 8EDhi4its NFN, NF,%N to NF,1N, N-N, N-,%N to N-,1N, NHN, NH,%N to NH,1N, an( NIN, NI,%N to NI,;N9. ?Petitione!I is, the!e o!e, in estoppe' to $'ai3 that it (i( not 6no# o (e3&!!a2e 4ein2 $ha!2e( 40 ?!espon(entI an( that it ha( not a2!ee( to it sin$e these eDhi4its sho# that ?petitione!I 6ne# o this (e3&!!a2e an( 40 pa0in2 o! the sa3e, it in e e$t, a2!ee( to the $o''e$tion o (e3&!!a2e. DDDDDDDDD On the othe! han(, ?petitione!I $'ai3s that ?!espon(entI $o3pan0 o#es the3 the a! 'a!2e! s&3 o P%);,.;@.<1 40 #a0 o (a3a2es a''e2e('0 s& e!e( 40 thei! 2oo(s #hen ?!espon(entI $o3pan0 !e3o"e( these 2oo(s !o3 its $a!2o "ans an( (eposite(

the3 in 4on(e( #a!eho&ses #itho&t its $onsent. It is not (isp&te( that ?!espon(entI $o3pan0 (i( not ?si$I in a$t !e3o"e these 2oo(s 4e'on2in2 to ?petitione!I !o3 its "ans an( (eposite( the3 in #a!eho&ses. Ho#e"e!, this #as (one 40 a&tho!it0 o the 5&!ea& o C&sto3s an( o! that p&!pose, ?!espon(entI a((!esse( a 'ette!,!e:&est to the Co''e$to! o C&sto3s, o! pe!3ission to !e3o"e the 2oo(s o (e en(ant !o3 its "ans 8EDhi4it NLN9. DDD. DDDDDDDDD The Co&!t in(s that the $ha!2es o! #a!eho&sin2 #e!e ne$essa!0 eDpenses $o"e!e( 40 the te!3s o the 4i'' o 'a(in2 #hi$h the $onsi2nee #as !esponsi4'e o!. The!e is the!e o!e no# no ne$essit0 o (is$&ssin2 #hethe! o! not the $o&nte!$'ai3 o ?petitione!I ha( p!es$!i4e( o! not. Neithe! is the!e an0 :&estion o 4a( aith on the pa!t o ?!espon(entI. Ahen it !e:&este( o! a&tho!it0 to !e3o"e ?petitione!KsI $onsi2ne( 2oo(s !o3 its "ans an( (eposite( the3 in #a!eho&ses, ?!espon(entI ha( a'!ea(0 2i"en $onsi2nee s& i$ient ti3e to ta6e (e'i"e!0 o the ship3ent. This, ?petitione!I $hose not to (o. Instea(, it sat pat 40 the te'ephone $a''in2 #itho&t 3a6in2 an0 positi"e e o!t to $he$6 &p on the ship3ent o! a!!an2e o! its (e'i"e!0 to its a$to!0. On$e a!!i"e( at the po!t, the ship3ent #as a"ai'a4'e to $onsi2nee o! its p!ope! (e'i"e!0 an( !e$eipt an( the $a!!ie! (is$ha!2e( o its !esponsi4i'it0 the!e o!. Rathe!, 40 its ina$tion, ?petitione!I #as 2&i't0 o 4a( aith. On$e it ha( !e$ei"e( the noti$e o a!!i"a' o the $a!!ie! in po!t, it #as in$&34ent on $onsi2nee to p&t #hee's in 3otion in o!(e! that the ship3ent $o&'( 4e (e'i"e!e( to it. The ina$tion o ?petitione!I #o&'( on'0 in(i$ate that it ha( no intention o ta6in2 (e'i"e!0 eD$ept at its o#n $on"enien$e th&s p!e"entin2 $a!!ie! !o3 ta6in2 on othe! ship3ents an( !o3 'ea"in2 po!t. S&$h &neDp'aine( an( &n4&siness,'i6e (e'a0 s3a$6s hi2h'0 o 4a( aith on the pa!t o ?petitione!I !athe! than o the ?!espon(entI. 8Ao!(s in 4!a$6et, a((e(9. Appea'in2 to the CA, #he!eat its !e$o&!se #as (o$6ete( as CA-*.R. CV +o. ,-./0, petitione! $onten(e( that the t!ia' $o&!t e!!e( in 8%9 ho'(in2 it 'ia4'e o! (e3&!!a2e, 8)9 (is3issin2 its $o&nte!$'ai3, an( 8;9 a#a!(in2 eDe3p'a!0 (a3a2es an( atto!ne0Ks ees to !espon(ent. As state( at the o&tset, ho#e"e!, the CA, in its assai'e( De3*/*o' -a+e- ?a'uary =, 199=,* a i!3e( in toto the B&(23ent o the t!ia' $o&!t. Un(a&nte(, petitione! is no# #ith this Co&!t via the p!esent !e$o&!se, i3p&tin2 to the CA the o''o#in2 e!!o!s:$!a:na( A. DDD in $on$'&(in2 that it ?petitione!I #as the one at a&'t in not #ith(!a#in2 its $a!2o !o3 the $ontaine! "ans in #hi$h the 2oo(s #e!e o!i2ina''0 shippe( (espite (o$&3enta!0 e"i(en$e an( #!itten a(3issions o p!i"ate !espon(ent to the $ont!a!0. 5. DDD in a i!3in2 the t!ia' $o&!tKs o!(e! o! the !e$o3p&tation o the B&(23ent a#a!( in a$$o!(an$e #ith A!ti$'e %)*< o the Ci"i' Co(e $ont!a!0 to eDistin2 B&!isp!&(en$e an( #itho&t an0 e"i(en$e at a'' to s&ppo!t it.> $han!o4'es"i!t&a''a#'i4a!0 The petition is pa!t'0 3e!ito!io&s. It is &n(isp&te( that the 2oo(s s&4Be$t o petitione!Ks $o&nte!$'ai3 an( $o"e!e( 40 se"en 8.9 5=Ls #ith Shippe!Ks Re e!en$e Nos. S,%>@11, S,%>@1>, S,%>@1@, S,%..1@, S,%..*<, S,%..1+ an( S,%..*%. #e!e 'oa(e( o! ship3ent to /ani'a on !espon(entKs "esse's in $ontaine! "ans on a NHo&se=Ho&se Containe!s,Shippe!s Loa(, Sto#a2e an( Co&ntN 4asis. This shippin2 a!!an2e3ent 3eans that the shippin2 $o3pan0Ks $ontaine! "ans a!e to 4e 4!o&2ht to the shippe! o! 'oa(in2 o its 2oo(sC that !o3 the shippe!Ks #a!eho&se, the 2oo(s in $ontaine! "ans a!e 4!o&2ht to the shippin2 $o3pan0 o! ship3entC that the shippin2 $o3pan0, &pon a!!i"a' o its ship at the po!t o (estination, is to (e'i"e! the $ontaine! "ans to the $onsi2neeKs $o3po&n( o! #a!eho&seC an( that the shippe! 8$onsi2nee9 is s&ppose( to 'oa(, sto# an( $o&nt the 2oo(s !o3 the $ontaine! "an.@ Li6e#ise &n(isp&te( is the a$t that the $ontaine! "ans $ontainin2 the 2oo(s $o"e!e( 40 th!ee 8;9 o the a o!esai( 5=Ls, pa!ti$&'a!'0 those #ith Shippe!Ks Re e!en$e Nos. S,%..1@, S,%..*< an( S,%..*%,+ #e!e (e'i"e!e( to a #a!eho&se, st!ippe( o thei! $ontents an( the $ontents (eposite( the!eat.%< $han!o4'es"i!t&a''a#'i4a!0 On the a!2&3ent that the !espon(ent, &pon the o!e2oin2 &n(isp&te( a$ts, "io'ate( its $ont!a$t&a' o4'i2ation to (e'i"e! #hen, instea( o (e'i"e!in2 the 2oo(s to the petitione! as $onsi2nee the!eo , it (eposite( the sa3e in 4on(e( #a!eho&se=s, petitione! #o&'( no# s$o!e the CA o! in(in2 it at a&'t o! non,#ith(!a#a' o its $a!2o !o3 the $ontaine! "ans #ithin the %<,(a0 !ee (e3&!!a2e pe!io(. P!essin2 the point, petitione! a!2&es that, sin$e the CA (!e# an e!!oneo&s $on$'&sion !o3 an &n(isp&te( set o a$ts, petitione! no# asse!ts that the 3atte! o #ho is at a&'t , its i!st assi2ne( e!!o! , $o&'( 4e t!eate( as a 'e2a' iss&e an( not a :&estion o a$t.

A te! $a!e &' $onsi(e!ation, the Co&!t s&stain the CAKs stan$e a&'tin2 the petitione! o! not ta6in2 (e'i"e!0 o its $a!2o !o3 the $ontaine! "ans #ithin the %<,(a0 !ee pe!io(, an ina$tion #hi$h 'e( !espon(ent to (eposit the sa3e in #a!eho&se=s. It 3a0 4e that, #hen the !e'e"ant a$ts a!e &n(isp&te(, the :&estion o #hethe! o! not the $on$'&sion (e(&$e( the!e !o3 40 the CA is $o!!e$t is a :&estion o 'a# p!ope!'0 $o2ni7a4'e 40 this Co&!t.%% Ho#e"e!, it has a'so 4een he'( that a'' (o&4ts as to the $o!!e$tness o s&$h $on$'&sions #i'' 4e !eso'"e( in a"o! o the (isposin2 $o&!t. %) So it 3&st 4e in this $ase. At an0 !ate, the Co&!t in(s that petitione!Ks i!st $ontention !aises a :&estion o a$t !athe! than o 'a#. An( sett'e( is the !&'e that a$t&a' in(in2s o the CA, pa!ti$&'a!'0 those $on i!3ato!0 o that o the t!ia' $o&!t, as he!e, a!e 4in(in2 on this Co&!t, %; sa"e o! the 3ost $o3pe''in2 o !easons, 'i6e #hen the0 a!e !ea$he( a!4it!a!i'0. %1 $han!o4'es"i!t&a''a#'i4a!0 As it #e!e, ho#e"e!, the $on$'&sion o the CA on #ho $onteDt&a''0 is the e!!in2 pa!t0 #as not eDa$t'0 (!a#n !o3 a "a$&&3, s&ppo!te( as s&$h $on$'&sion is 40 the !e$o!(s o the $ase. Ahat the CA #!ote #ith so3e 3eas&!e o 'o2i$ $o33en(s itse' o! $on$&!!en$e:$!a:na( Ho#e"e!, ... Ae in( that ?petitione!I #as the one at a&'t in not #ith(!a#in2 its $a!2o !o3 the $ontaine!s #he!ein the 2oo(s #e!e shippe( #ithin the ten 8%<9,(a0 !ee pe!io(. Ha( it (one so, then the!e #o&'( not ha"e 4een an0 nee( o (epositin2 the $a!2o in a #a!eho&se. It is in$&34ent &pon the $a!!ie! to i33e(iate'0 a("ise the $onsi2nee o the a!!i"a' o the 2oo(s o! i it (oes not, it $ontin&es to 4e 'ia4'e o! the sa3e &nti' the $onsi2nee has ha( !easona4'e oppo!t&nit0 to !e3o"e the3. So&n( 4&siness p!a$ti$e (i$tates that the $onsi2nee, &pon noti i$ation o the a!!i"a' o the 2oo(s, sho&'( i33e(iate'0 2et the $a!2o !o3 the $a!!ie! espe$ia''0 sin$e it has nee( o it. DDD. Appe''ant t!ies to shi t the 4'a3e on the ?!espon(entI 40 statin2 that it #as not in o!3e( 4e o!ehan( o the 'atte!Ks intention to (e'i"e! the 2oo(s to a #a!eho&se. It 'i6e#ise a''e2es that it (oes not 6no# #he!e to $onta$t ?!espon(entI o! it a!2&es that the pe!son 3annin2 the 'atte!Ks o i$e #o&'( on'0 ho'( o i$e o! a e# ho&!s, i not a'#a0s o&t. 5&t ha( it ta6en the ne$essa!0 steps o in:&i!in2 o! the a((!ess o ?!espon(entI !o3 the p!ope! 2o"e!n3ent o i$es, then it #o&'( ha"e s&$$ee(e( in in(in2 the 'atte!Ks a((!ess. J&(2in2 !o3 the ?petitione!KsI #a0 o $on(&$tin2 4&siness in the past, Ae $o3e to the $on$'&sion that it is &se( to pa0in2 (e3&!!a2e $ha!2es. EDhi4its NHN an( NIN a!e $e!tain'0 p!oo s o appe''antKs p!a$ti$e o not 2ettin2 its $a!2o !o3 the $a!!ie! i33e(iate'0 &pon noti i$ation o the 2oo(sK a!!i"a'. %* 8Ao!(s in 4!a$6et a((e(.9 It $annot 4e o"e!,e3phasi7e( that the $ontaine! "ans #e!e st!ippe( o thei! $a!2o #ith the p!io! a&tho!i7ation o the 5&!ea& o C&sto3s. The t!ia' $o&!t sai( as 3&$h, th&s:$!a:na( It is not (isp&te( that ?!espon(entI $o3pan0 (i( not ?si$I in a$t !e3o"e these 2oo(s 4e'on2in2 to ?petitione!I !o3 its "ans an( (eposite( the3 in #a!eho&ses. Ho#e"e!, this #as (one 40 a&tho!it0 o the 5&!ea& o C&sto3s an( o! that p&!pose, ?!espon(entI a((!esse( a 'ette!,!e:&est to the Co''e$to! o C&sto3s, o! pe!3ission to !e3o"e the 2oo(s o ?petitione!I !o3 its "ans 8EDhi4it NLN9. The $o!!espon(in2 a&tho!it0 #as 2!ante( 40 the 5&!ea& o C&sto3s to (o so as e"i(en$e( 40 a "an pe!3it . 8EDhi4it N/N9. In othe! #o!(s, #hi'e ?!espon(entI a(3its that it !e3o"e( the 2oo(s o ?petitione!I !o3 its "ans an( (eposite( the3 in "a!io&s #a!eho&ses, the!e is no :&estion that this #as (one 40 a&tho!it0 o the 5&!ea& o C&sto3s #hi$h is the p!ope! a2en$0 o the 2o"e!n3ent $ha!2e( #ith the s&pe!"ision an( !e2&'ation o 3a!iti3e $o33e!$e. Ve!i'0, the a&tho!it0 se$&!e( !o3 the 5&!ea& o C&sto3s is in(i$ati"e o the bona fides o !espon(entKs intention. An( as he'( 4e'o#, the a&tho!it0 th&s a$:&i!e( !e'ie"e( !espon(ent o its o4'i2ations &n(e! the 5=Ls #hen it $a&se( the $ontaine!s to 4e st!ippe( an( the 2oo(s sto!e( in 4on(e( #a!eho&ses. Not 'ost on this Co&!t is the a$t that the 5=Ls &n(e! #hi$h petitione! an$ho!s its $o&nte!$'ai3 a''o# the 2oo(s $a!!ie( to 4e (e'i"e!e( to 4on(e( #a!eho&ses o! the shippe!Ks an(=o! $onsi2neeKs a$$o&nt i it (oes not ta6e possession o! (e'i"e!0 the!eo as soon as the0 a!e at its (isposa' o! !e3o"a'. Se$tion %. o the Re2&'a! Lon2 Fo!3 In#a!( 5=L o the !espon(ent %> #hi$h is in$o!po!ate( 40 !e e!en$e to the Sho!t Fo!3 o 5=L%. p!o"i(es:$!a:na(

%.. The $a!!ie! sha'' not 4e !e:&i!e( to 2i"e an0 noti i$ation #hatsoe"e! o a!!i"a', (is$ha!2e o! an0 (isposition o o! a$tion ta6en #ith !espe$t to the 2oo(s, . e"en tho&2h the 2oo(s a!e $onsi2ne( to o!(e! #ith p!o"ision o! noti$e to a na3e( pe!son. The $a!!ie! o! 3aste! 3a0 appoint a ste"e(o!e o! an0 othe! pe!sons to &n'oa( an( ta6e (e'i"e!0 o the 2oo(s an( s&$h (e'i"e!0 !o3 shipKs ta$6'e sha'' 4e $onsi(e!e( $o3p'ete an( a'' !esponsi4i'it0 o the $a!!ie! sha'' then te!3inate. It is a2!ee( that #hen possession o the 2oo(s is !e$ei"e( o! ta6en 40 the $&sto3s o! othe! a&tho!ities o! 40 an0 ope!ato! o an0 'i2hte!, $!a t, . o! othe! a$i'ities #hethe! se'e$te( 40 the $a!!ie! o! 3aste!, shippe! o $onsi2nee, #hethe! p&4'i$ o! p!i"ate, s&$h a&tho!it0 o! pe!son sha'' 4e $onsi(e!e( as ha"in2 !e$ei"e( possession an( (e'i"e!0 o the 2oo(s so'e'0 as a2ent o an( on 4eha' o the shippe! an( $onsi2nee, .. 0/o *4 +,e 3o'/*6'ee -oe/ 'o+ +a7e .o//e//*o' or -e0*5ery o4 +,e 6oo-/ a/ /oo' a/ +,e 6oo-/ are a+ +,e -*/.o/a0 o4 +,e 3o'/*6'ee 4or re1o5a0, +,e 6oo-/ /,a00 be a+ +,e*r o(' r*/7 a'- e2.e'/e, -e0*5ery /,a00 be 3o'/*-ere- 3o1.0e+e a'- +,e 3arr*er 1ay, /ubEe3+ +o 3arr*erF/ 0*e'/, /e'- +,e 6oo-/ +o /+ore, (are,ou/e, .u+ +,e1 o' 0*6,+er/ or o+,er 3ra4+, .u+ +,e1 *' .o//e//*o' o4 au+,or*+*e/, -u1., .er1*+ +o 0*e (,ere 0a'-e- or o+,er(*/e -*/.o/e o4 +,e1, a0(ay/ a+ +,e r*/7 a'- e2.e'/e o4 +,e 6oo-/, an( the shippe! an( $onsi2nee sha'' pa0 an( in(e3ni 0 the $a!!ie! o! an0 'oss, (a3a2e, ine, $ha!2e o! eDpense #hatsoe"e! s& e!e( o! in$&!!e( in so (ea'in2 #ith o! (isposin2 o the 2oo(s, o! 40 !eason o the $onsi2neeKs ai'&!e o! (e'a0 in ta6in2 possession an( (e'i"e!0 as p!o"i(e( he!ein. 8E3phasis O&!s9 On the se$on( iss&e !aise(, the Co&!t in(s as e!!oneo&s the t!ia' $o&!tKs (e$ision, as a i!3e( 40 the CA, o! the !e$o3p&tation o the B&(23ent a#a!( as o the (ate o pa03ent in a$$o!(an$e #ith A!ti$'e %)*< o the Ci"i' Co(e. In $a''in2 o! the app'i$ation o the a o!e3entione( p!o"ision, !espon(ent &!2e( that B&(i$ia' noti$e 4e ta6en o the s&$$ee(in2 (e"a'&ations o the peso vis-5-vis the US (o''a! sin$e the ti3e the p!o$ee(in2s 4e2an in %+@%. A$$o!(in2 to !espon(ent, the $o3p&tation o the a3o&nt th&s (&e !o3 the petitione! sho&'( a$to! in s&$h peso (e"a'&ations.%@ $han!o4'es"i!t&a''a#'i4a!0 A!ti$'e %)*< o the Ci"i' Co(e states:$!a:na( In $ase an eDt!ao!(ina!0 in 'ation o! (e 'ation o the $&!!en$0 stip&'ate( sho&'( s&pe!"ene, the "a'&e o the $&!!en$0 at the ti3e o the esta4'ish3ent o the o4'i2ation sha'' 4e the 4asis o pa03ent, &n'ess the!e is an a2!ee3ent to the $ont!a!0. EDt!ao!(ina!0 in 'ation o! (e 'ation, as the $ase 3a0 4e, eDists #hen the!e is an &n&s&a' in$!ease o! (e$!ease in the p&!$hasin2 po#e! o the Phi'ippine peso #hi$h is 4e0on( the $o33on '&$t&ation in the "a'&e o sai( $&!!en$0, an( s&$h in$!ease o! (e$!ease $o&'( not ha"e 4een !easona4'0 o!eseen o! #as 3ani est'0 4e0on( the $onte3p'ation o the pa!ties at the ti3e o the esta4'ish3ent o the o4'i2ation.%+ EDt!ao!(ina!0 in 'ation $an ne"e! 4e ass&3e(C he #ho a''e2es the eDisten$e o s&$h pheno3enon 3&st p!o"e the sa3e.)< $han!o4'es"i!t&a''a#'i4a!0 The Co&!t ho'(s that the!e has 4een no eDt!ao!(ina!0 in 'ation #ithin the 3eanin2 o A!ti$'e %)*< o the Ci"i' Co(e. A$$o!(in2'0, the!e is no p'a&si4'e !eason o! o!(e!in2 the pa03ent o an o4'i2ation in an a3o&nt (i e!ent !o3 #hat has 4een a2!ee( &pon 4e$a&se o the p&!po!te( s&pe!"ention o eDt!ao!(ina!0 in 'ation. As it #e!e, !espon(ent #as &na4'e to p!o"e the o$$&!!en$e o eDt!ao!(ina!0 in 'ation sin$e it i'e( its $o3p'aint in %+@%. In(ee(, the !e$o!( is 4e!e t o an0 e"i(en$e, (o$&3enta!0 o! testi3onia', that in 'ation, na0, an eDt!ao!(ina!0 one, eDiste(. E"en i the p!i$e in(eD o 2oo(s an( se!"i$es 3a0 ha"e !isen (&!in2 the inte!"enin2 pe!io(, )% this in$!ease, #itho&t 3o!e, $annot 4e $onsi(e!e( as !es&'tin2 to 6e7traordinar) inflation6 as to B&sti 0 the app'i$ation o A!ti$'e %)*<. The e!osion o the "a'&e o the Phi'ippine peso in the past th!ee o! o&! (e$a(es, sta!tin2 in the 3i(,siDties, is, as the Co&!t o4se!"e( in 8in#son vs. Calte7 9Phil:, ;nc., )) $ha!a$te!isti$s o 3ost $&!!en$ies. An( #hi'e the Co&!t 3a0 ta6e B&(i$ia' noti$e o the (e$'ine in the p&!$hasin2 po#e! o the Phi'ippine $&!!en$0 in that span o ti3e, s&$h (o#n#a!( t!en( o the peso $annot 4e $onsi(e!e( as the eDt!ao!(ina!0 pheno3enon $onte3p'ate( 40 A!ti$'e %)*< o the Ci"i' Co(e. F&!the!3o!e, a4sent an o i$ia' p!ono&n$e3ent o! (e$'a!ation 40 $o3petent a&tho!ities o the eDisten$e o eDt!ao!(ina!0 in 'ation (&!in2 a 2i"en pe!io(, as he!e, the e e$ts o eDt!ao!(ina!0 in 'ation, i that 4e the $ase, a!e not to 4e app'ie(. Lest it 4e o"e!'oo6e(, A!ti$'e %)*< o the Co(e, as $o&$he(, $'ea!'0 p!o"i(es that the "a'&e o the peso at the ti3e o the esta4'ish3ent o the o4'i2ation sha'' $ont!o' an( 4e the 4asis o pa03ent o the $ont!a$t&a' o4'i2ation, &n'ess the!e is N a#reement to the contrar).N It is on'0 #hen the!e is a $ont!a!0 a2!ee3ent that eDt!ao!(ina!0 in 'ation #i'' 3a6e the "a'&e o the $&!!en$0 at the ti3e o pa03ent, not at the ti3e o the esta4'ish3ent o o4'i2ation, the 4asis o! pa03ent. ); The Co&!t, in obil $il Philippines, ;nc. vs. Court of Appeals and 1ernando A. Pedrosa,<3/ o!3&'ate( the sa3e !&'e in the o''o#in2 #ise:$!a:na(

In othe! #o!(s, an a2!ee3ent is nee(e( o! the e e$ts o an eDt!ao!(ina!0 in 'ation to 4e ta6en into a$$o&nt to a'te! the "a'&e o the $&!!en$0 at the ti3e o the esta4'ish3ent o the o4'i2ation #hi$h, as a !&'e, is a'#a0s the (ete!3inati"e e'e3ent, to 4e "a!ie( 40 a2!ee3ent that #o&'( in( !eason on'0 in the s&pe!"ention o eDt!ao!(ina!0 in 'ation o! (e 'ation. To 4e s&!e, neithe! the t!ia' $o&!t, the CA no! !espon(ent has pointe( to an0 p!o"ision o the $o"e!in2 5=Ls #hen$e !espon(ent so&!$e( its $ont!a$t&a' !i2ht &n(e! the p!e3ises #he!e the (e inin2 Na2!ee3ent to the $ont!a!0N is set o!th. Nee('ess to st!ess, the Co&!t sees no nee( to spe$&'ate as to the eDisten$e o s&$h a2!ee3ent, the 4&!(en o p!oo on this !e2a!( 4ein2 on !espon(ent. 8#EREFORE, the assai'e( (e$ision o the Co&!t o Appea's is FF$R;ED #ith the ;OD$F$C "$ON that the o!(e! o! !e$o3p&tation as o the (ate o pa03ent in a$$o!(an$e #ith the p!o"isions o A!ti$'e %)*< o the Ci"i' Co(e is (e'ete(. Costs a2ainst petitione!. SO ORDERED. G.R. No. 2:0=5 u6u/+ 12, 192B

SE>ER$NO "O%EN"$NO a'- PO"ENC$ N ; N$O, Plaintiffs-Appellants , "s. BEN$"O GON@ %E@ SA C#$ ;,(e en(ants,appe''ee. ?O#NSON, J.: PRINCIPAL FUESTIONS PRESENTED 5G THE APPEAL$han!o4'es "i!t&a' 'a# 'i4!a!0 The p!in$ipa' :&estions p!esente( 40 this appea' a!e: 8a9 Is the $ont!a$t in :&estion a pacto de retro o! a 3o!t2a2eL $han!o4'es "i!t&a' 'a# 'i4!a!0 8b9 Un(e! a pacto de retro, #hen the "en(o! 4e$o3es a tenant o the p&!$hase! an( a2!ees to pa0 a $e!tain a3o&nt pe! 3onth as !ent, 3a0 s&$h !ent !en(e! s&$h a $ont!a$t &s&!io&s #hen the a3o&nt pai( as !ent, $o3p&te( &pon the p&!$hase p!i$e, a3o&nts to a hi2he! !ate o inte!est &pon sai( a3o&nt than that a''o#e( 40 'a#L $han!o4'es "i!t&a' 'a# 'i4!a!0 8c9 /a0 the $ont!a$t in the p!esent $ase 3a0 4e 3o(i ie( 40 pa!o' e"i(en$eL ANTECEDENT FACTS$han!o4'es "i!t&a' 'a# 'i4!a!0 So3eti3e p!io! to the )@th (a0 o No"e34e!, %+)), the appe''ants p&!$hase( o the L&7on Ri$e /i''s, In$., a pie$e o! pa!$e' o 'an( #ith the camarin 'o$ate( the!eon, sit&ate( in the 3&ni$ipa'it0 o Ta!'a$ o the P!o"in$e o Ta!'a$ o! the p!i$e o P)*,<<<, p!o3isin2 to pa0 the!e o! in th!ee insta''3ents. The i!st insta''3ent o P),<<< #as (&e on o! 4e o!e the )( (a0 o /a0, %+)%C the se$on( insta''3ent o P@,<<< #as (&e on o! 4e o!e ;%st (a0 o /a0, %+)%C the 4a'an$e o P%*,<<< at %) pe! $ent inte!est #as (&e an( pa0a4'e on o! a4o&t the ;<th (a0 o No"e34e!, %+)). One o the $on(itions o that $ont!a$t o p&!$hase #as that on ai'&!e o the p&!$hase! 8p'ainti s an( appe''ants9 to pa0 the 4a'an$e o sai( p&!$hase p!i$e o! an0 o the insta''3ents on the (ate a2!ee( &pon, the p!ope!t0 4o&2ht #o&'( !e"e!t to the o!i2ina' o#ne!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The pa03ents (&e on the )( an( ;%st o /a0, %+)%, a3o&ntin2 to P%<,<<< #e!e pai( so a! as the !e$o!( sho#s &pon the (&e (ates. The 4a'an$e o P%*,<<< (&e on sai( $ont!a$t o p&!$hase #as pai( on o! a4o&t the %st (a0 o De$e34e!, %+)), in the 3anne! #hi$h #i'' 4e eDp'aine( 4e'o#. On the (ate #hen the 4a'an$e o P%*,<<< #ith inte!est #as pai(, the "en(o! o sai( p!ope!t0 ha( iss&e( to the p&!$hase!s t!ans e! $e!ti i$ate o tit'e to sai( p!ope!t0, No. *)@. Sai( t!ans e! $e!ti i$ate o tit'e 8No. *)@9 #as t!ans e! $e!ti i$ate o tit'e !o3 No. 1<, #hi$h sho#s that sai( 'an( #as o!i2ina''0 !e2iste!e( in the na3e o the "en(o! on the .th (a0 o No"e34e!, %+%;. PRESENT FACTS$han!o4'es "i!t&a' 'a# 'i4!a!0

On the .th (a0 o No"e34e!, %+)) the !ep!esentati"e o the "en(o! o the p!ope!t0 in :&estion #!ote a 'ette! to the appe''ant Poten$iana /anio 8EDhi4it A, p. *<9, noti 0in2 the 'atte! that i the 4a'an$e o sai( in(e4te(ness #as not pai(, an a$tion #o&'( 4e 4!o&2ht o! the p&!pose o !e$o"e!in2 the p!ope!t0, to2ethe! #ith (a3a2es o! non $o3p'ian$e #ith the $on(ition o the $ont!a$t o p&!$hase. The pe!tinent pa!ts o sai( 'ette! !ea( as o''o#s: Si!"ase nota! :&e (e no esta! 'i:&i(a(a esta $&enta e' (ia ;< (e' $o!!iente, p!o$e(e!e3os B&(i$ia'3ente $ont!a V(. pa!a !e$'a3a! 'a (e"o'&$ion (e' $a3a!in 0 'os (aos 0 pe!B&i$ios o$asiona(os a 'a $o3paia po! s& in$&3p'i3iento a' $ont!ato.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 So3os (e V(. atentos 0 S. S. S/ITH, 5ELL J CO., LTD. 50 8S2(.9 F. I. HI-HA/ T!eas&!e!. -ene!a' /ana2e!s LUEON RICE /ILLS INC. A$$o!(in2 to EDhi4its 5 an( D, #hi$h !ep!esent the a$$o&nt !en(e!e( 40 the "en(o!, the!e #as (&e an( pa0a4'e &pon sai( $ont!a$t o p&!$hase on the ;<th (a0 o No"e34e!, %+)), the s&3 P%>,+>*.<+. Upon !e$ei"in2 the 'ette! o the "en(o! o sai( p!ope!t0 o No"e34e! ., %+)), the p&!$hase!s, the appe''ants he!ein, !ea'i7in2 that the0 #o&'( 4e &na4'e to pa0 the 4a'an$e (&e, 4e2an to 3a6e an e o!t to 4o!!o# 3one0 #ith #hi$h to pa0 the 4a'an$e (&e, 4e2an to 3a6e an e o!t to 4o!!o# 3one0 #ith #hi$h to pa0 the 4a'an$e o thei! in(e4te(ness on the p&!$hase p!i$e o the p!ope!t0 in"o'"e(. Fina''0 an app'i$ation #as 3a(e to the (e en(ant o! a 'oan o! the p&!pose o satis 0in2 thei! in(e4te(ness to the "en(o! o sai( p!ope!t0. A te! so3e ne2otiations the (e en(ants a2!ee( to 'oan the p'ainti s to 'oan the p'ainti s the s&3 o P%.,*<< &pon $on(ition that the p'ainti s eDe$&te an( (e'i"e! to hi3 a pacto de retro o sai( p!ope!t0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In a$$o!(an$e #ith that a2!ee3ent the (e en(ant pai( to the p'ainti s 40 3eans o a $he$6 the s&3 o P%>,+>*.<+. The (e en(ant, in a((ition to sai( a3o&nt pai( 40 $he$6, (e'i"e!e( to the p'ainti s the s&3 o P;*1.+% to2ethe! #ith the s&3 o P%@< #hi$h the p'ainti s pai( to the atto!ne0s o! (!a tin2 sai( $ont!a$t o pacto de retro, 3a6in2 a tota' pai( 40 the (e en(ant to the p'ainti s an( o! the p'ainti s o P%.,*<< &pon the eDe$&tion an( (e'i"e!0 o sai( $ont!a$t. Sai( $ont!a$ts #as (ate( the )@th (a0 o No"e34e!, %+)), an( is in the #o!(s an( i2&!es o''o#in2: 8epan todos por la presente= $han!o4'es "i!t&a' 'a# 'i4!a!0 F&e nosot!os, 'os $on0&2es 8everino 2olentino ) Potenciana anio, a34os 3a0o!es (e e(a(, !esi(entes en e' /&ni$ipio (e Ca'&3pit, P!o"in$ia (e 5&'a$an, p!opieta!ios 0 t!anse&ntes en esta Ci&(a( (e /ani'a, de una parte, ) de otra, (enito *on&ale& 8) Chiam, 3a0o! (e e(a(, $asa(o $on /a!ia Santia2o, $o3e!$iante 0 "e$inos (e esta Ci&(a( (e /ani'a. /ANIFESTA/OS G HACE/OS CONSTAR:$han!o4'es "i!t&a' 'a# 'i4!a!0 P!i3e!o. F&e nosot!os, Se"e!ino To'entino 0 Poten$iano /anio, po! 0 en $onsi(e!a$ion a 'a $anti(a( (e (ie$isiete 3i' :&inientos pesos 8P%.,*<<9 3one(a i'ipina, :&e en este a$to he3os !e$i4i(o a n&est!a ente!a satis a$$ion (e Don 5enito -on7a'e7 S0 Chia3, $e(e3os, "en(e3os 0 t!aspasa3os a a"o! (e (i$ho Don 5enito -on7a'e7 S0 Chia3, s&s he!e(e!os 0 $a&saha4ientes, &na in$a :&e, se2&n e' Ce!ti i$a(o (e T!ans e!en$ia (e Tit&'o No. 1< eDpe(i(o po! e' Re2ist!a(o! (e Tit&'os (e 'a P!o"in$ia (e Ta!'a$ a a"o! (e NLu&on Rice ills Compan) LimitedN :&e a' in$o!po!a!se se (ono3ino 0 se (eno3ina NLu&on Rice ills ;nc.,N 0 :&e esta $o!po!a$ion nos ha t!ans e!i(o en "enta a4so'&ta, se (es$!i4e $o3o si2&e:$han!o4'es "i!t&a' 'a# 'i4!a!0 >n terreno 8'ote No. %9 $on 'as 3eBo!as eDistentes en e' 3is3o, sit&a(o en e' /&ni$ipio (e Ta!'a$. Lin(a po! e' O. 0 N. $on p!opie(a( (e /an&e' U!:&i$oC po! e' E. $on p!opie(a( (e 'a /ani'a Rai'!oa( Co.C 0 po! e' S. $on &n $a3ino. Pa!tien(o (e &n p&nto 3a!$a(o % en e' p'ano, $&0o p&nto se ha''a a' N. 1% 2(s. %.K E.@*+.1) 3. (e' 3oBon (e 'o$a'i7a$ion No. ) (e 'a O i$ina (e Te!!enos en Ta!'a$C 0 (es(e (i$ho p&nto % N. @% 2(s. ;%K O., .. 3. a' p&nto )C (es(e este p&nto N. 1 2(s. ))K E.C *1..< 3. a'

p&nto ;C (es(e este p&nto S. @> 2(s. %.K E.C >+.)* 3. a' p&nto 1C (es(e este p&nto S. ) 2(s. 1)K E., >%.1@ 3. a' p&nto (e pa!ti(aC 3i(ien(o &na eDtension s&pe! i$$ia' (e $&at!o 3i' (os$ientos (ie7 0 seis 3et!os $&a(!a(os 81,)%>9 3as o 3enos. To(os 'os p&ntos no34!a(os se ha''an 3a!$a(os en e' p'ano 0 so4!e e' te!!eno 'os p&ntos % 0 ) estan (ete!3ina(os po! 3oBones (e P. L. S. (e )< D )< D .< $enti3et!os 0 'os p&ntos ; 0 1 po! 3oBones (e' P. L. S. 5. L.: 'a o!ienta$ion se2&i(a es 'a "e!(a(e!a, sien(o 'a (e$'ina$ion 3a2neti$a (e < 2(s. 1*K E. 0 'a e$ha (e 'a 3e(i$ion, %. (e e4!e!o (e %+%;.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Se2&n(o. F&e es $on(i$ion (e esta "enta 'a (e :&e si en e' p'a7o (e $in$o 8*9 aos $onta(os (es(e e' (ia %. (e (i$ie34!e (e %+)), (e"o'"e3os a' eDp!esa(o Don 5enito -on7a'e7 S0 Chia3 e' !e e!i(o p!e$io (e (ie$isiete 3i' :&inientos pesos 8P%.,*<<9 :&e(a o4'i2a(o (i$ho S!. 5enito -on7a'e7 0 Chia3 a !et!o"en(e!nos 'a in$a a!!i4a (es$!itaC pe!o si t!ans$&!!e (i$ho p'a7o (e $in$o aos sin eBe!$ita! e' (e!e$ho (e !et!a$to :&e nos he3os !ese!"a(o, enton$es :&e(a!a esta "enta a4so'&ta e i!!e"o$a4'e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Te!$e!o. F&e (&!ante e' eDp!esa(o te!3ino (e' !et!a$to ten(!e3os en a!!en(a3iento 'a in$a a!!i4a (es$!ita, s&Beto a $on(i$iones si2&ientes: 8a9 E' a':&i'e! :&e nos o4'i2a3os a pa2a! po! 3ens&a'i(a(es "en$i(as a Don 5enito -on7a'e7 S0 Chia3 0 en s& (o3i$i'io, e!a (e t!es$ientos setenta 0 $in$o pesos 8P;.*9 3one(a i'ipina, $a(a 3es.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 8b9 E' a3i''a!a3iento (e 'a in$a a!!en(a(a se!a po! $&enta (e (i$ho Don 5enito -on7a'e7 S0 Chia3, asi $o3o ta34ien 'a p!i3a (e' se2&!o $ont!a in$en(ios, si e' $on"inie!a a' !e e!i(o S!. 5enito -on7a'e7 S0 Chia3 ase2&!a! (i$ha in$a.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 8c9 La a'ta (e pa2o (e' a':&i'e! a:&i estip&'a(o po! (os 3eses $onse$&ti"os (a!a '&2a! a 'a te!3ina$ion (e este a!!en(a3ieno 0 a 'a pe!(i(a (e' (e!e$ho (e !et!a$to :&e nos he3os !ese!"a(o, $o3o si nat&!a'3ente h&4ie!a eDpi!a(o e' te!3ino pa!a e''o, p&(ien(o en s& "i!t&( (i$ho S!. -on7a'e7 S0 Chia3 to3a! posesion (e 'a in$a 0 (esah&$ia!nos (e 'a 3is3a. C&a!to. F&e 0o, 5enito -on7a'e7 S0 Chia3, a 3i "e7 oto!2o :&e a$epto esta es$!it&!a en 'os p!e$isos te!3inos en :&e 'a (eBan oto!2a(a 'os $on0&2es Se"e!ino To'entino 0 Poten$iana /anio.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 En testi3onio (e to(o 'o $&a', i!3a3os 'a p!esente (e n&est!a 3ano en /ani'a, po! $&a(!&p'i$a(o en /ani'a, ho0 a )@ (e no"ie34!e (e %+)). 8F(o.9 SEVERINO TOLENTINO 8F(a.9 POTENCIANA /ANIO 8F(o.9 5ENITO -ONEALEE SG CHIA/ Fi!3a(o en p!esen$ia (e: 8F(os.9 /OISES /. 5UHAIN 5. S. 5ANAAAn eDa3ination o sai( $ont!a$t o sa'e #ith !e e!en$e to the i!st :&estion a4o"e, sho#s $'ea!'0 that it is a pacto de retro an( not a 3o!t2a2e. The!e is no p!etension on the pa!t o the appe''ant that sai( $ont!a$t, stan(in2 a'one, is a 3o!t2a2e. The pe!tinent 'an2&a2e o the $ont!a$t is: Se2&n(o. F&e es $on(i$ion (e esta "enta 'a (e :&e si en e' p'a7o (e $in$o 8*9 aos $onta(os (es(e e' (ia %. (e (i$ie34!e (e %+)), (e"o'"e3os a' eDp!esa(o Don 5enito -on7a'es S0 Chia3 e' !e e!i(o p!e$io (e (ie$isiete 3i' :&inientos pesos 8P%.,*<<9 :&e(a o4'i2a(o (i$ho S!. 5enito -on7a'es S0 Chia3 a !et!o"en(o!nos 'a in$a a!!i4a (es$!itaC pe!o si t!ans$&!!e (i$ho p'a7o (e $in$o 8*9 aos sin eBe!$ita! a' (e!e$ho (e !et!a$to :&e nos he3os !ese!"a(o, enton$es :&e(a!a esta "enta a4so'&ta e i!!e"o$a4'e.

Lan2&a2e $annot 4e $'ea!e!. The p&!pose o the $ont!a$t is eDp!esse( $'ea!'0 in sai( :&otation that the!e $an $e!tain'0 4e not (o&4t as to the p&!pose o the p'ainti to se'' the p!ope!t0 in :&estion, !ese!"in2 the !i2ht on'0 to !ep&!$hase the sa3e. The intention to se'' #ith the !i2ht to !ep&!$hase $annot 4e 3o!e $'ea!'0 eDp!esse(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 It #i'' 4e note( !o3 a !ea(in2 o sai( sa'e o pacto de retro, that the "en(o!, !e$o2ni7in2 the a4so'&te sa'e o the p!ope!t0, ente!e( into a $ont!a$t #ith the p&!$hase! 40 "i!t&e o #hi$h she 4e$a3e the NtenantN o the p&!$hase!. That $ont!a$t o !ent appea!s in sai( :&ote( (o$&3ent a4o"e as o''o#s: Te!$e!o. F&e (&!ante e' eDp!esa(o te!3ino (e' !et!a$to ten(!e3os en a!!en(a3iento 'a in$a a!!i4a (es$!ita, s&Beto a $on(i$iones si2&ientes:$han!o4'es "i!t&a' 'a# 'i4!a!0 8a9 E' a':&i'e! :&e nos o4'i2a3os a pa2a! po! 3ens&a'i(a(es "en$i(as a Don 5enito -on7a'e7 S0 Chia3 0 en s& (o3i$i'io, se!a (e t!es$ientos setenta 0 $in$o pesos 8P;.*9 3one(a i'ipina, $a(a 3es.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 8b9 E' a3i''a!a3iento (e 'a in$a a!!en(a(a se!a po! $&enta (e (i$ho Don 5enito -on7a'e7 S0 Chia3, asi $o3o ta34ien 'a p!i3a (e' se2&!o $ont!a in$en(ios, si 'e $on"inie!a a' !e e!i(o S!. 5enito -on7a'e7 S0 Chia3 ase2&!a! (i$ha in$a. F!o3 the o!e2oin2, #e a!e (!i"en to the o''o#in2 $on$'&sions: 1irst, that the $ont!a$t o pacto de retro is an a4so'&te sa'e o the p!ope!t0 #ith the !i2ht to !ep&!$hase an( not a 3o!t2a2eC an(, se$on(, that 40 "i!t&e o the sai( $ont!a$t the "en(o! 4e$a3e the tenant o the p&!$hase!, &n(e! the $on(itions 3entione( in pa!a2!aph ; o sai( $onta$t :&ote( a4o"e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 It has 4een the &ni o!3 theo!0 o this $o&!t, (&e to the se"e!it0 o a $ont!a$t o pacto de retro, to (e$'a!e the sa3e to 4e a 3o!t2a2e an( not a sa'e #hene"e! the inte!p!etation o s&$h a $ont!a$t B&sti ies that $on$'&sion. The!e 3&st 4e so3ethin2, ho#e"e!, in the 'an2&a2e o the $ont!a$t o! in the $on(&$t o the pa!ties #hi$h sho#s $'ea!'0 an( 4e0on( (o&4t that the0 inten(e( the $ont!a$t to 4e a N3o!t2a2eN an( not a pacto de retro. 8Inte!nationa' 5an6in2 Co!po!ation vs. /a!tine7, %< Phi'., )*)C Pa(i''a vs. Linsan2an, %+ Phi'., >*C C&3a2&n vs. A'in2a0, %+ Phi'., 1%*C O'inovs. /e(ina, %; Phi'., ;.+C /ana'o vs. -&e$o, 1) Phi'., +)*C Ve'a7:&e7 vs. Teo(o!o, 1> Phi'., .*.C Vi''a vs. Santia2o, ;@ Phi'., %*..9 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ae a!e not &n3in( &' o the a$t that sa'es #ith pacto de retro a!e not a"o!e( an( that the $o&!t #i'' not $onst!&e an inst!&3ent to one o sa'e #ith pacto de retro, #ith the st!in2ent an( one!o&s e e$t #hi$h o''o#s, &n'ess the te!3s o the (o$&3ent an( the s&!!o&n(in2 $i!$&3stan$es !e:&i!e it.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ahi'e it is 2ene!a' !&'e that pa!o' e"i(en$e is not a(3issi4'e o! the p&!pose o "a!0in2 the te!3s o a $ont!a$t, 4&t #hen an iss&e is s:&a!e'0 p!esente( that a $ont!a$t (oes not eDp!ess the intention o the pa!ties, $o&!ts #i'', #hen a p!ope! o&n(ation is 'ai( the!e o!, hea! e"i(en$e o! the p&!pose o as$e!tainin2 the t!&e intention o the pa!ties.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In the p!esent $ase the p'ainti s a''e2e in thei! $o3p'aint that the $ont!a$t in :&estion is a pacto de retro. The0 a(3it that the0 si2ne( it. The0 a(3it the0 so'( the p!ope!t0 in :&estion #ith the !i2ht to !ep&!$hase it. The te!3s o the $ont!a$t :&ote( 40 the p'ainti s to the (e en(ant #as a Nsa'eN #ith pacto de retro, an( the p'ainti s ha"e sho#n no $i!$&3stan$e #hate"e! #hi$h #o&'( B&sti 0 &s in $onst!&in2 sai( $ont!a$t to 4e a 3e!e N'oanN #ith 2&a!ant0. In e"e!0 $ase in #hi$h this $o&!t has $onst!&e( a $ont!a$t to 4e a 3o!t2a2e o! a 'oan instea( o a sa'e #ith pacto de retro, it has (one so, eithe! 4e$a&se the te!3s o s&$h $ont!a$t #e!e in$o3pati4'e o! in$onsistent #ith the theo!0 that sai( $ont!a$t #as one o p&!$hase an( sa'e. 8O'ino vs. /e(ina, supraC Pa(i''a vs. Linsan2an, supraC /an'a2nit vs. D0 P&i$o, ;1 Phi'., ;)*C Ro(!i2&e7 vs. Pa3int&an an( De Jes&s, ;. Phi'., @.>.9$han!o4'es "i!t&a' 'a# 'i4!a!0 In the $ase o Pa(i''a vs. Linsan2an the te!3 e3p'o0e( in the $ont!a$t to in(i$ate the nat&!e o the $on"e0an$e o the 'an( #as Np'e(2e(N instea( o Nso'(N. In the $ase o /an'a2nit vs. D0 P&i$o, #hi'e the "en(o! &se( to the te!3s Nsa'e an( t!ans e! #ith the !i2ht to !ep&!$hase,N 0et in sai( $ont!a$t he (es$!i4e( hi3se' as a N(e4to!N the p&!$hase! as a N$!e(ito!N an( the $ont!a$t as a N3o!t2a2eN. In the $ase o Rodri#ue& vs. Pamintuan an( De Jesus the pe!son #ho eDe$&te( the inst!&3ent, p&!po!tin2 on its a$e to 4e a (ee( o sa'e o $e!tain pa!$e's o 'an(, ha( 3e!e'0 a$te( &n(e! a po#e! o atto!ne0 !o3 the o#ne! o sai( 'an(, Na&tho!i7in2 hi3 to 4o!!o# 3one0 in s&$h a3o&nt an( &pon s&$h te!3s an( $on(itions as he 3i2ht (ee3 p!ope!, an( to se$&!e pa03ent o the 'oan 40 a 3o!t2a2e.N In the $ase o Villa vs. 8antia#o 8;@ Phi'., %*.9, a'tho&2h a $ont!a$t p&!po!tin2 to 4e a (ee( o sa'e #as eDe$&te(, the s&ppose( "en(o! !e3aine( in possession o the 'an( an( in"este( the 3one0 he ha( o4taine( !o3 the

s&ppose( "en(ee in 3a6in2 i3p!o"e3ents the!eon, #hi$h a$t B&sti ie( the $o&!t in ho'(in2 that the t!ansa$tion #as a 3e!e 'oan an( not a sa'e. In the $ase o Cu)u#an vs. 8antos 8;+ Phi'., +.<9, the p&!$hase! a$$epte( pa!tia' pa03ents !o3 the "en(o!, an( s&$h a$$eptan$e o pa!tia' pa03ents is a4so'&te'0 in$o3pati4'e #ith the i(ea o i!!e"o$a4i'it0 o the tit'e o o#ne!ship o the p&!$hase! at the eDpi!ation o the te!3 stip&'ate( in the o!i2ina' $ont!a$t o! the eDe!$ise o the !i2ht o !ep&!$hase.N$han!o4'es "i!t&a' 'a# 'i4!a!0 Re e!!in2 a2ain to the !i2ht o the pa!ties to "a!0 the te!3s o #!itten $ont!a$t, #e :&ote !o3 the (issentin2 opinion o Chie J&sti$e Ca0etano S. A!e''ano in the $ase o -o"e!n3ent o the Phi'ippine Is'an(s vs. Phi'ippine S&2a! Estates De"e'op3ent Co., #hi$h $ase #as appea'e( to the S&p!e3e Co&!t o the Unite( States an( the $ontention o the Chie J&sti$e in his (issentin2 opinion #as a i!3e( an( the (e$ision o the S&p!e3e Co&!t o the Phi'ippine Is'an(s #as !e"e!se(. 8See (e$ision o the S&p!e3e Co&!t o the Unite( States, J&ne ;, %+%@.9 1 The Chie J&sti$e sai( in (is$&ssin2 that :&estion:$han!o4'es "i!t&a' 'a# 'i4!a!0 A$$o!(in2 to a!ti$'e %)@) o the Ci"i' Co(e, in o!(e! to B&(2e o the intention o the $ont!a$tin2 pa!ties, $onsi(e!ation 3&st $hie '0 4e pai( to those a$ts eDe$&te( 40 sai( pa!ties #hi$h a!e $onte3po!a!0 #ith an( s&4se:&ent to the $ont!a$t. An( a$$o!(in2 to a!ti$'e %)@;, ho#e"e! 2ene!a' the te!3s o a $ont!a$t 3a0 4e, the0 3&st not 4e he'( to in$'&(e thin2s an( $ases (i e!ent !o3 those #ith !e2a!( to #hi$h the inte!este( pa!ties a2!ee( to $ont!a$t. NThe S&p!e3e Co&!t o the Phi'ippine Is'an(s he'( the pa!o' e"i(en$e #as a(3issi4'e in that $ase to "a!0 the te!3s o the $ont!a$t 4et#een the -o"e!n3ent o the Phi'ippine Is'an(s an( the Phi'ippine S&2a! Estates De"e'op3ent Co. In the $o&!se o the opinion o the S&p!e3e Co&!t o the Unite( States /!. J&sti$e 5!an(eis, spea6in2 o! the $o&!t, sai(: It is #e'' sett'e( that $o&!ts o e:&it0 #i'' !e o!3 a #!itten $ont!a$t #he!e, o#in2 to 3&t&a' 3ista6e, the 'an2&a2e &se( the!ein (i( not &''0 o! a$$&!ate'0 eDp!ess the a2!ee3ent an( intention o the pa!ties. The a$t that inte!p!etation o! $onst!&$tion o a $ont!a$t p!esents a :&estion o 'a# an( that, the!e o!e, the 3ista6e #as one o 'a# is not a 4a! to 2!antin2 !e'ie . . . . This $o&!t is a'#a0s (ispose( to a$$ept the $onst!&$tion #hi$h the hi2hest $o&!t o a te!!ito!0 o! possession has p'a$e( &pon a 'o$a' stat&te. 5&t that (isposition 3a0 not 4e 0ie'(e( to #he!e the 'o#e! $o&!t has $'ea!'0 e!!e(. He!e the $onst!&$tion a(opte( #as !este( &pon a $'ea!'0 e!!oneo&s ass&3ption as to an esta4'ishe( !&'e o e:&it0. . . . The 4&!(en o p!oo !estin2 &pon the appe''ant $annot 4e satis ie( 40 3e!e p!epon(e!an$e o the e"i(en$e. It is sett'e( that !e'ie 40 #a0 o !e o!3ation #i'' not 4e 2!ante( &n'ess the p!oo o 3&t&a' 3ista6e 4e o the $'ea!est an( 3ost satis a$to!0 $ha!a$te!. The e"i(en$e int!o(&$e( 40 the appe''ant in the p!esent $ase (oes not 3eet #ith that st!in2ent !e:&i!e3ent. The!e is not a #o!(, a ph!ase, a senten$e o! a pa!a2!aph in the enti!e !e$o!(, #hi$h B&sti ies this $o&!t in ho'(in2 that the sai( $ont!a$t o pacto de retro is a 3o!t2a2e an( not a sa'e #ith the !i2ht to !ep&!$hase. A!ti$'e %)@% o the Ci"i' Co(e p!o"i(es: NI the te!3s o a $ont!a$t a!e $'ea! an( 'ea"e no (o&4t as to the intention o the $ont!a$tin2 pa!ties, the 'ite!a' sense o its stip&'ations sha'' 4e o''o#e(.N A!ti$'e %)@) p!o"i(es: Nin o!(e! to B&(2e as to the intention o the $ont!a$tin2 pa!ties, attention 3&st 4e pai( p!in$ipa''0 to thei! $on(&$t at the ti3e o 3a6in2 the $ont!a$t an( s&4se:&ent'0 the!eto.N $han!o4'es "i!t&a' 'a# 'i4!a!0 Ae $annot the!eto $on$'&(e this 4!an$h o o&! (is$&ssion o the :&estion in"o'"e(, #itho&t :&otin2 !o3 that "e!0 #e'' !easone( (e$ision o the 'ate Chie J&sti$e A!e''ano, one o the 2!eatest B&!ists o his ti3e. He sai(, in (is$&ssin2 the :&estion #hethe! o! not the $ont!a$t, in the $ase o Lichauco vs. (eren#uer 8)< Phi'., %)9, #as a pacto de retro o! a 3o!t2a2e: The p&4'i$ inst!&3ent, EDhi4it C, in pa!t !ea(s as o''o#s: NDon /a$a!ion 5e!en2&e! (e$'a!es an( states that he is the p!op!ieto! in ee si3p'e o t#o pa!$e's o a''o# &napp!op!iate( $!o#n 'an( sit&ate( #ithin the (ist!i$t o his p&e4'o. The i!st has an a!ea o .; 4uiones, @ balitas an( @ loanes, 'o$ate( in the sitioo 5atasan, an( its 4o&n(a!ies a!e, et$., et$. The se$on( is in the sitio o Pananta2'a0, 4a!!io o Ca'&3pan2 has as a!ea o .; he$ta!es, )) a!es, an( > $enta!es, an( is 4o&n(e( on the no!th, et$., et$.N$han!o4'es "i!t&a' 'a# 'i4!a!0 In the eDe$&to!0 pa!t o the sai( inst!&3ent, it is state(: KThat &n(e! $on(ition o !i2ht to !ep&!$hase 8pacto de retro9 he se''s the sai( p!ope!ties to the a o!e3entione( Doa Co!ne'ia Lao$han2$o o! P1,<<< an( &pon the o''o#in2 $on(itions: Fi!st, the sa'e stip&'ate( sha'' 4e o! the pe!io( o t#o 0ea!s, $o&ntin2 !o3 this (ate, #ithin #hi$h ti3e the (eponent sha'' 4e entit'e( to !ep&!$hase the 'an( so'( &pon pa03ent o its p!i$eC se$on(, the 'an(s so'( sha'', (&!in2 the te!3 o the p!esent $ont!a$t, 4e he'( in 'ease 40 the &n(e!si2ne( #ho sha'' pa0, as !enta' the!e o!, the s&3 o 1<< pesos pe! ann&3, o! the e:&i"a'ent in s&2a! at the option o the "en(o!C thi!(, a'' the !&its o the sai( 'an(s sha'' 4e (eposite( in the s&2a! (eposito!0 o the "en(ee, sit&ate( in the (ist!i$t o F&iapo o this $it0, an( the "a'&e o #hi$h sha'' 4e app'ie( on a$$o&nt o the p!i$e o this sa'eC o&!th, the (eponent a$6no#'e(2es that he has !e$ei"e( !o3 the "en(o! the p&!$hase

p!i$e o P1,<<< a'!ea(0 pai(, an( in 'e2a' ten(e! $&!!en$0 o this $o&nt!0 . . .C i th, a'' the taDes #hi$h 3a0 4e assesse( a2ainst the 'an(s s&!"e0e( 40 $o3petent a&tho!it0, sha'' 4e pa0a4'e 40 an( $onstit&te a $ha!2e a2ainst the "en(o!C siDth, i , th!o&2h an0 &n&s&a' e"ent, s&$h as 'oo(, te3pest, et$., the p!ope!ties he!ein4e o!e en&3e!ate( sho&'( 4e (est!o0e(, #ho''0 o! in pa!t, it sha'' 4e in$&34ent &pon the "en(o! to !epai! the (a3a2e the!eto at his o#n eDpense an( to p&t the3 into a 2oo( state o $&'ti"ation, an( sho&'( he ai' to (o so he 4in(s hi3se' to 2i"e to the "en(ee othe! 'an(s o the sa3e a!ea, :&a'it0 an( "a'&e.K DDD DDD D D D$han!o4'es "i!t&a' 'a# 'i4!a!0

The opponent 3aintaine(, an( his theo!0 #as a$$epte( 40 the t!ia' $o&!t, that 5e!en2&e!Ks $ont!a$t #ith Lao$han2$o #as not one o sa'e #ith !i2ht o !ep&!$hase, 4&t 3e!e'0 one o 'oan se$&!e( 40 those p!ope!ties, an(, $onse:&ent'0, that the o#ne!ship o the 'an(s in :&estions $o&'( not ha"e 4een $on"e0e( to Lao$han2$o, inas3&$h as it $ontin&e( to 4e he'( 40 5e!en2&e!, as #e'' as thei! possession, #hi$h he ha( not $ease( to enBo0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 S&$h a theo!0 is, as a!2&e( 40 the appe''ant, e!!oneo&s. The inst!&3ent eDe$&te( 40 /a$a!io 5e!en2&e!, the teDt o #hi$h has 4een t!ans$!i4e( in this (e$ision, is "e!0 $'ea!. 5e!en2&e!Ks hei!s 3a0 not 2o $o&nte! to the 'ite!a' teno! o the o4'i2ation, the eDa$t eDp!ession o the $onsent o the $ont!a$tin2 $ontaine( in the inst!&3ent, EDhi4it C. Not 4e$a&se the 'an(s 3a0 ha"e $ontin&e( in possession o the "en(o!, not 4e$a&se the 'atte! 3a0 ha"e ass&3e( the pa03ent o the taDes on s&$h p!ope!ties, no! 0et 4e$a&se the sa3e pa!t0 3a0 ha"e 4o&n( hi3se' to s&4stit&te 40 anothe! an0 one o the p!ope!ties #hi$h 3i2ht 4e (est!o0e(, (oes the $ont!a$t $ease to 4e #hat it is, as set o!th in (etai' in the p&4'i$ inst!&3ent. The "en(o! $ontin&e( in the possession o the 'an(s, not as the o#ne! the!eo as 4e o!e thei! sa'e, 4&t as the 'essee #hi$h he 4e$a3e a te! its $ons&33ation, 40 "i!t&e o a $ont!a$t eDe$&te( in his a"o! 40 the "en(ee in the (ee( itse' , EDhi4it C. Ri2ht o o#ne!ship is not i3p'ie( 40 the $i!$&3stan$e o the 'esseeKs ass&3in2 the !esponsi4i'it0 o the pa03ent is o the taDes on the p!ope!t0 'ease(, o! thei! pa03ent is not pe$&'ia!'0 in$&34ent &pon the o#ne!, no! is s&$h !i2ht i3p'ie( 40 the o4'i2ation to s&4stit&te the thin2 so'( o! anothe! #hi'e in his possession &n(e! 'ease, sin$e that o4'i2ation $a3e !o3 hi3 an( he $ontin&es &n(e! anothe! $ha!a$te! in its possession,a !eason #h0 he 2&a!antees its inte2!it0 an( o4'i2ates hi3se' to !et&!n the thin2 e"en in a $ase o force ma'eure. S&$h 'ia4i'it0, as a 2ene!a' !&'e, is o!ei2n to $ont!a$ts o 'ease an(, i !e:&i!e(, is eDo!4itant, 4&t possi4'e an( 'a# &', i "o'&nta!i'0 a2!ee( to an( s&$h a2!ee3ent (oes not on this a$$o&nt in"o'"e an0 si2n o o#ne!ship, no! othe! 3eanin2 than the #i'' to i3pose &pon onese' s$!&p&'o&s (i'i2en$e in the $a!e o a thin2 4e'on2in2 to anothe!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The p&!$hase an( sa'e, on$e $ons&33ate(, is a $ont!a$t #hi$h 40 its nat&!e t!ans e!s the o#ne!ship an( othe! !i2hts in the thin2 so'(. A pacto de retro, o! sa'e #ith !i2ht to !ep&!$hase, is nothin2 4&t a pe!sona' !i2ht stip&'ate( 4et#een the "en(ee an( the "en(o!, to the en( that the 'atte! 3a0 a2ain a$:&i!e the o#ne!ship o the thin2 a'ienate(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 It is t!&e, "e!0 t!&e in(ee(, that the sa'e #ith !i2ht o !ep&!$hase is e3p'o0e( as a 3etho( o 'oanC it is 'i6e#ise t!&e that in p!a$ti$e 3an0 $ases o$$&! #he!e the $ons&33ation o a pacto de retro sa'e 3eans the inan$ia' !&in o a pe!sonC it is a'so, &n:&estiona4'e that in pacto de retro sa'es "e!0 i3po!tant inte!ests o ten inte!"ene, in the o!3 o the p!i$e o the 'ease o the thin2 so'(, #hi$h is stip&'ate( as an a((itiona' $o"enant. 8/an!esa, Ci"i' Co(e, p. ).1.9 $han!o4'es "i!t&a' 'a# 'i4!a!0 5&t in the p!esent $ase, &n'i6e othe!s hea!( 40 this $o&!t, the!e is no p!oo that the sa'e #ith !i2ht o !ep&!$hase, 3a(e 40 5e!en2&e! in a"o! o Laon$han2$o is !athe! a 3o!t2a2e to se$&!e a 'oan. Ae $o3e no# to a (is$&ssion o the se$on( :&estion p!esente( a4o"e, an( that is, statin2 the sa3e in anothe! o!3: /a0 a tenant $ha!2e his 'an('o!( #ith a "io'ation o the Us&!0 La# &pon the 2!o&n( that the a3o&nt o !ent he pa0s, 4ase( &pon the !ea' "a'&e o the p!ope!t0, a3o&nts to a &s&!io&s !ate o inte!estL Ahen the "en(o! o p!ope!t0 &n(e! a pacto de retro !ents the p!ope!t0 an( a2!ees to pa0 a !enta' "a'&e o! the p!ope!t0 (&!in2 the pe!io( o his !i2ht to !ep&!$hase, he the!e40 4e$o3es a NtenantN an( in a'' !espe$ts stan(s in the sa3e !e'ation #ith the p&!$hase! as a tenant &n(e! an0 othe! $ont!a$t o 'ease.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The appe''ant $onten(s that the !enta' p!i$e pai( (&!in2 the pe!io( o the eDisten$e o the !i2ht to !ep&!$hase, o! the s&3 o P;.* pe! 3onth, 4ase( &pon the "a'&e o the p!ope!t0, a3o&nte( to &s&!0. Us&!0, 2ene!a''0 spea6in2, 3a0 4e (e ine( as $ont!a$tin2 o! o! !e$ei"in2 so3ethin2 in eD$ess o the a3o&nt a''o#e( 40 'a# o! the 'oan o! o!4ea!an$e o 3one0,the ta6in2 o 3o!e inte!est o! the &se o 3one0 than the 'a# a''o#s. It see3s that the ta6in2 o inte!est o! the 'oan o 3one0, at 'east the ta6in2 o eD$essi"e inte!est has 4een !e2a!(e( #ith a4ho!!en$e !o3 the ea!'iest ti3es. 8D&nha3 vs. -o&'(, %> Johnson ?N. G.I, ;>..9 D&!in2 the 3i(('e a2es the peop'e o En2'an(, an( espe$ia''0 the En2'ish Ch&!$h, ente!taine( the opinion, then, $&!!ent in

E&!ope, that the ta6in2 o an0 inte!est o! the 'oan o 3one0 #as a (etesta4'e "i$e, hate &' to 3an an( $ont!a!0 to the 'a#s o -o(. 8; Co6eKs Instit&te, %*<C Ta0'e! on Us&!0, 11.9$han!o4'es "i!t&a' 'a# 'i4!a!0 Chan$e''o! Kent, in the $ase o Dunham vs. *ould, supra, sai(: NI #e 'oo6 4a$6 &pon histo!0, #e sha'' in( that the!e is s$a!$e'0 an0 peop'e, an$ient o! 3o(e!n, that ha"e not ha( &s&!0 'a#s. . . . The Ro3ans, th!o&2h the 2!eate! pa!t o thei! histo!0, ha( the (eepest a4ho!!en$e o &s&!0. . . . It #i'' 4e (ee3e( a 'itt'e sin2&'a!, that the sa3e "oi$e a2ainst &s&!0 sho&'( ha"e 4een !aise( in the 'a#s o China, in the Hin(& instit&tes o /en&, in the Ko!an o /aho3et, an( pe!haps, #e 3a0 sa0, in the 'a#s o a'' nations that #e 6no# o , #hethe! -!ee6 o! 5a!4a!ian.N$han!o4'es "i!t&a' 'a# 'i4!a!0 The $o''e$tion o a !ate o inte!est hi2he! than that a''o#e( 40 'a# is $on(e3ne( 40 the Phi'ippine Le2is'at&!e 8A$ts Nos. )>**, )>>) an( )++)9. 5&t is it &n'a# &' o! the o#ne! o a p!ope!t0 to ente! into a $ont!a$t #ith the tenant o! the pa03ent o a spe$i i$ a3o&nt o !ent o! the &se an( o$$&pation o sai( p!ope!t0, e"en tho&2h the a3o&nt pai( as N!ent,N 4ase( &pon the "a'&e o the p!ope!t0, 3i2ht eD$ee( the !ate o inte!est a''o#e( 40 'a#L That :&estion has ne"e! 4een (e$i(e( in this B&!is(i$tion. It is one o i!st i3p!ession. No $ases ha"e 4een o&n( in this B&!is(i$tion ans#e!in2 that :&estion. A$t No. )>** is NAn A$t iDin2 !ates o inte!est &pon K'oansK an( (e$'a!in2 the e e$t o !e$ei"in2 o! ta6in2 &s&!io&s !ates.N $han!o4'es "i!t&a' 'a# 'i4!a!0 It #i'' 4e note( that sai( stat&te i3poses a pena't0 &pon a N'oanN o! o!4ea!an$e o an0 3one0, 2oo(s, $hatte's o! $!e(its, et$. The $ent!a' i(ea o sai( stat&te is to p!ohi4it a !ate o inte!est on N'oans.N A $ont!a$t o N'oan,N is "e!0 (i e!ent $ont!a$t !o3 that o N!entN. A N'oan,N as that te!3 is &se( in the stat&te, si2ni ies the 2i"in2 o a s&3 o 3one0, 2oo(s o! $!e(its to anothe!, #ith a p!o3ise to !epa0, 4&t not a p!o3ise to !et&!n the sa3e thin2. To N'oan,N in 2ene!a' pa!'an$e, is to (e'i"e! to anothe! o! te3po!a!0 &se, on $on(ition that the thin2 o! its e:&i"a'ent 4e !et&!ne(C o! to (e'i"e! o! te3po!a!0 &se on $on(ition that an e:&i"a'ent in 6in( sha'' 4e !et&!ne( #ith a $o3pensation o! its &se. The #o!( N'oan,N ho#e"e!, as &se( in the stat&te, has a te$hni$a' 3eanin2. It ne"e! 3eans the !et&!n o the sa3e thin2. It 3eans the !et&!n o an e:&i"a'ent on'0, 4&t ne"e! the sa3e thin2 'oane(. A N'oanN has 4een p!ope!'0 (e ine( as an a("an$e pa03ent o 3one0, 2oo(s o! $!e(its &pon a $ont!a$t o! stip&'ation to !epa0, not to !et&!n, the thin2 'oane( at so3e &t&!e (a0 in a$$o!(an$e #ith the te!3s o the $ont!a$t. Un(e! the $ont!a$t o N'oan,N as &se( in sai( stat&te, the 3o3ent the $ont!a$t is $o3p'ete( the 3one0, 2oo(s o! $hatte's 2i"en $ease to 4e the p!ope!t0 o the o!3e! o#ne! an( 4e$o3es the p!ope!t0 o the o4'i2o! to 4e &se( a$$o!(in2 to his o#n #i'', &n'ess the $ont!a$t itse' eDp!ess'0 p!o"i(es o! a spe$ia' o! spe$i i$ &se o the sa3e. At a'' e"ents, the 3one0, 2oo(s o! $hatte's, the 3o3ent the $ont!a$t is eDe$&te(, $ease to 4e the p!ope!t0 o the o!3e! o#ne! an( 4e$o3es the a4so'&te p!ope!t0 o the o4'i2o!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 A $ont!a$t o N'oanN (i e!s 3ate!ia''0 !o3 a $ont!a$t o N!ent.N In a $ont!a$t o N!entN the o#ne! o the p!ope!t0 (oes not 'ose his o#ne!ship. He si3p'0 'oses his $ont!o' o"e! the p!ope!t0 !ente( (&!in2 the pe!io( o the $ont!a$t. In a $ont!a$t o N'oanN the thin2 'oane( 4e$o3es the p!ope!t0 o the o4'i2o!. In a $ont!a$t o N!entN the thin2 sti'' !e3ains the p!ope!t0 o the 'esso!. He si3p'0 'oses $ont!o' o the sa3e in a 'i3ite( #a0 (&!in2 the pe!io( o the $ont!a$t o N!entN o! 'ease. In a $ont!a$t o N!entN the !e'ation 4et#een the $ont!a$to!s is that o 'an('o!( an( tenant. In a $ont!a$t o N'oanN o 3one0, 2oo(s, $hatte's o! $!e(its, the !e'ation 4et#een the pa!ties is that o o4'i2o! an( o4'i2ee. NRentN 3a0 4e (e ine( as the $o3pensation eithe! in 3one0, p!o"isions, $hatte's, o! 'a4o!, !e$ei"e( 40 the o#ne! o the soi' !o3 the o$$&pant the!eo . It is (e ine( as the !et&!n o! $o3pensation o! the possession o so3e $o!po!ea' inhe!itan$e, an( is a p!o it iss&in2 o&t o 'an(s o! tene3ents, in !et&!n o! thei! &se. It is that, #hi$h is to pai( o! the &se o 'an(, #hethe! in 3one0, 'a4o! o! othe! thin2 a2!ee( &pon. A $ont!a$t o N!entN is a $ont!a$t 40 #hi$h one o the pa!ties (e'i"e!s to the othe! so3e non$ons&3a4'e thin2, in o!(e! that the 'atte! 3a0 &se it (&!in2 a $e!tain pe!io( an( !et&!n it to the o!3e!C #he!eas a $ont!a$t o N'oanN, as that #o!( is &se( in the stat&te, si2ni ies the (e'i"e!0 o 3one0 o! othe! $ons&3a4'e thin2s &pon $on(ition o !et&!nin2 an e:&i"a'ent a3o&nt o the sa3e 6in( o! :&antit0, in #hi$h $ases it is $a''e( 3e!e'0 a N'oan.N In the $ase o a $ont!a$t o N!ent,N &n(e! the $i"i' 'a#, it is $a''e( a N$o33o(at&3.N$han!o4'es "i!t&a' 'a# 'i4!a!0 F!o3 the o!e2oin2 it #i'' 4e seen that the!e is a #hi'e (istin$tion 4et#een a $ont!a$t o N'oan,N as that #o!( is &se( in the stat&te, an( a $ont!a$t o N!entN e"en tho&2h those #o!(s a!e &se( in o!(ina!0 pa!'an$e as inte!$han2ea4'e te!3s.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The "a'&e o 3one0, 2oo(s o! $!e(its is easi'0 as$e!taine( #hi'e the a3o&nt o !ent to 4e pai( o! the &se an( o$$&pation o the p!ope!t0 3a0 (epen( &pon a tho&san( (i e!ent $on(itionsC as o! eDa3p'e, a!3 'an(s o eDa$t'0 e:&a' p!o(&$ti"e $apa$it0 an( o the sa3e ph0si$a' "a'&e 3a0 ha"e a (i e!ent !enta' "a'&e, (epen(in2 &pon 'o$ation, p!i$es o $o33o(ities, p!oDi3it0 to the 3a!6et, et$. Ho&ses 3a0 ha"e a (i e!ent !enta' "a'&e (&e to 'o$ation, $on(itions o 4&siness, 2ene!a' p!ospe!it0 o! (ep!ession, a(apta4i'it0 to pa!ti$&'a! p&!poses, e"en tho&2h the0 ha"e eDa$t'0 the sa3e o!i2ina' $ost. A sto!e on the Es$o'ta, in the $ente! o 4&siness, $onst!&$te( eDa$t'0 'i6e a sto!e 'o$ate( o&tsi(e o the 4&siness $ente!, #i'' ha"e a 3&$h hi2he! !enta' "a'&e than the othe!. T#o p'a$es o 4&siness 'o$ate( in (i e!ent se$tions o the $it0 3a0 4e $onst!&$te( eDa$t'0 on the sa3e a!$hite$t&!a' p'an

an( 0et one, (&e to pa!ti$&'a! 'o$ation o! a(apta4i'it0 to a pa!ti$&'a! 4&siness #hi$h the 'esso! (esi!es to $on(&$t, 3a0 ha"e a "e!0 3&$h hi2he! !enta' "a'&e than one not so 'o$ate( an( not so #e'' a(apte( to the pa!ti$&'a! 4&siness. A "e!0 $heap 4&i'(in2 on the $a!ni"a' 2!o&n( 3a0 !ent o! 3o!e 3one0, (&e to the pa!ti$&'a! $i!$&3stan$es an( s&!!o&n(in2s, than a 3&$h 3o!e "a'&a4'e p!ope!t0 'o$ate( e'se#he!e. It #i'' th&s 4e seen that the !ent to 4e pai( o! the &se an( o$$&pation o p!ope!t0 is not ne$essa!i'0 iDe( &pon the "a'&e o the p!ope!t0. The a3o&nt o !ent is iDe(, 4ase( &pon a tho&san( (i e!ent $on(itions an( 3a0 o! 3a0 not ha"e an0 (i!e$t !e e!en$e to the "a'&e o the p!ope!t0 !ente(. To ho'( that N&s&!0N $an 4e 4ase( &pon the $o3pa!ati"e a$t&a' !enta' "a'&e an( the a$t&a' "a'&e o the p!ope!t0, is to s&4Be$t e"e!0 'an('o!( to an anno0an$e not $onte3p'ate( 40 the 'a#, an( #o&'( $!eate a "e!0 2!eat (ist&!4an$e in e"e!0 4&siness o! !&!a' $o33&nit0. Ae $annot 4!in2 o&!se'"es to 4e'ie"e that the Le2is'at&!e $onte3p'ate( an0 s&$h (ist&!4an$e in the e:&i'i4!i&3 o the 4&siness o the $o&nt!0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In the p!esent $ase the p!ope!t0 in :&estion #as so'(. It #as an a4so'&te sa'e #ith the !i2ht on'0 to !ep&!$hase. D&!in2 the pe!io( o !e(e3ption the p&!$hase! #as the a4so'&te o#ne! o the p!ope!t0. D&!in2 the pe!io( o !e(e3ption the "en(o! #as not the o#ne! o the p!ope!t0. D&!in2 the pe!io( o !e(e3ption the "en(o! #as a tenant o the p&!$hase!. D&!in2 the pe!io( o !e(e3ption the !e'ation #hi$h eDiste( 4et#een the "en(o! an( the "en(ee #as that o 'an('o!( an( tenant. That !e'ation $an on'0 4e te!3inate( 40 a !ep&!$hase o the p!ope!t0 40 the "en(o! in a$$o!(an$e #ith the te!3s o the sai( $ont!a$t. The $ont!a$t #as one o !ent. The $ont!a$t #as not a 'oan, as that #o!( is &se( in A$t No. )>**.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 As o4noDio&s as $ont!a$ts o pacto de retro a!e, 0et ne"e!the'ess, the $o&!ts ha"e no !i2ht to 3a6e $ont!a$ts o! pa!ties. The0 3a(e thei! o#n $ont!a$t in the p!esent $ase. The!e is not a #o!(, a ph!ase, a senten$e o! pa!a2!aph, #hi$h in the s'i2htest #a0 in(i$ates that the pa!ties to the $ont!a$t in :&estion (i( not inten( to se'' the p!ope!t0 in :&estion a4so'&te'0, si3p'0 #ith the !i2ht to !ep&!$hase. Peop'e #ho 3a6e thei! o#n 4e(s 3&st 'ie the!eon.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ahat has 4een sai( a4o"e #ith !e e!en$e to the !i2ht to 3o(i 0 $ont!a$ts 40 pa!o' e"i(en$e, s& i$ient'0 ans#e!s the thi!( :&estions p!esente( a4o"e. The 'an2&a2e o the $ont!a$t is eDp'i$it, $'ea!, &na34i2&o&s an( 4e0on( :&estion. It eDp!esses the eDa$t intention o the pa!ties at the ti3e it #as 3a(e. The!e is not a #o!(, a ph!ase, a senten$e o! pa!a2!aph o&n( in sai( $ont!a$t #hi$h nee(s eDp'anation. The pa!ties the!eto ente!e( into sai( $ont!a$t #ith the &'' &n(e!stan(in2 o its te!3s an( sho&'( not no# 4e pe!3itte( to $han2e o! 3o(i 0 it 40 pa!o' e"i(en$e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Aith !e e!en$e to the i3p!o"e3ents 3a(e &pon sai( p!ope!t0 40 the p'ainti s (&!in2 the 'i e o the $ont!a$t, EDhi4it C, the!e is he!e40 !ese!"e( to the p'ainti s the !i2ht to eDe!$ise in a sepa!ate a$tion the !i2ht 2&a!antee( to the3 &n(e! a!ti$'e ;>% o the Ci"i' Co(e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Fo! a'' o the o!e2oin2 !easons, #e a!e &''0 pe!s&a(e( !o3 the a$ts o the !e$o!(, in !e'ation #ith the 'a# app'i$a4'e the!eto, that the B&(23ent appea'e( !o3 sho&'( 4e an( is he!e40 a i!3e(, #ith $osts. So o!(e!e(. "#$RD D$>$S$ON EUFE;$ %;ED a'RO;E% %;ED , Petitione!s, G.R. No. 150=0: P!esent: GNARES,SANTIA-O, J., Chairperson, AUSTRIA,/ARTINEE, CORONA,O NACHURA, an( REGES, JJ. P!o3&'2ate(: Jan&a!0 )@, )<<@ D,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,D

$!a'a#, "e!s&s ,

B "# % ; R!E"$NG $NDUS"R$ES, $NC., Respon(ent.

DEC$S$ON N C#UR , J.C This is a Petition o! Re"ie# on Certiorari &n(e! R&'e 1* o the R&'es o Co&!t, o the De$ision ?%I o the Co&!t o Appea's 8CA9, (ate( Septe34e! ;, )<<%, in CA,-.R. CV No. >..@1, an( its Reso'&tion ?)I (ate( No"e34e! %+, )<<%. The assai'e( De$ision a i!3e( #ith 3o(i i$ation the De$ision ?;I o the Re2iona' T!ia' Co&!t 8RTC9, /a6ati Cit0, 5!an$h %;>, (ate( /a0 +, )<<< in Ci"i' Case No. +@,1%%. $!a'a#So3eti3e in /a0 %++., !espon(ent 5atha'a /a!6etin2 In(&st!ies, In$., as 'essee, !ep!esente( 40 its p!esi(ent Ra3on H. -a!$ia, !ene#e( its Cont!a$t o Lease ?1I #ith Pon$iano L. A'3e(a 8Pon$iano9, as 'esso!, h&s4an( o petitione! E& e3ia an( athe! o petitione! Ro3e' A'3e(a. Un(e! the sai( $ont!a$t, Pon$iano a2!ee( to 'ease a po!tion o the A'3e(a Co3po&n(, 'o$ate( at ))<@ Pason2 Ta3o St!eet, /a6ati Cit0, $onsistin2 o .,;1@.)* s:&a!e 3ete!s, o! a 3onth'0 !enta' o P%,%<.,;1@.>+, o! a te!3 o o&! 819 0ea!s !o3 /a0 %, %++. &n'ess soone! te!3inate( as p!o"i(e( in the $ont!a$t. ?*I The $ont!a$t o 'ease $ontaine( the o''o#in2 pe!tinent p!o"isions #hi$h 2a"e !ise to the instant $ase: $!a'a#SIHTH It is eDp!ess'0 &n(e!stoo( 40 the pa!ties he!eto that the !enta' !ate stip&'ate( is 4ase( on the p!esent !ate o assess3ent on the p!ope!t0, an( that in $ase the assess3ent sho&'( he!ea te! 4e in$!ease( o! an0 ne# taD, $ha!2e o! 4&!(en 4e i3pose( 40 a&tho!ities on the 'ot an( 4&i'(in2 #he!e the 'ease( p!e3ises a!e 'o$ate(, LESSEE sha'' pa0, #hen the !enta' he!ein p!o"i(e( 4e$o3es (&e, the a((itiona' !enta' o! $ha!2e $o!!espon(in2 to the po!tion he!e40 'ease(C p!o"i(e(, ho#e"e!, that in the e"ent that the p!esent assess3ent o! taD on sai( p!ope!t0 sho&'( 4e !e(&$e(, LESSEE sha'' 4e entit'e( to !e(&$tion in the stip&'ate( !enta', 'i6e#ise in p!opo!tion to the po!tion 'ease( 40 hi3C $!a'a#SEVENTH In $ase an eDt!ao!(ina!0 in 'ation o! (e"a'&ation o Phi'ippine C&!!en$0 sho&'( s&pe!"ene, the "a'&e o Phi'ippine peso at the ti3e o the esta4'ish3ent o the o4'i2ation sha'' 4e the 4asis o pa03entC ?>I D&!in2 the e e$ti"it0 o the $ont!a$t, Pon$iano (ie(. The!ea te!, !espon(ent (ea't #ith petitione!s.In a 'ette! ?.I (ate( De$e34e! )+, %++., petitione!s a("ise( !espon(ent that the o!3e! sha'' assess an( $o''e$t Va'&e A((e( TaD 8VAT9 on its 3onth'0 !enta's. In !esponse, !espon(ent $onten(e( that VAT 3a0 not 4e i3pose( as the !enta's iDe( in the $ont!a$t o 'ease #e!e s&ppose( to in$'&(e the VAT the!ein, $onsi(e!in2 that thei! $ont!a$t #as eDe$&te( on /a0 %, %++.#hen the VAT 'a# ha( 'on2 4een in e e$t.?@I On Jan&a!0 )>, %++@, !espon(ent !e$ei"e( anothe! 'ette! !o3 petitione!s in o!3in2 the o!3e! that its 3onth'0 !enta' sho&'( 4e in$!ease( 40 .;M p&!s&ant to $on(ition No. . o the $ont!a$t an( A!ti$'e %)*< o the Ci"i' Co(e. Respon(ent oppose( petitione!s (e3an( an( insiste( that the!e #as no eDt!ao!(ina!0 in 'ation to #a!!ant the app'i$ation o A!ti$'e %)*< in 'i2ht o the p!ono&n$e3ent o this Co&!t in "a!io&s $ases.?+I Respon(ent !e &se( to pa0 the VAT an( a(B&ste( !enta's as (e3an(e( 40 petitione!s 4&t $ontin&e( to pa0 the stip&'ate( a3o&nt set o!th in thei! $ont!a$t. On Fe4!&a!0 %@, %++@, !espon(ent instit&te( an a$tion o! (e$'a!ato!0 !e'ie o! p&!poses o (ete!3inin2 the $o!!e$t inte!p!etation o $on(ition Nos. > an( . o the 'ease $ont!a$t to p!e"ent (a3a2e an( p!eB&(i$e. ?%<I The $ase #as (o$6ete( as Ci"i' Case No. +@, 1%% 4e o!e the RTC o /a6ati. On /a!$h %<, %++@, petitione!s in t&!n i'e( an a$tion o! eBe$t3ent, !es$ission an( (a3a2es a2ainst !espon(ent o! ai'&!e o the 'atte! to "a$ate the p!e3ises a te! the (e3an( 3a(e 40 the o!3e!. ?%%I 5e o!e !espon(ent $o&'( i'e an ans#e!, petitione!s i'e( a Noti$e o Dis3issa'.?%)I The0 s&4se:&ent'0 !e i'e( the $o3p'aint 4e o!e the /et!opo'itan T!ia' Co&!t o /a6atiC the $ase #as !a 'e( to 5!an$h %;+ an( #as (o$6ete( as Ci"i' Case No. *;*+>. Petitione!s 'ate! 3o"e( o! the (is3issa' o the (e$'a!ato!0 !e'ie $ase o! 4ein2 an i3p!ope! !e3e(0 $onsi(e!in2 that !espon(ent #as a'!ea(0 in 4!ea$h o the o4'i2ation an( that the $ase #o&'( not en( the 'iti2ation an( sett'e the !i2hts o the pa!ties. The t!ia' $o&!t, ho#e"e!, #as not pe!s&a(e(, an( $onse:&ent'0, (enie( the 3otion. A te! t!ia' on the 3e!its, on /a0 +, )<<<, the RTC !&'e( in a"o! o !espon(ent an( a2ainst petitione!s. The pe!tinent po!tion o the (e$ision !ea(s: AHEREFORE, p!e3ises $onsi(e!e(, this Co&!t !en(e!s B&(23ent on the $ase as o''o#s:

%9 (e$'a!in2 that p'ainti is not 'ia4'e o! the pa03ent o Va'&e,A((e( TaD 8VAT9 o %<M o the !ent o! ?theI &se o the 'ease( p!e3isesC )9 (e$'a!in2 that p'ainti is not 'ia4'e o! the pa03ent o an0 !enta' a(B&st3ent, the!e 4ein2 no ?eDt!ao!(ina!0I in 'ation o! (e"a'&ation, as p!o"i(e( in the Se"enth Con(ition o the 'ease $ont!a$t, to B&sti 0 the sa3eC ;9 ho'(in2 (e en(ants 'ia4'e to p'ainti o! the tota' a3o&nt o P%,%%+,%<).%+, sai( a3o&nt !ep!esentin2 pa03ents e!!oneo&s'0 3a(e 40 p'ainti as VAT $ha!2es an( !enta' a(B&st3ent o! the 3onths o Jan&a!0, Fe4!&a!0 an( /a!$h, %+++C an( 19 ho'(in2 (e en(ants 'ia4'e to p'ainti o! the a3o&nt o P%,%<.,;1@.>+, sai( a3o&nt !ep!esentin2 the 4a'an$e o p'ainti s !enta' (eposit sti'' #ith (e en(ants. SO ORDERED.?%;I $!a'a#The t!ia' $o&!t (enie( petitione!s thei! !i2ht to pass on to !espon(ent the 4&!(en o pa0in2 the VAT sin$e it #as not a ne# taD that #o&'( $a'' o! the app'i$ation o the siDth $'a&se o the $ont!a$t. The $o&!t, 'i6e#ise, (enie( thei! !i2ht to $o''e$t the (e3an(e( in$!ease in !enta', the!e 4ein2 no eDt!ao!(ina!0 in 'ation o! (e"a'&ation as p!o"i(e( o! in the se"enth $'a&se o the $ont!a$t.5e$a&se o the pa03ent 3a(e 40 !espon(ent o the !enta' a(B&st3ent (e3an(e( 40 petitione!s, the $o&!t o!(e!e( the !estit&tion 40 the 'atte! to the o!3e! o the a3o&nts pai(, not#ithstan(in2 the #e'',esta4'ishe( !&'e that in an a$tion o! (e$'a!ato!0 !e'ie , othe! than a (e$'a!ation o !i2hts an( o4'i2ations, a i!3ati"e !e'ie s a!e not so&2ht 40 o! a#a!(e( to the pa!ties. $!a'a#Petitione!s e'e"ate( the a o!esai( $ase to the Co&!t o Appea's #hi$h a i!3e( #ith 3o(i i$ation the RTC (e$ision. The fallo !ea(s: $!a'a#AHEREFORE, p!e3ises $onsi(e!e(, the p!esent appea' is DIS/ISSED an( the appea'e( (e$ision in Ci"i' Case No. +@,1%% is he!e40 AFFIR/ED #ith /ODIFICATION in that the o!(e! o! the !et&!n o the 4a'an$e o the !enta' (eposits an( o the a3o&nts !ep!esentin2 the %<M VAT an( !enta' a(B&st3ent, is he!e40 DELETED. $!a'a#No p!ono&n$e3ent as to $osts. $!a'a#SO ORDERED.?%1I $!a'a#The appe''ate $o&!t a2!ee( #ith the $on$'&sions o 'a# an( the app'i$ation o the (e$isiona' !&'es on the 3atte! 3a(e 40 the RTC. Ho#e"e!, it o&n( that the t!ia' $o&!t eD$ee(e( its B&!is(i$tion in 2!antin2 a i!3ati"e !e'ie to the !espon(ent, pa!ti$&'a!'0 the !estit&tion o its eD$ess pa03ent. $!a'a#Petitione!s no# $o3e 4e o!e this Co&!t !aisin2 the o''o#in2 iss&es: I. AHETHER OR NOT ARTICLE %)*< OF THE NEA CIVIL CODE IS APPLICA5LE TO THE CASE AT 5AR. II. AHETHER OR NOT THE DOCTRINE ENUNCIATED IN FILIPINO PIPE AND FOUNDRG CORP. VS. NAAASA CASE, %>% SCRA ;) AND CO/PANION CASES ARE 8si$9 APPLICA5LE IN THE CASE AT 5AR. III. AHETHER OR NOT IN NOT APPLGIN- THE DOCTRINE IN THE CASE OF DEL ROSARIOVS. THE SHELL CO/PANG OF THE PHILIPPINES, %>1 SCRA *>), THE HONORA5LE COURT OF APPEALS SERIOUSLG ERRED ON A FUESTION OF LAA. IV. AHETHER OR NOT THE FINDIN- OF THE HONORA5LE COURT OF APPEALS THAT RESPONDENT IS NOT LIA5LE TO PAG THE %<M VALUE ADDED TAH IS IN ACCORDANCE AITH THE /ANDATE OF RA ..%>.

V. AHETHER OR NOT DECLARATORG RELIEF IS PROPER SINCE PLAINTIFF,APPELLEE AAS IN 5REACH AHEN THE PETITION FOR DECLARATORG RELIEF AAS FILED 5EFORE THE TRIAL COURT. $!a'a# In ine, the iss&es o! o&! !eso'&tion a!e as o''o#s: %9 #hethe! the a$tion o! (e$'a!ato!0 !e'ie is p!ope!C )9 #hethe! !espon(ent is 'ia4'e to pa0 %<M VAT p&!s&ant to Rep&4'i$ A$t 8RA9 ..%>C an( ;9 #hethe! the a3o&nt o !enta's (&e the petitione!s sho&'( 4e a(B&ste( 40 !eason o eDt!ao!(ina!0 in 'ation o! (e"a'&ation. De$'a!ato!0 !e'ie is (e ine( as an a$tion 40 an0 pe!son inte!este( in a (ee(, #i'', $ont!a$t o! othe! #!itten inst!&3ent, eDe$&ti"e o!(e! o! !eso'&tion, to (ete!3ine an0 :&estion o $onst!&$tion o! "a'i(it0 a!isin2 !o3 the inst!&3ent, eDe$&ti"e o!(e! o! !e2&'ation, o! stat&te, an( o! a (e$'a!ation o his !i2hts an( (&ties the!e&n(e!. The on'0 iss&e that 3a0 4e !aise( in s&$h a petition is the :&estion o $onst!&$tion o! "a'i(it0 o p!o"isions in an inst!&3ent o! stat&te. Co!o''a!0 is the 2ene!a' !&'e that s&$h an a$tion 3&st 4e B&sti ie(, as no othe! a(e:&ate !e'ie o! !e3e(0 is a"ai'a4'e &n(e! the $i!$&3stan$es. ?%*I De$isiona' 'a# en&3e!ates the !e:&isites o an a$tion o! (e$'a!ato!0 !e'ie , as o''o#s: %9 the s&4Be$t 3atte! o the $ont!o"e!s0 3&st 4e a (ee(, #i'', $ont!a$t o! othe! #!itten inst!&3ent, stat&te, eDe$&ti"e o!(e! o! !e2&'ation, o! o!(inan$eC )9 the te!3s o sai( (o$&3ents an( the "a'i(it0 the!eo a!e (o&4t &' an( !e:&i!e B&(i$ia' $onst!&$tionC ;9 the!e 3&st ha"e 4een no 4!ea$h o the (o$&3ents in :&estionC 19 the!e 3&st 4e an a$t&a' B&sti$ia4'e $ont!o"e!s0 o! the !ipenin2 see(s o one 4et#een pe!sons #hose inte!ests a!e a("e!seC *9 the iss&e 3&st 4e !ipe o! B&(i$ia' (ete!3inationC an( >9 a(e:&ate !e'ie is not a"ai'a4'e th!o&2h othe! 3eans o! othe! o!3s o a$tion o! p!o$ee(in2.?%>I It is 4e0on( $a"i' that the o!e2oin2 !e:&isites a!e p!esent in the instant $ase, eD$ept that petitione!s insist that !espon(ent #as a'!ea(0 in 4!ea$h o the $ont!a$t #hen the petition #as i'e(. Ae (o not a2!ee. A te! petitione!s (e3an(e( pa03ent o a(B&ste( !enta's an( in the 3onths that o''o#e(, !espon(ent $o3p'ie( #ith the te!3s an( $on(itions set o!th in thei! $ont!a$t o 'ease 40 pa0in2 the !enta's stip&'ate( the!ein. Respon(ent !e'i2io&s'0 &' i''e( its o4'i2ations to petitione!s e"en (&!in2 the pen(en$0 o the p!esent s&it. The!e is no sho#in2 that !espon(ent $o33itte( an a$t $onstit&tin2 a 4!ea$h o the s&4Be$t $ont!a$t o 'ease. Th&s, !espon(ent is not 4a!!e( !o3 instit&tin2 4e o!e the t!ia' $o&!t the petition o! (e$'a!ato!0 !e'ie . Petitione!s $'ai3 that the instant petition is not p!ope! 4e$a&se a sepa!ate a$tion o! !es$ission, eBe$t3ent an( (a3a2es ha( 4een $o33en$e( 4e o!e anothe! $o&!tC th&s, the $onst!&$tion o the s&4Be$t $ont!a$t&a' p!o"isions sho&'( 4e "enti'ate( in the sa3e o!&3. Ae a!e not $on"in$e(. It is t!&e that in Pan#aniban v. Pilipinas 8hell Petroleum Corporation ?%.I #e he'( that the petition o! (e$'a!ato!0 !e'ie sho&'( 4e (is3isse( in "ie# o the pen(en$0 o a sepa!ate a$tion o! &n'a# &' (etaine!. Ho#e"e!, #e $annot app'0 the sa3e !&'in2 to the instant $ase. In Pan#aniban, the &n'a# &' (etaine! $ase ha( a'!ea(0 4een !eso'"e( 40 the t!ia' $o&!t 4e o!e the (is3issa' o the (e$'a!ato!0 !e'ie $aseC an( it #as petitione! in that $ase #ho insiste( that the a$tion o! (e$'a!ato!0 !e'ie 4e p!e e!!e( o"e! the a$tion o! &n'a# &' (etaine!. Con"e!se'0, in the $ase at 4en$h, the t!ia' $o&!t ha( not 0et !eso'"e( the !es$ission=eBe$t3ent $ase (&!in2 the pen(en$0 o the (e$'a!ato!0 !e'ie petition. In a$t, the t!ia' $o&!t, #he!e the !es$ission $ase #as on appea', itse' initiate( the s&spension o the p!o$ee(in2s pen(in2 the !eso'&tion o the a$tion o! (e$'a!ato!0 !e'ie . Ae a!e not &n3in( &' o the (o$t!ine en&n$iate( in 2eodoro, Jr. v. irasol?%@I #he!e the (e$'a!ato!0 !e'ie a$tion #as (is3isse( 4e$a&se the iss&e the!ein $o&'( 4e th!eshe( o&t in the &n'a# &' (etaine! s&it. Get, a2ain, in that $ase, the!e #as a'!ea(0 a 4!ea$h o $ont!a$t at the ti3e o the i'in2 o the (e$'a!ato!0 !e'ie petition. This (issi3i'a! a$t&a' 3i'ie& p!os$!i4es the Co&!t !o3 app'0in2 2eodoroto the instant $ase. -i"en a'' these atten(ant $i!$&3stan$es, the Co&!t is (ispose( to ente!tain the instant (e$'a!ato!0 !e'ie a$tion instea( o (is3issin2 it, not#ithstan(in2 the pen(en$0 o the eBe$t3ent=!es$ission $ase 4e o!e the t!ia' $o&!t. The !eso'&tion o the p!esent petition #o&'( #!ite finis to the pa!ties (isp&te, as it #o&'( sett'e on$e an( o! a'' the :&estion o the p!ope! inte!p!etation o the t#o $ont!a$t&a' stip&'ations s&4Be$t o this $ont!o"e!s0. No#, on the s&4stanti"e 'a# iss&es.

Petitione!s !epeate('0 3a(e a (e3an( on !espon(ent o! the pa03ent o VAT an( o! !enta' a(B&st3ent a''e2e('0 4!o&2ht a4o&t 40 eDt!ao!(ina!0 in 'ation o! (e"a'&ation. 5oth the t!ia' $o&!t an( the appe''ate $o&!t o&n( no 3e!it in petitione!s $'ai3. Ae see no !eason to (epa!t !o3 s&$h in(in2s. As to the 'ia4i'it0 o !espon(ent o! the pa03ent o VAT, #e $ite #ith app!o"a' the !atio$ination o the appe''ate $o&!t, vi&.: $!a'a#C'ea!'0, the pe!son p!i3a!i'0 'ia4'e o! the pa03ent o VAT is the 'esso! #ho 3a0 $hoose to pass it on to the 'essee o! a4so!4 the sa3e. 5e2innin2 Jan&a!0 %, %++>, the 'ease o !ea' p!ope!t0 in the o!(ina!0 $o&!se o 4&siness, #hethe! o! $o33e!$ia' o! !esi(entia' &se, #hen the 2!oss ann&a' !e$eipts eD$ee( P*<<,<<<.<<, is s&4Be$t to %<M VAT. Not#ithstan(in2 the 3an(ato!0 pa03ent o the %<M VAT 40 the 'esso!, the a$t&a' shi tin2 o the sai( taD 4&!(en &pon the 'essee is $'ea!'0 optiona' on the pa!t o the 'esso!, &n(e! the te!3s o the stat&te. The #o!( 3a0 in the stat&te, 2ene!a''0 spea6in2, (enotes that it is (i!e$to!0 in nat&!e. It is 2ene!a''0 pe!3issi"e on'0 an( ope!ates to $on e! (is$!etion. In this $ase, (espite the app'i$a4i'it0 o the !&'e &n(e! Se$. ++ o the NIRC, as a3en(e( 40 R.A. ..%>, 2!antin2 the 'esso! the option to pass on to the 'essee the %<M VAT, to eDistin2 $ont!a$ts o 'ease as o Jan&a!0 %, %++>, the o!i2ina' 'esso!, Pon$iano L. A'3e(a (i( not $ha!2e the 'essee,appe''ee the %<M VAT no! p!o"i(e( o! its a((itiona' i3position #hen the0 !ene#e( the $ont!a$t o 'ease in /a0 %++.. /o!e si2ni i$ant'0, sai( 'esso! (i( not a$t&a''0 $o''e$t a %<M VAT on the 3onth'0 !enta' (&e !o3 the 'essee,appe''ee after the eDe$&tion o the /a0 %++. $ont!a$t o 'ease. The ine"ita4'e i3p'i$ation is that the 'esso! inten(e( not to a"ai' o the option 2!ante( hi3 40 'a# to shi t the %<M VAT &pon the 'essee,appe''ee. D D D.?%+I In sho!t, petitione!s a!e estoppe( !o3 shi tin2 to !espon(ent the 4&!(en o pa0in2 the VAT. Petitione!s !e'ian$e on the siDth $on(ition o the $ont!a$t is, 'i6e#ise, &na"ai'in2. This p!o"ision $'ea!'0 states that !espon(ent $an on'0 4e he'( 'ia4'e o! ne% ta7es i3pose( a te! the e e$ti"it0 o the $ont!a$t o 'ease, that is, a te! /a0 %++., an( on'0 i the0 pe!tain to the 'ot an( the 4&i'(in2 #he!e the 'ease( p!e3ises a!e 'o$ate(. Consi(e!in2 that RA ..%> too6 e e$t in %++1, the VAT $annot 4e $onsi(e!e( as a ne# taD in /a0 %++., as to a'' #ithin the $o"e!a2e o the siDth stip&'ation. Neithe! $an petitione!s 'e2iti3ate'0 (e3an( !enta' a(B&st3ent 4e$a&se o eDt!ao!(ina!0 in 'ation o! (e"a'&ation. Petitione!s $onten( that A!ti$'e %)*< o the Ci"i' Co(e (oes not app'0 to this $ase 4e$a&se the $ont!a$t stip&'ation spea6s o eDt!ao!(ina!0 in 'ation o! (e"a'&ation #hi'e the Co(e spea6s o eDt!ao!(ina!0 in 'ation o! (e 'ation. The0 insist that the (o$t!ine p!ono&n$e( in Del Rosario v. 2he 8hell Compan), Phils. Limited?)<I sho&'( app'0. Essentia' to $ont!a$t $onst!&$tion is the as$e!tain3ent o the intention o the $ont!a$tin2 pa!ties, an( s&$h (ete!3ination 3&st ta6e into a$$o&nt the $onte3po!aneo&s an( s&4se:&ent a$ts o the pa!ties. This intention, on$e as$e!taine(, is (ee3e( an inte2!a' pa!t o the $ont!a$t.?)%I Ahi'e, in(ee(, $on(ition No. . o the $ont!a$t spea6s o eDt!ao!(ina!0 in 'ation o! (e"a'&ation as $o3pa!e( to A!ti$'e %)*<s eDt!ao!(ina!0 in 'ation o! (e 'ation, #e in( that #hen the pa!ties &se( the te!3 (e"a'&ation, the0 !ea''0 (i( not inten( to (epa!t !o3 A!ti$'e %)*< o the Ci"i' Co(e.Con(ition No. . o the $ont!a$t sho&'(, th&s, 4e !ea( in ha!3on0 #ith the Ci"i' Co(e p!o"ision. That this is the intention o the pa!ties is e"i(ent !o3 petitione!s 'ette! ?))I (ate( Jan&a!0 )>, %++@, #he!e, in (e3an(in2 !enta' a(B&st3ent ostensi4'0 4ase( on $on(ition No. ., petitione!s 3a(e eDp'i$it !e e!en$e to A!ti$'e %)*< o the Ci"i' Co(e, e"en :&otin2 the 'a# "e!4ati3. Th&s, the app'i$ation o Del Rosario is not #a!!ante(. Rathe!, B&!isp!&(entia' !&'es on the app'i$ation o A!ti$'e %)*< sho&'( 4e $onsi(e!e(. A!ti$'e %)*< o the Ci"i' Co(e states: $!a'a#$!a'a#In $ase an eDt!ao!(ina!0 in 'ation o! (e 'ation o the $&!!en$0 stip&'ate( sho&'( s&pe!"ene, the "a'&e o the $&!!en$0 at the ti3e o the esta4'ish3ent o the o4'i2ation sha'' 4e the 4asis o pa03ent, &n'ess the!e is an a2!ee3ent to the $ont!a!0. In 'ation has 4een (e ine( as the sha!p in$!ease o 3one0 o! $!e(it, o! 4oth, #itho&t a $o!!espon(in2 in$!ease in 4&siness t!ansa$tion. The!e is in 'ation #hen the!e is an in$!ease in the "o'&3e o 3one0 an( $!e(it !e'ati"e to a"ai'a4'e 2oo(s, !es&'tin2 in

a s&4stantia' an( $ontin&in2 !ise in the 2ene!a' p!i$e 'e"e'. ?);I In a n&34e! o $ases, this Co&!t ha( p!o"i(e( a (is$o&!se on #hat $onstit&tes eDt!ao!(ina!0 in 'ation, th&s: ?EIDt!ao!(ina!0 in 'ation eDists #hen the!e is a (e$!ease o! in$!ease in the p&!$hasin2 po#e! o the Phi'ippine $&!!en$0 #hi$h is &n&s&a' o! 4e0on( the $o33on '&$t&ation in the "a'&e o sai( $&!!en$0, an( s&$h in$!ease o! (e$!ease $o&'( not ha"e 4een !easona4'0 o!eseen o! #as 3ani est'0 4e0on( the $onte3p'ation o the pa!ties at the ti3e o the esta4'ish3ent o the o4'i2ation.?)1I The a$t&a' $i!$&3stan$es o4tainin2 in the p!esent $ase (o not 3a6e o&t a $ase o eDt!ao!(ina!0 in 'ation o! (e"a'&ation as #o&'( B&sti 0 the app'i$ation o A!ti$'e %)*< o the Ci"i' Co(e. Ae #o&'( 'i6e to st!ess that the e!osion o the "a'&e o the Phi'ippine peso in the past th!ee o! o&! (e$a(es, sta!tin2 in the 3i(,siDties, is $ha!a$te!isti$ o 3ost $&!!en$ies. An( #hi'e the Co&!t 3a0 ta6e B&(i$ia' noti$e o the (e$'ine in the p&!$hasin2 po#e! o the Phi'ippine $&!!en$0 in that span o ti3e, s&$h (o#n#a!( t!en( o the peso $annot 4e $onsi(e!e( as the eDt!ao!(ina!0 pheno3enon $onte3p'ate( 40 A!ti$'e %)*< o the Ci"i' Co(e. F&!the!3o!e, a4sent an o i$ia' p!ono&n$e3ent o! (e$'a!ation 40 $o3petent a&tho!ities o the eDisten$e o eDt!ao!(ina!0 in 'ation (&!in2 a 2i"en pe!io(, the e e$ts o eDt!ao!(ina!0 in 'ation a!e not to 4e app'ie(. ?)*I 8#EREFORE, p!e3ises $onsi(e!e(, the petition is DEN$ED. The De$ision o the Co&!t o Appea'sin CA,-.R. CV No. >..@1, (ate( Septe34e! ;, )<<%, an( its Reso'&tion (ate( No"e34e! %+, )<<%, a!e FF$R;ED. $!a'a# SO ORDERED. G.R. No. 1B1545 C De3e1ber 19, 200B E<U$" B%E PC$ B N!,O $;EE AU a'- BE? N %$ONE% P S, Petitioners, v. NG S#EUNG NGOROO -o*'6 bu/*'e// u'-er +,e 'a1e a'- /+y0e G!EN ; R!E"$NG,G !EN PP%$ NCE D$>$S$ON, $NC. a'- BEN? ;$N E. GO,Respondents. DEC$S$ON CORON , J.C This petition o! !e"ie# on certiorari % see6s to set asi(e the (e$ision) o the Co&!t o Appea's 8CA9 in CA,-.R. SP No. @;%%) an( its !eso'&tion; (en0in2 !e$onsi(e!ation. On O$to4e! ., )<<%, !espon(ents N2 She&n2 N2o!,1 Ken App'ian$e Di"ision, In$. an( 5enBa3in E. -o i'e( an a$tion o! ann&'3ent an(=o! !e o!3ation o (o$&3ents an( $ont!a$ts* a2ainst petitione! E:&ita4'e PCI 5an6 8E:&ita4'e9 an( its e3p'o0ees, Ai3ee G& an( 5eBan Lione' Apas, in the Re2iona' T!ia' Co&!t 8RTC9, 5!an$h %> o Ce4& Cit0.> The0$'ai3e( that E:&ita4'e in(&$e( the3 to a"ai' o its peso an( (o''a! $!e(it a$i'ities 40 o e!in2 'o# inte!est !ates . so the0 a$$epte( E:&ita4'eKs p!oposa' an( si2ne( the 4an6Ks p!e,p!inte( p!o3isso!0 notes on "a!io&s (ates 4e2innin2 %++>. The0, ho#e"e!, #e!e &na#a!e that the (o$&3ents $ontaine( i(enti$a' es$a'ation $'a&ses 2!antin2 E:&ita4'e a&tho!it0 to in$!ease inte!est !ates #itho&t thei! $onsent.@ $han!o4'es"i!t&a''a#'i4a!0 E:&ita4'e, in its ans#e!, asse!te( that !espon(ents 6no#in2'0 a$$epte( a'' the te!3s an( $on(itions $ontaine( in the p!o3isso!0 notes.+ In a$t, the0 $ontin&o&s'0 a"ai'e( o an( 4ene ite( !o3 E:&ita4'eKs $!e(it a$i'ities o! i"e 0ea!s.%< $han!o4'es"i!t&a''a#'i4a!0 A te! t!ia', the RTC &phe'( the "a'i(it0 o the p!o3isso!0 notes. It o&n( that, in )<<% a'one, E:&ita4'e !est!&$t&!e( !espon(entsK 'oans a3o&ntin2 to USP))@,)<< an( P%,<<<,<<<.%% The t!ia' $o&!t, ho#e"e!, in"a'i(ate( the es$a'ation $'a&se $ontaine( the!ein 4e$a&se it "io'ate( the p!in$ip'e o 3&t&a'it0 o $ont!a$ts. %) Ne"e!the'ess, it too6 B&(i$ia' noti$e o the steep (ep!e$iation o the peso (&!in2 the inte!"enin2 pe!io(%; an( (e$'a!e( the eDisten$e o eDt!ao!(ina!0 (e 'ation.%1 Conse:&ent'0, the RTC o!(e!e( the &se o the %++> (o''a! eD$han2e !ate in $o3p&tin2 !espon(entsK (o''a!,(eno3inate( 'oans.%* Last'0, 4e$a&se the 4&siness !ep&tation o !espon(ents #as 8a''e2e('09 se"e!e'0 (a3a2e( #hen E:&ita4'e !o7e thei! a$$o&nts,%> the t!ia' $o&!t a#a!(e( 3o!a' an( eDe3p'a!0 (a3a2es to the3.%. $han!o4'es"i!t&a''a#'i4a!0 The (ispositi"e po!tion o the Fe4!&a!0 *, )<<1 RTC (e$ision%@ p!o"i(e(:$!a:na(

8#EREFORE, p!e3ises $onsi(e!e(, B&(23ent is he!e40 !en(e!e(:$!a:na( A9 O!(e!in2 ?E:&ita4'eI to !einstate an( !et&!n the a3o&nt o ?!espon(entsKI (eposit p'a$e( on ho'( stat&sC 59 O!(e!in2 ?E:&ita4'eI to pa0 ?!espon(entsI the s&3 o P%) ?3Ii''ion ?pIesos as 3o!a' (a3a2esC C9 O!(e!in2 ?E:&ita4'eI to pa0 ?!espon(entsI the s&3 o P%< ?3Ii''ion ?pIesos as eDe3p'a!0 (a3a2esC D9 O!(e!in2 (e en(ants Ai3ee G& an( 5eBan ?Lione'I Apas to pa0 ?!espon(entsI, Boint'0 an( se"e!a''0, the s&3 o ?tI#o ?3Ii''ion ?pIesos as 3o!a' an( eDe3p'a!0 (a3a2esC E9 O!(e!in2 ?E:&ita4'e, Ai3ee G& an( 5eBan Lione' ApasI, Boint'0 an( se"e!a''0, to pa0 ?!espon(entsKI atto!ne0Ks ees in the s&3 o P;<<,<<<C 'iti2ation eDpenses in the s&3 o P*<,<<< an( the $ost o s&itC F9 Di!e$tin2 p'ainti s N2 She&n2 N2o! an( Ken /a!6etin2 to pa0 ?E:&ita4'eI the &npai( p!in$ipa' o4'i2ation o! the peso 'oan as #e'' as the &npai( o4'i2ation o! the (o''a! (eno3inate( 'oanC -9 Di!e$tin2 p'ainti N2 She&n2 N2o! an( Ken /a!6etin2 to pa0 ?E:&ita4'eI inte!est as o''o#s:$!a:na( %9 %)M pe! ann&3 o! the peso 'oansC )9 @M pe! ann&3 o! the (o''a! 'oans. The 4asis o! the pa03ent o the (o''a! o4'i2ation is the $on"e!sion !ate o P)>.*< pe! (o''a! a"ai'e( o at the ti3e o in$&!!in2 o the o4'i2ation in a$$o!(an$e #ith A!ti$'e %)*< o the Ci"i' Co(e o the Phi'ippinesC H9 Dis3issin2 ?E:&ita4'eKsI $o&nte!$'ai3 eD$ept the pa03ent o the a o!estate( &npai( p!in$ipa' 'oan o4'i2ations an( inte!est. SO ORDERED.%+ $han!o4'es"i!t&a''a#'i4a!0 E:&ita4'e an( !espon(ents i'e( thei! !espe$ti"e noti$es o appea'.)< $han!o4'es"i!t&a''a#'i4a!0 In the /a!$h %, )<<1 o!(e! o the RTC, 4oth noti$es #e!e (enie( (&e $o&!se 4e$a&se E:&ita4'e an( !espon(ents N ai'e( to s&43it p!oo that the0 pai( thei! !espe$ti"e appea' ees.N)% $han!o4'es"i!t&a''a#'i4a!0 8#EREFORE, p!e3ises $onsi(e!e(, the appea' inte!pose( 40 (e en(ants !o3 the De$ision in the a4o"e,entit'e( $ase is DEN$ED (&e $o&!se. / o4 February 2B, 2004, +,e De3*/*o' -a+e- February 5, 2004, */ 3o'/*-ere- 4*'a0 a'- e2e3u+ory *' /o 4ar a/ ?EHu*+ab0e, *1ee Au a'- BeEa' %*o'e0 .a/I are 3o'3er'e-.)) 8e3phasis s&pp'ie(9 E:&ita4'e 3o"e( o! the !e$onsi(e!ation o the /a!$h %, )<<1 o!(e! o the RTC); on the 2!o&n( that it (i( in a$t pa0 the appea' ees. Respon(ents, on the othe! han(, p!a0e( o! the iss&an$e o a #!it o eDe$&tion.)1 $han!o4'es"i!t&a''a#'i4a!0 On /a!$h )1, )<<1, the RTC iss&e( an o3ni4&s o!(e! (en0in2 E:&ita4'eKs 3otion o! !e$onsi(e!ation o! 'a$6 o 3e!it )* an( o!(e!e( the iss&an$e o a #!it o eDe$&tion in a"o! o Respondents.)> A$$o!(in2 to the RTC, 4e$a&se !espon(ents (i( not 3o"e o! the !e$onsi(e!ation o the p!e"io&s o!(e! 8(en0in2 (&e $o&!se to the pa!tiesK noti$es o appea'9, ). the Fe4!&a!0 *, )<<1 (e$ision 4e$a3e ina' an( eDe$&to!0 as to 4oth pa!ties an( a #!it o eDe$&tion a2ainst E:&ita4'e #as in o!(e!. )@ $!a A #!it o eDe$&tion #as the!ea te! iss&e()+ an( th!ee !ea' p!ope!ties o E:&ita4'e #e!e 'e"ie( &pon.;< $han!o4'es"i!t&a''a#'i4a!0 On /a!$h )>, )<<1, E:&ita4'e i'e( a petition o! !e'ie in the RTC !o3 the /a!$h %, )<<1 o!(e!. ;% It, ho#e"e!, #ith(!e# that petition on /a!$h ;<, )<<1;) an( instea( i'e( a petition o! certiorari #ith an app'i$ation o! an inB&n$tion in the CA to enBoin the i3p'e3entation an( eDe$&tion o the /a!$h )1, )<<1 o3ni4&s o!(e!.;; $han!o4'es"i!t&a''a#'i4a!0 On J&ne %>, )<<1, the CA 2!ante( E:&ita4'eKs app'i$ation o! inB&n$tion. A #!it o p!e'i3ina!0 inB&n$tion #as $o!!espon(in2'0 iss&e(.;1 $han!o4'es"i!t&a''a#'i4a!0

Not#ithstan(in2 the #!it o inB&n$tion, the p!ope!ties o E:&ita4'e p!e"io&s'0 'e"ie( &pon #e!e so'( in a p&4'i$ a&$tion on J&'0 %, )<<1. Respon(ents #e!e the hi2hest 4i((e!s an( $e!ti i$ates o sa'e #e!e iss&e( to the3.;* $han!o4'es"i!t&a''a#'i4a!0 On A&2&st %<, )<<1, E:&ita4'e 3o"e( to ann&' the J&'0 %, )<<1 a&$tion sa'e an( to $ite the she!i s #ho $on(&$te( the sa'e in $onte3pt o! p!o$ee(in2 #ith the a&$tion (espite the inB&n$tion o!(e! o the CA.;> $han!o4'es"i!t&a''a#'i4a!0 On O$to4e! )@, )<<*, the CA (is3isse( the petition o! certiorari .;. It o&n( E:&ita4'e 2&i't0 o o!&3 shoppin2 4e$a&se the 4an6 i'e( its petition o! certiorari in the CA se"e!a' ho&!s 4e o!e #ith(!a#in2 its petition o! !e'ie in the RTC.;@ /o!eo"e!, E:&ita4'e ai'e( to (is$'ose, 4oth in the state3ent o 3ate!ia' (ates an( $e!ti i$ate o non, o!&3 shoppin2 8atta$he( to its petition o! certiorari in the CA9, that it ha( a pen(in2 petition o! !e'ie in the RTC.;+ $han!o4'es"i!t&a''a#'i4a!0 E:&ita4'e 3o"e( o! !e$onsi(e!ation1< 4&t it #as (enie(.1% Th&s, this petition. E:&ita4'e asse!ts that it #as not 2&i't0 o o!&3 shoppin2 4e$a&se the petition o! !e'ie #as #ith(!a#n on the same da) the petition o! certiorari #as i'e(.1) It 'i6e#ise a"e!s that its petition o! certiorari #as 3e!ito!io&s 4e$a&se the RTC $o33itte( 2!a"e a4&se o (is$!etion in iss&in2 the /a!$h )1, )<<1 o3ni4&s o!(e! #hi$h #as 4ase( on an e!!oneo&s ass&3ption. The /a!$h %, )<<1 o!(e! (en0in2 its noti$e o appea' o! non pa03ent o appea' ees #as e!!oneo&s 4e$a&se it ha( in a$t pai( the !e:&i!e( ees.1; Th&s, the RTC, 40 iss&in2 its /a!$h )1, )<<1 o3ni4&s o!(e!, e e$ti"e'0 p!e"ente( E:&ita4'e !o3 appea'in2 the patent'0 #!on2 Fe4!&a!0 *, )<<1 (e$ision.11 $han!o4'es"i!t&a''a#'i4a!0 This petition is 3e!ito!io&s. EHu*+ab0e 8a/ No+ Gu*0+y O4 Foru1 /,o..*'6 Fo!&3 shoppin2 eDists #hen t#o o! 3o!e a$tions in"o'"in2 the sa3e t!ansa$tions, essentia' a$ts an( $i!$&3stan$es a!e i'e( an( those a$tions !aise i(enti$a' iss&es, s&4Be$t 3atte! an( $a&ses o a$tion.1* The test is #hethe!, in t#o o! 3o!e pen(in2 $ases, the!e is i(entit0 o pa!ties, !i2hts o! $a&ses o a$tions an( !e'ie s. 1> $han!o4'es"i!t&a''a#'i4a!0 E:&ita4'eKs petition o! !e'ie in the RTC an( its petition o! certiorari in the CA (i( not ha"e i(enti$a' $a&ses o a$tion. The petition o! !e'ie !o3 the (enia' o its noti$e o appea' #as 4ase( on the RTCKs B&(23ent o! ina' o!(e! p!e"entin2 it !o3 ta6in2 an appea' 40 N !a&(, a$$i(ent, 3ista6e o! eD$&sa4'e ne2'i2en$e.N1. On the othe! han(, its petition o! certiorari in the CA, a spe$ia' $i"i' a$tion, so&2ht to $o!!e$t the 2!a"e a4&se o (is$!etion a3o&ntin2 to 'a$6 o B&!is(i$tion $o33itte( 40 the RTC.1@ $han!o4'es"i!t&a''a#'i4a!0 In a petition o! !e'ie , the B&(23ent o! ina' o!(e! is !en(e!e( 40 a $o&!t #ith $o3petent B&!is(i$tion. In a petition o! certiorari , the o!(e! is !en(e!e( 40 a $o&!t #itho&t o! in eD$ess o its B&!is(i$tion. /o!eo"e!, E:&ita4'e s&4stantia''0 $o3p'ie( #ith the !&'e on non, o!&3 shoppin2 #hen it 3o"e( to #ith(!a# its petition o! !e'ie in the RTC on the sa3e (a0 8in a$t B&st o&! ho&!s an( o!t0 3in&tes a te!9 it i'e( the petition o! certiorari in the CA. E"en i E:&ita4'e ai'e( to (is$'ose that it ha( a pen(in2 petition o! !e'ie in the RTC, it !e$ti ie( #hat #as (o&4t'ess'0 a $a!e'ess o"e!si2ht 40 #ith(!a#in2 the petition o! !e'ie B&st a e# ho&!s a te! it i'e( its petition o! certiorari in the CA Q a $'ea! in(i$ation that it ha( no intention o 3aintainin2 the t#o a$tions at the sa3e ti3e. ",e "r*a0 Cour+ Co11*++e- Gra5e bu/e o4 D*/3re+*o' $' $//u*'6 $+/ ;ar3, 1, 2004 a'- ;ar3, 24, 2004 Or-er/ Se$tion %, R&'e >* o the R&'es o Co&!t p!o"i(es:$!a:na( Se$tion %. Petition for Certiorari . Ahen a'y +r*bu'a0, boar- or o44*3er e2er3*/*'6 Eu-*3*a0 or Hua/*9Eu-*3*a0 4u'3+*o' ,a/ a3+e- (*+,ou+ or *' e23e// o4 *+/ or ,*/ Eur*/-*3+*o', or (*+, 6ra5e abu/e o4 -*/3re+*o' a1ou'+*'6 +o 0a37 or e23e// o4 Eur*/-*3+*o', an( +,ere */ 'o a..ea0, 'or a'y .0a*', /.ee-y or a-eHua+e re1e-y *' +,e or-*'ary 3our/e o4 0a(, a pe!son a22!ie"e( the!e40 3a0 i'e a "e!i ie( petition in the p!ope! $o&!t, a''e2in2 the a$ts #ith $e!taint0 an( p!a0in2 that B&(23ent 4e !en(e!e( ann&''in2 o! 3o(i 0in2 the p!o$ee(in2s o s&$h t!i4&na', 4oa!( o! o i$e!, an( 2!antin2 s&$h in$i(enta' !e'ie s as 'a# an( B&sti$e 3a0 !e:&i!e.

The petition sha'' 4e a$$o3panie( 40 a $e!ti ie( t!&e $op0 o the B&(23ent, o!(e! o! !eso'&tion s&4Be$t the!eo , $opies o a'' p'ea(in2s an( (o$&3ents !e'e"ant an( pe!tinent the!eto, an( a s#o!n $e!ti i$ate o non, o!&3 shoppin2 as p!o"i(e( in the thi!( pa!a2!aph o Se$tion ;, R&'e 1>. The!e a!e t#o s&4stantia' !e:&i!e3ents in a petition o! certiorari . These a!e:$!a:na( %. that the t!i4&na', 4oa!( o! o i$e! eDe!$isin2 B&(i$ia' o! :&asi,B&(i$ia' &n$tions a$te( #itho&t o! in eD$ess o his o! its B&!is(i$tion o! #ith 2!a"e a4&se o (is$!etion a3o&ntin2 to 'a$6 o! eD$ess o B&!is(i$tionC an( ). that the!e is no appea' o! an0 p'ain, spee(0 an( a(e:&ate !e3e(0 in the o!(ina!0 $o&!se o 'a#. Fo! a petition o! certiorari p!e3ise( on 2!a"e a4&se o (is$!etion to p!ospe!, petitione! 3&st sho# that the p&4'i$ !espon(ent patent'0 an( 2!oss'0 a4&se( his (is$!etion an( that a4&se a3o&nte( to an e"asion o positi"e (&t0 o! a "i!t&a' !e &sa' to pe! o!3 a (&t0 enBoine( 40 'a# o! to a$t at a'' in $onte3p'ation o 'a#, as #he!e the po#e! #as eDe!$ise( in an a!4it!a!0 an( (espoti$ 3anne! 40 !eason o passion o! hosti'it0.1+ $han!o4'es"i!t&a''a#'i4a!0 The /a!$h %, )<<1 o!(e! (enie( (&e $o&!se to the noti$es o appea' o 4oth E:&ita4'e an( Respondents. Ho#e"e!, it (e$'a!e( that the Fe4!&a!0 *, )<<1 (e$ision #as 4*'a0 a'- e2e3u+ory o'0y (*+, re/.e3+ +o EHu*+ab0e.*< As eDpe$te(, the /a!$h )1, )<<1 o3ni4&s o!(e! (enie( E:&ita4'eKs 3otion o! !e$onsi(e!ation an( 2!ante( !espon(entsK 3otion o! the iss&an$e o a #!it o eDe$&tion.*% $han!o4'es"i!t&a''a#'i4a!0 The /a!$h %, )<<1 an( /a!$h )1, )<<1 o!(e!s o the RTC #e!e o4"io&s'0 inten(e( to p!e"ent E:&ita4'e, et a'. !o3 appea'in2 the Fe4!&a!0 *, )<<1 (e$ision. Not on'0 that. The eDe$&tion o the (e$ision #as &n(e!ta6en #ith in(e$ent haste, e e$ti"e'0 o4"iatin2 o! (e eatin2 E:&ita4'eKs !i2ht to a"ai' o possi4'e 'e2a' !e3e(ies. No 3atte! ho# #e 'oo6 at it, the RTC $o33itte( 2!a"e a4&se o (is$!etion in !en(e!in2 those o!(e!s. Aith !e2a!( to #hethe! E:&ita4'e ha( a p'ain, spee(0 an( a(e:&ate !e3e(0 in the o!(ina!0 $o&!se o 'a#, #e ho'( that the!e #as none. The RTC (enie( (&e $o&!se to its noti$e o appea' in the /a!$h %, )<<1 o!(e!. It a i!3e( that (enia' in the /a!$h )1, )<<1 o3ni4&s o!(e!. Hen$e, the!e #as no #a0 E:&ita4'e $o&'( ha"e possi4'0 appea'e( the Fe4!&a!0 *, )<<1 (e$ision.*) $han!o4'es"i!t&a''a#'i4a!0 A'tho&2h E:&ita4'e i'e( a petition o! !e'ie !o3 the /a!$h )1, )<<1 o!(e!, that petition #as not a p'ain, spee(0 an( a(e:&ate !e3e(0 in the o!(ina!0 $o&!se o 'a#.*; A petition o! !e'ie &n(e! R&'e ;@ is an e:&ita4'e !e3e(0 a''o#e( on'0 in eD$eptiona' $i!$&3stan$es o! #he!e the!e is no othe! a"ai'a4'e o! a(e:&ate !e3e(0.*1 $!a Th&s, #e 2!ant E:&ita4'eKs petition o! certiorari an( $onse:&ent'0 2i"e (&e $o&!se to its appea'. EHu*+ab0e Ra*/e- Pure <ue/+*o'/ o4 %a( *' $+/ Pe+*+*o' For Re5*e( The B&!is(i$tion o this Co&!t in R&'e 1* petitions is 'i3ite( to :&estions o 'a#. ** The!e is a :&estion o 'a# N#hen the (o&4t o! $ont!o"e!s0 $on$e!ns the $o!!e$t app'i$ation o 'a# o! B&!isp!&(en$e to a $e!tain set o a$tsC o! #hen the iss&e (oes not $a'' o! the p!o4ati"e "a'&e o the e"i(en$e p!esente(, the t!&th o! a'sehoo( o a$ts 4ein2 a(3itte(.N*> E:&ita4'e (oes not assai' the a$t&a' in(in2s o the t!ia' $o&!t. Its a!2&3ents essentia''0 o$&s on the n&''it0 o the RTCKs Fe4!&a!0 *, )<<1 (e$ision. E:&ita4'e points o&t that that (e$ision #as patent'0 e!!oneo&s, /.e3*a00y +,e e2orb*+a'+ a(ar- o4 -a1a6e/, as it #as in$onsistent #ith eDistin2 'a# an( B&!isp!&(en$e.*. ",e Pro1*//ory No+e/ 8ere >a0*The RTC &phe'( the "a'i(it0 o the p!o3isso!0 notes (espite !espon(entsK asse!tion that those (o$&3ents #e!e $ont!a$ts o a(hesion. A $ont!a$t o a(hesion is a $ont!a$t #he!e40 a'3ost a'' o its p!o"isions a!e (!a te( 40 one pa!t0.*@ The pa!ti$ipation o the othe! pa!t0 is 'i3ite( to a iDin2 his si2nat&!e o! his Na(hesionN to the $ont!a$t. *+ Fo! this !eason, $ont!a$ts o a(hesion a!e st!i$t'0 $onst!&e( a2ainst the pa!t0 #ho (!a te( it.>< $han!o4'es"i!t&a''a#'i4a!0

It is e!!oneo&s, ho#e"e!, to $on$'&(e that $ont!a$ts o a(hesion a!e in"a'i( per se. The0 a!e, on the $ont!a!0, as 4in(in2 as o!(ina!0 $ont!a$ts. A pa!t0 is in !ea'it0 !ee to a$$ept o! !eBe$t it. A $ont!a$t o a(hesion 4e$o3es "oi( on'0 #hen the (o3inant pa!t0 ta6es a("anta2e o the #ea6ness o the othe! pa!t0, $o3p'ete'0 (ep!i"in2 the 'atte! o the oppo!t&nit0 to 4a!2ain on e:&a' ootin2.>% $!a That #as not the $ase he!e. As the t!ia' $o&!t note(, i the te!3s an( $on(itions o e!e( 40 E:&ita4'e ha( 4een t!&'0 p!eB&(i$ia' to !espon(ents, the0 #o&'( ha"e #a'6e( o&t an( ne2otiate( #ith anothe! 4an6 at the i!st a"ai'a4'e instan$e. 5&t the0 (i( not. Instea(, the0 $ontin&o&s'0 a"ai'e( o E:&ita4'eKs $!e(it a$i'ities o! i"e 'on2 0ea!s. Ahi'e the RTC $ate2o!i$a''0 o&n( that !espon(ents ha( o&tstan(in2 (o''a!, an( peso,(eno3inate( 'oans #ith E:&ita4'e, it, ho#e"e!, ai'e( to as$e!tain the tota' a3o&nt (&e 8p!in$ipa', inte!est an( pena'ties, i an09 as o J&'0 +, )<<%. The t!ia' $o&!t (i( not eDp'ain ho# it a!!i"e( at the a3o&nts o USP))@,)<< an( P%,<<<,<<<.>) In etro anila 2ransit Corporation v. D. . Consun'i,>; #e !eite!ate( that this Co&!t is not a t!ie! o a$ts an( it sha'' pass &pon the3 on'0 o! $o3pe''in2 !easons #hi$h &n o!t&nate'0 a!e not p!esent in this $ase.>1 Hen$e, #e o!(e!e( the pa!tia' !e3an( o the $ase o! the so'e p&!pose o (ete!3inin2 the a3o&nt o a$t&a' (a3a2es.>* E/3a0a+*o' C0au/e >*o0a+e- ",e Pr*'3*.0e O4 ;u+ua0*+y O4 Co'+ra3+/ Es$a'ation $'a&ses a!e not "oi( per se. Ho#e"e!, one N#hi$h 2!ants the $!e(ito! an &n4!i('e( !i2ht to a(B&st the inte!est in(epen(ent'0 an( &p#a!('0, $o3p'ete'0 (ep!i"in2 the (e4to! o the !i2ht to assent to an i3po!tant 3o(i i$ation in the a2!ee3entN is "oi(. C'a&ses o that nat&!e "io'ate the p!in$ip'e o 3&t&a'it0 o $ont!a$ts. >> A!ti$'e %;<@>. o the Ci"i' Co(e ho'(s that a $ont!a$t 3&st 4in( 4oth $ont!a$tin2 pa!tiesC its "a'i(it0 o! $o3p'ian$e $annot 4e 'e t to the #i'' o one o the3.>@ $han!o4'es"i!t&a''a#'i4a!0 Fo! this !eason, #e ha"e $onsistent'0 he'( that a "a'i( es$a'ation $'a&se p!o"i(es: %. that the !ate o inte!est #i'' on'0 4e in$!ease( i the app'i$a4'e 3aDi3&3 !ate o inte!est is in$!ease( 40 'a# o! 40 the /oneta!0 5oa!(C an( ). that the stip&'ate( !ate o inte!est #i'' 4e !e(&$e( i the app'i$a4'e 3aDi3&3 !ate o inte!est is !e(&$e( 40 'a# o! 40 the /oneta!0 5oa!( 8(e,es$a'ation $'a&se9. >+ $han!o4'es"i!t&a''a#'i4a!0 The RTC o&n( that E:&ita4'eKs p!o3isso!0 notes &ni o!3'0 state(= I s&4Be$t p!o3isso!0 note is eDten(e(, the inte!est o! s&4se:&ent eDtensions sha'' 4e at s&$h !ate as sha'' 4e (ete!3ine( 40 the 4an6..< $han!o4'es"i!t&a''a#'i4a!0 E:&ita4'e (i$tate( the inte!est !ates i the te!3 8o! pe!io( o! !epa03ent9 o the 'oan #as eDten(e(. Respon(ents ha( no $hoi$e 4&t to a$$ept the3. This #as a "io'ation o A!ti$'e %;<@ o the Ci"i' Co(e. F&!the!3o!e, the assai'e( es$a'ation $'a&se (i( not $ontain the ne$essa!0 p!o"isions o! "a'i(it0, that is, it neithe! p!o"i(e( that the !ate o inte!est #o&'( 4e in$!ease( on'0 i a''o#e( 40 'a# o! the /oneta!0 5oa!(, no! a''o#e( (e,es$a'ation. Fo! these !easons, the es$a'ation $'a&se #as "oi(. Aith !e2a!( to the p!ope! !ate o inte!est, in +e% 8ampa#uita (uilders v. Philippine +ational (an?.% #e he'( that, 4e$a&se the es$a'ation $'a&se #as ann&''e(, the p!in$ipa' a3o&nt o the 'oan #as s&4Be$t to the o!i2ina' o! stip&'ate( !ate o inte!est. Upon 3at&!it0, the a3o&nt (&e #as s&4Be$t to 'e2a' inte!est at the !ate o %)M pe! ann&3. .) $han!o4'es"i!t&a''a#'i4a!0 Conse:&ent'0, !espon(ents sho&'( pa0 E:&ita4'e the inte!est !ates o %).>>M p.a. o! thei! (o''a!,(eno3inate( 'oans an( )<M p.a. o! thei! peso,(eno3inate( 'oans !o3 Jan&a!0 %<, )<<% to J&'0 +, )<<%. The!ea te!, E:&ita4'e #as entit'e( to 'e2a' inte!est o %)M p.a. on a'' a3o&nts (&e. ",ere 8a/ No E2+raor-*'ary De40a+*o' EDt!ao!(ina!0 in 'ation eDists #hen the!e is an &n&s&a' (e$!ease in the p&!$hasin2 po#e! o $&!!en$0 8that is, 4e0on( the $o33on '&$t&ation in the "a'&e o $&!!en$09 an( s&$h (e$!ease $o&'( not 4e !easona4'0 o!eseen o! #as 3ani est'0 4e0on( the $onte3p'ation o the pa!ties at the ti3e o the o4'i2ation. EDt!ao!(ina!0 (e 'ation, on the othe! han(, in"o'"es an in"e!se sit&ation..; $han!o4'es"i!t&a''a#'i4a!0

A!ti$'e %)*< o the Ci"i' Co(e p!o"i(es:$!a:na( A!ti$'e %)*<. In $ase an eDt!ao!(ina!0 in 'ation o! (e 'ation o the $&!!en$0 stip&'ate( sho&'( inte!"ene, the "a'&e o the $&!!en$0 at the ti3e o the esta4'ish3ent o the o4'i2ation sha'' 4e the 4asis o pa03ent, &n'ess the!e is an a2!ee3ent to the $ont!a!0. Fo! eDt!ao!(ina!0 in 'ation 8o! (e 'ation9 to a e$t an o4'i2ation, the o''o#in2 !e:&isites 3&st 4e p!o"en:$!a:na( %. that the!e #as an o i$ia' (e$'a!ation o eDt!ao!(ina!0 in 'ation o! (e 'ation !o3 the 5an26o Sent!a' n2 Pi'ipinas 85SP9C.1 $han!o4'es"i!t&a''a#'i4a!0 ). that the o4'i2ation #as $ont!a$t&a' in nat&!eC.* an( ;. that the pa!ties eDp!ess'0 a2!ee( to $onsi(e! the e e$ts o the eDt!ao!(ina!0 in 'ation o! (e 'ation..> $han!o4'es"i!t&a''a#'i4a!0 Despite the (e"a'&ation o the peso, the 5SP ne"e! (e$'a!e( a sit&ation o eDt!ao!(ina!0 in 'ation. /o!eo"e!, a'tho&2h the o4'i2ation in this instan$e a!ose o&t o a $ont!a$t, the pa!ties (i( not a2!ee to !e$o2ni7e the e e$ts o eDt!ao!(ina!0 in 'ation 8o! (e 'ation9... The RTC ne"e! 3entione( that the!e #as a s&$h stip&'ation eithe! in the p!o3isso!0 note o! 'oan a2!ee3ent. The!e o!e, !espon(ents sho&'( pa0 thei! (o''a!,(eno3inate( 'oans at the eD$han2e !ate iDe( 40 the 5SP on the (ate o 3at&!it0. .@ ",e (ar- O4 ;ora0 '- E2e1.0ary Da1a6e/ %a37e- Ba/*/ /o!a' (a3a2es a!e in the $ate2o!0 o an a#a!( (esi2ne( to $o3pensate the $'ai3ant o! a$t&a' inB&!0 s& e!e(, not to i3pose a pena't0 to the #!on2(oe!..+ To 4e entit'e( to 3o!a' (a3a2es, a $'ai3ant 3&st p!o"e:$!a:na( %. That he o! she s& e!e( 4es3i!$he( !ep&tation, o! ph0si$a', 3enta' o! ps0$ho'o2i$a' s& e!in2 s&staine( 40 the $'ai3antC ). That the (e en(ant $o33itte( a #!on2 &' a$t o! o3issionC ;. That the #!on2 &' a$t o! o3ission #as the p!oDi3ate $a&se o the (a3a2es the $'ai3ant s&staine(C 1. The $ase is p!e(i$ate( on an0 o the instan$es eDp!esse( o! en"isione( 40 A!ti$'e ))%+@< an( )))<@% . @) $!a Inculpa contractual o! 4!ea$h o $ont!a$t, 3o!a' (a3a2es a!e !e$o"e!a4'e on'0 i the (e en(ant a$te( !a&(&'ent'0 o! in 4a( aith o! in #anton (is!e2a!( o his $ont!a$t&a' o4'i2ations.@; The 4!ea$h 3&st 4e #anton, !e$6'ess, 3a'i$io&s o! in 4a( aith, an( opp!essi"e o! a4&si"e.@1 $!a The RTC o&n( that !espon(ents (i( not pa0 E:&ita4'e the inte!est (&e on Fe4!&a!0 +, )<<% 8o! an0 3onth the!ea te! p!io! to the 3at&!it0 o the 'oan9@* o! the a3o&nt (&e 8p!in$ipa' p'&s inte!est9 (&e on J&'0 +, )<<%.@> Conse:&ent'0, E:&ita4'e app'ie( !espon(entsK (eposits to thei! 'oans &pon 3at&!it0. The !e'ationship 4et#een a 4an6 an( its (eposito! is that o $!e(ito! an( (e4to!. @. Fo! this !eason, a 4an6 has the !i2ht to set,o the (eposits in its han(s o! the pa03ent o a (eposito!Ks in(e4te(ness.@@ $han!o4'es"i!t&a''a#'i4a!0 Respon(ents in(ee( (e a&'te( on thei! o4'i2ation. Fo! this !eason, E:&ita4'e ha( the option to eDe!$ise its 'e2a' !i2ht to set,o o! $o3pensation. Ho#e"e!, the RTC 3ista6en'0 8o!, as it no# appea!s, (e'i4e!ate'09 $on$'&(e( that E:&ita4'e a$te( N !a&(&'ent'0 o! in 4a( aith o! in #anton (is!e2a!(N o its $ont!a$t&a' o4'i2ations (espite the a4sen$e o p!oo . The &n(enia4'e a$t #as that, #hate"e! (a3a2e !espon(ents s&staine( #as .ure0y +,e 3o'/eHue'3e o4 +,e*r 4a*0ure +o .ay +,e*r 0oa'/. The!e #as the!e o!e a4so'&te'0 no 4asis o! the a#a!( o 3o!a' (a3a2es to the3. Neithe! #as the!e !eason to a#a!( eDe3p'a!0 (a3a2es. Sin$e !espon(ents #e!e not entit'e( to 3o!a' (a3a2es, neithe! sho&'( the0 4e a#a!(e( eDe3p'a!0 (a3a2es.@+ An( i !espon(ents #e!e not entit'e( to 3o!a' an( eDe3p'a!0 (a3a2es, neithe! $o&'( the0 4e a#a!(e( atto!ne0Ks ees an( 'iti2ation eDpenses.+< CCORD$NG%A, the petition is he!e40 GR N"ED. The O$to4e! )@, )<<* (e$ision an( Fe4!&a!0 ;, )<<> !eso'&tion o the Co&!t o Appea's in CA,-.R. SP No. @;%%) a!e he!e40 RE>ERSED an( SE" S$DE.

The /a!$h )1, )<<1 o3ni4&s o!(e! o the Re2iona' T!ia' Co&!t, 5!an$h %>, Ce4& Cit0 in Ci"i' Case No. CE5,)>+@; is he!e40 NNU%%ED o! 4ein2 !en(e!e( #ith 2!a"e a4&se o (is$!etion a3o&ntin2 to 'a$6 o! eD$ess o B&!is(i$tion. A'' p!o$ee(in2s &n(e!ta6en p&!s&ant the!eto a!e 'i6e#ise (e$'a!e( n&'' an( "oi(. The /a!$h %, )<<1 o!(e! o the Re2iona' T!ia' Co&!t, 5!an$h %> o Ce4& Cit0 in Ci"i' Case No. CE5,)>+@; is he!e40 SE" S$DE. The appea' o petitione!s E:&ita4'e PCI 5an6, Ai3ee G& an( 5eBan Lione' Apas is the!e o!e 2i"en (&e $o&!se. The Fe4!&a!0 *, )<<1 (e$ision o the Re2iona' T!ia' Co&!t, 5!an$h %> o Ce4& Cit0 in Ci"i' Case No. CE5,)>+@; is a$$o!(in2'0 SE" S$DE. Ne# B&(23ent is he!e40 ente!e(: %. o!(e!in2 !espon(ents N2 She&n2 N2o!, (oin2 4&siness &n(e! the na3e an( st0'e o NKen /a!6etin2,N Ken App'ian$e Di"ision, In$. an( 5enBa3in E. -o to pa0 petitione! E:&ita4'e PCI 5an6 the p!in$ipa' a3o&nt o thei! (o''a!, an( peso,(eno3inate( 'oansC ). o!(e!in2 !espon(ents N2 She&n2 N2o!, (oin2 4&siness &n(e! the na3e an( st0'e o NKen /a!6etin2,N Ken App'ian$e Di"ision, In$. an( 5enBa3in E. -o to pa0 petitione! E:&ita4'e PCI 5an6 inte!est at:$!a:na( a9 %).>>M p.a. #ith !espe$t to thei! (o''a!,(eno3inate( 'oans !o3 Jan&a!0 %<, )<<% to J&'0 +, )<<%C 49 )<M p.a. #ith !espe$t to thei! peso,(eno3inate( 'oans !o3 Jan&a!0 %<, )<<% to J&'0 +, )<<%C+% $!a $9 p&!s&ant to o&! !&'in2 in "astern 8hippin# Lines v. Court of Appeals,+) the tota' a3o&nt (&e on J&'0 +, )<<% sha'' ea!n 'e2a' inte!est at %)M p.a. !o3 the ti3e petitione! E:&ita4'e PCI 5an6 (e3an(e( pa03ent, #hethe! B&(i$ia''0 o! eDt!a,B&(i$ia''0C an( (9 a te! this De$ision 4e$o3es ina' an( eDe$&to!0, the app'i$a4'e !ate sha'' 4e %)M p.a. &nti' &'' satis a$tionC ;. a'' othe! $'ai3s an( $o&nte!$'ai3s a!e (is3isse(. As a sta!tin2 point, the Re2iona' T!ia' Co&!t, 5!an$h %> o Ce4& Cit0 sha'' $o3p&te the eDa$t a3o&nts (&e on the !espe$ti"e (o''a!,(eno3inate( an( peso,(eno3inate( 'oans, as o J&'0 +, )<<%, o !espon(ents N2 She&n2 N2o!, (oin2 4&siness &n(e! the na3e an( st0'e o NKen /a!6etin2,N Ken App'ian$e Di"ision an( 5enBa3in E. -o. SO ORDERED. G.R. No. %94B=B= ?u0y 24, 1942

G$% ? RDEN$%, Plaintiff-Appellant, "s. #EF"$ SO% S &alias #EP"$ SO% S, ?EP"$ SO% S), Defendant-Appellee. ;OR N, J.C $han!o4'es "i!t&a' 'a# 'i4!a!0 This is an a$tion o! o!e$'os&!e o 3o!t2a2e. The on'0 :&estion !aise( in this appea' is: Is (e en(ant,appe''ee 4o&n( to pa0 the stip&'ate( inte!est on'0 &p to the (ate o 3at&!it0 as iDe( in the p!o3isso!0 note, o! &p to the (ate pa03ent is e e$te(L This :&estion is, in o&! opinion $ont!o''e( 40 the eDp!ess stip&'ation o the pa!ties.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Pa!a2!aph 1 o the 3o!t2a2e (ee( !e$ites: F&e en $onsi(e!a$ion a (i$ha s&3a a&n po! pa2a! (e DOS /IL CUATROCIENTOS PESOS 8P),1<<<.<<9, 3one(a i'ipina, :&e e' S!. Hepti So'as se $o3p!o3ete a pa2a! a' S!. Ja!(eni' en o antes (e' (ia t!eintai&no 8;%9 (e 3a!7o (e 3i' no"e$ientos t!eintai$&a!to 8%+;19, $on 'os inte!eses (e (i$ha s&3a a' tipo (e (o$e po! $iento 8%)M9 an&a' a pa!ti! (es(e e$ha hasta e' (ia (e s& "en$i3iento o sea t!eintai&no 8;%9 (e 3a!7o (e 3i' no"e$ientos t!eintai$&at!o 8%+;19, po! 'a p!esente, e' S!. Hepti So'as $e(e 0 t!aspasa, po! "ia (e p!i3e!a hipote$a, a a"o! (e' S!. Ja!(eni', s&s he!e(e!os 0 $a&saha4ientes, 'a pa!$e'a (e te!!eno (es$!ita en e' pa!!a o p!i3e!o 8%.9 (e esta es$!it&!a. De en(ant,appe''ee has, the!e o!e, $'ea!'0 a2!ee( to pa0 inte!est on'0 &p to the (ate o 3at&!it0, o! &nti' /a!$h ;%, %+;1. As the $ont!a$t is si'ent as to #hethe! a te! that (ate, in the e"ent o non,pa03ent, the (e4to! #o&'( $ontin&e to pa0 inte!est, #e $annot

in 'a#, in(&'2e in an0 p!es&3ption as to s&$h inte!estC othe!#ise, #e #o&'( 4e i3posin2 &pon the (e4to! an o4'i2ation that the pa!ties ha"e not $hosen to a2!ee &pon. A!ti$'e %.** o the Ci"i' Co(e p!o"i(es that Ninte!est sha'' 4e (&e on'0 #hen it has 4een e7pressl) stipulated.N 8E3phasis s&pp'ie(.9 $han!o4'es "i!t&a' 'a# 'i4!a!0 A #!itin2 3&st 4e inte!p!ete( a$$o!(in2 to the 'e2a' 3eanin2 o its 'an2&a2e 8se$tion )@>, A$t No. %+<, no# se$tion *@, R&'e %);9, an( on'0 #hen the #o!(in2 o the #!itten inst!&3ent appea!s to 4e $ont!a!0 to the e"i(ent intention o the pa!ties that s&$h intention 3&st p!e"ai'. 8A!ti$'e %)@%, Ci"i' Co(e.9 The!e is nothin2 in the 3o!t2a2e (ee( to sho# that the te!3s e3p'o0e( 40 the pa!ties the!eto a!e at #a! #ith thei! e"i(ent intent. On the $ont!a!0 the a$t o the 3o!t2a2e o 2!antin2 to the 3o!t2a2o! on the sa3e (ate o eDe$&tion o the (ee( o 3o!t2a2e, an eDtension o one 0ea! !o3 the (ate o 3at&!it0 #ithin #hi$h to 3a6e pa03ent, #itho&t 3a6in2 an0 3ention o an0 inte!est #hi$h the 3o!t2a2o! sho&'( pa0 (&!in2 the a((itiona' pe!io( 8see EDhi4it 5 atta$he( to the $o3p'aint9, in(i$ates that the t!&e intention o the pa!ties #as that no inte!est sho&'( 4e pai( (&!in2 the pe!io( o 2!a$e. Ahat !eason the pa!ties 3a0 ha"e the!e o!, #e nee( not he!e see6 to eDp'o!e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Neithe! has eithe! o the pa!ties sho#n that, 40 3&t&a' 3ista6e, the (ee( o 3o!t2a2e ai's to eDp!ess thei! a2!ee3ent, o! i s&$h 3ista6e eDiste(, p'ainti #o&'( ha"e &n(o&4te('0 a((&$e( e"i(en$e to esta4'ish it an( as6e( that the (ee( 4e !e o!3e( a$$o!(in2'0, &n(e! the pa!$e',e"i(en$e !&'e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ae ho'( the!e o!e, that as the $ont!a$t is $'ea! an( &n3ista6a4'e an( the te!3s e3p'o0e( the!ein ha"e not 4een sho#n to 4e'ie o! othe!#ise ai' to eDp!ess the t!&e intention o the pa!ties an( that the (ee( has not 4een assai'e( on the 2!o&n( o 3&t&a' 3ista6e #hi$h #o&'( !e:&i!e its !e o!3ation, sa3e sho&'( 4e 2i"en its &'' o!$e an( e e$t. Ahen a pa!t0 s&es on a #!itten $ont!a$t an( no atte3pt is 3a(e to sho# an0 "i$e the!ein, he $annot 4e a''o#e( to 'a0 an0 $'ai3 3o!e than #hat its $'ea! stip&'ations a$$o!(. His o3ission, to #hi$h the 'a# atta$hes a (e inite #a!nin2 as an in the instant $ase, $annot 40 the $o&!ts 4e a!4it!a!i'0 s&pp'ie( 40 #hat thei! o#n notions o B&sti$e o! e:&it0 3a0 (i$tate.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 P'ainti is, the!e o!e, entit'e( on'0 to the stip&'ate( inte!est o %) pe! $ent on the 'oan o P), 1<< !o3 No"e34e! @, %+;) to /a!$h ;%, %+;1. An( it 4ein2 a a$t that eDt!a B&(i$ia' (e3an(s ha"e 4een 3a(e #hi$h #e 3a0 ass&3e to ha"e 4een so 3a(e on the eDpi!ation o the 0ea! o 2!a$e, he sha'' 4e entit'e( to 'e2a' inte!est &pon the p!in$ipa' an( the a$$!&e( inte!est !o3 Ap!i' %, %+;*, &nti' &'' pa03ent.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Th&s 3o(i ie( B&(23ent is a i!3e(, #ith $osts a2ainst appe''ant.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 @ulo, C.J., $&aeta and (ocobo, JJ., $on$&!.

Se.ara+e O.*'*o'/ $han!o4'es "i!t&a' 'a# 'i4!a!0 P R S, J., (issentin2: $han!o4'es "i!t&a' 'a# 'i4!a!0 Un(e! the a$ts state( in the (e$ision o the 3aBo!it0, I $o3e to the $on$'&sion that inte!est at the !ate o %) pe! $ent pe! ann&3 sho&'( 4e pai( &p to the (ate o pa03ent o the #ho'e in(e4te(ness is 3a(e. Pa03ent o s&$h inte!est is eDp!ess'0 stip&'ate(. T!&e, it is state( in the 3o!t2a2e $ont!a$t that inte!est #as to 4e pai( &p to /a!$h ;%, %+;1, 4&t this (ate #as inse!te( 3e!e'0 4e$a&se it #as the (ate o 3at&!it0. The eDtension note is si'ent as !e2a!(s inte!est, 4&t its pa03ent is $'ea!'0 i3p'ie( !o3 the nat&!e o the t!ansa$tion #hi$h is on'0 a !ene#a' o the o4'i2ation. In 30 opinion, the !&'in2 o the 3aBo!it0 is ano3a'o&s an( at #a! #ith $o33on p!a$ti$e an( e"e!0(a0 4&siness &sa2e. G.R. No. %95909: O3+ober 11, 19=5 P C$" F. REFOR;$N a'- #E$RS OF FR NC$SCO REFOR;$N , Petitioners, "s. "#E #ONOR B%E > %ER$ NO P. "O;O%, ?R., a/ ?u-6e o4 +,e Cour+ o4 F*r/+ $'/+a'3e, Bra'3, I$, CEBU C$"A, S#E%% REF$N$NG CO;P NA &P#$%S.), $NC., a'- ;$C# E%, $NCORPOR "ED,Respondents.

CUE> S, J.: #o( 1u3,, by (ay o4 0e6a0 *'+ere/+, /,ou0- a Eu-61e'+ -eb+or .ay +,e Eu-61e'+ 3re-*+or9 */ +,e *//ue ra*/e- by +,e REFOR;$N S &,ere*' .e+*+*o'er/) *' +,*/ Pe+*+*o' 4or Re5*e( o' 3er+*orar* o4 +,e Re/o0u+*o' o4 +,e #o'. re/.o'-e'+ ?u-6e >a0er*a'o P. "o1o0, ?r. o4 +,e +,e' Cour+ o4 F*r/+ $'/+a'3e o4 Cebu9Bra'3, I$, *//ue- *' C*5*0 Ca/e No. R9112B9, a' a3+*o' 4or Re3o5ery o4 Da1a6e/ 4or *'Eury +o Per/o' a'- %o// o4 Pro.er+y.3,a'rob0e/5*r+ua0a(0*brary 3,a'rob0e/ 5*r+ua0 0a( 0*brary ",e -*/.o/*+*5e .or+*o' o4 +,e a//a*0e- Re/o0u+*o' rea-/ a/ 4o00o(/9 $' 0*6,+ &/*3) o4 +,e 4ore6o*'6, +,e 3o'/*-ere- 5*e( ,ere +,a+ by 0e6a0 *'+ere/+ */ 1ea'+ /*2 &:J) .er3e'+ a/ .ro5*-e- 4or by r+*30e 2209 o4 +,e C*5*0 Co-e. %e+ a (r*+ o4 e2e3u+*o' be *//ue-.3,a'rob0e/5*r+ua0a(0*brary 3,a'rob0e/ 5*r+ua0 0a( 0*brary SO ORDERED. 1 3,a'rob0e/ 5*r+ua0 0a( 0*brary Petitione!sK 3otion o! the !e$onsi(e!ation o the :&estione( Reso'&tion ha"in2 4een (enie(, the0 no# $o3e 4e o!e Us th!o&2h the instant petition p!a0in2 o! the settin2 asi(e o the sai( Reso'&tion an( o! a (e$'a!ation that the B&(23ent in thei! a"o! sho&'( 4ea! 'e2a' inte!est at the !ate o t#e'"e 8%)M9 pe!$ent pe! ann&3 p&!s&ant to Cent!a' 5an6 Ci!$&'a! No. 1%> (ate( J&'0 )+, %+.1.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 He!e&n(e! a!e the pe!tinent ante$e(ents: $han!o4'es "i!t&a' 'a# 'i4!a!0 On J&ne ., %+.), B&(23ent #as !en(e!e( 40 the Co&!t o Fi!st instan$e o Ce4& in Ci"i' Case No. R,%%).+, 2 the (ispositi"e po!tion o #hi$h !ea(s, AHEREFORE, B&(23ent is he!e40 !en(e!e( in a"o! o the p'ainti s an( thi!( pa!t0 (e en(ants an( a2ainst the (e en(ants an( thi!( pa!t0 p'ainti s as o''o#s: O!(e!in2 (e en(ants an( thi!( pa!t0 p'ainti s She'' an( /i$hae', In$o!po!ate( to pa0 Boint'0 an( se"e!a''0 the o''o#in2 pe!sons: 8a9 ...$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 829 P'ainti s Pa$ita F. Re o!3ina an( F!an$is$o Re o!3ina the s&3 o P%;%,<@1.<< #hi$h is the "a'&e o the 4oat F 5 Pa$ita I'' to2ethe! #ith its a$$esso!ies, ishin2 2ea! an( e:&ip3ent 3in&s P@<,<<<.<< #hi$h is the "a'&e o the ins&!an$e !e$o"e!e( an( the a3o&nt o P%<,<<<.<< a 3onth as the esti3ate( 3onth'0 'oss s& e!e( 40 the3 as a !es&'t o the i!e o /a0 >, %+>+ &p to the ti3e the0 a!e a$t&a''0 pai( o! a'!ea(0 the tota' s&3 o P;.<,<<<.<< as o J&ne 1, %+.) %ith le#al interest !o3 the i'in2 o the $o3p'aint &nti' pai( an( to pa0 atto!ne0Ks ees o P*,<<<.<< #ith $osts a2ainst (e en(ants an( thi!( pa!t0 p'ainti s. On appea' to the then Co&!t o Appea's, the t!ia' $o&!tKs B&(23ent #as 3o(i ie( to !ea(s as o''o#s, AHEREFORE. the B&(23ent appea'e( !o3 is 3o(i ie( s&$h that (e en(ants,appe''ants She'' Re inin2 Co. 8Phi's.9, In$. an( /i$hae', In$o!po!ate( a!e he!e40 o!(e!e( to pa0 ... The t#o 8)9 (e en(ants, appe''ants a!e a'so (i!e$te( to pa0 P%<<,<<<.<< #ith 'e2a' inte!ests !o3 the i'in2 o the $o3p'aint &nti' pai( as $o3pensato!0 an( 3o!a' (a3a2es an( P1%,<<<.<< $o3pensation o! the "a'&e o the 'ost 4oat #ith 'e2a' inte!est !o3 the i'in2 o the $o3p'aint &nti' &''0 pai( to Pa$ita F. Re o!3ina an( the hei!s o F!an$is$o Re o!3ina. The 'ia4i'it0 o the t#o (e en(ants o! an the a#a!(s is so'i(a!0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 DDD DDD DDD ED$ept as 3o(i ie( a4o"e, the !est o the B&(23ent appea'e( !o3 is a i!3e(. The (e en(ants,appe''ants sha'' pa0 $osts in a"o! o the p'ainti s. Appe''ants She'' an( /i$hae' an( thi!( pa!t0 (e en(ant Anita L. A4e''anosa sha'' sho&'(e! thei! !espe$ti"e $osts.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0

SO ORDERED. 3 $han!o4'es "i!t&a' 'a# 'i4!a!0 The sai( (e$ision ha"in2 4e$o3e ina' on O$to4e! )1, %+@<, the $ase #as !e3an(e( to the 'o#e! $o&!t o! eDe$&tion an( this is #he!e the $ont!o"e!s0 sta!te(. In the $o3p&tation o the N'e2a' inte!estN (e$!ee( in the B&(23ent so&2ht to 4e eDe$&te(, petitione!s $'ai3 that the N'e2a' inte!estN sho&'( 4e at the !ate o t#e'"e 8%)M9 pe!$ent pe! ann&3, in"o6in2 in s&ppo!t o thei! a o!esai( s&43ission, Cent!a' 5an6 o the Phi'ippines Ci!$&'a! No. 1%>. Upon the othe! han(, p!i"ate !espon(ents insist that sai( 'e2a' inte!est sho&'( 4e at the !ate o siD 8>M9 pe!$ent pe! ann&3 on'0, p&!s&ant to an( 40 a&tho!it0 o A!ti$'e ))<+ o the Ne# Ci"i' Co(e in !e'ation to A!ti$'es ))%< an( ))%% the!eo .$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 In s&ppo!t o thei! stan(, petitione!s $onten( that Cent!a' 5an6 Ci!$&'a! No. 1%> #hi$h p!o"i(es , 50 "i!t&e o the a&tho!it0 2!ante( to it &n(e! Se$tion % o A$t )>**, as a3en(e(, othe!#ise 6no#n as the NUs&!0 La#N the /oneta!0 5oa!( in its Reso'&tion No. %>)) (ate( J&'0 )+, %+.1, has p!es$!i4e( that the !ate o inte!est o! the loan or forbearance of an0 3one0, 2oo(s, o! $!e(its an( the !ate a''o#e( in 'ud#ments, in the a4sen$e o eDp!ess $ont!a$t as to s&$h !ate o inte!est, sha'' 4e t#e'"e 8%)M9 pe! $ent pe! ann&3. This Ci!$&'a! sha'' ta6e e e$t i33e(iate'0. 8Ita'i$s s&pp'ie(9 in$'&(es the B&(23ent so&2ht to 4e eDe$&te( in this $ase, 4e$a&se it is $o"e!e( 40 the ph!ase )n( the !ate a''o#e( in B&(23ents in the a4sen$e o eDp!ess $ont!a$t as to s&$h !ate o inte!est ... N in the a o!e:&ote( $i!$&'a!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The petition is (e"oi( o 3e!it. Conse:&ent'0, its (is3issa' is in o!(e!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Cent!a' 5an6 Ci!$&'a! No. 1%> #hi$h too6 e e$t on J&'0 )+, %+.1 #as iss&e( an( p!o3&'2ate( 40 the /oneta!0 5oa!( p&!s&ant to the a&tho!it0 2!ante( to the Cent!a' 5an6 40 P.D. No. %%>, #hi$h a3en(e( A$t No. )>**, othe!#ise 6no#n as the Us&!0 La#. The a3en(3ent !o3 #hi$h sai( a&tho!it0 e3anate( !ea(s as o''o#s, Se$tion %,a. The /oneta!0 5oa!( is he!e40 a&tho!i7e( to p!es$!i4e the 3aDi3&3 !ate o! !ates o inte!est o! the loan or rene%al thereof or the forbearance of an) mone), #oods or credits, an( to $han2e s&$h !ate o! !ates #hene"e! #a!!ante( 40 p!e"ai'in2 e$ono3i$ an( so$ia' $on(itions: P!o"i(e(, That s&$h $han2es sha'' not 4e 3a(e o tene! than on$e e"e!0 t#e'"e 3onths.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In the eDe!$ise o the a&tho!it0 he!ein 2!ante(, the /oneta!0 5oa!( 3a0 p!es$!i4e hi2he! 3aDi3&3 !ates o! $ons&3e! 'oans o! !ene#a's the!eo as #e'' as s&$h 'oans 3a(e 40 pa#nshops, inan$e $o3panies an( othe! si3i'a! $!e(it instit&tions a'tho&2h the !ates p!es$!i4e( o! these instit&tions nee( not ne$essa!i'0 4e &ni o!3. 8Ita'i$s s&pp'ie(9 A$tin2 p&!s&ant to this 2!ant o a&tho!it0, the /oneta!0 5oa!( in$!ease( the !ate o 'e2a' inte!est !o3 that o siD 8>M9 pe!$ent pe! ann&3 o!i2ina''0 a''o#e( &n(e! Se$tion I o A$t No. )>** to t#e'"e 8%)M9 pe!$ent pe! ann&3.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 It #i'' 4e note( that A$t No. )>** (ea's #ith inte!est on 8%9 'oansC 8)9 o!4ea!an$es o an0 3one0, 2oo(s, o! $!e(itsC an( 8;9 !ate a''o#e( in B&(23ents.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The iss&e no# is,#hat 6in( o B&(23ent is !e e!!e( to &n(e! the sai( 'a#. Petitione!s 3aintain that it $o"e!s a'' 6in(s o 3oneta!0 B&(23ent.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The $ontention is (e"oi( o 3e!it.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The B&(23ents spo6en o an( !e e!!e( to a!e J&(23ents in 'iti2ations in"o'"in2 'oans o! o!4ea!an$e o an0 K3one0, 2oo(s o! $!e(its. An0 othe! 6in( o 3oneta!0 B&(23ent #hi$h has nothin2 to (o #ith, no! in"o'"in2 'oans o! o!4ea!an$e o an0 3one0, 2oo(s o! $!e(its (oes not a'' #ithin the $o"e!a2e o the sai( 'a# o! it is not #ithin the a34it o the a&tho!it0 2!ante( to the Cent!a' 5an6. The /oneta!0 5oa!( 3a0 not t!ea( on o!4i((en 2!o&n(s. It $annot !e#!ite othe! 'a#s. That &n$tion is "este( so'e'0 #ith the 'e2is'ati"e a&tho!it0. It is aDio3ati$ in 'e2a' he!3ene&ti$s that stat&tes sho&'( 4e $onst!&e( as a #ho'e an( not as a se!ies o (is$onne$te( a!ti$'es an( ph!ases. In the a4sen$e o a $'ea! $ont!a!0 intention, #o!(s an( ph!ases in stat&tes sho&'( not 4e inte!p!ete( in iso'ation !o3 one anothe!. 4 A #o!( o! ph!ase in a stat&te is a'#a0s &se( in asso$iation #ith othe! #o!(s o! ph!ases an( its 3eanin2 3a0 th&s 4e 3o(i ie( o! !est!i$te( 40 the 'atte!. 5 $han!o4'es "i!t&a' 'a# 'i4!a!0

Anothe! o!3i(a4'e a!2&3ent a2ainst the tena4i'it0 o petitione!sK stan( a!e the #he!eases o PD No. %%> #hi$h 4!o&2ht a4o&t the 2!ant o a&tho!it0 to the Cent!a' 5an6 an( #hi$h !ea(s th&s, AHEREAS, the inte!est !ate, to2ethe! #ith othe! 3oneta!0 an( $!e(it po'i$0 inst!&3ents, pe! o!3s a "ita' !o'e in 3o4i'i7in2 (o3esti$ sa"in2s an( att!a$tin2 $apita' !eso&!$es into p!e e!!e( a!eas o in"est3entsC AHEREAS, the 3oneta!0 a&tho!ities ha"e !e$o2ni7e( the nee( to a3en( the p!esent Us&!0. La# to a''o# o! 3o!e 'eDi4'e inte!est !ate $ei'in2s that #o&'( 4e 3o!e !esponsi"e to the !e:&i!e3ents o $han2in2 e$ono3i$ $on(itionsC $han!o4'es "i!t&a' 'a# 'i4!a!0 AHEREAS, the a"ai'a4i'it0 o a(e:&ate $apita' !eso&!$es is, a3on2 othe! a$to!s, a (e$isi"e e'e3ent in the a$hie"e3ent o the (e$'a!e( o4Be$ti"e o a$$e'e!atin2 the 2!o#th o the nationa' e$ono30.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Co3in2 to the $ase at 4a!, the (e$ision he!ein so&2ht to 4e eDe$&te( is one !en(e!e( in an A$tion o! Da3a2es o! inB&!0 to pe!sons an( 'oss o p!ope!t0 an( (oes not in"o'"e an0 'oan, 3&$h 'ess o!4ea!an$es o an0 3one0, 2oo(s o! $!e(its. As $o!!e$t'0 a!2&e( 40 the p!i"ate !espon(ents, the 'a# app'i$a4'e to the sai( $ase is A!ti$'e ))<+ o the Ne# Ci"i' Co(e #hi$h !ea(s, A!t. ))<+. I the o4'i2ation $onsists in the pa03ent o a s&3 o 3one0, an( the (e4to! in$&!s in (e'a0, the in(e3nit0 o! (a3a2es, the!e 4ein2 no stip&'ation to the $ont!a!0, sha'' 4e the pa03ent o inte!est a2!ee( &pon, an( in the a4sen$e o stip&'ation, the 'e2a' inte!est #hi$h is siD pe!$ent pe! ann&3. The a4o"e p!o"ision !e3ains &nto&$he( (espite the 2!ant o a&tho!it0 to the Cent!a' 5an6 40 A$t No. )>**, as a3en(e(. To 3a6e Cent!a' 5an6 Ci!$&'a! No. 1%> app'i$a4'e to an0 $ase othe! than those spe$i i$a''0 p!o"i(e( o! 40 the Us&!0 La# #i'' 3a6e the sa3e o (o&4t &' $onstit&tiona'it0 sin$e the /oneta!0 5oa!( #i'' 4e eDe!$isin2 'e2is'ati"e &n$tions #hi$h #as 4e0on( the inten(3ent o P.D. No. %%>.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 IN VIEA OF THE FORE-OIN- CONSIDERATIONS, an( in(in2 the instant petition to 4e #itho&t 3e!it, the sa3e is he!e40 DIS/ISSED #ith $osts a2ainst petitione!s.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 SO ORDERED. Concepcion, Jr., Abad 8antos, elencio-!errera, "scolin, Relova, *utierre&, Jr., De la 1uente, Alampa) and Pata'o, JJ., concur.chanroblesvirtuala%librar) chanrobles virtual la% librar) a?asiar, CJ., %ith separate opinion of Justice Plana.chanroblesvirtuala%librar) chanrobles virtual la% librar) A4uino, J., concurs in the result. $han!o4'es "i!t&a' 'a# 'i4!a!0

Se.ara+e O.*'*o'/

P% N , J., $on$&!!in2 an( (issentin2: $han!o4'es "i!t&a' 'a# 'i4!a!0 %. Cent!a' 5an6 Ci!$&'a! 1%> (ate( J&'0 )+, %+.1 in$!ease( the !ate o inte!est a''o#e( in B&(23ents !o3 >M to %)M pe! ann&3. To 30 a6no#'e(2e,4e o!e the instant $ase, tha "a'i(it0 o C5 Ci!$&'a! 1%> ha( not 4een $ha''en2e( in this Co&!t. In Vi'o!ia "s. Co&!t o Appea's, %); SCRA )*+, it #as ass&3e( that the Cent!a' 5an6 # as ''e2a''0 a&tho!i7e( to iss&e the sai( Ci!$&'a!. The on'0 iss&e the!e !aise(#as #hethe! the in$!ease in inte!est !ate $o&'( 4e 2i"en !et!ospe$ti"e ope!ation.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0

). % (o not 4e'ie"e the Cent!a' 5an6 a&tho!it0 he!e in :&estion is p!e3ise( on Se$tion %,a o A$t No. )>** 8Us&!0 La#9, as inse!te( 40 P!esi(entia' De$!ee %%>. The $ite( se$tion !ea(s: Se$. %,a. The /oneta!0 5oa!( is he!e40 a&tho!i7e( to p!es$!i4e the ma7imum !ate o! !ates o inte!est o! the 'oan o! !ene#a' the!eo o! the o!4ea!an$e o an0 3one0, 2oo(s o! $!e(its, an( to $han2e s&$h !ate o! !ates #hene"e! #a!!ante( 40 p!e"ai'in2 e$ono3i$ an( so$ia' $on(itions: P!o"i(e(, That s&$h $han2es sha'' not 4e 3a(e o tene! than on$e e"e!0 t#e'"e 3onths.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In the eDe!$ise o the a&tho!it0 he!ein 2!ante(, the /oneta!0 5oa!( 3a0 p!es$!i4e hi2he! ma7imum !ates o! $ons&3e! 'oans o! !ene#a's the!eo as #e'' as s&$h 'oans 3a(e 40 pa#nshops, inan$e $o3panies an( othe! si3i'a! $!e(it instit&tions a'tho&2h the !ates p!es$!i4e( o! these instit&tions nee( not ne$essa!i'0 4e &ni o!3.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The a4o"e 'a# (oes not e3po#e! the Cent!a' 5an6 to iD the spe$i i$ !ate o inte!est to 4e $ha!2e( o! 'oans. It 3e!e'0 2!ants the po#e! to p!es$!i4e the ma7imum inte!est !ate, 'ea"in2 it to the $ont!a$tin2 pa!ties to (ete!3ine #ithin the a''o#a4'e 'i3it #hat p!e$ise'0 the inte!est !ate #i'' 4e. In othe! Ao!(s, the p!o"ision p!es&pposes that the pa!ties to the 'oan a2!ee3ent a!e !ee to iD the inte!est !ate, the $ei'in2 p!es$!i4e( 40 the Cent!a' 5an6 ope!atin2 3e!e'0 to !est!i$t the pa!tiesK !ee(o3 to stip&'ate. So "ie#e(, Se$. %,a $annot in$'&(e a p!o"ision on interest to be allo%ed in 'ud#ments, #hi$h is not the s&4Be$t o $ont!a$t&a' stip&'ations an( the!e o!e $annot 'o2i$a''0 4e 3a(e s&4Be$t to inte!est 8$ei'in29, #hi$h is a'' that Se$. %,a $o"e!s. Note that Cent!a' 5an6 Ci!$&'a! 1%> itse' in"o6es as the 4asis o! its iss&an$e Se$. %, !athe! than Se$. %,a, o the Us&!0 La#. ;. 50 p&!pose an( ope!ati"e e e$t, Se$. % o the Us&!0 La# is (i e!ent !o3 Se$. %,a. Se$tion %. The !ate o inte!est o! the loan or forbearance o an0 3one0, 2oo(s, o! $!e(its an( the rate allo%ed in 'ud#ments, in the a4sen$e o eDp!ess $ont!a$t as to s&$h !ate o inte!est, sha'' 4e siD pe! $ent&3 pe! ann&3 o! s&$h !ate as 3a0 4e p!es$!i4e( 40 the /oneta!0 5oa!( o the Cent!a' 5an6 o the Phi'ippines o! that p&!pose in a$$o!(an$e #ith the a&tho!it0 he!e40 2!ante(. 9;talics supplied This se$tion en"isa2es t#o sit&ations: 8a9 a 'oan o! o!4ea!an$e o 3one0, 2oo(s o! $!e(it, #he!e the pa!ties a2!ee( on the pa03ent o inte!est 4&t ai'e( to iD the !ate the!eo C an( 849 a 'iti2ation that has en(e( in a ina' B&(23ent o! the pa03ent o 3one0. In eithe! $ase, the !o'e o Se$tion % is to iD the spe$i i$ !ate o inte!est o! 'e2a' inte!est 8>M9 to 4e $ha!2e(. It a'so i3p'ie('0 (e'e2ates to the Cent!a' 5an6 the po#e! to 3o(i 0 the sai( inte!est !ate. Th&s, the inte!est !ate sha'' 4e >M pe! ann&3 o! Ns&$h !ate as 3a0 4e p!es$!i4e( 40 the /oneta!0 5oa!( o the Cent!a' 5an6 ...N 1. The a&tho!it0 to $han2e the 'e2a' inte!est that has 4een (e'e2ate( to the Cent!a' 5an6 &n(e! the :&ote( Se$tion % is a4so'&te an( &n:&a'i ie(. It is t!&e that Se$tion % sa0s that the !ate o inte!est sha'' 4e > M pe! ann&3 o! Ns&$h !ate as 3a0 4e p!es$!i4e( 40 the /oneta!0 5oa!( o the Cent!a' 5an6 ... in a$$o!(an$e #ith the a&tho!it0 he!e40 2!ante(.N 5&t neithe! in the sai( se$tion no! in an0 othe! se$tion o the 'a# is the!e a 2&i(e'ine o! 'i3itation i3pose( on the Cent!a' 5an6. The (ete!3ination o #hat the app'i$a4'e inte!est !ate sha'' 4e, as (istin2&ishe( !o3 inte!est !ate ceilin#, is $o3p'ete'0 'e t to the B&(23ent o the Cent!a' 5an6. In sho!t, the!e is a tota' a4(i$ation o 'e2is'ati"e po#e!, #hi$h !en(e!s the (e'e2ation "oi(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 *. Un(e! the "ie# ta6en a4o"e, it is &nne$essa!0 to 3a6e a (istin$tion 4et#een B&(23ents in 'iti2ations in"o'"in2 'oans an( B&(23ents in 'iti2ations that ha"e nothin2 to (o #ith 'oans.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 >. I $on$'&(e that the Cent!a' 5an6 a&tho!it0 to $han2e the 'e2a' !ate o inte!est a''o#e( in B&(23ents is $onstit&tiona''0 (e e$ti"eC an( in$i(enta''0, this "i$e a'so a e$ts its a&tho!it0 to $han2e the 'e2a' inte!est o >M pe! ann&3 as to 'oans an( o!4ea!an$e o 3one0, 2oo(s o! $!e(its, as en"isa2e( in Se$tion % o the Us&!0 La#. I this $on$'&sion 4e $o!!e$t, it is i3pe!ati"e to ena$t a 'a# eithe! in$!easin2 the 'e2a' inte!est to a !ea'isti$ 'e"e' o! s&pp'0in2 the (e i$ien$ies o the Us&!0 La# #hi$h !en(e! the (e'e2ation o po#e! the!ein $onstit&tiona''0 (e e$ti"e. 2eehan?ee, J., concur.

Se.ara+e O.*'*o'/

P% N , J., $on$&!!in2 an( (issentin2: %. Cent!a' 5an6 Ci!$&'a! 1%> (ate( J&'0 )+, %+.1 in$!ease( the !ate o inte!est a''o#e( in B&(23ents !o3 >M to %)M pe! ann&3. To 30 a6no#'e(2e,4e o!e the instant $ase, tha "a'i(it0 o C5 Ci!$&'a! 1%> ha( not 4een $ha''en2e( in this Co&!t. In Vi'o!ia "s. Co&!t o Appea's, %); SCRA )*+, it #as ass&3e( that the Cent!a' 5an6 # as ''e2a''0 a&tho!i7e( to iss&e the sai( Ci!$&'a!. The on'0 iss&e the!e !aise(#as #hethe! the in$!ease in inte!est !ate $o&'( 4e 2i"en !et!ospe$ti"e ope!ation.$han!o4'es "i!t&a' 'a# 'i4!a!0 ). % (o not 4e'ie"e the Cent!a' 5an6 a&tho!it0 he!e in :&estion is p!e3ise( on Se$tion %,a o A$t No. )>** 8Us&!0 La#9, as inse!te( 40 P!esi(entia' De$!ee %%>. The $ite( se$tion !ea(s: Se$. %,a. The /oneta!0 5oa!( is he!e40 a&tho!i7e( to p!es$!i4e the ma7imum !ate o! !ates o inte!est o! the 'oan o! !ene#a' the!eo o! the o!4ea!an$e o an0 3one0, 2oo(s o! $!e(its, an( to $han2e s&$h !ate o! !ates #hene"e! #a!!ante( 40 p!e"ai'in2 e$ono3i$ an( so$ia' $on(itions: P!o"i(e(, That s&$h $han2es sha'' not 4e 3a(e o tene! than on$e e"e!0 t#e'"e 3onths.$han!o4'es "i!t&a' 'a# 'i4!a!0 In the eDe!$ise o the a&tho!it0 he!ein 2!ante(, the /oneta!0 5oa!( 3a0 p!es$!i4e hi2he! ma7imum !ates o! $ons&3e! 'oans o! !ene#a's the!eo as #e'' as s&$h 'oans 3a(e 40 pa#nshops, inan$e $o3panies an( othe! si3i'a! $!e(it instit&tions a'tho&2h the !ates p!es$!i4e( o! these instit&tions nee( not ne$essa!i'0 4e &ni o!3.$han!o4'es "i!t&a' 'a# 'i4!a!0 The a4o"e 'a# (oes not e3po#e! the Cent!a' 5an6 to iD the spe$i i$ !ate o inte!est to 4e $ha!2e( o! 'oans. It 3e!e'0 2!ants the po#e! to p!es$!i4e the ma7imum inte!est !ate, 'ea"in2 it to the $ont!a$tin2 pa!ties to (ete!3ine #ithin the a''o#a4'e 'i3it #hat p!e$ise'0 the inte!est !ate #i'' 4e. In othe! Ao!(s, the p!o"ision p!es&pposes that the pa!ties to the 'oan a2!ee3ent a!e !ee to iD the inte!est !ate, the $ei'in2 p!es$!i4e( 40 the Cent!a' 5an6 ope!atin2 3e!e'0 to !est!i$t the pa!tiesK !ee(o3 to stip&'ate. So "ie#e(, Se$. %,a $annot in$'&(e a p!o"ision on interest to be allo%ed in 'ud#ments, #hi$h is not the s&4Be$t o $ont!a$t&a' stip&'ations an( the!e o!e $annot 'o2i$a''0 4e 3a(e s&4Be$t to inte!est 8$ei'in29, #hi$h is a'' that Se$. %,a $o"e!s. Note that Cent!a' 5an6 Ci!$&'a! 1%> itse' in"o6es as the 4asis o! its iss&an$e Se$. %, !athe! than Se$. %,a, o the Us&!0 La#. ;. 50 p&!pose an( ope!ati"e e e$t, Se$. % o the Us&!0 La# is (i e!ent !o3 Se$. %,a. Se$tion %. The !ate o inte!est o! the loan or forbearance o an0 3one0, 2oo(s, o! $!e(its an( the rate allo%ed in 'ud#ments, in the a4sen$e o eDp!ess $ont!a$t as to s&$h !ate o inte!est, sha'' 4e siD pe! $ent&3 pe! ann&3 o! s&$h !ate as 3a0 4e p!es$!i4e( 40 the /oneta!0 5oa!( o the Cent!a' 5an6 o the Phi'ippines o! that p&!pose in a$$o!(an$e #ith the a&tho!it0 he!e40 2!ante(. 9;talics supplied This se$tion en"isa2es t#o sit&ations: 8a9 a 'oan o! o!4ea!an$e o 3one0, 2oo(s o! $!e(it, #he!e the pa!ties a2!ee( on the pa03ent o inte!est 4&t ai'e( to iD the !ate the!eo C an( 849 a 'iti2ation that has en(e( in a ina' B&(23ent o! the pa03ent o 3one0. In eithe! $ase, the !o'e o Se$tion % is to iD the spe$i i$ !ate o inte!est o! 'e2a' inte!est 8>M9 to 4e $ha!2e(. It a'so i3p'ie('0 (e'e2ates to the Cent!a' 5an6 the po#e! to 3o(i 0 the sai( inte!est !ate. Th&s, the inte!est !ate sha'' 4e >M pe! ann&3 o! Ns&$h !ate as 3a0 4e p!es$!i4e( 40 the /oneta!0 5oa!( o the Cent!a' 5an6. . .N 1. The a&tho!it0 to $han2e the 'e2a' inte!est that has 4een (e'e2ate( to the Cent!a' 5an6 &n(e! the :&ote( Se$tion % is a4so'&te an( &n:&a'i ie(. It is t!&e that Se$tion % sa0s that the !ate o inte!est sha'' 4e > M pe! ann&3 o! Ns&$h !ate as 3a0 4e p!es$!i4e( 40 the /oneta!0 5oa!( o the Cent!a' 5an6 ... in a$$o!(an$e #ith the a&tho!it0 he!e40 2!ante(.N 5&t neithe! in the sai( se$tion no! in an0 othe! se$tion o the 'a# is the!e a 2&i(e'ine o! 'i3itation i3pose( on the Cent!a' 5an6. The (ete!3ination o #hat the app'i$a4'e inte!est !ate sha'' 4e, as (istin2&ishe( !o3 inte!est !ate ceilin#, is $o3p'ete'0 'e t to the B&(23ent o the Cent!a' 5an6. In sho!t, the!e is a tota' a4(i$ation o 'e2is'ati"e po#e!, #hi$h !en(e!s the (e'e2ation "oi(.$han!o4'es "i!t&a' 'a# 'i4!a!0 *. Un(e! the "ie# ta6en a4o"e, it is &nne$essa!0 to 3a6e a (istin$tion 4et#een B&(23ents in 'iti2ations in"o'"in2 'oans an( B&(23ents in 'iti2ations that ha"e nothin2 to (o #ith 'oans.$han!o4'es "i!t&a' 'a# 'i4!a!0 >. I $on$'&(e that the Cent!a' 5an6 a&tho!it0 to $han2e the 'e2a' !ate o inte!est a''o#e( in B&(23ents is $onstit&tiona''0 (e e$ti"eC an( in$i(enta''0, this "i$e a'so a e$ts its a&tho!it0 to $han2e the 'e2a' inte!est o >M pe! ann&3 as to 'oans an( o!4ea!an$e o 3one0, 2oo(s o! $!e(its, as en"isa2e( in Se$tion % o the Us&!0 La#. I this $on$'&sion 4e $o!!e$t, it is i3pe!ati"e to ena$t a 'a# eithe! in$!easin2 the 'e2a' inte!est to a !ea'isti$ 'e"e' o! s&pp'0in2 the (e i$ien$ies o the Us&!0 La# #hi$h !en(e! the (e'e2ation o po#e! the!ein $onstit&tiona''0 (e e$ti"e.

G.R. No. 1193B9. Se.+e1ber 25, 199= RODE%O G. PO%O" N, SR.,Petitioner, "s. HON. COURT OF APPEALS 8E'e"enth Di"ision9, RE-IONAL TRIAL COURT IN /AKATI CITG 85!an$h %;)9, an( SECURITG DINERS INTERNATIONAL CORPORATION, Respondents. DEC$S$ON RO;ERO, J.C Assai'e( 4e o!e this Co&!t in a Petition o! Re"ie# on Certiorari is the (e$ision% o the Co&!t o Appea's in CA,-.R. CV No. ;;).< a i!3in2 the (e$ision o 5!an$h %;) o the Re2iona' T!ia' Co&!t o /a6ati Cit0. P!i"ate !espon(ent Se$&!it0 Dine!s Inte!nationa' Co!po!ation 8Dine!s C'&49, a $!e(it $a!( $o3pan0, eDten(s $!e(it a$$o3o(ations to its $a!(ho'(e!s o! the p&!$hase o 2oo(s an( othe! se!"i$es !o3 3e34e! esta4'ish3ents. Sai( 2oo(s an( se!"i$es a!e !ei34&!se( 'ate! on 40 $a!(ho'(e!s &pon p!ope! 4i''in2. Petitione! Ro(e'o -. Po'otan, S!. app'ie( o! 3e34e!ship an( $!e(it a$$3o(ations #ith Dine!s C'&4 in O$to4e! %+@*. The app'i$ation o!3 $ontaine( te!3s an( $on(itions 2o"e!nin2 the &se an( a"ai'3ent o the Dine!s C'&4 $a!(, a3on2 #hi$h is o! the $a!(ho'(e! to pa0 a'' $ha!2es 3a(e th!o&2h the &se o sai( $a!( #ithin the pe!io( in(i$ate( in the state3ent o a$$o&nt an( an0 !e3ainin2 &npai( 4a'an$e to ea!n ;M inte!est pe! ann&3 p'&s p!i3e !ate o Se$&!it0 5an6 J T!&st Co3pan0. Nota4'0, in the app'i$ation o!3 s&43itte( 40 petitione!, O !i$ano Can'as o4'i2ate( hi3se' to pa0 Boint'0 an( se"e!a''0 #ith petitione! the 'atte!s o4'i2ation to p!i"ate !espon(ent. Upon a$$eptan$e o his app'i$ation, petitione! #as iss&e( Dine!s C'&4 $a!( No. ;>*%,)%).>>,;<<*. As o /a0 @, %+@., petitione! in$&!!e( $!e(it $ha!2es p'&s app!op!iate inte!est an( se!"i$e $ha!2es in the a22!e2ate a3o&nt o P;;,@%+.@1 #hi$h ha( 4e$o3e (&e an( (e3an(a4'e. De3an(s o! pa03ent 3a(e a2ainst petitione! p!o"e( &ti'e. Hen$e, p!i"ate !espon(ent i'e( a Co3p'aint o! Co''e$tion o S&3 o /one0 a2ainst petitione! 4e o!e the 'o#e! $o&!t. The 'o#e! $o&!t !&'e(, th&s: AHEREFORE, B&(23ent is he!e40 !en(e!e( o!(e!in2 (e en(ants to pa0 Boint'0 an( se"e!a''0 p'ainti : a9 The a3o&nt o P;;,@%+.@1 an( inte!est o ;M pe! ann&3 p'&s p!i3e !ate o S5TC an( se!"i$e $ha!2es o )M pe! 3onth sta!tin2 /a0 +, %+@. &nti' the enti!e o4'i2ation is &''0 pai(C 49 An a3o&nt e:&i"a'ent to )*M o an0 an( a'' a3o&nts (&e an( pa0a4'e as atto!ne0s ees, p'&s $osts o s&it. Aith !espe$t to the $!oss,$'ai3 o (e en(ant O !i$ano Can'as, (e en(ant Ro(e'o -. Po'otan, S!. is o!(e!e( to in(e3ni 0 an(=o! !ei34&!se the o!3e! o! #hate"e! he 3a0 4e o!(e!e( to pa0 p'ainti . The Co&!t o Appea's a i!3e( the !&'in2 o the 'o#e! $o&!t. Hen$e, this petition. Petitione! assi2ns the o''o#in2 e!!o!s: I RESPONDENT COURT OF APPEALS CO//ITTED AN ERROR OF LAA IN RULIN- AS VALID AND LE-AL THE FOLLOAIN- PROVISION ON INTEREST IN THE DINERS CARD CONTRACT, TO AIT: PAG/ENT OF CHAR-ES , DDD DDD DDD The Ca!(ho'(e! a2!ees to pa0 inte!est pe! ann&3 at ;M p'&s the p!i3e !ate o Se$&!it0 5an6 an( T!&st Co3pan0. DDD DDD DDD P!o"i(e( that i the!e o$$&!s an0 $han2e in the p!e"ai'in2 3a!6et !ates the ne# inte!est !ate sha'' 4e the 2&i(in2 !ate o $o3p&tin2 the inte!est (&e on the o&tstan(in2 o4'i2ation #itho&t nee( o se!"in2 noti$e to the Ca!(ho'(e! othe! than the !e:&i!e( postin2 on the 3onth'0 state3ent se!"e( to the Ca!(ho'(e!.

The Ca!(ho'(e! he!e40 a&tho!i7es Se$&!it0 Dine!s to $o!!espon(in2'0 in$!ease the !ate o s&$h inte!est in the e"ent o $han2es in p!e"ai'in2 3a!6et !ates an( to $ha!2e a((itiona' se!"i$e ees as 3a0 4e (ee3e( ne$essa!0 in o!(e! to 3aintain its se!"i$e to the Ca!(ho'(e!. II RESPONDENT COURT OF APPEALS CO//ITTED AN ERROR OF LAA IN RULIN- IN EFFECT THAT PRIVATE RESPONDENTS STATE/ENT OF ACCOUNT 8EDh. )9 AS A JUDICIAL AD/ISSION THAT /RS. POLOTAN HAD ALREADG PAID COULD 5E CONTRADICTED AITHOUT THE PRIVATE RESPONDENT LAGIN- THE PROPER 5ASIS FOR THE INTRODUCTION OF CONTRARG EVIDENCEC III RESPONDENT COURT OF APPEALS CO//ITTED A -RIEVOUS ERROR OF FACT IN FINDIN- AS CREDI5LE THE ILLO-ICAL AND A5SURD EHPLANATION OF PRIVATE RESPONDENTS /R. VICENTEC IV RESPONDENT COURT OF APPEALS ERRED IN NOT AAARDIN- DA/A-ES TO PETITIONER. In the i!st assi2n3ent o e!!o!, petitione! a!2&es that the p!o"ision on inte!est !ate is o4s$&!e an( a34i2&o&s an( not s&s$epti4'e o !easona4'e inte!p!etation pa!ti$&'a!'0 the te!3s p!i3e !ate, p!e"ai'in2 3a!6et !ate an( 2&i(in2 !ate. In e e$t, the!e #as no 3eetin2 o 3in(s. As s&$h, this 4ein2 a $ont!a$t o a(hesion, an0 a34i2&it0 sho&'( 4e !eso'"e( a2ainst the one #ho $a&se( it. Petitione! a((e( that the sai( p!o"ision #as a'so i''e2a' as it "io'ate( the 'a#s an( Cent!a' 5an6 Ci!$&'a!s. Ahi'e sai( p!o"iso a''o#e( o! the es$a'ation o inte!est, it (i( not a''o# o! a (o#n#a!( a(B&st3ent o the sa3e. In his se$on( an( thi!( assi2n3ent o e!!o!, petitione! $'ai3e( that Dine!s C'&4 a(3itte(, th!o&2h its state3ent o a$$o&nt, that petitione!s #i e, /!s. Po'otan, ha( no 3o!e a$$o&nt #ith it. 5&t then, he $'ai3e( that the 'o#e! $o&!t an( the Co&!t o Appea's a''o#e( the testi3on0 o one /!. Vi$ente eDp'ainin2 that the !eason #h0 /!s. Po'otan ha( no 3o!e a$$o&nt #ith it #as that 4ein2 a s&pp'e3enta!0 $a!(ho'(e!, he! a$$o&nt #as $onso'i(ate( #ith that o petitione! in a$$o!(an$e #ith its ne# po'i$0. He a!2&e( that sin$e Dine!s C'&4 a(3itte( that /!s. Po'otan ha( no 3o!e a$$o&nt #ith it, the on'0 #a0 it $o&'( $ont!a(i$t s&$h a(3ission #as 40 (e$'a!in2 that the sa3e #as a !es&'t o a pa'pa4'e 3ista6e in a$$o!(an$e #ith Se$tion 1 o R&'e %)+ o the Re"ise( R&'es on E"i(en$e. In a(3ittin2 sai( eDp'anation, the 'o#e! $o&!t an( the Co&!t o Appea's "io'ate( the !&'e on the #ei2ht to 4e a$$o!(e( $on 'i$tin2 e"i(en$e. In e e$t, petitione! insists that 4oth $o&!ts a"o!e( the &n$o!!o4o!ate( testi3onia' e"i(en$e o /!. Vi$ente o"e! the (o$&3enta!0 e"i(en$e p!esente( 40 petitione! an( a(3itte( 40 Dine!s C'&4. In its o&!th assi2n3ent o e!!o!, petitione! $'ai3e( that he sho&'( ha"e 4een a#a!(e( (a3a2es 4e$a&se o Dine!s C'&4s 4a( aith. This Co&!t in(s petitione!s $ontentions #itho&t 3e!it. The iss&es p!esente( 40 petitione! a!e $'ea!'0 :&estions o 'a#. Not#ithstan(in2 petitione!s s&43ission o the a4o"e e!!o!s, ho#e"e!, the $o!e iss&e is 4asi$a''0 one o a$t. This $ase ste33e( !o3 a si3p'e $o3p'aint o! $o''e$tion o s&3 o 3one0. The 'o#e! $o&!t an( the Co&!t o Appea's o&n( that petitione! in(ee( o#e( Dine!s C'&4 the a3o&nt 4ein2 (e3an(e(. In the $ase o Re)es v. CA,) this Co&!t he'( that a$t&a' in(in2s o the t!ia' $o&!t, a(opte( an( $on i!3e( 40 the Co&!t o Appea's, a!e ina' an( $on$'&si"e an( 3a0 not 4e !e"ie#e( on appea'. The eD$eptions to this !&'e a!e as o''o#s: 8%9 #hen the in e!en$e 3a(e is 3ani est'0 3ista6en, a4s&!( o! i3possi4'eC 8)9 #hen the!e is a 2!a"e a4&se o (is$!etionC 8;9 #hen the in(in2 is 2!o&n(e( enti!e'0 on spe$&'ations, s&!3ises o! $onBe$t&!esC 819 #hen the B&(23ent o the Co&!t o Appea's is 4ase( on 3isapp!ehension o a$tsC 8*9 #hen the in(in2s o a$t a!e $on 'i$tin2C 8>9 #hen the Co&!t o Appea's, in 3a6in2 its in(in2s, #ent 4e0on( the iss&es o the $ase an( the sa3e is $ont!a!0 to the a(3issions o 4oth appe''ant an( appe''eeC 8.9 #hen the in(in2s o the Co&!t o Appea's a!e $ont!a!0 to those o the t!ia' $o&!tC 8@9 #hen the in(in2s o a$t a!e $on$'&sions #itho&t $itation o spe$i i$ e"i(en$e on #hi$h the0 a!e 4ase(C 8+9 #hen the Co&!t o Appea's 3ani est'0 o"e!'oo6e( $e!tain !e'e"ant a$ts

not (isp&te( 40 the pa!ties an( #hi$h, i p!ope!'0 $onsi(e!e(, #o&'( B&sti 0 a (i e!ent $on$'&sion an( 8%<9 #hen the in(in2s o a$t o the Co&!t o Appea's a!e p!e3ise( on the a4sen$e o e"i(en$e an( a!e $ont!a(i$te( 40 the e"i(en$e on !e$o!(. On'0 a $'ea! sho#in2 that an0 o the a4o"e,$ite( eD$eptions eDists #o&'( B&sti 0 a !e"ie# o the in(in2s o a$t 3a(e 40 the 'o#e! $o&!t an( &phe'( 40 the Co&!t o Appea's. In the instant $ase, a !e"ie# o the (e$isions o the 'o#e! $o&!t, as #e'' as the Co&!t o Appea's, sho#s that the $on$'&sions ha"e 4een 'o2i$a''0 a!!i"e( at an( s&4stantia''0 s&ppo!te( 40 the e"i(en$e p!esente( 40 the pa!ties. 5e that as it 3a0, this Co&!t sees it it an( p!ope! to (is$&ss the 3e!its o this petition 4ase( on petitione!s $'ai3 that sin$e the $ont!a$t he si2ne( #ith Dine!s C'&4 #as a $ont!a$t o a(hesion, the o4s$&!e p!o"ision on inte!est sho&'( 4e !eso'"e( in his a"o!. A $ont!a$t o a(hesion is one in #hi$h one o the $ont!a$tin2 pa!ties i3poses a !ea(0,3a(e o!3 o $ont!a$t #hi$h the othe! pa!t0 3a0 a$$ept o! !eBe$t, 4&t $annot 3o(i 0. One pa!t0 p!epa!es the stip&'ation in the $ont!a$t, #hi'e the othe! pa!t0 3e!e'0 a iDes his si2nat&!e o! his a(hesion the!eto, 2i"in2 no !oo3 o! ne2otiation an( (ep!i"in2 the 'atte! o the oppo!t&nit0 to 4a!2ain on e:&a' ootin2.; A(3itte('0, the $ont!a$t $ontainin2 stan(a!( stip&'ations i3pose( &pon those #ho see6 to a"ai' o its $!e(it se!"i$es #as p!epa!e( 40 Dine!s C'&4. The!e is no #a0 a p!ospe$ti"e $!e(it $a!( ho'(e! $an o4Be$t to an0 one!o&s p!o"ision as it is o e!e( on a ta6e,it,o!,'ea"e,it 4asis. 5ein2 a $ont!a$t o a(hesion, an0 a34i2&it0 in its p!o"isions 3&st 4e $onst!&e( a2ainst p!i"ate !espon(ent. In(ee(, the te!3s p!i3e !ate, p!e"ai'in2 3a!6et !ate, )M pena't0 $ha!2e, se!"i$e ee, an( 2&i(in2 !ate a!e te$hni$a' te!3s #hi$h a!e 4e0on( the 6en o an o!(ina!0 'a03an. To 4e s&!e, petitione! ha!('0 a''s into the $ate2o!0 o an o!(ina!0 'a03an. As apt'0 o4se!"e( 40 the Co&!t o Appea's: D D D ?AIppe''ant 40 his o#n a(3ission is a 'a#0e! 40 p!o ession, a !ep&ta4'e 4&siness3an an( a note( 'ea(e! o a n&34e! o so$io,$i"i$ o!2ani7ations. Aith s&$h i3p!essi"e $!e(entia's, this Co&!t is ha!(,p&t to atho3 so3eone o his $a'i4!e ente!in2 into a $ont!a$t #ith e0es 4'in( o'(e(.1 Ne"e!the'ess, these t0pes o $ont!a$ts ha"e 4een (e$'a!e( as 4in(in2 as o!(ina!0 $ont!a$ts, the !eason 4ein2 that the pa!t0 #ho a(he!es to the $ont!a$t is !ee to !eBe$t it enti!e'0.* The 4in(in2 e e$t o an0 a2!ee3ent 4et#een pa!ties to a $ont!a$t is p!e3ise( on t#o sett'e( p!in$ip'es: 8%9 that an0 o4'i2ation a!isin2 !o3 a $ont!a$t has the o!$e o 'a# 4et#een the pa!tiesC an( 8)9 that the!e 3&st 4e 3&t&a'it0 4et#een the pa!ties 4ase( on thei! essentia' e:&a'it0. An0 $ont!a$t #hi$h appea!s to 4e hea"i'0 #ei2he( in a"o! o one o the pa!ties so as to 'ea( to an &n$ons$iona4'e !es&'t is "oi(. An0 stip&'ation !e2a!(in2 the "a'i(it0 o! $o3p'ian$e o the $ont!a$t #hi$h is 'e t so'e'0 to the #i'' o one o the pa!ties, is 'i6e#ise, in"a'i(.> It is i3po!tant to st!ess that the Co&!t is not p!e$'&(e( !o3 !&'in2 o&t 4'in( a(he!en$e to thei! te!3s i the atten(ant a$ts an( $i!$&3stan$es sho# that the0 sho&'( 4e i2no!e( o! 4ein2 o4"io&s'0 too one,si(e(. . In this $ase, Petitione!, in e e$t, $'ai3s that the s&4Be$t $ont!a$t is one,si(e( in that the $ont!a$t a''o#s o! the es$a'ation o inte!ests, 4&t (oes not p!o"i(e o! a (o#n#a!( a(B&st3ent o the sa3e in "io'ation o Cent!a' 5an6 Ci!$&'a! +<*. The $'ai3 is #itho&t 4asis. 1irst, 40 si2nin2 the $ont!a$t, petitione! an( p!i"ate !espon(ent a2!ee( &pon the !ate as stip&'ate( in the s&4Be$t $ont!a$t. S&$h is no# a''o#e( 40 C.5. Ci!$&'a! +<*.@ 8econd, petitione! ai'e( to $ite an0 pa!ti$&'a! p!o"ision o sai( Ci!$&'a! #hi$h #as a''e2e('0 "io'ate( 40 the s&4Be$t $ont!a$t. 5e that as it 3a0, the!e is nothin2 inhe!ent'0 #!on2 #ith es$a'ation $'a&ses. Es$a'ation $'a&ses a!e "a'i( stip&'ations in $o33e!$ia' $ont!a$ts to 3aintain is$a' sta4i'it0 an( to !etain the "a'&e o 3one0 in 'on2 te!3 $ont!a$ts. + Petitione! &!the! a!2&es that the inte!est !ate #as &ni'ate!a''0 i3pose( an( 4ase( on the stan(a!(s an( !ate o!3&'ate( so'e'0 40 Dine!s C'&4. In 1lorendo v. CA,%< this Co&!t has he'( that:

D D D the &ni'ate!a' (ete!3ination an( i3position o in$!ease( inte!est !ates 40 the he!ein !espon(ent 4an6 is o4"io&s'0 "io'ati"e o the principle of mutualit) of contracts o!(aine( in A!ti$'e %;<@ o the Ci"i' Co(e. As this Co&!t he'( in PN5 ". CA 8%+> SCRA *;> ?%++%I9: In o!(e! that o4'i2ations a!isin2 !o3 $ont!a$ts 3a0 ha"e the o!$e o 'a# 4et#een the pa!ties, the!e 3&st 4e mutualit) 4et#een the pa!ties 4ase( on thei! essentia' e:&a'it0. A $ont!a$t $ontainin2 a $on(ition #hi$h 3a6es its &' i''3ent (epen(ent eD$'&si"e'0 &pon the &n$ont!o''e( #i'' o one o the $ont!a$tin2 pa!ties, is "oi(. D D D The $ont!a$t&a' p!o"ision in :&estion states that i the!e o$$&!s an0 $han2e in the p!e"ai'in2 3a!6et !ates, the ne# inte!est !ate sha'' 4e the 2&i(in2 !ate in $o3p&tin2 the inte!est (&e on the o&tstan(in2 o4'i2ation #itho&t nee( o se!"in2 noti$e to the Ca!(ho(e! othe! than the !e:&i!e( postin2 on the 3onth'0 state3ent se!"e( to the Ca!(ho'(e!. This $o&'( not 4e $onsi(e!e( an es$a'ation $'a&se o! the !eason that it neithe! states an in$!ease no! a (e$!ease in inte!est !ate. Sai( $'a&se si3p'0 states that the inte!est !ate sho&'( 4e 4ase( on the p!e"ai'in2 3a!6et !ate. Inte!p!etin2 it (i e!ent'0, #hi'e sai( $'a&se (oes not eDp!ess'0 stip&'ate a !e(&$tion in inte!est !ate, it ne"e!the'ess p!o"i(es a 'ee#a0 o! the inte!est !ate to 4e !e(&$e( in $ase the p!e"ai'in2 3a!6et !ates (i$tate its !e(&$tion. A(3itte('0, the se$on( pa!a2!aph o the :&estione( p!o"iso #hi$h p!o"i(es that the Ca!(ho'(e! he!e40 a&tho!i7es Se$&!it0 Dine!s to $o!!espon(in2'0 in$!ease the !ate o s&$h inte!est in the e"ent o $han2es in p!e"ai'in2 3a!6et !ates D D D is an es$a'ation $'a&se. Ho#e"e!, it $annot 4e sai( to 4e (epen(ent so'e'0 on the #i'' o p!i"ate !espon(ent as it is a'so (epen(ent on the p!e"ai'in2 3a!6et !ates. Es$a'ation $'a&ses a!e not 4asi$a''0 #!on2 o! 'e2a''0 o4Be$tiona4'e as 'on2 as the0 a!e 'o+ /o0e0y .o+e/+a+*5e bu+ ba/e- o' rea/o'ab0e a'- 5a0*- 6rou'-/.%% O4"io&s'0, the '&$t&ation in the 3a!6et !ates is 4e0on( the $ont!o' o p!i"ate !espon(ent. As to the se$on( an( thi!( assi2n3ents o e!!o!, it is 3is'ea(in2 o! petitione! to sa0 that p!i"ate !espon(ent ha( B&(i$ia''0 a(3itte( that its state3ent o a$$o&nt is p!oo that /!s. Po'otan has a'!ea(0 pai( he! a$$o&nt #ith p!i"ate !espon(ent. P!o$ee(in2 !o3 sai( p!e3ise, it is &!the! 3is'ea(in2 o! petitione! to $on$'&(e that p!i"ate !espon(ents testi3onia' e"i(en$e a4o&t a ne# po'i$0 $ont!a(i$te( its B&(i$ia''0 a(3itte( (o$&3enta!0 e"i(en$e #itho&t 'a0in2 the p!ope! 4asis o! the int!o(&$tion o $ont!a!0 e"i(en$e an( in "io'ation o Se$tion ), R&'e %)+ o the Re"ise( R&'es on E"i(en$e, #hi$h p!o"i(es that: A(3issions 3a(e 40 the pa!ties in the p'ea(in2s, o! in the $o&!se o the t!ia' o! othe! p!o$ee(in2s (o not !e:&i!e p!oo an( $an not 4e $ont!a(i$te( &n'ess p!e"io&s'0 sho#n to ha"e 4een 3a(e th!o&2h pa'pa4'e 3ista6e. Ce!tain'0, Dine!s C'&4 $o&'( not (en0 the eDisten$e o EDhi4it ) #hi$h is the State3ent o A$$o&nt iss&e( to /!s. Po'otan sin$e, p!e$ise'0, it #as the one #hi$h iss&e( sai( state3ent. 5&t to $on$'&(e that sai( State3ent o A$$o&nt #as 'i6e#ise an a(3ission that /!s. Po'otan has no 3o!e a$$o&nt #ith Dine!s C'&4 #o&'( 4e e:&i"o$ato!0, o! non,se:&it&!. Ahi'e p!i"ate !espon(ent a(3itte( the eDisten$e o EDhi4it ), it $o&'( not ha"e a2!ee( to the p&!pose o! #hi$h the eDhi4it #as p!esente(. As satis a$to!i'0 o&n( 40 the Co&!t o Appea's an( to #hi$h this Co&!t a2!ees: Appe''ants a''e2ation is 3is'ea(in2. On the $ont!a!0, appe''ees !e4&tta' #itness, A' !e(o Vi$ente, $ate2o!i$a''0 state( that the !eason the State3ent o A$$o&nt in the na3e o A'i$ia Po'otan sho#e( a 7e!o 4a'an$e 8EDh. )9 #as (&e to the a$t that e e$ti"e Fe4!&a!0 %+@+, &n(e! a ne# s0ste3, sepa!ate 3onth'0 state3ents #e!e p!o(&$e( on s&pp'e3enta!0 $a!( 3e34e!s. P!io! to Fe4!&a!0 %+@+, the a"ai'3ents o /!. an( /!s. Po'otan #e!e in$o!po!ate( &n(e! one state3ent. /o!eo"e!, it is to 4e o4se!"e( that #hi'e the Co3p'aint #as i'e( on %* /a0 %+@., the Dine!s C'&4 /onth'0 State3ent in the na3e o A'i$ia 5. Po'otan is (ate( a'3ost t#o 8)9 0ea!s 'ate! o! <)=<@=@+ 8EDh. )9. This 4o'ste!s the testi3on0 o A' !e(o Vi$ente !e2a!(in2 the ent!0 o 7e!o 4a'an$e in /!s. Po'otans na3e. A'tho&2h sai( eDhi4it #o&'(, 40 itse' , sho# that /!s. Po'otan ha( no 3o!e a$$o&nt #ith Dine!s C'&4, it #o&'( not ha"e 4een $on$'&si"e to p!o"e that sai( a$$o&nt #as a'!ea(0 pai(. The p!ope! e"i(en$e #o&'( ha"e 4een a !e$eipt o pa03ent. Si2ni i$ant'0, petitione! (i( not $ontest the p&!$hases as in(i$ate( in the state3ents o a$$o&nt 4&t 3e!e'0 a''e2e( that so3e o the p&!$hases 4ein2 $'ai3e( to ha"e 4een 3a(e 40 petitione! #e!e not s&ppo!te( 40 in"oi$es. The 'o#e! $o&!t o&n( othe!#ise. %)

In 'i2ht o the a4o"e, this Co&!t sees no !eason to a#a!( (a3a2es to petitione!. 8#EREFORE, in "ie# o the o!e2oin2, the petition o! certiorari is he!e40 DENIED an( the De$ision o the Co&!t o Appea's AFFIR/ED #ith the /ODIFICATION that the atto!ne0s ees a!e !e(&$e( to %*M. SO ORDERED. G.R. No. 14=491 C February =, 200B SPOUSES @ C R$ S B CO%OR a'- C "#ER$NE B CO%OR, Petitioners, v. B NCO F$%$P$NO S >$NGS ND ;OR"G GE B N!, D GUP N C$"A BR NC# a'- ; RCE%$NO C. BONU N, Respondents. DECISION S NDO> %9GU"$ERRE@, J.: Petition o! Re"ie# on Certiorari &n(e! R&'e 1* o the %++. R&'es o Ci"i' P!o$e(&!e, as a3en(e(, assai'in2 the De$ision % o the Co&!t o Appea's in CA,-.R. CV No. 1..;) p!o3&'2ate( on Fe4!&a!0 );, )<<% an( its Reso'&tion (ate( /a0 ;<, )<<%. On Fe4!&a!0 %%, %+@), spo&ses Ea$a!ias an( Cathe!ine 5a$o'o!, he!ein petitione!s, o4taine( a 'oan o P)11,<<<.<< !o3 5an$o Fi'ipino Sa"in2s an( /o!t2a2e 5an6, Da2&pan Cit0 5!an$h, !espon(ent. The0 eDe$&te( a p!o3isso!0 note p!o"i(in2 that the a3o&nt sha'' 4e pa0a4'e #ithin a pe!io( o ten 8%<9 0ea!s #ith a 3onth'0 a3o!ti7ation o P*,;@<.<< 4e2innin2 /a!$h %%, %+@) an( e"e!0 %%th (a0 o the 3onth the!ea te!C that the inte!est !ate sha'' 4e t#ent0, o&! pe!$ent 8)1M9 pe! ann&3, #ith a pena't0 o th!ee pe!$ent 8;M9 on an0 &npai( 3onth'0 a3o!ti7ationC that the!e sha'' 4e a se!"i$e $ha!2e o th!ee pe!$ent 8;M9 pe! ann&3 on the 'oanC an( that in $ase !espon(ent 4an6 see6s the assistan$e o $o&nse' to en o!$e the $o''e$tion o the 'oan, petitione!s sha'' 4e 'ia4'e o! ten pe!$ent 8%<M9 o the a3o&nt (&e as atto!ne0Ks ees an( i teen pe!$ent 8%*M9 o the a3o&nt (&e as 'i:&i(ate( (a3a2es. As se$&!it0 o! the 'oan, petitione!s 3o!t2a2e( #ith !espon(ent 4an6 thei! pa!$e' o 'an( 'o$ate( in Da2&pan Cit0, Pan2asinan, !e2iste!e( &n(e! T!ans e! Ce!ti i$ate o Tit'e No. 1<@).. F!o3 /a!$h %%, %+@) to J&'0 %<, %++%, petitione!s pai( !espon(ent 4an6 P1%), %++.;>. The!ea te!, the0 ai'e( to pa0 the !e3ainin2 4a'an$e o the 'oan. On A&2&st ., %++), petitione!s !e$ei"e( !o3 !espon(ent 4an6 a state3ent o a$$o&nt statin2 that thei! in(e4te(ness as o J&'0 ;%, %++) a3o&nts to P@1<,@1*.>%. In its 'ette! (ate( Jan&a!0 %;, %++;, !espon(ent 4an6 in o!3e( petitione!s that sho&'( the0 ai' to pa0 thei! 'oan #ithin i teen 8%*9 (a0s !o3 noti$e, app!op!iate a$tion sha'' 4e ta6en a2ainst the3. D&e to petitione!sK ai'&!e to sett'e thei! o4'i2ation, !espon(ent instit&te(, on /a!$h *, %++;, an a$tion o! eDt!a,B&(i$ia' o!e$'os&!e o 3o!t2a2e. P!io! the!eto, o! on Fe4!&a!0 %, %++;, petitione!s i'e( #ith 5!an$h 1< o the sa3e RTC, a $o3p'aint o! "io'ation o the Us&!0 La# a2ainst !espon(ent, (o$6ete( as Ci"i' Case No. D,%<1@<. The0 a''e2e( that the p!o"isions o the p!o3isso!0 note $onstit&te a &s&!io&s t!ansa$tion $onsi(e!in2 the 8%9 !ate o inte!est, 8)9 the !ate o pena'ties, se!"i$e $ha!2e, atto!ne0Ks ees an( 'i:&i(ate( (a3a2es, an( 8;9 (e(&$tions o! s&!$ha!2es an( ins&!an$e p!e3i&3. In thei! a3en(e( $o3p'aint, petitione!s &!the! a''e2e( that, (&!in2 the $'os&!e o !espon(ent 4an6, it $ease( to 4e a 4an6in2 instit&tion an(, the!e o!e, $o&'( not $ha!2e inte!ests an( instit&te o!e$'os&!e p!o$ee(in2. On A&2&st )*, %++1, the RTC !en(e!e( its (e$ision (is3issin2 petitione!sK $o3p'aint, ho'(in2 that:$!a:na( 8%9 The te!3s an( $on(itions o the Dee( o /o!t2a2e an( the P!o3isso!0 Note a!e 'e2a' an( not &s&!io&s.

The p'ainti

!ee'0 si2ne( the Dee( o /o!t2a2e an( the P!o3isso!0 Note #ith &'' 6no#'e(2e o its te!3s an( $on(itions.

The inte!est !ate o )1M pe! ann&3 is not &s&!io&s an( (oes not "io'ate the Us&!0 La# 8A$t )>**9 as a3en(e( 40 P.D. No. %>>. The !ate o inte!est, in$'&(in2 $o33issions, p!e3i&3s, ees an( othe! $ha!2es, on a 'oan o! o!4ea!an$e o an0 3one0 et$., !e2a!('ess o 3at&!it0 D D D, sha'' not 4e s&4Be$t to an0 $ei'in2 &n(e! o! p&!s&ant to the Us&!0 La#, as a3en(e( 8C5 Ci!$&'a! no. +<*9. Hen$e, the )1M inte!est pe! ann&3 is a''o#e( &n(e! P.D. No. %>>. Fo! so3eti3e no#, &s&!0 has 4een 'e2a''0 non,eDistent. Inte!est $an no# 4e as 'en(e! an( 4o!!o#e! 3a0 a2!ee &pon 8Ve!(eBo ". CA, Jan. )+, %+@@. %*. SCRA .1;9. The i3position o pena'ties in $ase the o4'i2ation is not &' i''e( is not p!ohi4ite( 40 the Us&!0 La#. Pa!ties to a $ont!a$t o 'oan 3a0 "a'i('0 a2!ee &pon the i3position o pena't0 $ha!2es in $ase o (e'a0 o! non,pa03ent o the 'oan. The p&!pose is to $o3pe' the (e4to! to pa0 his (e4t on ti3e 8-o Chio$o ". /a!tine7, 1* Phi'. )*>, )>*9. 8)9 The $'os&!e o 5an$o Fi'ipino (i( not s&spen( o! stop its &s&a' an( no!3a' 4an6in2 ope!ations 'i6e the $o''e$tion o 'oan !e$ei"a4'es an( o!e$'os&!es o 3o!t2a2es. In "ie# o the o!e2oin2, p'ainti s ai'e( to s&4stantiate thei! $a&se o a$tion a2ainst the (e en(ant. ) $han!o4'es"i!t&a''a#'i4a!0 On appea', the Co&!t o Appea's !en(e!e( its De$ision a i!3in2 the De$ision o the t!ia' $o&!t. Petitione!Ks s&4se:&ent 3otion o! !e$onsi(e!ation #as (enie(. Hen$e, this p!esent petition o! !e"ie# on certiorari !aisin2 this 'one iss&e: #hethe! the inte!est !ate is NeD$essi"e an( &n$ons$iona4'e.N It is the petitione!sK $ontention that #hi'e the Us&!0 La# $ei'in2 on inte!est !ates #as 'i te( 40 Cent!a' 5an6 Ci!$&'a! No. +<*, the!e is nothin2 in the sai( $i!$&'a! #hi$h 2!ants !espon(ent 4an6 carte blanche a&tho!it0 to !aise inte!est !ates to 'e"e's #hi$h Neithe! ens'a"e the 4o!!o#e! o! 'ea( to a he3o!!ha2in2 o thei! assets.N ; $han!o4'es"i!t&a''a#'i4a!0 In its $o33ent 1 , !espon(ent 4an6 3aintaine( that petitione!, 40 si2nin2 the Dee( o /o!t2a2e an( P!o3isso!0 Note, 6no#in2'0 an( !ee'0 $onsente( to its te!3s an( $on(itions. A $ont!a$t 4et#een the pa!ties 3&st not 4e i3pai!e(. The inte!est !ate o )1M pe! ann&3 is not &s&!io&s an( (oes not "io'ate the Us&!0 La#. * $han!o4'es"i!t&a''a#'i4a!0 The petition 'a$6s 3e!it. A!ti$'e %+*> o the Ci"i' Co(e p!o"i(es that no interest shall be due unless it has been e7pressl) stipulated in %ritin#. He!e, the pa!ties a2!ee( in #!itin2 on Fe4!&a!0 %%, %+@) that the !ate o inte!est on the petitione!sK 'oan sha'' 4e )1M pe! ann&3. At the ti3e the pa!ties ente!e( into the 'oan t!ansa$tion, the app'i$a4'e 'a# #as the Us&!0 La# 8A$t )>**9, as a3en(e( 40 P.D. No. %>>, #hi$h p!o"i(es that the !ate o inte!est o! the o!4ea!an$e o 3one0 #hen se$&!e( 40 a 3o!t2a2e &pon !ea' estate, sho&'( not 4e 3o!e than >M pe! ann&3 o! the 3aDi3&3 !ate p!es$!i4e( 40 the /oneta!0 5oa!( o the Cent!a' 5an6 o the Phi'ippines in o!$e at the ti3e the 'oan #as 2!ante(. Cent!a' 5an6 Ci!$&'a! No. .@;, #hi$h too6 e e$t on J&'0 %, %+@%, !e3o"e( the $ei'in2 on inte!est !ates on a $e!tain $'ass o 'oans, th&s:$!a:na( SECTION ). The inte!est !ate on a 'oan o!4ea!an$e o an0 3one0, 2oo(s, o! $!e(its #ith a 3at&!it0 o 3o!e than se"en h&n(!e( thi!t0 8.;<9 (a0s sha'' not 4e s&4Be$t to an0 $ei'in2. > $han!o4'es"i!t&a''a#'i4a!0 In the p!esent $ase, the te!3 o the s&4Be$t 'oan is o! a pe!io( o %< 0ea!s. Consi(e!in2 that its 3at&!it0 is 3o!e than .;< (a0s, the inte!est !ate is not s&4Be$t to an0 $ei'in2 o''o#in2 the a4o"e p!o"ision. The!e o!e, the )1M inte!est !ate a2!ee( &pon 40 pa!ties (oes not "io'ate the Us&!0 La#, as a3en(e( 40 P.D. %%>. This Co&!t has $onsistent'0 he'( that o! so3eti3e no#, &s&!0 has 4een 'e2a''0 non,ineDistent an( that inte!est $an no# 4e $ha!2e( as 'en(e! an( 4o!!o#e! 3a0 a2!ee &pon. . As a 3atte! o a$t, Se$tion % o Cent!a' 5an6 Ci!$&'a! No. +<* states that:$!a:na(

SECTION %. The !ate o inte!est, in$'&(in2 $o33issions, p!e3i&3s, ees an( othe! $ha!2es , on a 'oan o! o!4ea!an$e o an0 3one0, 2oo(s, o! $!e(its, !e2a!('ess o 3at&!it0 an( #hethe! se$&!e( o! &nse$&!e(, that 3a0 4e $ha!2e( o! $o''e$te( 40 an0 pe!son, #hethe! nat&!a' o! B&(i$ia', sha'' not 4e s&4Be$t to an0 $ei'in2 p!es$!i4e( &n(e! o! p&!s&ant to the Us&!0 La#, as a3en(e(. @ $han!o4'es"i!t&a''a#'i4a!0 /o!eo"e!, in 2rade A ;nvestment Development Corporation of the Philippines v. Roblett ;ndustrial Construction Corporation, + this Co&!t has !&'e( that:$!a:na( Aith the s&spension o the Us&!0 La# an( the !e3o"a' o inte!est $ei'in2, the pa!ties a!e !ee to stip&'ate the inte!est to 4e i3pose( on 3oneta!0 o4'i2ations. A4sent an0 e"i(en$e o !a&(, &n(&e in '&en$e, o! an0 "i$e o $onsent eDe!$ise( 40 one pa!t0 a2ainst the othe!, the inte!est !ate a2!ee( &pon is 4in(in2 &pon the3. The!e is no in(i$ation in the !e$o!(s that an0 o the in$i(ents #hi$h "itiate $onsent on the pa!t o petitione!s is p!esent. In(ee(, the inte!est !ate a2!ee( &pon is 4in(in2 on the3. Aith !espe$t to the pena't0 an( se!"i$e $ha!2es, the sa3e a!e &n$ons$iona4'e o! eD$essi"e. Petitione!s in"o6e this Co&!tKs !&'in2s in A'3e(a "s. Co&!t o Appea's %< an( /e(e' "s. Co&!t o Appea's %% to sho# that the inte!est !ate in the s&4Be$t p!o3isso!0 note is &n$ons$iona4'e. Thei! !e'ian$e on these $ases is 3isp'a$e(. In Almeda, #hat this Co&!t st!&$6 (o#n as 4ein2 &n$ons$iona4'e an( eD$essi"e #as the &ni'ate!a' in$!ease in the inte!est !ates !o3 1=J to :=J. This Co&!t !&'e( th&s:$!a:na( It is p'ain'0 o4"io&s, the!e o!e, !o3 the &n(isp&te( a$ts o the $ase that !espon(ent 4an6 u'*0a+era00y a0+ere- +,e +er1/ o4 *+/ 3o'+ra3+ by *'3rea/*'6 +,e *'+ere/+ ra+e/ o4 +,e 0oa' (*+,ou+ +,e .r*or a//e'+ o4 +,e 0a++er. In a$t, the 3anne! o a2!ee3ent is itse' eDp'i$it'0 stip&'ate( 40 the Ci"i' Co(e #hen it p!o"i(es, in A!ti$'e %+*>, that NNo inte!est sha'' 4e (&e &n'ess it has 4een eDp!ess'0 stip&'ate( in #!itin2.N Ahat has 4een Nstip&'ate( in #!itin2N !o3 a pe!&sa' o the inte!est !ate p!o"ision o the $!e(it a2!ee3ent si2ne( 4et#een the pa!ties is that petitione!s #e!e 4o&n( 3e!e'0 to pa0 )%M inte!est D D D. Petitione!s a'so $annot in( !e &2e in /e(e'. In this $ase, #hat this Co&!t (e$'a!e( as &n$ons$iona4'e #as the i3position o a BBC inte!est !ate pe! ann&3. In the instant $ase, the inte!est !ate is on'0 3/C per annum, a2!ee( &pon 40 4oth pa!ties. 50 no 3eans $an it 4e $onsi(e!e( &n$ons$iona4'e o! eD$essi"e. Ve!i'0, petitione!s $annot no# !ene2e on thei! o4'i2ation to $o3p'0 #ith #hat is in$&34ent &pon the3 &n(e! the 'oan a2!ee3ent. A $ont!a$t is the 'a# 4et#een the pa!ties an( the0 a!e 4o&n( 40 its stip&'ations. %) $han!o4'es"i!t&a''a#'i4a!0 Petitione!s &!the! $onten( that (&!in2 the $'os&!e o !espon(ent 4an6 8 !o3 Jan&a!0 %, %+@* to J&'0 %, %++19, it 'ost its &n$tion as a 4an6in2 instit&tion an(, the!e o!e, $o&'( no 'on2e! $ha!2e inte!ests an( instit&te o!e$'os&!e p!o$ee(in2s. In the $ase o (anco 1ilipino 8avin#s A ort#a#e (an? vs. onetar) (oard, Central (an? of the Philippines, %; this Co&!t !&'e( that the 4an6Ks $'os&!e (i( not (i3inish the a&tho!it0 an( po#e!s o the (esi2nate( 'i:&i(ato! to e e$t&ate an( $a!!0 on the a(3inist!ation o the 4an6, th&s:$!a:na( D D D. Ae (i( not p!ohi4it ho#e"e! a$ts s&$h as !e$ei"in2 $o''e$ti4'es an( !e$ei"a4'es o! pa0in2 o $!e(ito!sK $'ai3s an( othe! t!ansa$tions pe!tainin2 to the no!3a' ope!ations o a 4an6. The!e is no (o&4t that that the p!ose$&tion o s&its o! $o''e$tion an( the o!e$'os&!e o 3o!t2a2es a2ainst (e4to!s o the 4an6 40 the 'i:&i(ato! a!e a3on2 the &s&a' an( o!(ina!0 t!ansa$tions pe!tainin2 to the a(3inist!ation o a 4an6. D D D. Li6e#ise, in (anco 1ilipino 8avin#s and ort#a#e (an? vs. @bae&, %1 #he!e one o the iss&es #as #hethe! !espon(ent 4an6 $an $o''e$t inte!est on its 'oans (&!in2 its pe!io( o 'i:&i(ation an( $'os&!e, this Co&!t he'(:$!a:na( In 5an$o Fi'ipino Sa"in2s an( /o!t2a2e 5an6 ". /oneta!0 5oa!(, the "a'i(it0 o the $'os&!e an( !e$ei"e!ship o 5an$o Fi'ipino #as p&t in iss&e. 5&t the pen(en$0 o the $ase (i( not (i3inish the a&tho!it0 o the (esi2nate( 'i:&i(ato! to a(3iniste! an( $ontin&e the 4an6Ks t!ansa$tions. The Co&!t a''o#e( the 4an6 'i:&i(ato! to $ontin&e !e$ei"in2 $o''e$ti4'es an( !e$ei"a4'es o! pa0in2 o $!e(ito!Ks $'ai3s an( othe! t!ansa$tions pe!tainin2 to no!3a' ope!ations o a 4an6. A3on2 these t!ansa$tions #e!e the p!ose$&tion o s&its a2ainst (e4to!s o! $o''e$tion an( o! o!e$'os&!e o 3o!t2a2es. The 4an6 #as a''o#e( to $o''e$t inte!ests on its 'oans #hi'e &n(e! 'i:&i(ation, p!o"i(e( that the inte!ests #e!e 'e2a'.

In ine, #e ho'( that the inte!est !ate on the 'oan a2!ee( &pon 4et#een the pa!ties is not eD$essi"e o! &n$ons$iona4'eC an( that (&!in2 the $'os&!e o !espon(ent 4an6, it $o&'( sti'' &n$tion as a 4on(in2 instit&tion, hen$e, $o&'( $ontin&e $o''e$tin2 inte!ests !o3 petitione!s. 8#EREFORE, #e DENA the petition an( FF$R; the $ha''en2e( De$ision an( Reso'&tion o the Co&!t o Appea's in CA, -.R. CV No. 1..;). Costs a2ainst petitione!s. SO ORDERED. G.R. No. %930BB1 ;ay 2=, 19=4 %$ ; % 8, Plaintiff-Appellee, "s. O%A;P$C S 8;$%% CO. a'- E%$NO %EE C#$, (e en(ants,appe''ants.

/ELENCIO,HERRERA, J.= This is an appea' 40 (e en(ants !o3 a De$ision !en(e!e( 40 the then Co&!t o Fi!st Instan$e o 5&'a$an. The appea' #as o!i2ina''0 ta6en to the then Co&!t o Appea's, #hi$h en(o!se( it to this instan$e statin2 that the iss&e in"o'"e( #as one o 'a#.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 It appea!s that on o! a4o&t Septe34e! ., %+*., p'ainti 'oane( P%<,<<<.<<, #itho&t inte!est, to (e en(ant pa!tne!ship an( (e en(ant E'ino Lee Chi, as the 3ana2in2 pa!tne!. The 'oan 4e$a3e &'ti3ate'0 (&e on Jan&a!0 ;%, %+><, 4&t #as not pai( on that (ate, #ith the (e4to!s as6in2 o! an eDtension o th!ee 3onths, o! &p to Ap!i' ;<, %+><.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 On /a!$h %., %+><, the pa!ties eDe$&te( anothe! 'oan (o$&3ent. Pa03ent o the P%<,<<<.<< #as eDten(e( to Ap!i' ;<, %+><, 4&t the o4'i2ation #as in$!ease( 40 P>,<<<.<< as o''o#s: That the s&3 o SIH THOUSAND PESOS 8P>,<<<.<<9, Phi'ippine $&!!en$0 sha'' o!3 pa!t o the p!in$ipa' o4'i2ation to ans#e! o! atto!ne0Ks ees, 'e2a' inte!est, an( othe! $ost in$i(ent the!eto to 4e pai( &nto the $!e(ito! an( his s&$$esso!s in inte!est &pon the te!3ination o this a2!ee3ent. De en(ants a2ain ai'e( to pa0 thei! o4'i2ation 40 Ap!i' ;<, %+>< an(, on Septe34e! );, %+><, p'ainti instit&te( this $o''e$tion $ase. De en(ants a(3itte( the P%<,<<<.<< p!in$ipa' o4'i2ation, 4&t $'ai3e( that the a((itiona' P>,<<<.<< $onstit&te( &s&!io&s inte!est.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Upon app'i$ation o p'ainti , the T!ia' Co&!t iss&e(, on the sa3e (ate o Septe34e! );, %+><, a #!it o Atta$h3ent on !ea' an( pe!sona' p!ope!ties o (e en(ants 'o$ate( at Ka!an2'an, N&e"a E$iBa. A te! the A!it o Atta$h3ent #as i3p'e3ente(, p!o$ee(in2s 4e o!e the T!ia' Co&!t "e!se( p!in$ipa''0 in !e2a!(s to the atta$h3ent.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 On Jan&a!0 %@, %+>%, an O!(e! #as iss&e( 40 the T!ia' Co&!t statin2 that Nafter considerin# the manifestation of both counsel in Chambers, the Co&!t he!e40 a''o#s 4oth pa!ties to si3&'taneo&s'0 s&43it a /otion o! S&33a!0 J&(23ent. 1 The p'ainti i'e( his /otion o! S&33a!0 J&(23ent on Jan&a!0 ;%, %+>%, #hi'e (e en(ants i'e( thei!s on Fe4!&a!0 ), %+>'. 2 $han!o4'es "i!t&a' 'a# 'i4!a!0 On J&ne )>, %+>%, the T!ia' Co&!t !en(e!e( (e$ision o!(e!in2 (e en(ants to pa0 p'ainti Nthe a3o&nt o P%<,<<<.<< p'&s the &!the! s&3 o P>,<<<.<< 40 #a0 o 'i:&i(ate( (a3a2es . . . #ith 'e2a' !ate o inte!est on 4oth a3o&nts !o3 Ap!i' ;<, %+><.N It is !o3 this B&(23ent that (e en(ants ha"e appea'e(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ae ha"e (e$i(e( to a i!3.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Un(e! A!ti$'e %;*1 o the Ci"i' Co(e, in !e2a!(s to the a2!ee3ent o the pa!ties !e'ati"e to the P>,<<<.<< o4'i2ation, Nit is p!es&3e( that it eDists an( is 'a# &', &n'ess the (e4to! p!o"es the $ont!a!0N. No e"i(entia!0 hea!in2 ha"in2 4een he'(, it has to 4e

$on$'&(e( that (e en(ants ha( not p!o"en that the P>,<<<.<< o4'i2ation #as i''e2a'. Con i!3in2 the T!ia' Co&!tKs in(in2, #e "ie# the P>,<<<.<< o4'i2ation as 'i:&i(ate( (a3a2es s& e!e( 40 p'ainti , as o /a!$h %., %+><, !ep!esentin2 'oss o inte!est in$o3e, atto!ne0Ks ees an( in$i(enta's.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The 3ain th!&st o (e en(antsK appea' is the a''e2ation in thei! Ans#e! that the P>,<<<.<< $onstit&te( &s&!io&s inte!est. The0 insist the $'ai3 o &s&!0 sho&'( ha"e 4een (ee3e( a(3itte( 40 p'ainti as it #as Nnot (enie( spe$i i$a''0 an( &n(e! oathN. 3 $han!o4'es "i!t&a' 'a# 'i4!a!0 Se$tion + o the Us&!0 La# 8A$t )>**9 p!o"i(e(: SEC. +. 2he person or corporation sued sha'' i'e its ans#e! in #!itin2 &n(e! oath to an0 $o3p'aint 4!o&2ht o! i'e( a2ainst sai( pe!son o! $o!po!ation 4e o!e a $o3petent $o&!t to !e$o"e! the 3one0 o! othe! pe!sona' o! !ea' p!ope!t0, see(s o! a2!i$&'t&!a' p!o(&$ts, $ha!2e( o! !e$ei"e( in "io'ation o the p!o"isions o this A$t. The 'a$6 o ta6in2 an oath to an ans#e! to a $o3p'aint #i'' 3ean the a(3ission o the a$ts $ontaine( in the 'atte!. The o!e2oin2 p!o"ision en"isa2es a $o3p'aint i'e( a2ainst an entit0 #hi$h has $o33itte( &s&!0, o! the !e$o"e!0 o the &s&!io&s inte!est pai(. In that $ase, i the entit0 s&e( sha'' not i'e its ans#e! &n(e! oath (en0in2 the a''e2ation o &s&!0, the (e en(ant sha'' 4e (ee3e( to ha"e a(3itte( the &s&!0. The p!o"ision (oes not app'0 to a $ase, as in the p!esent, #he!e it is the (e en(ant, not the p'ainti , #ho is a''e2in2 &s&!0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 /o!eo"e!, o! so3eti3e no#, &s&!0 has 4een 'e2a''0 non,eDistent. Inte!est $an no# 4e $ha!2e( as 'en(e! an( 4o!!o#e! 3a0 a2!ee &pon. 4 The R&'es o Co&!t in !e2a!(s to a''e2ations o &s&!0, p!o$e(&!a' in nat&!e, sho&'( 4e $onsi(e!e( !epea'e( #ith !et!oa$ti"e e e$t. Stat&tes !e2&'atin2 the p!o$e(&!e o the $o&!ts #i'' 4e $onst!&e( as app'i$a4'e to a$tions pen(in2 an( &n(ete!3ine( at the ti3e o thei! passa2e. P!o$e(&!a' 'a#s a!e !et!ospe$ti"e in that sense an( to that eDtent. 5 ... Se$tion )18(9, Rep&4'i$ A$t No. @.>, 6no#n as the A!4it!ation La#, #hi$h too6 e e$t on %+ De$e34e! %+*;, an( 3a0 4e !et!oa$ti"e'0 app'ie( to the $ase at 4a! 4e$a&se it is p!o$e(&!a' in nat&!e. ... : AHEREFORE, the appea'e( B&(23ent is he!e40 a i!3e(, #itho&t p!ono&n$e3ent as to $osts.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 SO ORDERED. G.R. No. 139290 C ;ay 19, 200: "R DE D $N>ES";EN" DE>E%OP;EN" CORPOR "$ON OF "#E P#$%$PP$NES &For1er0y P,*0*..*'e E2.or+ D Fore*6' %oa' Guara'+ee Cor.ora+*o', Petitioner, v. ROB%E"" $NDUS"R$ % CONS"RUC"$ON CORPOR "$ON, ROBER"O G. B$ER a'- %E"$C$ B$ER , a'- P R ;OUN" $NSUR NCE CORPOR "$ON, Respondents. RESOLUTION "$NG , J.: Un(e! $onsi(e!ation a!e the 3otion o! !e$onsi(e!ation% (ate( ); De$e34e! )<<* an( s&pp'e3enta' 3otion o! !e$onsi(e!ation) (ate( ); Jan&a!0 )<<>, 4oth i'e( 40 !espon(ent Pa!a3o&nt Ins&!an$e Co!po!ation 8Pa!a3o&nt9 #ith !e2a!( to o&! De$ision; (ate( %% No"e34e! )<<* #hi$h (ispose( o the $ase as o''o#s:$!a:na( AHEREFORE, p!e3ises $onsi(e!e(, the petition is he!e40 -RANTED. The De$ision o the Co&!t o Appea's is REVERSED an( the B&(23ent o the Re2iona' T!ia' Co&!t is REINSTATED #ith the o''o#in2 3o(i i$ations: a9 o!(e!in2 !espon(ents Ro4'ett, the A4ie!as, an( Pa!a3o&nt, Boint'0 an( se"e!a''0, to pa0 petitione! Phi'2&a!antee the a3o&nt o P%%,..*,>%%.)*, #ith the o''o#in2 !ates o inte!est an( pena't0 $ha!2e, to #it:

i. o! !espon(ent Pa!a3o&nt, ei2hteen pe!$ent 8%@M9 inte!est pe! ann&3 !o3 * J&ne %++< &nti' &''0 pai(C ii. o! !espon(ents Ro4'ett an( the A4ie!as, siDteen pe!$ent 8%>M9 inte!est pe! ann&3 !o3 * J&ne %++< &nti' &''0 pai(C an( pena't0 $ha!2e o siDteen pe!$ent 8%>M9 pe! ann&3 $o3po&n(e( 3onth'0 !o3 * J&ne %++< &nti' &''0 pai(C 49 o!(e!in2 !espon(ents Ro4'ett an( the A4ie!as, Boint'0 an( se"e!a''0, to pa0 petitione! Phi'2&a!antee the a3o&nt o P%@,<)+,)%+..@ p'&s %)M inte!est the!eon !o3 the ti3e o ina'it0 o B&(23ent &nti' &''0 pai(C $9 o!(e!in2 !espon(ents Ro4'ett an( the A4ie!as, Boint'0 an( se"e!a''0, to pa0 petitione! Phi'2&a!antee ten pe!$ent 8%<M9 o P%%,..*,>%%.)*, as atto!ne0Ks ees, p'&s the $osts o s&itC (9 o!(e!in2 !espon(ent Pa!a3o&nt, Boint'0 an( se"e!a''0 #ith !espon(ents Ro4'ett an( the A4ie!as, to pa0 petitione! Phi'2&a!antee P%<<,<<<.<< as !easona4'e atto!ne0Ks eesC e9 o!(e!in2 !espon(ents Ro4'ett an( 5en'ot, Boint'0 an( se"e!a''0, to !ei34&!se !espon(ent Pa!a3o&nt #hate"e! a3o&nt it #o&'( pa0 petitione! Phi'2&a!antee in$'&(in2 a'' inte!ests, atto!ne0Ks ees an( the $ostsC an( 9 o!(e!in2 a'' the !espon(ents, Boint'0 an( se"e!a''0, an( the thi!(,pa!t0 (e en(ants, a'so Boint'0 an( se"e!a''0, to pa0 petitione! Phi'2&a!antee 'e2a' inte!est o %)M pe! ann&3 on the B&(23ent a#a!(s !espe$ti"e'0 a2ainst the3 !o3 the ti3e o ina'it0 o B&(23ent &nti' &''0 pai(. SO ORDERED.1 $!a In s&ppo!t o its 3otion o! !e$onsi(e!ation, Pa!a3o&nt s&43its the o''o#in2 2!o&n(s: 8%9 Pa!a3o&nt iss&e( a 4i((e!Ks 4on( an( not a pe! o!3an$e o! 2&a!antee 4on( so that #hen !espon(ent Ro4'ett In(&st!ia' Const!&$tion Co!po!ation 8Ro4'ett9 eDe$&te( the s&4,$ont!a$t a2!ee3ent, Pa!a3o&nt #as !e'ease( !o3 'ia4i'it0 the!e&n(e!C 8)9 petitione! is 2&i't0 o 3is!ep!esentation an( $on$ea'3ent in se$&!in2 Pa!a3o&ntKs $ontin&in2 $o33it3ent to ans#e! o! Ro4'ettKs !epa03ent s$he3eC 8;9 petitione! an( Ro4'ett ente!e( into a !eha4i'itation p!o2!a3 #hi$h no"ate( the p!in$ipa' o4'i2ation o the pa!ties !es&'tin2 in the (is$ha!2e o Pa!a3o&ntC 819 the s&4Be$t s&!et0 4on( eDpi!e( #itho&t an0 $'ai3 4ein2 3a(e a2ainst the sa3eC an( 8*9 Pa!a3o&nt is not 'ia4'e o! atto!ne0Ks ees. The s&pp'e3enta' 3otion o! !e$onsi(e!ation essentia''0 !eite!ates the a''e2ations an( a!2&3ents o&n( in the 3otion o! !e$onsi(e!ation #ith the a((itiona' $ontention that the inte!est $ha!2e on the p!in$ipa' (e4t is &n$ons$iona4'e. Ae ha"e pe!&se( the instant 3otions an( in( no ne# s&4stantia' a!2&3ents to #a!!ant the !e"e!sa' o! 3o(i i$ation o o&! Decision. Respon(entKs 3otion essentia''0 $on$e!ns iss&es that ha"e 4een passe( &pon an( &''0 $onsi(e!e( 40 the Co&!t in the (e$ision so&2ht to 4e !e$onsi(e!e(. Th&s, #e in( no $o2ent !eason to (epa!t !o3 the !&'in2 s&4Be$t o this !e$o&!se. The on'0 3atte! 'e t to 4e !eso'"e( is the "a'i(it0 o the inte!est $ha!2e a2ainst the p!in$ipa' a3o&nt in"o'"e( in this $ase. Un(e! the s&!et0 4on(,* Pa!a3o&nt 4o&n( itse' Boint'0 an( se"e!a''0 #ith Ro4'ett to pa0 petitione! to the eDtent o P%%,..*,>%%.;* o! #hate"e! (a3a2es an( 'ia4i'ities the 'atte! 3a0 s& e! 40 "i!t&e o its $o&nte!2&a!antee. Pa!a3o&nt &!the! a2!ee( to pa0 petitione! inte!est the!eon at the !ate o %@M pe! ann&3 !o3 the (ate o !e$eipt o petitione!Ks i!st (e3an( 'ette! &p to the (ate o a$t&a' pa03ent. In o&! De$ision, #e o&n( that none o the pa!ties :&estione( the "a'i(it0 o the stip&'ate( inte!est !ate. Fin(in2 the sa3e 'e2a', #e &phe'( its "a'i(it0. Aith the s&spension o the Us&!0 La# an( the !e3o"a' o inte!est $ei'in2, the pa!ties a!e !ee to stip&'ate the inte!est to 4e i3pose( on 3oneta!0 o4'i2ations. A4sent an0 e"i(en$e o !a&(, &n(&e in '&en$e, o! an0 "i$e o $onsent eDe!$ise( 40 one pa!t0 a2ainst the othe!, the inte!est !ate a2!ee( &pon is 4in(in2 &pon the3.> Ne"e!the'ess, #e !&'e( that Pa!a3o&ntKs 'ia4i'it0 the!e o! sho&'( $o33en$e !o3 the (ate o B&(i$ia' (e3an(, o! on * J&ne %++<, an( not !o3 the (ate petitione! 3a(e a o!3a' noti$e o (e3an( to Pa!a3o&nt. This is 4&t ai! as the (e'a0 in the pe! o!3an$e o Pa!a3o&nt is att!i4&ta4'e to the ai'&!e o petitione! to in o!3 the o!3e! o the (e"e'op3ents in the ne2otiations #ith Ro4'ett. Pa!a3o&nt a!2&es that it is 3a(e 'ia4'e o! app!oDi3ate'0 P1@ 3i''ion, the 4&'6 o #hi$h is the inte!est $ha!2e an( not the p!in$ipa' a3o&nt. It then s&43its that the inte!est is $'ea!'0 ini:&ito&s, &n$ons$iona4'e an( eDo!4itant, th&s $ont!a!0 to 3o!a's,. $itin2 o&! !&'in2 in /e(e' ". Co&!t o Appea's.@ In the sai( $ase, #e he'( as "oi( the stip&'ation on inte!est at the !ate o

*.*M pe! 3onth o! >>M pe! ann&3, on a P*<<,<<<.<< 'oan, the sa3e 4ein2 NeD$essi"e, ini:&ito&s, &n$ons$iona4'e an( eDo!4itant, hen$e, $ont!a!0 to 3o!a's 8N$ont!a 4onos 3o!esN9, i not a2ainst the 'a#.N+ $han!o4'es"i!t&a''a#'i4a!0 It #o&'( see3 that Pa!a3o&ntKs opposition to the inte!est a#a!(e( he!ein (oes not sp!in2 !o3 the in"a'i(it0 o the stip&'ate( inte!est !ate 4&t !athe! on the !es&'tin2 a3o&nt o inte!est $ha!2e a'one, #hi$h i $o&nte( !o3 the (ate o B&(i$ia' (e3an( #o&'( $o3e to !o&2h'0 P;) 3i''ion #hi$h is th!i$e the a3o&nt o the p!in$ipa' (e4t o P%%,..*,>%%.;*. Ahi'e the Co&!t !e$o2ni7es the !i2ht o the pa!ties to ente! into $ont!a$ts an( #ho a!e eDpe$te( to $o3p'0 #ith thei! te!3s an( o4'i2ations, this !&'e is not a4so'&te. Stip&'ate( inte!est !ates a!e i''e2a' i the0 a!e &n$ons$iona4'e %< an( the Co&!t is a''o#e( to te3pe! inte!est !ates #hen ne$essa!0. %% In eDe!$isin2 this "este( po#e! to (ete!3ine #hat is ini:&ito&s an( &n$ons$iona4'e, the Co&!t 3&st $onsi(e! the $i!$&3stan$es o ea$h $ase.%) Ahat 3a0 4e ini:&ito&s an( &n$ons$iona4'e in one $ase, 3a0 4e B&st in anothe!. In a n&34e! o $ases,%; this Co&!t e:&ita4'0 !e(&$e( the inte!est !ate a2!ee( &pon 40 the pa!ties o! 4ein2 ini:&ito&s, &n$ons$iona4'e, an(=o! eDho!4itant. Nota4'0 in the $ase o De"e'op3ent 5an6 o the Phi'ippines ". Co&!t o Appea's%1 , #hi'e this Co&!t he'( that !espon(ents #e!e 'ia4'e o! the stip&'ate( inte!est !ate o %@M pe! ann&3, #e e:&ita4'0 !e(&$e( the sa3e to %<M pe! ann&3 a te! in(in2 that the inte!ests an( pena't0 $ha!2es a'one eD$ee(e( the a3o&nt o the p!in$ipa' (e4t. As s&$h, the inte!ests #e!e o&n( to 4e eD$essi"e. Ae &!the! he'( that the a((itiona' pena't0 $ha!2e o @M pe! ann&3 #o&'( s& i$ient'0 $o"e! #hate"e! e'se (a3a2es petitione! 3a0 ha"e in$&!!e( s&$h as atto!ne0Ks ees an( 'iti2ation eDpenses. In the instant $ase, the !es&'tin2 inte!est $ha!2e has t&!ne( o&t to 4e eD$essi"e in the $onteDt o its 4ase $o3p&tation pe!io(, an( hen$e, &n#a!!ante( in a$t an( in ope!ation. Ae a!e not &n3in( &' o the 'en2th o ti3e this $ase has 4een pen(in2 in $o&!t o! #hi$h the a3o&nt in"o'"e( has 4a''oone( to the o&t!a2eo&s a3o&nt o 3o!e than P1* 3i''ion #hi$h is 4our +*1e/ the p!in$ipa' (e4t. Ahi'e #e ha"e s&staine( the "a'i(it0 o 3&$h hi2he! inte!est !ates o )%M pe! ann&3 in 5a&tista ". Pi'a! De"e'op3ent Co!po!ation%* an( )1M pe! ann&3 in -a!$ia ". Co&!t o Appea's%> as the a$t&a' $i!$&3stan$es the!ein #a!!ant, it is #e'' to note that $o3pa!e( to the instant $ase, the sai( $ases #e!e 'iti2ate( o! a sho!te! pe!io( o ti3e,%) 0ea!s an( ; 0ea!s, !espe$ti"e'0. De"e'op3ent 5an6 o the Phi'ippines%. #as ina''0 (e$i(e( a te! on'0 %< 0ea!s o 'iti2ation. He!e, the $o3p'aint #as i'e( in the 'o#e! $o&!t on * J&ne %++< o! siDteen 8%>9 0ea!s a2o. Conse:&ent'0, the a'!ea(0 h&2e p!in$ipa' (e4t s#e''e( to a $onsi(e!a4'0 (isp!opo!tionate s&3. Th&s, #e (ee3 an inte!est !ate o %)M pe! ann&3 is 3o!e !easona4'e &n(e! the $i!$&3stan$es. AHEREFORE, p!e3ises $onsi(e!e(, !espon(ent Pa!a3o&ntKs 3otion o! !e$onsi(e!ation an( s&pp'e3enta' 3otion o! !e$onsi(e!ation a!e -RANTED IN PART an( o&! assai'e( De$ision (ate( %% No"e34e! )<<* is he!e40 ;OD$F$ED. The inte!est !ate o %@M pe! ann&3 as stip&'ate( in the s&!et0 4on( is e:&ita4'0 !e(&$e( to %)M pe! ann&3. TheDecision is FF$R;ED 8$"# F$N %$"A in a'' othe! !espe$ts. SO ORDERED. [G. R. No. 13:0=0 C ?a'uary 1:, 2002] E S"ERN S#$PP$NG %$NES, $NC., Petitioner, v. COURT OF APPEALS an( /ANILA -AS CORPORATION, respondents. DECISION PARDO, J.: The Case The $ase is a petition o! !e"ie# on certiorari o the (e$ision o the Co&!t o Appea's?% #hi$h !e"e!se( that o the Re2iona' T!ia' Co&!t, /ani'a?) (i!e$tin2 the /et!opo'itan T!ia' Co&!t, /ani'a to ho'( in a4e0an$e the en o!$e3ent o its (e$ision?; o! eBe$t3ent, pen(in2 the !en(ition o (e$ision in $i"i' $ases in"o'"in2 the sa3e pa!ties on the iss&e o o#ne!ship o the s&4Be$t p!ope!t0.

The Fa$ts The a$ts, as o&n( 40 the Co&!t o Appea's, a!e as o''o#s: /ani'a -as Co!po!ation 8petitione!9, a 2o"e!n3ent $ont!o''e( $o!po!ation, is the o#ne! o a pa!$e' o 'an( sit&ate( at the easte!n si(e o San$ian2$o St!eet, Pa$o, /ani'a #ith t#o !onta2es on the no!the!n si(e o Pa7 /. -&an7on St!eet $ontainin2 an a!ea o %),><< s:&a!e 3ete!s, 3o!e o! 'ess. On No"e34e! +, %+@), petitione! ente!e( into a $ont!a$t o 'ease #ith Easte!n Shippin2 Lines, In$. 8p!i"ate !espon(ent9 #he!e40 it 'ease( to the 'atte! the a o!esai( p!ope!t0 o! a pe!io( o ten 8%<9 0ea!s 4e2innin2No"e34e! %*, %+@) &p to No"e34e! %*, %++). The pa!ties a2!ee(, a3on2 othe! thin2s, to the o''o#in2 pe!tinent stip&'ations, to #it: %. PERIOD OF LEASE The 'ease sha'' 4e o! ten 8%<9 0ea!s $o33en$in2 on No"e34e! %*, %+@) an( sha'' eDpi!e on No"e34e! %*, %++), &n'ess the sa3e 4e eDten(e( o! anothe! pe!io( s&4Be$t to 3&t&a' a2!ee3ent o 4oth pa!ties. Ho#e"e!, sho&'( the LESSOR (e$i(e to se'' the 'ease( p!e3ises (&!in2 the te!3 o the 'ease( pe!io(, he sho&'( noti 0 the LESSEE at 'east thi!t0 8;<9 (a0s !o3 !e$eipt o the noti$e &n(e! the te!3s an( $on(itions as 3a0 4e 3&t&a''0 a2!ee( &pon 40 the pa!ties. ). PRE,TER/INATION Pa!a2!aph % a4o"e not#ithstan(in2, the pa!ties he!eto a2!ee a te! the i th 0ea! o 'ease o the option=!i2ht to p!ete!3inate this Cont!a$t o Lease on an0 2!o&n( #hatsoe"e! #itho&t pena't0 p!o"i(e( a'' o&tstan(in2 o4'i2ations ha"e 4een sett'e( an( 2i"in2 one to the othe! %)< (a0s p!io! noti$e. 8Un(e!s$o!in2 s&pp'ie(9 On No"e34e! )), %+@), the pa!ties a3en(e( the $ont!a$t 40 'i3itin2 the a!ea to 4e $o"e!e( 40 the 'ease to %),%@+ s:&a!e 3ete!s on'0, he!eina te! !e e!!e( to as the 'ease( p!e3ises. On Jan&a!0 ;<, %+@+, 'ea!nin2 that petitione! #as a3on2 the 2o"e!n3ent,o#ne( o! $ont!o''e( $o!po!ations &n(e! $onsi(e!ation o! p!i"ati7ation an( sa'e, p!i"ate !espon(ent #!ote petitione! o its intention to eDe!$ise its option &n(e! C'a&se % o the 'ease $ont!a$t to p&!$hase the 'ease( p!e3ises. Respon(in2, petitione! #!ote p!i"ate !espon(ent that sin$e the 2o"e!n3ent 3an(ate is to p!i"ati7e o! se'' its sha!es o! the enti!e inte!est o the Nationa' De"e'op3ent Co3pan0 8NDC9 #ith petitione! an( not B&st assets an(=o! 'an(, it #as the opinion o its 5oa!( o Di!e$to!s that C'a&se % 3a0 not 4e in"o6e(. Petitione!, ho#e"e!, ass&!e( p!i"ate !espon(ent that in the p!epa!ation o the 4i((in2 2&i(e'ines, it #o&'( ta6e $o2ni7an$e o the 'ease an( p!esent the sa3e to the 4i((in2 p&4'i$ as pa!t o NDCs (is$'os&!es. On Septe34e! %., %++%, p!i"ate !espon(ent a2ain #!ote petitione!, a("isin2 it o its intention to eDten( the te!3 o the 'ease $ont!a$t o! anothe! ten 8%<9 0ea!s a te! its eDpi!ation on No"e34e! %*, %++), an( !eite!atin2 its p!e"io&s o e! to p&!$hase the 'ease( p!e3ises. On O$to4e! )@, %++%, petitione! a("ise( p!i"ate !espon(ent that it $o&'( not 2!ant its !e:&est o! a %<,0ea! eDtension as it ha( a'!ea(0 (!a#n &p its ina' p'ans to se'' the enti!e pa!$e' #hi$h $onsists o 1 'ots $o"e!e( 40 1 tit'es an( $ontainin2 a tota' a!ea o %*, 1>+.*< s:. 3. 8he!eina te! !e e!!e( to as the p!ope!t0 in :&estion9 in$'&(in2 the 'ease( p!e3ises an( #as p'annin2 to se'' it 4e o!e the 0ea! en(e(. An( petitione! in"o6e( its !i2ht to p!e,te!3inate the $ont!a$t &n(e! C'a&se ) the!eo , a("isin2 p!i"ate !espon(ent, ho#e"e!, to pa!ti$ipate, i it #ishe(, in the p&4'i$ 4i((in2. T#o p&4'i$ 4i((in2s #e!e 'ate! he'( 40 petitione! 4&t ai'e( on a$$o&nt o #hi$h it (e$i(e( to instea( se'' the p!ope!t0 in :&estion on the 4ases o a ne2otiate( sa'e #hi$h it anno&n$e( #o&'( 4e he'( on Fe4!&a!0 %<, %++). On Fe4!&a!0 %<, %++), th!ee 4i((e!s o the p!ope!t0 in :&estion in$'&(in2 p!i"ate !espon(ent #ho 3a(e $'ea! that its pa!ti$ipation sho&'( not 4e inte!p!ete( as a #ai"e! o its option to p&!$hase &n(e! the $ont!a$t ten(e!e( thei! !espe$ti"e o e!s. The 'a# i!3 o Ca!a2, Ca4a''es, Ja3o!a J So3e!a #ho 3a(e a 4i( o! an &n(is$'ose( $'ient e3e!2e( as the hi2hest 4i((e! at P@<,)%@,<<<.<< o! the p!ope!t0 in :&estion. P!i"ate !espon(ent then in o!3e( petitione!, 40 'ette! o Fe4!&a!0 %., %++), that it #as eDe!$isin2 its p!e e!entia' !i2ht to p&!$hase the p!ope!t0 in :&estion o! the sa3e a3o&nt as that ten(e!e( 40 the hi2hest 4i((e!, en$'osin2 the!e#ith a $ashie!s $he$6 o! P*,>1>,1<1 !ep!esentin2 %<M o the p&!$hase p!i$e, an( p!o3isin2 to pa0 the !e3ainin2 +<M #ithin ;< (a0s !o3

eDe$&tion o the ina' (ee( o a4so'&te sa'e in its a"o!. P!i"ate !espon(ent at the sa3e ti3e !ese!"e( its !i2ht to :&estion the o e! o the hi2hest 4i((e! on the 2!o&n( o "io'ation o $e!tain 4i((in2 !&'es an( !e2&'ation an( o e!e( to p&!$hase the p!ope!t0 in :&estion, in the e"ent the sai( hi2hest 4i((e! is (is:&a'i ie(, at the neDt hi2hest ten(e!e( p!i$e o P>*,<<1,;><.<<. Petitione! !et&!ne( the $ashie!s $he$6 to p!i"ate !espon(ent an(, 40 'ette! o /a!$h %>, %++) sent 40 its $o&nse', the O i$e o the -o"e!n3ent Co!po!ate Co&nse', o!3a''0 (e3an(e( p!i"ate !espon(ent to "a$ate the 'ease( p!e3ises #ithin * (a0s !o3 !e$eipt the!eo , a''e2in2 that its $ontin&e( o$$&pan$0 4e0on( Fe4!&a!0 )*, %++), the eDpi!ation o the %)<,(a0 2!a$e pe!io( !o3 O$to4e! )+, %++% 2i"en to it in a$$o!(an$e #ith the $ont!a$t ha( 4e$o3e &n'a# &'. P!i"ate !espon(ent !e &se( to 'ea"e the 'ease( p!e3ises, ho#e"e!, hen$e, petitione! i'e( on Ap!i' %*, %++) the p!esent &n'a# &' (etaine! $ase a2ainst it #ith the /et!opo'itan T!ia' Co&!t 8/TC9 o /ani'a #hi$h #as (o$6ete( as Ci"i' Case No. +1,.%;+; an( !a 'e( to 5!an$h % the!eo . P!i"ate !espon(ent, as (e en(ant, a''e2e( in its Ans#e! #ith Co&nte!$'ai3 that petitione!, as p'ainti , ha( $o3e to $o&!t #ith &n$'ean han(s, an( ha( s&pp!esse( the t!&e a$ts o the $ase in o!(e! to (is2&ise it as one o! eBe$t3ent #hen it #as not as the 'ease $ont!a$t the0 ente!e( into is $o&p'e( #ith inte!estC that at the 3ost, it is (ee3e( to ha"e p&!$hase( the 'ease( p!e3ises at the te!3s an( $on(itions o the hi2hest 4i((e! at the ne2otiate( sa'e p!o$ee(in2s on Fe4!&a!0 %<, %++) o!, at the 'east, it is entit'e( to eDe!$ise its !i2ht o i!st !e &sa'C an( that at the "e!0 'east, it is entit'e( to a (e$'a!ation that the 'ease is (ee3e( !ene#e( o! anothe! ten 8%<9 0ea!s 4e2innin2 No"e34e! %>, %++). On /a!$h ), %++;, petitione! i'e( a S&pp'e3enta' Co3p'aint a"e!!in2 that as the %<,0ea! 'ease pe!io( ha( a'!ea(0 eDpi!e(, the $ontin&e( o$$&pan$0 40 p!i"ate !espon(ent o the 'ease( p!e3ises ha( 4e$o3e &n'a# &' an( #itho&t 4ases i!!espe$ti"e o #hethe! o! not the $ont!a$t o 'ease #as p!ete!3inate(. P!i"ate !espon(ent, in its S&pp'e3enta' Ans#e! #ith Co&nte!$'ai3, $o&nte!e( that petitione! is 4a!!e( 40 estoppe' an( 'a$hes !o3 in"o6in2 the a&to3ati$ eDpi!ation o the $ont!a$t. D&!in2 the pen(en$0 o the eBe$t3ent $ase 4e o!e the /TC, a $e!tain Santia2o C&a 8C&a9 i'e( a $ase o! inB&n$tion 4e o!e the Re2iona' T!ia' Co&!t 8RTC9 o /ani'a a2ainst petitione! see6in2 to enBoin petitione! !o3 p!o$ee(in2 #ith its 4i((in2 o the p!ope!t0 in :&estion, $'ai3in2 that he #as the hi2hest 4i((e! in a p!e"io&s 4i((in2 an(, the!e o!e, petitione! sho&'( a#a!( an( se'' the sa3e to it. The $ase #as (o$6ete( as Ci"i' Case No. +),><+>* an( #as !a 'e( to 5!an$h 1+ o the sai( $o&!t. P!i"ate !espon(ent inte!"ene( in sai( $ase, in"o6in2 its !i2ht o i!st !e &sa'. C&a 'ate! 3o"e( to (is3iss the $ase #hi$h #as 2!ante(. The (is3issa' #as appea'e( 40 p!i"ate !espon(ent to this Co&!t an( is no# pen(in2 $onsi(e!ation in CA,-. R. CV No. 1<++.. On Ap!i' %1, %++1, p!i"ate !espon(ent i'e( at the RTC o /ani'a a $ase a2ainst petitione! an( C&a, (o$6ete( as Ci"i' Case No. +1,.<%1<, see6in2 to ann&' the sa'e o a ;,%+@.@< s:&a!e 3ete! 'ot $o"e!e( 40 TCT ;+1@) eDe$&te( 40 petitione! in a"o! o C&a, #hi$h 'ot (oes not o!3 pa!t o the p!ope!t0 in :&estion. The pen(en$0 o the t#o a4o"e,3entione( $ases #as in"o6e( 40 p!i"ate !espon(ent in its Position Pape! i'e( onJ&'0 )), %++; #ith the /TC as 2!o&n( o! the s&spension o the eBe$t3ent p!o$ee(in2s. In a (e$ision o J&ne %>, %++1, the /TC !eBe$te( p!i"ate !espon(ents position an( &phe'( petitione!s p!ete!3ination o the 'ease $ont!a$t (&e to the a4sen$e o a 3&t&a' a2!ee3ent 40 the pa!ties o! its eDtension. The /TC he'( that sin$e the pa!ties ai'e( to !ea$h a 3&t&a' a2!ee3ent on the p&!$hase o the 'ease( p!e3ises, the!e is no 4asis in $on$'&(in2 that p!i"ate !espon(ent ha( p&!$hase( the sa3eC an( that the pen(en$0 o the t#o othe! $i"i' $ases #as not a 4a! to the !eso'&tion o the eBe$t3ent $ase. The (e$!eta' pa!t o the /TC (e$ision !ea(s: Ahe!e o!e, B&(23ent is he!e40 !en(e!e( in a"o! o p'ainti , o!(e!in2 (e en(ant, its !ep!esentati"es, a2ents, e3p'o0ees an( assi2ns, to "a$ate the 'ease( p!e3ises an( to pa0 to p'ainti the o''o#in2: a9 Pa03ent o! the &se o the 'ease( p!e3ise( in the a3o&nt o One H&n(!e( T#ent0 SiD Tho&san( Pesos 8P%)>,<<<. <<9 pe! 3onth sta!tin2 on Fe4!&a!0 )*, %++), &nti' (e en(ant "a$ates the 'ease( p!e3isesC 49 Atto!ne0s ees in the a3o&nt o Fi t0 Tho&san( Pesos 8P*<,<<<.<<9C $9 Costs o s&it.

P!i"ate !espon(ent appea'e( the /TC (e$ision to the RTC o /ani'a #he!e it #as (o$6ete( as Ci"i' Case No. +1,%;+;. On J&ne ), %++*, !espon(ent $o&!t, 5!an$h ;1 o the RTC o /ani'a to #hi$h the appea' #as !a 'e(, !en(e!e( a (e$ision the (ispositi"e po!tion o #hi$h !ea(s: AHEREFORE, 'et the !e$o!( 4e !e3an(e( to the Co&!t a :&o #ith &!the! o!(e! to ho'( the en o!$e3ent o the (e$ision in a4e0an$e pen(in2 ina' (e$ision o the $ases, na3e'0, CA,-. R. CV No. 1<++., entit'e( Santia2o C&a, p'ainti ,appe''ee "s. /ani'a -as Co!po!ation, et a'., (e en(ant,appe''ant, Easte!n Shippin2 Lines, In$., p'ainti ,inte!"eno!,appe''ant 4ein2 $onsi(e!e( 40 the Co&!t o Appea's an( Ci"i' Case No. +1,.<%1<, entit'e( Easte!n Shippin2 Lines "s. /ani'a -as Co!po!ation, et a'. pen(in2 t!ia' 4e o!e 5!an$h 1. o the Re2iona' T!ia' Co&!t o /ani'a.The!ea te!, to !en(e! a (e$ision 4ase( !o3 the ina' (e$ision on the a4o"e,$aptione( $ase. 8Un(e!s$o!in2 s&pp'ie(9.?1 On A&2&st )@, %++*, !espon(ent /ani'a -as Co!po!ation i'e( #ith the Co&!t o Appea's a petition o! !e"ie# o the !e2iona' t!ia' $o&!t (e$ision.?* On De$e34e! %, %++;, petitione! Easte!n Shippin2 Lines, In$. i'e( an ans#e! to the petition.?> On /a!$h %;, %++@, the Co&!t o Appea's p!o3&'2ate( a (e$ision,?. !e"e!sin2 the (e$ision o the Re2iona' T!ia' Co&!t, /ani'a, 5!an$h ;1?@@Petition, AnneD U, Rollo, pp. )1%,)**.@ an( !einstatin2 the (e$ision o the /et!opo'itan T!ia' Co&!t, /ani'a, 5!an$h %.?+ On Ap!i' ., %++@, petitione! ESLI i'e( a 3otion o! !e$onsi(e!ation?%< o the (e$ision. On O$to4e! %+, %++@, the Co&!t o Appea's (enie( the 3otion.?%% Hen$e, this appea'.?%) The Iss&e The on'0 iss&e !aise( is #hethe! petitione! Easte!n Shippin2 Lines, In$. has &n'a# &''0 #ithhe'( possession o the s&4Be$t p!e3ises !o3 !espon(ent /ani'a -as Co!po!ation. The Co&!ts R&'in2 Ae (en0 the petition. An a$tion o! &n'a# &' (etaine! 3a0 4e i'e( #hen possession 40 a 'an('o!(, "en(o!, "en(ee o! othe! pe!son a2ainst #ho3 the possession o an0 'an( o! 4&i'(in2 is &n'a# &''0 #ithhe'(, a te! the eDpi!ation o! te!3ination o the !i2ht to ho'( possession, 40 "i!t&e o a $ont!a$t, eDp!ess o! i3p'ie(.?%; In /an&e' ". Co&!t o Appea's,?%1 #e $ate2o!i$a''0 state( that: P!o$ee(in2s in o!$i4'e ent!0 an( (etaine! a!e #ho''0 s&33a!0 in nat&!e. The a$t o 'ease an( the eDpi!ation o its te!3s a!e the on'0 e'e3ents o this 6in( o a$tion. The :&estion o o#ne!ship is &nessentia' an( sho&'( 4e !aise( 40 the (e en(ant in an app!op!iate a$tion. An0 $ont!o"e!s0 o"e! o#ne!ship !i2hts $o&'( an( sho&'( 4e sett'e( a te! the pa!t0 #ho ha( the p!io!, pea$e &' an( a$t&a' possession is !et&!ne( to the p!ope!t0. In the $ase at 4a!, the 'ease $ont!a$t 4et#een the pa!ties #as e e$ti"e'0 p!ete!3inate( p&!s&ant to the stip&'ations the!eo . At an0 !ate, the 'ease pe!io( eDpi!e( on No"e34e! %*, %++). Th&s, as $o!!e$t'0 he'( 40 the Co&!t o Appea's, e"en ass&3in2 that the p!e,te!3ination o the $ont!a$t #as not "a'i('0 eDe!$ise(, the $ont!a$t o 'ease has nonethe'ess eDpi!e( #itho&t the pa!ties ente!in2 into a 3&t&a' a2!ee3ent eithe! eDten(in2 o! !ene#in2 it, th&s !en(e!in2 &n'a# &' the o$$&pation o the p!e3ises 40 petitione! Easte!n Shippin2 Lines, In$. Conse:&ent'0, ha"in2 4een 2i"en a (e3an( to "a$ate the p!e3ises in :&estion, petitione! Easte!n Shippin2 Lines, In$. is no# &n'a# &''0 #ithho'(in2 possession o the 'ease( p!ope!t0 !o3 /ani'a -as Co!po!ation, #hi$h is entit'e( to ph0si$a' possession as the !e2iste!e( o#ne! o the s&4Be$t 'an(. The a2e,o'( !&'e is that the pe!son #ho has a to!!ens tit'e o"e! a 'an( is entit'e( to possession the!eo .?%* In Co Tia3$o ". Dia7,?%> #e e3phasi7e( that the p!in$ip'e &n(e!'0in2 the 4!e"it0 an( si3p'i$it0 o p'ea(in2s in o!$i4'e ent!0 an( &n'a# &' (etaine! $ases !ests &pon $onsi(e!ations o p&4'i$ po'i$0. Cases o o!$i4'e ent!0 an( (etaine! a!e s&33a!0 in

nat&!e o! the0 in"o'"e pe!t&!4ation o so$ia' o!(e! #hi$h 3a0 4e !esto!e( as p!o3pt'0 as possi4'e, an(, a$$o!(in2'0, te$hni$a'ities o! (etai's o p!o$e(&!e #hi$h 3a0 $a&se &nne$essa!0 (e'a0s sho&'( 4e $a!e &''0 a"oi(e(.?%. S&$h $ases a!e (esi2ne( to p!o"i(e o! an eDpe(itio&s 3eans o p!ote$tin2 a$t&a' possession o! the !i2ht to possession o the p!ope!t0 in"o'"e(. ?%@ Easte!n Shippin2 Lines, In$. #hi$h is o$$&p0in2 the p!e3ises &p to the p!esent ti3e is $'ea!'0 &n'a# &''0 #ithho'(in2 possession a te! te!3ination o the 'ease pe!io( an( !e &ses to 'ea"e the p!ope!t0 (espite (e3an( to "a$ate the p!e3ises.?%+ Hen$e, a $o3p'aint o! &n'a# &' (etaine! #as p!ope!'0 i'e( #ithin one 8%9 0ea! the!e !o3.?)< In a$tions o o!$i4'e ent!0 an( (etaine!, the 3ain iss&e is possession de facto,?)% in(epen(ent'0 o an0 $'ai3 o o#ne!ship o! possession de 'ure that eithe! pa!t0 3a0 set o!th in his p'ea(in2.?)) As in$i(ents o the 3ain iss&e o possession de facto, the in e!io! $o&!t $an (e$i(e the :&estions o 8a9 #hethe! o! not the !e'ationship 4et#een the pa!ties is one o 'an('o!( an( tenantC 849 #hethe! o! not the!e is a 'ease $ont!a$t 4et#een the pa!ties, the pe!io( o s&$h 'ease $ont!a$t an( #hethe! o! not the 'ease $ont!a$t has a'!ea(0 eDpi!e(C 8$9 the B&st an( !easona4'e a3o&nt o the !ent?); an( the (ate #hen it #i'' ta6e e e$tC 8(9 the !i2ht o the tenant to 6eep the p!e3ises a2ainst the #i'' o the 'an('o!(C an( 8e9 i the (e en(ant has 4&i't on the 'an( a s&4stantia' an( "a'&a4'e 4&i'(in2 an( the!e is no (isp&te 4et#een the pa!ties as to the o#ne!ship o the 'an( an( the 4&i'(in2, thei! !i2hts a$$o!(in2 to the Ci"i' Co(e. De en(ants $'ai3 o o#ne!ship o the p!ope!t0 !o3 #hi$h p'ainti see6s to eBe$t hi3 is not s& i$ient to (i"est the in e!io! $o&!t o its B&!is(i$tion o"e! the a$tion o o!$i4'e ent!0 an( (etaine!.?)1 In an &n'a# &' (etaine! $ase, the on'0 iss&e is #hethe! the (e en(ant has &n'a# &''0 #ithhe'( possession o the p!e3ises a te! the eDpi!ation o! te!3ination o its !i2ht to ho'( possession &n(e! an0 $ont!a$t, eDp!ess o! i3p'ie(. Th&s, #hen the !e'ationship o 'esso! an( 'essee is esta4'ishe( in an &n'a# &' (etaine! $ase, an0 atte3pt o the pa!ties to inBe$t the :&estion o o#ne!ship into the $ase is &ti'e, eD$ept inso a! as it 3i2ht th!o# 'i2ht on the !i2ht o possession. Petitione!, ho#e"e!, insists on its !i2ht o! option o i!st !e &sa' to p&!$hase the p!ope!t0 4e'on2in2 to /ani'a -as Co!po!ation to ho'( tena$io&s'0 on to the p!e3ises. As $o!!e$t'0 !&'e( 40 the Co&!t o Appea's, e"en i 8petitione!9 ha( the !i2ht o i!st !e &sa', its eDe!$ise $o&'( not 4e e:&ate( #ith a&to3ati$ o#ne!ship, 2i"en the inB&n$tion &n(e! C'a&se % 8&n(e! te!3s an( $on(itions as 3a0 4e 3&t&a''0 a2!ee( &pon 40 the pa!ties9 o the $ont!a$t that the pa!ties 3&st i!st a!!i"e at te!3s an( $on(itions 3&t&a''0 a$$epta4'e to the3, 4&t the!e #as none.?)* Nonethe'ess, an0 s&ppose( iss&e as to petitione! Easte!n Shippin2 Lines, In$.s !i2ht o! option o i!st !e &sa' is 'iti2ate( 4e o!e the Re2iona' T!ia' Co&!t, /ani'a,?)> #he!e a $ase o! spe$i i$ pe! o!3an$e 8p!a0in2 o! the iss&an$e o a Noti$e o A#a!(9 #as i'e( 40 Easte!n Shippin2 Lines, In$., as p'ainti ,inte!"eno! the!ein an( is sti'' pen(in2 4e o!e the t!ia' $o&!t. As he!eto o!e state(, petitione!s !i2ht o i!st !e &sa' $o&'( 4e sett'e( in the app!op!iate $o&!t hea!in2 the $ase. Ho#e"e!, in the eBe$t3ent $ase, it is eno&2h that the 'ease ea!'ie! ente!e( into 40 the pa!ties has eDpi!e( an( petitione! is &n'a# &''0 #ithho'(in2 possession o the p!e3ises !o3 its o#ne!, the /ani'a -as Co!po!ation. Hen$e, petitione! Easte!n Shippin2 Lines, In$. 3a0 4e e"i$te( the!e !o3. The Fa''o 8#EREFORE, the Co&!t DIS/ISSES the petition o! 'a$6 o 3e!it, an( AFFIR/S the (e$ision o the Co&!t o Appea's?). in toto. No $osts. SO ORDERED. G.R. No. %9::=2: u6u/+ 19, 19== B N! OF "#E P#$%$PP$NE $S% NDS, Petitioner, "s. "#E $N"ER;ED$ "E PPE%% "E COUR" a'@S#ORN C! Respondents.

COR"ES, J.: The o!i2ina' pa!ties to this $ase #e!e Ri7a'(0 T. Esho!na$6 an( the Co33e!$ia' 5an6 an( T!&st Co3pan0 o the Phi'ippines ?he!ea te! !e e!!e( to as NCO/TRUST.NI In %+@<, the 5an6 o the Phi'ippine Is'an(s 8he!ea te! !e e!!e( to as 5PI a4so!4e( CO/TRUST th!o&2h a $o!po!ate 3e!2e!, an( #as s&4stit&te( as pa!t0 to the $ase.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ri7a'(0 Esho!na$6 initiate( p!o$ee(in2s on J&ne )@,%+.> 40 i'in2 in the Co&!t o Fi!st Instan$e o Ri7a' , Ca'oo$an Cit0 a $o3p'aint a2ainst CO/TRUST a''e2in2 o&! $a&ses o a$tion. ED$ept o! the thi!( $a&se o a$tion, the CFI !&'e( in a"o! o Esho!na$6. The 4an6 appea'e( to the Inte!3e(iate Appe''ate Co&!t #hi$h 3o(i ie( the CFI (e$ision a4so'"in2 the 4an6 !o3 'ia4i'it0 on the o&!th $a&se o a$tion. The pe!tinent po!tions o the B&(23ent, as 3o(i ie(, !ea(: IN VIEA OF THE FORE-OIN-, the Co&!t !en(e!s B&(23ent as o''o#s: $han!o4'es "i!t&a' 'a# 'i4!a!0 %. O!(e!in2 the (e en(ant CO/TRUST to !esto!e to the (o''a! sa"in2s a$$o&nt o p'ainti 8No. )*,1%<+9 the a3o&nt o U.S P%,<<<.<< as o O$to4e! )., %+.* to ea!n inte!est to2ethe! #ith the !e3ainin2 4a'an$e o the sai( a$$o&nt at the !ate iDe( 40 the 4an6 o! (o''a! (eposits &n(e! Cent!a' 5an6 Ci!$&'a! ;1;C $han!o4'es "i!t&a' 'a# 'i4!a!0 ). O!(e!in2 (e en(ant CO/TRUST to !et&!n to the p'ainti the a3o&nt o U.S. P;,<<<.<< i33e(iate'0 &pon the ina'it0 o this (e$ision, #itho&t inte!est o! the !eason that the sai( a3o&nt #as 3e!e'0 he'( in $&sto(0 o! sa e6eepin2, 4&t #as not a$t&a''0 (eposite( #ith the (e en(ant CO/TRUST 4e$a&se 4ein2 $ash $&!!en$0, it $annot 40 'a# 4e (eposite( #ith p'ainti s (o''a! a$$o&nt an( (e en(antKs on'0 o4'i2ation is to !et&!n the sa3e to p'ainti &pon (e3an(C $han!o4'es "i!t&a' 'a# 'i4!a!0 DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 *. O!(e!in2 (e en(ant CO/TRUST to pa0 p'ainti in the a3o&nt o P@,<<<.<< as (a3a2es in the $on$ept o 'iti2ation eDpenses an( atto!ne0Ks ees s& e!e( 40 p'ainti as a !es&'t o the ai'&!e o the (e en(ant 4an6 to !esto!e to his 8p'ainti s9 a$$o&nt the a3o&nt o U.S. P%,<<<.<< an( to !et&!n to hi3 8p'ainti 9 the U.S. P;,<<<.<< $ash 'e t o! sa e6eepin2.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Costs a2ainst (e en(ant CO/TRUST.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 SO ORDERED. ?Ro''o, pp. 1.,1@.I Un(a&nte(, the 4an6 $o3es to this Co&!t p!a0in2 that it 4e tota''0 a4so'"e( !o3 an0 'ia4i'it0 to Esho!na$6. The 'atte! not ha"in2 appea'e( the Co&!t o Appea's (e$ision, the iss&es a$in2 this Co&!t a!e 'i3ite( to the 4an6Ks 'ia4i'it0 #ith !e2a!( to the i!st an( se$on( $a&ses o a$tion an( its 'ia4i'it0 o! (a3a2es.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 %. Ae i!st $onsi(e! the i!st $a&se o a$tion, On the (ates 3ate!ia' to this $ase, Ri7a'(0 Esho!na$6 an( his #i e, Shi!'e0 -o!ospe, 3aintaine( in CO/TRUST, F&e7on Cit0 5!an$h, a (o''a! sa"in2s a$$o&nt an( a peso $&!!ent a$$o&nt.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 On O$to4e! )., %+.*, an app'i$ation o! a (o''a! (!a t #as a$$o3p'ishe( 40 Vi!2i'io V. -a!$ia, Assistant 5!an$h /ana2e! o CO/TRUST F&e7on Cit0, pa0a4'e to a $e!tain Leo"i2i'(a D. Di7on in the a3o&nt o P%,<<<.<<. In the app'i$ation, -a!$ia in(i$ate( that the a3o&nt #as to 4e $ha!2e( to Do''a! Sa"in2s A$$t. No. )*,1%<+, the sa"in2s a$$o&nt o the Esho!na$6sC the $ha!2es o! $o33ission, (o$&3enta!0 sta3p taD an( othe!s tota''in2 P%..1> #e!e to 4e $ha!2e( to C&!!ent A$$t. No. )%<1>*,)+, a2ain, the $&!!ent a$$o&nt o the Esho!na$6s. The!e #as no in(i$ation o the na3e o the p&!$hase! o the (o''a! (!a t.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 On the sa3e (ate, O$to4e! ).,%+.*, CO/TRUST, &n(e! the si2nat&!e o Vi!2i'io V. -a!$ia, iss&e( a $he$6 pa0a4'e to the o!(e! o Leo"i2i'(a D. Di7on in the s&3 o US P%,<<< (!a#n on the Chase /anhattan 5an6, Ne# Go!6, #ith an in(i$ation that it #as to 4e $ha!2e( to Do''a! Sa"in2s A$$t. No. )*,1%<+.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0

Ahen Esho!na$6 noti$e( the #ith(!a#a' o USP%,<<<.<< !o3 his a$$o&nt, he (e3an(e( an eDp'anation !o3 the 4an6. In ans#e!, CO/TRUST $'ai3e( that the peso "a'&e o the #ith(!a#a' #as 2i"en to Att0. E!nesto Esho!na$6, J!., 4!othe! o Ri7a'(0, on O$to4e! )., %+.* #hen he 8E!nesto9 en$ashe( #ith CO/TRUST a $ashie!Ks $he$6 o! P@,1*<.<< iss&e( 40 the /ani'a 5an6in2 Co!po!ation pa0a4'e to E!nesto.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Upon $onsi(e!ation o the o!e2oin2 a$ts, this Co&!t in(s no !eason to (ist&!4 the !&'in2 o 4oth the t!ia' $o&!t an( the Appe''ate Co&!t on the i!st $a&se o a$tion. Petitione! 3&st 4e he'( 'ia4'e o! the &na&tho!i7e( #ith(!a#a' o USP%,<<<.<< !o3 p!i"ate !espon(entKs (o''a! a$$o&nt.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In its (espe!ate atte3pt to B&sti 0 its a$t o #ith(!a#in2 !o3 its (eposito!Ks sa"in2s a$$o&nt, the 4an6 has a(opte( in$onsistent theo!ies. Fi!st, it sti'' 3aintains that the peso "a'&e o the a3o&nt #ith(!a#n #as 2i"en to Att0. E!nesto Esho!na$6, J!. #hen the 'atte! en$ashe( the /ani'a4an6 Cashie!Ks Che$6. At the sa3e ti3e, the 4an6 $'ai3s that the #ith(!a#a' #as 3a(e p&!s&ant to an a2!ee3ent #he!e Esho!na$6 a''e2e('0 a&tho!i7e( the 4an6 to #ith(!a# !o3 his (o''a! sa"in2s a$$o&nt s&$h a3o&nt #hi$h, #hen $on"e!te( to pesos, #o&'( 4e nee(e( to &n( his peso $&!!ent a$$o&nt. I in(ee( the peso e:&i"a'ent o the a3o&nt #ith(!a#n !o3 the (o''a! a$$o&nt #as $!e(ite( to the peso $&!!ent a$$o&nt, #h0 (i( the 4an6 sti'' ha"e to pa0 E!nestoL $han!o4'es "i!t&a' 'a# 'i4!a!0 At an0 !ate, 4oth eDp'anations a!e &na"ai'in2. Aith !e2a!( to the i!st eDp'anation, petitione! 4an6 has not sho#n ho# the t!ansa$tion in"o'"in2 the $ashie!Ks $he$6 is !e'ate( to the t!ansa$tion in"o'"in2 the (o''a! (!a t in a"o! o Di7on inan$e( 40 the #ith(!a#a' !o3 Ri7a'(0Ks (o''a! a$$o&nt. The t#o t!ansa$tions appea! enti!e'0 in(epen(ent o ea$h othe!. /o!eo"e!, E!nesto Esho!na$6, J!., possesses a pe!sona'it0 (istin$t an( sepa!ate !o3 Ri7a'(0 Esho!na$6. Pa03ent 3a(e to E!nesto $annot 4e $onsi(e!e( pa03ent to Ri7a'(0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 As to the se$on( eDp'anation, e"en i #e ass&3e that the!e #as s&$h an a2!ee3ent, the e"i(en$e (o not sho# that the #ith(!a#a' #as 3a(e p&!s&ant to it. Instea(, the !e$o!( !e"ea's that the a3o&nt #ith(!a#n #as &se( to inan$e a (o''a! (!a t in a"o! o Leo"i2i'(a D. Di7on, an( not to &n( the $&!!ent a$$o&nt o the Esho!na$6s. The!e is no p!oo #hatsoe"e! that peso C&!!ent A$$o&nt No. )%<,1>*,)+ #as e"e! $!e(ite( #ith the peso e:&i"a'ent o the USP%,<<<.<< #ith(!a#n on O$to4e! )., %+.* !o3 Do''a! Sa"in2s A$$o&nt No. )*,1%<+.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 ). As o! the se$on( $a&se o a$tion, the $o3p'aint i'e( #ith the t!ia' $o&!t a''e2e( that on De$e34e! @, %+.*, Esho!na$6 ent!&ste( to CO/TRUST, th!& -a!$ia, US P;,<<<.<< cash8pop&'a!'0 6no#n as 2!een4a$6s9 o! safe?eepin#, an( that the a2!ee3ent #as e34o(ie( in a (o$&3ent, a $op0 o #hi$h #as atta$he( to an( 3a(e pa!t o the $o3p'aint. The (o$&3ent !ea(s: /a6ati Ca4'e A((!ess: $han!o4'es "i!t&a' 'a# 'i4!a!0 Phi'ippines NCO/TRUSTN $han!o4'es "i!t&a' 'a# 'i4!a!0 CO//ERCIAL 5ANK AND TRUST CO/PANG $han!o4'es "i!t&a' 'a# 'i4!a!0 o the Phi'ippines $han!o4'es "i!t&a' 'a# 'i4!a!0 F&e7on Cit0 5!an$h De$e34e! @, %+.* /R. RIEALDG T. ESHORNACK $han!o4'es "i!t&a' 'a# 'i4!a!0 J=OR /RS SHIRLEG E. ESHORNACK $han!o4'es "i!t&a' 'a# 'i4!a!0 Si!=/a(a3: Ae a$6no#'e(2e( 8si$9 ha"in2 !e$ei"e( !o3 0o& to(a0 the s&3 o US DOLLARS: THREE THOUSAND ONLG 8USP;,<<<.<<9 o! sa e6eepin2. Re$ei"e( 40: $han!o4'es "i!t&a' 'a# 'i4!a!0

8S2(.9 VIR-ILIO V. -ARCIA It #as a'so a''e2e( in the $o3p'aint that (espite (e3an(s, the 4an6 !e &se( to !et&!n the 3one0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In its ans#e!, CO/TRUST a"e!!e( that the USP;,<<< #as $!e(ite( to Esho!na$6Ks peso $&!!ent a$$o&nt at p!e"ai'in2 $on"e!sion !ates.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 It 3&st 4e e3phasi7e( that CO/TRUST (i( not (en0 spe$i i$a''0 &n(e! oath the a&thenti$it0 an( (&e eDe$&tion o the a4o"e inst!&3ent.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 D&!in2 t!ia', it #as esta4'ishe( that on De$e34e! @, %+.* Esho!na$6 in(ee( (e'i"e!e( to the 4an6 US P;,<<< o! sa e6eepin2. Ahen he !e:&este( the !et&!n o the 3one0 on /a0 %<, %+.>, CO/TRUST eDp'aine( that the s&3 #as (ispose( o in this 3anne!: USP),<<<.<< #as so'( on De$e34e! )+, %+.* an( the peso p!o$ee(s a3o&ntin2 to P%1,+)<.<< #e!e (eposite( to Esho!na$6Ks $&!!ent a$$o&nt pe! (eposit s'ip a$$o3p'ishe( 40 -a!$iaC the !e3ainin2 USP%,<<<.<< #as so'( on Fe4!&a!0 ;, %+.> an( the peso p!o$ee(s a3o&ntin2 to P@,;*<.<< #e!e (eposite( to his $&!!ent a$$o&nt pe! (eposit s'ip a'so a$$o3p'ishe( 40 -a!$ia.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Asi(e !o3 asse!tin2 that the USP;,<<<.<< #as p!ope!'0 $!e(ite( to Esho!na$6Ks $&!!ent a$$o&nt at p!e"ai'in2 $on"e!sion !ates, 5PI no# posits anothe! 2!o&n( to (e eat p!i"ate !espon(entKs $'ai3. It no# a!2&es that the $ont!a$t e34o(ie( in the (o$&3ent is the $ont!a$t o (eposit&3 8as (e ine( in A!ti$'e %+>), Ne# Ci"i' Co(e9, #hi$h 4an6s (o not ente! into. The 4an6 a''e2es that -a!$ia eD$ee(e( his po#e!s #hen he ente!e( into the t!ansa$tion. Hen$e, it is $'ai3e(, the 4an6 $annot 4e 'ia4'e &n(e! the $ont!a$t, an( the o4'i2ation is p&!e'0 pe!sona' to -a!$ia.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 5e o!e #e 2o into the nat&!e o the $ont!a$t ente!e( into, an i3po!tant point #hi$h a!ises on the p'ea(in2s, 3&st 4e $onsi(e!e(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The se$on( $a&se o a$tion is 4ase( on a (o$&3ent p&!po!tin2 to 4e si2ne( 40 CO/TRUST, a $op0 o #hi$h (o$&3ent #as atta$he( to the $o3p'aint. In sho!t, the se$on( $a&se o a$tion #as 4ase( on an a$tiona4'e (o$&3ent. It #as the!e o!e in$&34ent &pon the 4an6 to spe$i i$a''0 (en0 &n(e! oath the (&e eDe$&tion o the (o$&3ent, as p!es$!i4e( &n(e! R&'e @, Se$tion @, i it (esi!e(: 8%9 to :&estion the a&tho!it0 o -a!$ia to 4in( the $o!po!ationC an( 8)9 to (en0 its $apa$it0 to ente! into s&$h $ont!a$t. ?See, E.5. /e!$hant ". Inte!nationa' 5an6in2 Co!po!ation, > Phi'. ;%1 8%+<>9.I No s#o!n ans#e! (en0in2 the (&e eDe$&tion o the (o$&3ent in :&estion, o! :&estionin2 the a&tho!it0 o -a!$ia to 4in( the 4an6, o! (en0in2 the 4an6Ks $apa$it0 to ente! into the $ont!a$t, #as e"e! i'e(. Hen$e, the 4an6 is (ee3e( to ha"e a(3itte( not on'0 -a!$iaKs a&tho!it0, 4&t a'so the 4an6Ks po#e!, to ente! into the $ont!a$t in :&estion.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In the past, this Co&!t ha( o$$asion to eDp'ain the !eason 4ehin( this p!o$e(&!a' !e:&i!e3ent. The !eason o! the !&'e en&n$iate( in the o!e2oin2 a&tho!ities #i'', #e thin6, 4e !ea(i'0 app!e$iate(. In (ea'in2 #ith $o!po!ations the p&4'i$ at 'a!2e is 4o&n( to !e'0 to a 'a!2e eDtent &pon o&t#a!( appea!an$es. I a 3an is o&n( a$tin2 o! a $o!po!ation #ith the eDte!na' in(i$ia o a&tho!it0, an0 pe!son, not ha"in2 noti$e o #ant o a&tho!it0, 3a0 &s&a''0 !e'0 &pon those appea!an$esC an( i it 4e o&n( that the (i!e$to!s ha( pe!3itte( the a2ent to eDe!$ise that a&tho!it0 an( the!e40 he'( hi3 o&t as a pe!son $o3petent to 4in( the $o!po!ation, o! ha( a$:&ies$e( in a $ont!a$t an( !etaine( the 4ene it s&ppose( to ha"e 4een $on e!!e( 40 it, the $o!po!ation #i'' 4e 4o&n(, not#ithstan(in2 the a$t&a' a&tho!it0 3a0 ne"e! ha"e 4een 2!ante( $han!o4'es "i!t&a' 'a# 'i4!a!0 ... Ahethe! a pa!ti$&'a! o i$e! a$t&a''0 possesses the a&tho!it0 #hi$h he ass&3es to eDe!$ise is !e:&ent'0 6no#n to "e!0 e#, an( the p!oo o it &s&a''0 is not !ea(i'0 a$$essi4'e to the st!an2e! #ho (ea's #ith the $o!po!ation on the aith o the ostensi4'e a&tho!it0 eDe!$ise( 40 so3e o the $o!po!ate o i$e!s. It is the!e o!e !easona4'e, in a $ase #he!e an o i$e! o a $o!po!ation has 3a(e a $ont!a$t in its na3e, that the $o!po!ation sho&'( 4e !e:&i!e(, i it (enies his a&tho!it0, to state s&$h (e ense in its ans#e!. 50 this 3eans the p'ainti is app!ise( o the a$t that the a2entKs a&tho!it0 is $onteste(C an( he is 2i"en an oppo!t&nit0 to a((&$e e"i(en$e sho#in2 eithe! that the a&tho!it0 eDiste( o! that the $ont!a$t #as !ati ie( an( app!o"e(. ?Ra3i!e7 ". O!ienta'ist Co. an( Fe!nan(e7, ;@ Phi'. >;1, >1*, >1> 8%+%@9.I Petitione!Ks a!2&3ent 3&st a'so 4e !eBe$te( o! anothe! !eason. The p!a$ti$a' e e$t o a4so'"in2 a $o!po!ation !o3 'ia4i'it0 e"e!0 ti3e an o i$e! ente!s into a $ont!a$t #hi$h is 4e0on( $o!po!ate po#e!s, e"en #itho&t the p!ope! a''e2ation o! p!oo that the $o!po!ation has not a&tho!i7e( no! !ati ie( the o i$e!Ks a$t, is to $ast $o!po!ations in so pe! e$t a 3o'( that t!ans2!essions an(

#!on2s 40 s&$h a!ti i$ia' 4ein2s 4e$o3e i3possi4'e ?5isse'' ". /i$hi2an So&the!n an( N.I.R. Cos )) N.G )*@ 8%@><9.I NTo sa0 that a $o!po!ation has no !i2ht to (o &na&tho!i7e( a$ts is on'0 to p&t o!th a "e!0 p'ain t!&is3 4&t to sa0 that s&$h 4o(ies ha"e no po#e! o! $apa$it0 to e!! is to i3p&te to the3 an eD$e''en$e #hi$h (oes not 4e'on2 to an0 $!eate( eDisten$e #ith #hi$h #e a!e a$:&ainte(. The (istin$tion 4et#een po#e! an( !i2ht is no 3o!e to 4e 'ost si2ht o in !espe$t to a!ti i$ia' than in !espe$t to nat&!a' pe!sons.N ?;bid.I $han!o4'es "i!t&a' 'a# 'i4!a!0 Ha"in2 (ete!3ine( that -a!$iaKs a$t o ente!in2 into the $ont!a$t 4in(s the $o!po!ation, #e no# (ete!3ine the $o!!e$t nat&!e o the $ont!a$t, an( its 'e2a' $onse:&en$es, in$'&(in2 its en o!$ea4i'it0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The (o$&3ent #hi$h e34o(ies the $ont!a$t states that the USP;,<<<.<< #as !e$ei"e( 40 the 4an6 o! sa e6eepin2. The s&4se:&ent a$ts o the pa!ties a'so sho# that the intent o the pa!ties #as !ea''0 o! the 4an6 to sa e'0 6eep the (o''a!s an( to !et&!n it to Esho!na$6 at a 'ate! ti3e, Th&s, Esho!na$6 (e3an(e( the !et&!n o the 3one0 on /a0 %<, %+.>, o! o"e! i"e 3onths 'ate!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The a4o"e a!!an2e3ent is that $ont!a$t (e ine( &n(e! A!ti$'e %+>), Ne# Ci"i' Co(e, #hi$h !ea(s: A!t. %+>). A (eposit is $onstit&te( !o3 the 3o3ent a pe!son !e$ei"es a thin2 4e'on2in2 to anothe!, #ith the o4'i2ation o sa e'0 6eepin2 it an( o !et&!nin2 the sa3e. I the sa e6eepin2 o the thin2 (e'i"e!e( is not the p!in$ipa' p&!pose o the $ont!a$t, the!e is no (eposit 4&t so3e othe! $ont!a$t. Note that the o4Be$t o the $ont!a$t 4et#een Esho!na$6 an( CO/TRUST #as o!ei2n eD$han2e. Hen$e, the t!ansa$tion #as $o"e!e( 40 Cent!a' 5an6 Ci!$&'a! No. )<, Rest!i$tions on -o'( an( Fo!ei2n ED$han2e T!ansa$tions, p!o3&'2ate( on De$e34e! +, %+1+, #hi$h #as in o!$e at the ti3e the pa!ties ente!e( into the t!ansa$tion in"o'"e( in this $ase. The $i!$&'a! p!o"i(es: DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 ). 2ransactions in the assets (es$!i4e( 4e'o# an( a'' (ea'in2s in the3 o #hate"e! nat&!e, in$'&(in2, #he!e app'i$a4'e thei! eDpo!tation an( i3po!tation, shall +$2 be effected, eD$ept #ith !espe$t to (eposit a$$o&nts in$'&(e( in s&4,pa!a2!aphs 849 an( 8$9 o this pa!a2!aph, #hen s&$h (eposit a$$o&nts a!e o#ne( 40 an( in the na3e o , 4an6s. 8a9 An0 an( a'' assets, p!o"i(e( the0 a!e he'( th!o&2h, in, o! #ith 4an6s o! 4an6in2 instit&tions 'o$ate( in the Phi'ippines, in$'&(in2mone), $he$6s, (!a ts, 4&''ions 4an6 (!a ts, (eposit a$$o&nts 8(e3an(, ti3e an( sa"in2s9, a'' (e4ts, in(e4te(ness o! o4'i2ations, inan$ia' 4!o6e!s an( in"est3ent ho&ses, notes, (e4ent&!es, sto$6s, 4on(s, $o&pons, 4an6 a$$eptan$es, 3o!t2a2es, p'e(2es, 'iens o! othe! !i2hts in the nat&!e o se$&!it0, e7pressed in forei#n currencies, o! i pa0a4'e a4!oa(, i!!espe$ti"e o the $&!!en$0 in #hi$h the0 a!e eDp!esse(, an( 4e'on2in2 to an0 pe!son, i!3, pa!tne!ship, asso$iation, 4!an$h o i$e, a2en$0, $o3pan0 o! othe! &nin$o!po!ate( 4o(0 o! $o!po!ation !esi(in2 o! 'o$ate( #ithin the Phi'ippinesC $han!o4'es "i!t&a' 'a# 'i4!a!0 849 An0 an( a'' assets o the 6in(s in$'&(e( an(=o! (es$!i4e( in s&4pa!a2!aph 8a9 a4o"e, #hethe! o! not he'( th!o&2h, in, o! #ith 4an6s o! 4an6in2 instit&tions, an( eDistent #ithin the Phi'ippines, #hi$h 4e'on2 to an0 pe!son, i!3, pa!tne!ship, asso$iation, 4!an$h o i$e, a2en$0, $o3pan0 o! othe! &nin$o!po!ate( 4o(0 o! $o!po!ation not !esi(in2 o! 'o$ate( #ithin the Phi'ippinesC $han!o4'es "i!t&a' 'a# 'i4!a!0 8$9 An0 an( a'' assets eDistent #ithin the Phi'ippines in$'&(in2 3one0, $he$6s, (!a ts, 4&''ions, 4an6 (!a ts, a'' (e4ts, in(e4te(ness o! o4'i2ations, inan$ia' se$&!ities $o33on'0 (ea't in 40 4an6e!s, 4!o6e!s an( in"est3ent ho&ses, notes, (e4ent&!es, sto$6, 4on(s, $o&pons, 4an6 a$$eptan$es, 3o!t2a2es, p'e(2es, 'iens o! othe! !i2hts in the nat&!e o se$&!it0 eDp!esse( in o!ei2n $&!!en$ies, o! i pa0a4'e a4!oa(, i!!espe$ti"e o the $&!!en$0 in #hi$h the0 a!e eDp!esse(, an( 4e'on2in2 to an0 pe!son, i!3, pa!tne!ship, asso$iation, 4!an$h o i$e, a2en$0, $o3pan0 o! othe! &nin$o!po!ate( 4o(0 o! $o!po!ation !esi(in2 o! 'o$ate( #ithin the Phi'ippines. DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 1. 8a9 All receipts of forei#n e7chan#e shall be sold dail) to the Central (an? 40 those a&tho!i7e( to (ea' in o!ei2n eD$han2e. A'' !e$eipts o o!ei2n eD$han2e 40 an0 pe!son, i!3, pa!tne!ship, asso$iation, 4!an$h o i$e, a2en$0, $o3pan0 o! othe! &nin$o!po!ate( 4o(0 o! $o!po!ation sha'' 4e so'( to the a&tho!i7e( a2ents o the Cent!a' 5an6 40 the recipients %ithin one business da) follo%in# the receipt of such forei#n e7chan#e . An0 pe!son, i!3, pa!tne!ship, asso$iation, 4!an$h o i$e, a2en$0, $o3pan0 o! othe! &nin$o!po!ate( 4o(0 o! $o!po!ation, !esi(in2 o! 'o$ate( #ithin the Phi'ippines, #ho a$:&i!es on an( a te! the

(ate o this Ci!$&'a! o!ei2n eD$han2e sha'' not, &n'ess 'i$ense( 40 the Cent!a' 5an6, (ispose o s&$h o!ei2n eD$han2e in #ho'e o! in pa!t, no! !e$ei"e 'ess than its &'' "a'&e, no! (e'a0 ta6in2 o#ne!ship the!eo eD$ept as s&$h (e'a0 is $&sto3a!0C P!o"i(e(, &!the!, That #ithin one (a0 &pon ta6in2 o#ne!ship, o! !e$ei"in2 pa03ent, o o!ei2n eD$han2e the a o!e3entione( pe!sons an( entities sha'' se'' s&$h o!ei2n eD$han2e to (esi2nate( a2ents o the Cent!a' 5an6.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 @. St!i$t o4se!"an$e o the p!o"isions o this Ci!$&'a! is enBoine(C an( an0 pe!son, i!3 o! $o!po!ation, o!ei2n o! (o3esti$, #ho 4ein2 4o&n( to the o4se!"an$e the!eo , o! o s&$h othe! !&'es, !e2&'ations o! (i!e$ti"es as 3a0 he!ea te! 4e iss&e( in i3p'e3entation o this Ci!$&'a!, sha'' ai' o! !e &se to $o3p'0 #ith, o! a4i(e 40, o! sha'' "io'ate the sa3e, sha'' 4e sub'ect to the penal sanctions provided in the Central (an? Act. $han!o4'es "i!t&a' 'a# 'i4!a!0 DDD DDD DDD Pa!a2!aph 1 8a9 a4o"e #as 3o(i ie( 40 Se$tion > o Cent!a' 5an6 Ci!$&'a! No. )@%, Re2&'ations on Fo!ei2n ED$han2e, p!o3&'2ate( on No"e34e! )>, %+>+ 40 'i3itin2 its $o"e!a2e to Phi'ippine !esi(ents on'0. Se$tion > p!o"i(es: SEC. >. A'' !e$eipts o o!ei2n eD$han2e 40 an0 resident pe!son, i!3, $o3pan0 o! $o!po!ation sha'' 4e so'( to a&tho!i7e( a2ents o the Cent!a' 5an6 40 the !e$ipients #ithin one 4&siness (a0 o''o#in2 the !e$eipt o s&$h o!ei2n eD$han2e. An0 resident pe!son, i!3, $o3pan0 o! $o!po!ation residin# or located %ithin the Philippines, #ho a$:&i!es o!ei2n eD$han2e sha'' not, &n'ess a&tho!i7e( 40 the Cent!a' 5an6, (ispose o s&$h o!ei2n eD$han2e in #ho'e o! in pa!t, no! !e$ei"e 'ess than its &'' "a'&e, no! (e'a0 ta6in2 o#ne!ship the!eo eD$ept as s&$h (e'a0 is $&sto3a!0C P!o"i(e(, That, #ithin one 4&siness (a0 &pon ta6in2 o#ne!ship o! !e$ei"in2 pa03ent o o!ei2n eD$han2e the a o!e3entione( pe!sons an( entities sha'' se'' s&$h o!ei2n eD$han2e to the a&tho!i7e( a2ents o the Cent!a' 5an6. As ea!'ie! state(, the (o$&3ent an( the s&4se:&ent a$ts o the pa!ties sho# that the0 inten(e( the 4an6 to sa e6eep the o!ei2n eD$han2e, an( !et&!n it 'ate! to Esho!na$6, #ho a''e2e( in his $o3p'aint that he is a Phi'ippine !esi(ent. The pa!ties (i( not inten(e( to se'' the US (o''a!s to the Cent!a' 5an6 #ithin one 4&siness (a0 !o3 !e$eipt. Othe!#ise, the $ont!a$t o depositum #o&'( ne"e! ha"e 4een ente!e( into at a''.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Sin$e the 3e!e sa e6eepin2 o the 2!een4a$6s, #itho&t se''in2 the3 to the Cent!a' 5an6 #ithin one 4&siness (a0 !o3 !e$eipt, is a t!ansa$tion #hi$h is not a&tho!i7e( 40 C5 Ci!$&'a! No. )<, it 3&st 4e $onsi(e!e( as one #hi$h a''s &n(e! the 2ene!a' $'ass o p!ohi4ite( t!ansa$tions. Hen$e, p&!s&ant to A!ti$'e * o the Ci"i' Co(e, it is "oi(, ha"in2 4een eDe$&te( a2ainst the p!o"isions o a 3an(ato!0=p!ohi4ito!0 'a#. /o!e i3po!tant'0, it a o!(s neithe! o the pa!ties a $a&se o a$tion a2ainst the othe!. NAhen the n&''it0 p!o$ee(s !o3 the i''e2a'it0 o the $a&se o! o4Be$t o the $ont!a$t, an( the a$t $onstit&tes a $!i3ina' o ense, 4oth pa!ties 4ein2 in pari delicto, the0 sha'' ha"e no $a&se o a$tion a2ainst ea$h othe!. . .N ?A!t. %1%%, Ne# Ci"i' Co(e.I The on'0 !e3e(0 is one on 4eha' o the State to p!ose$&te the pa!ties o! "io'atin2 the 'a#.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ae th&s !&'e that Esho!na$6 $annot !e$o"e! &n(e! the se$on( $a&se o a$tion.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 ;. Last'0, #e in( the P@,<<<.<< a#a!(e( 40 the $o&!ts a 4uo as (a3a2es in the $on$ept o 'iti2ation eDpenses an( atto!ne0Ks ees to 4e !easona4'e. The a#a!( is s&staine(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 AHEREFORE, the (e$ision appea'e( !o3 is he!e40 /ODIFIED. Petitione! is o!(e!e( to !esto!e to the (o''a! sa"in2s a$$o&nt o p!i"ate !espon(ent the a3o&nt o USP%,<<<.<< as o O$to4e! )., %+.* to ea!n inte!est at the !ate iDe( 40 the 4an6 o! (o''a! sa"in2s (eposits. Petitione! is &!the! o!(e!e( to pa0 p!i"ate !espon(ent the a3o&nt o P@,<<<.<< as (a3a2es. The othe! $a&ses o a$tion o p!i"ate !espon(ent a!e o!(e!e( (is3isse(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 SO ORDERED. G.R. No. %930511 February 14, 19=0

; NUE% ;. SERR NO, Petitioner, "s. CEN"R % B N! OF "#E P#$%$PP$NESK O>ERSE S B N! OF ; N$% K E;ER$"O ;. R ;OS, SUS N B. R ;OS, E;ER$"O B. R ;OS, ?R., ?OSEF R ;OS DE% R ; , #OR C$O DE% R ; , N"ON$O B. R ;OS, F$%O;EN R ;OS %EDES; , RODO%FO %EDES; , >$C"OR$ R ;OS " N?U "CO, a'- "EOF$%O " N?U "CO, Respondents. Rene Dio?no for petitioner.chanrobles virtual la% librar) 1.". "van#elista A *lecerio 2. $rsolino for respondent Central (an? of the Philippines.chanrobles virtual la% librar) 1eliciano C. 2umale, Pacifico 2. 2orres and Antonio (. Peri4uet for respondent $verseas (an? of la% librar) Josefina *. 8alon#a for all other respondents. ,,R anila.chanrobles virtual

CONCEPC$ON, ?R., J.: Petition o! mandamus an( p!ohi4ition, #ith p!e'i3ina!0 inB&n$tion, that see6s the esta4'ish3ent o Boint an( so'i(a!0 'ia4i'it0 to the a3o&nt o Th!ee H&n(!e( Fi t0 Tho&san( Pesos, #ith inte!est, a2ainst !espon(ent Cent!a' 5an6 o the Phi'ippines an( O"e!seas 5an6 o /ani'a an( its sto$6ho'(e!s, on the a''e2e( ai'&!e o the O"e!seas 5an6 o /ani'a to !et&!n the ti3e (eposits 3a(e 40 petitione! an( assi2ne( to hi3, on the 2!o&n( that !espon(ent Cent!a' 5an6 ai'e( in its (&t0 to eDe!$ise st!i$t s&pe!"ision o"e! !espon(ent O"e!seas 5an6 o /ani'a to p!ote$t (eposito!s an( the 2ene!a' p&4'i$. 1Petitione! a'so p!a0s that 4oth !espon(ent 4an6s 4e o!(e!e( to eDe$&te the p!ope! an( ne$essa!0 (o$&3ents to $onstit&te a'' p!ope!ties iste( in AnneD N.N o the Ans#e! o !espon(ent Cent!a' 5an6 o the Phi'ippines in -.R. No. L,)+;*), entit'e( 6"merita . Ramos, et al vs. Central (an? of the Philippines,6 into a t!&st &n( in a"o! o petitione! an( a'' othe! (eposito!s o !espon(ent O"e!seas 5an6 o /ani'a. It is a'so p!a0e( that the !espon(ents 4e p!ohi4ite( pe!3anent'0 !o3 hono!in2, i3p'e3entin2, o! (oin2 an0 a$t p!e(i$ate( &pon the "a'i(it0 o! e i$a$0 o the (ee(s o 3o!t2a2e, assi2n3ent. an(=o! $on"e0an$e o! t!ans e! o #hate"e! nat&!e o the p!ope!ties 'iste( in AnneD N.N o the Ans#e! o !espon(ent Cent!a' 5an6 in -.R. No. )+;*). 2 $han!o4'es "i!t&a' 'a# 'i4!a!0 A so&2ht o! eD,pa!te p!e'i3ina!0 inB&n$tion a2ainst 4oth !espon(ent 4an6s #as not 2i"en 40 this Co&!t.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Un(isp&te( pe!tinent a$ts a!e: $han!o4'es "i!t&a' 'a# 'i4!a!0 On O$to4e! %;, %+>> an( De$e34e! %), %+>>, petitione! 3a(e a ti3e (eposit, o! one 0ea! #ith >M inte!est, o One H&n(!e( Fi t0 Tho&san( Pesos 8P%*<,<<<.<<9 #ith the !espon(ent O"e!seas 5an6 o /ani'a. 3Con$ep$ion /aneBa a'so 3a(e a ti3e (eposit, o! one 0ea! #ith >,M inte!est, on /a!$h >, %+>., o T#o H&n(!e( Tho&san( Pesos 8P)<<,<<<.<<9 #ith the sa3e !espon(ent O"e!seas 5an6 o /ani'a. 4 $han!o4'es "i!t&a' 'a# 'i4!a!0 On A&2&st ;%, %+>@, Con$ep$ion /aneBa, 3a!!ie( to Fe'iD4e!to /. Se!!ano, assi2ne( an( $on"e0e( to petitione! /an&e' /. Se!!ano, he! ti3e (eposit o P)<<,<<<.<< #ith !espon(ent O"e!seas 5an6 o /ani'a. 5 $han!o4'es "i!t&a' 'a# 'i4!a!0 Not#ithstan(in2 se!ies o (e3an(s o! en$ash3ent o the a o!e3entione( ti3e (eposits !o3 the !espon(ent O"e!seas 5an6 o /ani'a, (atin2 !o3 De$e34e! >, %+>. &p to /a!$h 1, %+>@, not a sin2'e one o the ti3e (eposit $e!ti i$ates #as hono!e( 40 !espon(ent O"e!seas 5an6 o /ani'a. : $han!o4'es "i!t&a' 'a# 'i4!a!0 Respon(ent Cent!a' 5an6 a(3its that it is $ha!2e( #ith the (&t0 o a(3iniste!in2 the 4an6in2 s0ste3 o the Rep&4'i$ an( it eDe!$ises s&pe!"ision o"e! a'' (oin2 4&siness in the Phi'ippines, 4&t (enies the petitione!Ks a''e2ation that the Cent!a' 5an6 has the (&t0 to eDe!$ise a 3ost !i2i( an( st!in2ent s&pe!"ision o 4an6s, i3p'0in2 that !espon(ent Cent!a' 5an6 has to #at$h e"e!0 3o"e o! a$ti"it0 o a'' 4an6s, in$'&(in2 !espon(ent O"e!seas 5an6 o /ani'a. Respon(ent Cent!a' 5an6 $'ai3s that as o /a!$h %), %+>*, the O"e!seas 5an6 o /ani'a, #hi'e ope!atin2, #as on'0 on a 'i3ite( (e2!ee o 4an6in2 ope!ations sin$e the /oneta!0 5oa!( (e$i(e( in its Reso'&tion No. ;)), (ate( /a!$h %), %+>*, to p!ohi4it the O"e!seas 5an6 o /ani'a !o3 3a6in2 ne# 'oans

an( in"est3ents in "ie# o its $h!oni$ !ese!"e (e i$ien$ies a2ainst its (eposit 'ia4i'ities. This 'i3ite( ope!ation o !espon(ent O"e!seas 5an6 o /ani'a $ontin&e( &p to %+>@. B $han!o4'es "i!t&a' 'a# 'i4!a!0 Respon(ent Cent!a' 5an6 a'so (enie( that it is 2&a!anto! o the pe!3anent so'"en$0 o an0 4an6in2 instit&tion as $'ai3e( 40 petitione!. It $'ai3s that neithe! the 'a# no! so&n( 4an6in2 s&pe!"ision !e:&i!es !espon(ent Cent!a' 5an6 to a("e!tise o! !ep!esent to the p&4'i$ an0 !e3e(ia' 3eas&!es it 3a0 i3pose &pon $h!oni$ (e'in:&ent 4an6s as s&$h a$tion 3a0 ine"ita4'0 !es&'t to pani$ o! 4an6 N!&nsN. In the 0ea!s %+>>,%+>., the!e #e!e no in(in2s to (e$'a!e the !espon(ent O"e!seas 5an6 o /ani'a as inso'"ent. = $han!o4'es "i!t&a' 'a# 'i4!a!0 Respon(ent Cent!a' 5an6 'i6e#ise (enie( that a $onst!&$ti"e t!&st #as $!eate( in a"o! o petitione! an( his p!e(e$esso! in inte!est Con$ep$ion /aneBa #hen thei! ti3e (eposits #e!e 3a(e in %+>> an( %+>. #ith the !espon(ent O"e!seas 5an6 o /ani'a as (&!in2 that ti3e the 'atte! #as not an inso'"ent 4an6 an( its ope!ation as a 4an6in2 instit&tion #as 4ein2 sa'"a2e( 40 the !espon(ent Cent!a' 5an6. 9 $han!o4'es "i!t&a' 'a# 'i4!a!0 Respon(ent Cent!a' 5an6 a"e!s no 6no#'e(2e o petitione!Ks $'ai3 that the p!ope!ties 2i"en 40 !espon(ent O"e!seas 5an6 o /ani'a as a((itiona' $o''ate!a's to !espon(ent Cent!a' 5an6 o the Phi'ippines o! the o!3e!Ks o"e!(!a ts an( e3e!2en$0 'oans #e!e a$:&i!e( th!o&2h the &se o (eposito!sK 3one0, in$'&(in2 that o the petitione! an( Con$ep$ion /aneBa. 10 $han!o4'es "i!t&a' 'a# 'i4!a!0 In -.R. No. L,)+;>), entit'e( 6"merita . Ramos, et al. vs. Central (an? of the Philippines,6 a $ase #as i'e( 40 the petitione! Ra3os, #he!ein !espon(ent O"e!seas 5an6 o /ani'a so&2ht to p!e"ent !espon(ent Cent!a' 5an6 !o3 $'osin2, (e$'a!in2 the o!3e! inso'"ent, an( 'i:&i(atin2 its assets. Petitione! /an&e' Se!!ano in this $ase, i'e( on Septe34e! >, %+>@, a 3otion to inte!"ene in -.R. No. L,)+;*), on the 2!o&n( that Se!!ano ha( a !ea' an( 'e2a' inte!est as (eposito! o the O"e!seas 5an6 o /ani'a in the 3atte! in 'iti2ation in that $ase. Respon(ent Cent!a' 5an6 in -.R. No. L,)+;*) oppose( petitione! /an&e' Se!!anoKs 3otion to inte!"ene in that $ase, on the 2!o&n( that his $'ai3 as (eposito! o the O"e!seas 5an6 o /ani'a sho&'( p!ope!'0 4e "enti'ate( in the Co&!t o Fi!st Instan$e, an( i this Co&!t #e!e to a''o# Se!!ano to inte!"ene as (eposito! in -.R. No. L,)+;*), tho&san(s o othe! (eposito!s #o&'( o''o# an( th&s $a&se an a"a'an$he o $ases in this Co&!t. In the !eso'&tion (ate( O$to4e! 1, %+>@, this Co&!t (enie( Se!!anoKs, 3otion to inte!"ene. The $ontents o sai( 3otion to inte!"ene a!e s&4stantia''0 the sa3e as those o the p!esent petition. 11 $han!o4'es "i!t&a' 'a# 'i4!a!0 This Co&!t !en(e!e( (e$ision in -.R. No. L,)+;*) on O$to4e! 1, %+.%, #hi$h 4e$a3e ina' an( eDe$&to!0 on /a!$h ;, %+.), a"o!a4'e to the !espon(ent O"e!seas 5an6 o /ani'a, #ith the (ispositi"e po!tion to #it: $han!o4'es "i!t&a' 'a# 'i4!a!0 AHEREFORE, the #!its p!a0e( o! in the petition a!e he!e40 2!ante( an( !espon(ent Cent!a' 5an6Ks !eso'&tion Nos. %)>;, %)+< an( %;;; 8that p!ohi4it the O"e!seas 5an6 o /ani'a to pa!ti$ipate in $'ea!in2, (i!e$t the s&spension o its ope!ation, an( o!(e!in2 the 'i:&i(ation o sai( 4an69 a!e he!e40 ann&''e( an( set asi(eC an( sai( !espon(ent Cent!a' 5an6 o the Phi'ippines is (i!e$te( to $o3p'0 #ith its o4'i2ations &n(e! the Votin2 T!&st A2!ee3ent, an( to (esist !o3 ta6in2 a$tion in "io'ation the!e o!. Costs a2ainst !espon(ent Cent!a' 5an6 o the Phi'ippines. 12 $han!o4'es "i!t&a' 'a# 'i4!a!0 5e$a&se o the a4o"e (e$ision, petitione! in this $ase i'e( a 3otion o! B&(23ent in this $ase, p!a0in2 o! a (e$ision on the 3e!its, a(B&(2in2 !espon(ent Cent!a' 5an6 Boint'0 an( se"e!a''0 'ia4'e #ith !espon(ent O"e!seas 5an6 o /ani'a to the petitione! o! the P;*<,<<< ti3e (eposit 3a(e #ith the 'atte! 4an6, #ith a'' inte!ests (&e the!einC an( (e$'a!in2 a'' assets assi2ne( o! 3o!t2a2e( 40 the !espon(ents O"e!seas 5an6 o /ani'a an( the Ra3os 2!o&ps in a"o! o the Cent!a' 5an6 as t!&st &n(s o! the 4ene it o petitione! an( othe! (eposito!s. 13 $han!o4'es "i!t&a' 'a# 'i4!a!0 50 the "e!0 nat&!e o the $'ai3s an( $a&ses o a$tion a2ainst !espon(ents, the0 in !ea'it0 a!e !e$o"e!0 o ti3e (eposits p'&s inte!est !o3 !espon(ent O"e!seas 5an6 o /ani'a, an( !e$o"e!0 o (a3a2es a2ainst !espon(ent Cent!a' 5an6 o! its a''e2e( ai'&!e to st!i$t'0 s&pe!"ise the a$ts o the othe! !espon(ent 5an6 an( p!ote$t the inte!ests o its (eposito!s 40 "i!t&e o the $onst!&$ti"e t!&st $!eate( #hen !espon(ent Cent!a' 5an6 !e:&i!e( the othe! !espon(ent to in$!ease its $o''ate!a's o! its o"e!(!a ts sai( e3e!2en$0 'oans, sai( $o''ate!a's a''e2e('0 a$:&i!e( th!o&2h the &se o (eposito!s 3one0. These $'ai3s sho&( 4e "enti'ate( in the Co&!t o Fi!st Instan$e o p!ope! B&!is(i$tion as Ae a'!ea(0 pointe( o&t #hen this Co&!t (enie( petitione!Ks 3otion to inte!"ene in -.R. No. L,)+;*). C'ai3s o these nat&!e a!e not p!ope! in a$tions o! 3an(a3&s an( p!ohi4ition as the!e is no sho#n $'ea! a4&se o (is$!etion 40 the Cent!a' 5an6 in its eDe!$ise o s&pe!"ision o"e! the othe! !espon(ent O"e!seas 5an6 o /ani'a, an( i the!e #as, petitione! he!e is not the p!ope! pa!t0 to !aise that :&estion, 4&t !athe! the O"e!seas 5an6 o /ani'a, as it (i( in -.R. No. L,)+;*). Neithe! is the!e an0thin2 to p!ohi4it in this $ase, sin$e the :&estione( a$ts o the !espon(ent Cent!a' 5an6 8the a$ts o (isso'"in2 an( 'i:&i(atin2 the O"e!seas 5an6 o /ani'a9, #hi$h petitione! he!e inten(s to &se as his 4asis o!

$'ai3s o (a3a2es a2ainst !espon(ent Cent!a' 5an6, ha( 4een a$$o3p'ishe( a 'on2 ti3e a2o.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 F&!the!3o!e, 4oth pa!ties o"e!'oo6e( one &n(a3enta' p!in$ip'e in the nat&!e o 4an6 (eposits #hen the petitione! $'ai3e( that the!e sho&'( 4e $!eate( a $onst!&$ti"e t!&st in his a"o! #hen the !espon(ent O"e!seas 5an6 o /ani'a in$!ease( its $o''ate!a's in a"o! o !espon(ent Cent!a' 5an6 o! the o!3e!Ks o"e!(!a ts an( e3e!2en$0 'oans, sin$e these $o''ate!a's #e!e a$:&i!e( 40 the &se o (eposito!sK 3one0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 5an6 (eposits a!e in the nat&!e o i!!e2&'a! (eposits. The0 a!e !ea''0 'oans 4e$a&se the0 ea!n inte!est. A'' 6in(s o 4an6 (eposits, #hethe! iDe(, sa"in2s, o! $&!!ent a!e to 4e t!eate( as 'oans an( a!e to 4e $o"e!e( 40 the 'a# on 'oans. 14 C&!!ent an( sa"in2s (eposit a!e 'oans to a 4an6 4e$a&se it $an &se the sa3e. The petitione! he!e in 3a6in2 ti3e (eposits that ea!n inte!ests #ith !espon(ent O"e!seas 5an6 o /ani'a #as in !ea'it0 a $!e(ito! o the !espon(ent 5an6 an( not a (eposito!. The !espon(ent 5an6 #as in t&!n a (e4to! o petitione!. Fai'&!e o he !espon(ent 5an6 to hono! the ti3e (eposit is ai'&!e to pa0 s o4'i2ation as a (e4to! an( not a 4!ea$h o t!&st a!isin2 !o3 (eposita!0Ks ai'&!e to !et&!n the s&4Be$t 3atte! o the (eposit $han!o4'es "i!t&a' 'a# 'i4!a!0 AHEREFORE, the petition is (is3isse( o! 'a$6 o 3e!it, #ith $osts a2ainst petitione!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 SO ORDERED. G.R. No. 1029B0 ;ay 13, 1993 %U@ N S$ , Petitioner, "s. COUR" OF PPE %S a'- SECUR$"A B N! a'- "RUS" CO;P NA, Respondents. D >$DE, ?R., J.: The De$ision o p&4'i$ !espon(ent Co&!t o Appea's in CA,-.R. CV No. )>.;., p!o3&'2ate( on )% A&2&st %++%, 1!e"e!sin2 an( settin2 asi(e the De$ision, (ate( %+ Fe4!&a!0 %++<, 2o 5!an$h 1. o the Re2iona' T!ia' Co&!t 8RTC9 o /ani'a in Ci"i' Case No. @.,1)><%, entit'e( NLUEAN SIA vs. SECURITG 5ANK an( TRUST CO.,N is $ha''en2e( in this petition o! !e"ie# on certiorari &n(e! R&'e 1* o the R&'es Co&!t.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ci"i' Case No. @.,1)><% is an a$tion o! (a3a2es a!isin2 o&t o the (est!&$tion o! 'oss o the sta3p $o''e$tion o the p'ainti 8petitione! he!ein9 $ontaine( in Sa et0 Deposit 5oD No. *1 #hi$h ha( 4een !ente( !o3 the (e en(ant p&!s&ant to a $ont!a$t (eno3inate( as a Lease A2!ee3ent. 3J&(23ent the!ein #as !en(e!e( in a"o! o the (ispositi"e po!tion o #hi$h !ea(s: AHEREFORE, p!e3ises $onsi(e!e(, B&(23ent is he!e40 !en(e!e( in a"o! o the p'ainti an( a2ainst the (e en(ant, Se$&!it0 5an6 J T!&st Co3pan0, o!(e!in2 the (e en(ant 4an6 to pa0 the p'ainti the s&3 o , $han!o4'es "i!t&a' 'a# 'i4!a!0 a9 T#ent0 Tho&san( Pesos 8P)<,<<<.<<9, Phi'ippine C&!!en$0, as a$t&a' (a3a2esC $han!o4'es "i!t&a' 'a# 'i4!a!0 49 One H&n(!e( Tho&san( Pesos 8P%<<,<<<.<<9, Phi'ippine C&!!en$0, as 3o!a' (a3a2esC an( $han!o4'es "i!t&a' 'a# 'i4!a!0 $9 Fi"e Tho&san( Pesos 8P*,<<<.<<9, Phi'ippine C&!!en$0, as atto!ne0Ks ees an( 'e2a' eDpenses.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The $o&nte!$'ai3 set &p 40 the (e en(ant a!e he!e40 (is3isse( o! 'a$6 o 3e!it.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 No $osts.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 SO ORDERED. 4 $han!o4'es "i!t&a' 'a# 'i4!a!0 The ante$e(ent a$ts o the p!esent $ont!o"e!s0 a!e s&33a!i7e( 40 the p&4'i$ !espon(ent in its $ha''en2e( (e$ision as o''o#s:

The p'ainti !ente( on /a!$h )), %+@* the Sa et0 Deposit 5oD No. *1 o the (e en(ant 4an6 at its 5inon(o 5!an$h 'o$ate( at the Foo6ien Ti3es 5&i'(in2, So'e! St., 5inon(o, /ani'a #he!ein he p'a$e( his $o''e$tion o sta3ps. The sai( sa et0 (eposit 4oD 'ease( 40 the p'ainti #as at the 4otto3 o! at the 'o#est 'e"e' o the sa et0 (eposit 4oDes o the (e en(ant 4an6 at its a o!esai( 5inon(o 5!an$h.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 D&!in2 the 'oo(s that too6 p'a$e in %+@* an( %+@>, 'oo(#ate! ente!e( into the (e en(ant 4an6Ks p!e3ises, seepe( into the sa et0 (eposit 4oD 'ease( 40 the p'ainti an( $a&se(, a$$o!(in2 to the p'ainti , (a3a2e to his sta3ps $o''e$tion. The (e en(ant 4an6 !eBe$te( the p'ainti Ks $'ai3 o! $o3pensation o! his (a3a2e( sta3ps $o''e$tion, so, the p'ainti instit&te( an a$tion o! (a3a2es a2ainst the (e en(ant 4an6.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The (e en(ant 4an6 (enie( 'ia4i'it0 o! the (a3a2e( sta3ps $o''e$tion o the p'ainti on the 4asis o the NR&'es an( Re2&'ations -o"e!nin2 the Lease o Sa e Deposit 5oDesN 8EDhs. NA,%N, N%,AN9, pa!ti$&'a!'0 pa!a2!aphs + an( %;, #hi$h !ea(s 8sic9: $han!o4'es "i!t&a' 'a# 'i4!a!0 N+. The 'ia4i'it0 o the 5an6 40 !eason o the 'ease, is 'i3ite( to the eDe!$ise o the (i'i2en$e to p!e"ent the openin2 o the sa e 40 an0 pe!son othe! than the Rente!, his a&tho!i7e( a2ent o! 'e2a' !ep!esentati"eC DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 N%;. The 5an6 is not a (eposito!0 o the $ontents o the sa e an( it has neithe! the possession no! the $ont!o' o the sa3e. The 5an6 has no inte!est #hatsoe"e! in sai( $ontents, eD$ept as he!ein p!o"i(e(, an( it ass&3es a4so'&te'0 no 'ia4i'it0 in $onne$tion the!e#ith.N $han!o4'es "i!t&a' 'a# 'i4!a!0 The (e en(ant 4an6 a'so $onten(e( that its $ont!a$t #ith the p'ainti o"e! sa et0 (eposit 4oD No. *1 #as one o 'ease an( not o (eposit an(, the!e o!e, 2o"e!ne( 40 the 'ease a2!ee3ent 8EDhs. NAN, NLN9 #hi$h sho&'( 4e the app'i$a4'e 'a#C that the (est!&$tion o the p'ainti Ks sta3ps $o''e$tion #as (&e to a $a'a3it0 4e0on( o4'i2ation on its pa!t to noti 0 the p'ainti a4o&t the 'oo(#ate!s that in&n(ate( its p!e3ises at 5inon(o 4!an$h #hi$h a''e2e('0 seepe( into the sa et0 (eposit 4oD 'ease( to the p'ainti .$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The t!ia' $o&!t then (i!e$te( that an o$&'a! inspe$tion on 8sic9 the $ontents o the sa et0 (eposit 4oD 4e $on(&$te(, #hi$h #as (one on De$e34e! @, %+@@ 40 its $'e!6 o $o&!t in the p!esen$e o the pa!ties an( thei! $o&nse's. A !epo!t the!eon #as then s&43itte( on De$e34e! %), %+@@ 8Re$o!(s, p. +@,A9 an( $on i!3e( in open $o&!t 40 4oth pa!ties th!& $o&nse' (&!in2 the hea!in2 on the sa3e (ate 8;bid., p. %<)9 statin2: NThat the Sa et0 5oD Deposit No. *1 #as opene( 40 4oth p'ainti L&7an Sia an( the A$tin2 5!an$h /ana2e! Ji330 5. Gnion in the p!esen$e o the &n(e!si2ne(, p'ainti Ks an( (e en(antKs $o&nse'. Sai( Sa et0 5oD #hen opene( $ontains t#o a'4&3s o (i e!ent si7es an( thi$6ness, 'en2th an( #i(th an( a tin 4oD #ith p!inte( #o!( KTai Pin2 Shian2 Roast Po!6 in pie$es #ith Chinese (esi2ns an( $ha!a$te!.N Con(ition o the a4o"e,state( Ite3s , N5oth a'4&3s a!e #et, 3o'(0 an( 4a('0 (a3a2e(.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 %. The i!st a'4&3 3eas&!es %< %=@ in$hes in 'en2th, @ in$hes in #i(th an( ;=1 in thi$6. The 'ea"es o the a'4&3 a!e atta$he( to e"e!0 pa2e an( $annot 4e 'i te( #itho&t (est!o0in2 it, hen$e the sta3ps $ontaine( the!ein a!e no 'on2e! "isi4'e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 ). The se$on( a'4&3 3eas&!e %) %=) in$hes in 'en2th, + ;=1 in #i(th % in$h thi$6. So3e o its pa2es $an sti'' 4e 'i te(. The sta3ps the!ein $an sti'' 4e (istin2&ishe( 4&t 4e0on( !esto!ation. Othe!s ha"e 'ost its o!i2ina' o!3.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 ;. The tin 4oD is !&st0 insi(e. It $ontains an a'4&3 #ith se"e!a' pie$es o pape!s st&$6 &p to the $o"e! o the 4oD. The $on(ition o the a'4&3 is the se$on( a4o"e3entione( a'4&3.N 5 $han!o4'es "i!t&a' 'a# 'i4!a!0

The SECURITG 5ANK AND TRUST CO/PANG, he!eina te! !e e!!e( to as S5TC, appea'e( the t!ia' $o&!tKs (e$ision to the p&4'i$ !espon(ent Co&!t o Appea's. The appea' #as (o$6ete( as CA,-.R. CV No. )>.;..$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In &!2in2 the p&4'i$ !espon(ent to !e"e!se the (e$ision o the t!ia' $o&!t, S5TC $onten(e( that the 'atte! e!!e( in 8a9 ho'(in2 that the 'ease a2!ee3ent is a $ont!a$t o a(hesionC 849 in(in2 that the (e en(ant ha( ai'e( to eDe!$ise the !e:&i!e( (i'i2en$e eDpe$te( o a 4an6 in 3aintainin2 the sa et0 (eposit 4oDC 8$9 a#a!(in2 to the p'ainti a$t&a' (a3a2es in the a3o&nt o P)<,<<<.<<, 3o!a' (a3a2es in the a3o&nt o P%<<,<<<.<< an( atto!ne0Ks ees an( 'e2a' eDpenses in the a3o&nt o P*,<<<.<<C an( 8(9 (is3issin2 the $o&nte!$'ai3.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 On )% A&2&st %++%, the !espon(ent p!o3&'2ate( its (e$ision the (ispositi"e po!tion o #hi$h !ea(s: AHEREFORE, the (e$ision appea'e( !o3 is he!e40 REVERSED an( instea( the appe''eeKs $o3p'aint is he!e40 DIS/ISSED. The appe''ant 4an6Ks $o&nte!$'ai3 is 'i6e#ise DIS/ISSED. No $osts. : $han!o4'es "i!t&a' 'a# 'i4!a!0 In !e"e!sin2 the t!ia' $o&!tKs (e$ision an( a4so'"in2 S5TC !o3 'ia4i'it0, the p&4'i$ !espon(ent o&n( an( !&'e( that: $han!o4'es "i!t&a' 'a# 'i4!a!0 a9 the ine p!int in the NLease A2!ee3ent N 8EDhi4its NAN an( N%N 9 $onstit&tes the te!3s an( $on(itions o the $ont!a$t o 'ease #hi$h the appe''ee 8no# petitione!9 ha( "o'&nta!i'0 an( 6no#in2'0 eDe$&te( #ith S5TCC $han!o4'es "i!t&a' 'a# 'i4!a!0 49 the $ont!a$t ente!e( into 40 the pa!ties !e2a!(in2 Sa e Deposit 5oD No. *1 #as not a $ont!a$t o (eposit #he!ein the 4an6 4e$a3e a (eposita!0 o the s&4Be$t sta3p $o''e$tionC hen$e, as $onten(e( 40 S5TC, the p!o"isions o 5oo6 IV, Tit'e HII o the Ci"i' Co(e on (eposits (o not app'0C $han!o4'es "i!t&a' 'a# 'i4!a!0 $9 The o''o#in2 p!o"isions o the :&estione( 'ease a2!ee3ent o the sa et0 (eposit 4oD 'i3itin2 S5TCKs 'ia4i'it0: +. The 'ia4i'it0 o the 4an6 40 !eason o the 'ease, is 'i3ite( to the eDe!$ise o the (i'i2en$e to p!e"ent the openin2 o the Sa e 40 an0 pe!son othe! than the Rente!, his a&tho!i7e( a2ent o! 'e2a' !ep!esentati"e. DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 %;. The 4an6 is not a (eposito!0 o the $ontents o the Sa e an( it has neithe! the possession no! the $ont!o' o the sa3e. The 5an6 has no inte!est #hatsoe"e! in sai( $ontents, eD$ept as he!ein p!o"i(e(, an( it ass&3es a4so'&te'0 no 'ia4i'it0 in $onne$tion the!e#ith. a!e "a'i( sin$e sai( stip&'ations a!e not $ont!a!0 to 'a#, 3o!a's, 2oo( $&sto3s, p&4'i$ o!(e! o! p&4'i$ po'i$0C an( $han!o4'es "i!t&a' 'a# 'i4!a!0 (9 the!e is no $on$!ete e"i(en$e to sho# that S5TC ai'e( to eDe!$ise the !e:&i!e( (i'i2en$e in 3aintainin2 the sa et0 (eposit 4oDC #hat #as p!o"en #as that the 'oo(s o %+@* an( %+@>, #hi$h #e!e 4e0on( the $ont!o' o S5TC, $a&se( the (a3a2e to the sta3p $o''e$tionC sai( 'oo(s #e!e o!t&ito&s e"ents #hi$h S5TC sho&'( not 4e he'( 'ia4'e o! sin$e it #as not sho#n to ha"e pa!ti$ipate( in the a22!a"ation o the (a3a2e to the sta3p $o''e$tionC on the $ont!a!0, it o e!e( its se!"i$es to se$&!e the assistan$e o an eDpe!t in o!(e! to sa"e 3ost o the sta3ps, 4&t the appe''ee !e &se(C appe''ee 3&st then 4ea! the 'ose &n(e! the p!in$ip'e o Nres perit domino.N $han!o4'es "i!t&a' 'a# 'i4!a!0 Uns&$$ess &' in his 4i( to ha"e the a4o"e (e$ision !e$onsi(e!e( 40 the p&4'i$ !espon(ent, Bpetitione! i'e( the instant petition #he!ein he $onten(s that: I IT AAS A -RAVE ERROR OR AN A5USE OF DISCRETION ON THE PART OF THE RESPONDENT COURT AHEN IT RULED THAT RESPONDENT S5TC DID NOT FAIL TO EHERCISE THE REFUIRED DILI-ENCE IN /AINTAININTHE SAFETG DEPOSIT 5OH OF THE PETITIONER CONSIDERIN- THAT SU5STANTIAL EVIDENCE EHIST 8sic9 PROVIN- THE CONTRARG.

II THE RESPONDENT COURT SERIOUSLG ERRED IN EHCULPATIN- PRIVATE RESPONDENT FRO/ ANG LIA5ILITG AHATSOEVER 5G REASON OF THE PROVISIONS OF PARA-RAPHS + AND %; OF THE A-REE/ENT 8EHHS. NAN AND NA,%N9. III THE RESPONDENT COURT SERIOUSLG ERRED IN NOT UPHOLDIN- THE AAARDS OF THE TRIAL COURT FOR ACTUAL AND /ORAL DA/A-ES, INCLUDIN- ATTORNEGKS FEES AND LE-AL EHPENSES, IN FAVOR OF THE PETITIONER. = $han!o4'es "i!t&a' 'a# 'i4!a!0 Ae s&4se:&ent'0 2a"e (&e $o&!se the petition an( !e:&i!e( 4oth pa!ties to s&43it thei! !espe$ti"e 3e3o!an(a, #hi$h the0 $o3p'ie( #ith. 9 Petitione! insists that the t!ia' $o&!t $o!!e$t'0 !&'e( that S5TC ha( ai'e( Nto eDe!$ise the !e:&i!e( (i'i2en$e eDpe$te( o a 4an6 3aintainin2 s&$h sa et0 (eposit 4oD . . . in the 'i2ht o the en"i!on3enta' $i!$&3stan$e o sai( sa et0 (eposit 4oD a te! the 'oo(s o %+@* an( %+@>.N He a!2&es that s&$h a $on$'&sion is s&ppo!te( 40 the e"i(en$e on !e$o!(, to #it: S5TC #as &''0 $o2ni7ant o the eDa$t 'o$ation o the sa et0 (eposit 4oD in :&estionC it 6ne# that the p!e3ises #e!e in&n(ate( 40 'oo(#ate!s in %+@* an( %+@> an( $onsi(e!in2 that the 4an6 is 2&a!(e( t#ent0, o&! 8)19 ho&!s a (a0 , it is sa e to $on$'&(e that it #as a'so a#a!e o the in&n(ation o the p!e3ises #he!e the sa et0 (eposit 4oD #as 'o$ate(C (espite s&$h 6no#'e(2e, ho#e"e!, it ne"e! 4othe!e( to in o!3 the petitione! o the 'oo(in2 o! ta6e an0 app!op!iate 3eas&!es to ins&!e the sa et0 an( 2oo( 3aintenan$e o the sa et0 (eposit 4oD in :&estion.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 S5TC (oes not s:&a!e'0 (isp&te these a$tsC !athe!, it !e'ies on the !&'e that in(in2s o a$ts o the Co&!t o Appea's, #hen s&ppo!te( 40 s&4stantia' eDi(en$e, a!e not !e"ie#a4'e on appea' 40 certiorari. 10 The o!e2oin2 !&'e is, o $o&!se, s&4Be$t to $e!tain eD$eptions s&$h as #hen the!e eDists a (ispa!it0 4et#een the a$t&a' in(in2s an( $on$'&sions o the Co&!t o Appea's an( the t!ia' $o&!t. 11S&$h a (ispa!it0 o4tains in the p!esent $ase.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 As Ae see it, S5TCKs theo!0, #hi$h #as &phe'( 40 the p&4'i$ !espon(ent, is that the NLease A2!ee3ent N $o"e!in2 Sa e Deposit 5oD No. *1 8EDhi4it NA an( N%N9 is B&st that , a $ont!a$t o 'ease , an( not a $ont!a$t o (eposit, an( that pa!a2!aphs + an( %; the!eo , #hi$h eDp!ess'0 'i3it the 4an6Ks 'ia4i'it0 as o''o#s: +. The 'ia4i'it0 o the 4an6 40 !eason o the 'ease, is 'i3ite( to the eDe!$ise o the (i'i2en$e to p!e"ent the openin2 o the Sa e 40 an0 pe!son othe! than the Rente!, his a&t'io!i7e( a2ent o! 'e2a' !ep!esentati"eC DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 %;. The 4an6 is not a (eposito!0 o the $ontents o the Sa e an( it has neithe! the possession no! the $ont!o' o the sa3e. The 5an6 has no inte!est #hatsoe"e! sai( $ontents, eD$ept as he!ein p!o"i(e(, an( it ass&3es a4so'&te'0 no 'ia4i'it0 in $onne$tion the!e#ith. 12 $han!o4'es "i!t&a' 'a# 'i4!a!0 a!e "a'i( an( 4in(in2 &pon the pa!ties. In the $ha''en2e( (e$ision, the p&4'i$ !espon(ent &!the! a"e!s that e"en #itho&t s&$h a 'i3itation o 'ia4i'it0, S5TC sho&'( sti'' 4e a4so'"e( !o3 an0 !esponsi4i'it0 o! the (a3a2e s&staine( 40 the petitione! as it appea!s that s&$h (a3a2e #as o$$asione( 40 a o!t&ito&s e"ent an( that the !espon(ent 4an6 #as !ee !o3 an0 pa!ti$ipation in the a22!a"ation o the inB&!0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ae $annot a$$ept this theo!0 an( !atio$ination. Conse:&ent'0, this Co&!t in(s the petition to 4e i3p!esse( #ith 3e!it.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In the !e$ent $ase CA A#ro-;ndustrial Development Corp. vs. Court of Appeals, 13this Co&!t eDp'i$it'0 !eBe$te( the $ontention that a $ont!a$t o! the &se o a sa et0 (eposit 4oD is a $ont!a$t o 'ease 2o"e!ne( 40 Tit'e VII, 5oo6 IV o the Ci"i' Co(e. No! (i( Ae &''0 s&4s$!i4e to the "ie# that it is a $ont!a$t o (eposit to 4e st!i$t'0 2o"e!ne( 40 the Ci"i' Co(e p!o"ision on (epositC 14it is, as

Ae (e$'a!e(, a spe$ia' 6in( o (eposit. The p!e"ai'in2 !&'e in A3e!i$an B&!isp!&(en$e , that the !e'ation 4et#een a 4an6 !entin2 o&t sa e (eposit 4oDes an( its $&sto3e! #ith !espe$t to the $ontents o the 4oD is that o a 4ai'o! an( 4ai'ee, the 4ai'3ent o! hi!e an( 3&t&a' 4ene it 15, has 4een a(opte( in this B&!is(i$tion, th&s: In the $onteDt o o&! 'a#s #hi$h a&tho!i7e 4an6in2 instit&tions to !ent o&t sa et0 (eposit 4oDes, it is $'ea! that in this B&!is(i$tion, the p!e"ai'in2 !&'e in the Unite( States has 4een a(opte(. Se$tion .) o the -ene!a' 5an6in2 A$t ?R.A. ;;., as a3en(e(I pe!tinent'0 p!o"i(es: $han!o4'es "i!t&a' 'a# 'i4!a!0 NSe$. .). In a((ition to the ope!ations spe$i i$a''0 a&tho!i7e( e'se#he!e in this A$t, 4an6in2 instit&tions othe! than 4&i'(in2 an( 'oan asso$iations 3a0 pe! o!3 the o''o#in2 se!"i$es: 8a9 Re$ei"e in $&sto(0 &n(s, (o$&3ents, an( "a'&a4'e o4Be$ts, an( !ent sa et0 (eposit 4oDes o! the sa e:&a!(in2 o s&$h e e$ts. DDD DDD DDD $han!o4'es "i!t&a' 'a# 'i4!a!0 The 4an6s sha'' pe! o!3 the se!"i$es pe!3itte( &n(e! s&4se$tions 8a9, 849 an( 8$9 o this se$tion as depositories o! as a2ents. . . .N8e3phasis s&pp'ie(9 $han!o4'es "i!t&a' 'a# 'i4!a!0 Note that the p!i3a!0 &n$tion is sti'' o&n( #ithin the pa!a3ete!s o a $ont!a$t o deposit,i.e., the !e$ei"in2 in $&sto(0 o &n(s, (o$&3ents an( othe! "a'&a4'e o4Be$ts o! sa e6eepin2. The !entin2 o&t o the sa et0 (eposit 4oDes is not in(epen(ent !o3, 4&t !e'ate( to o! in $onB&n$tion #ith, this p!in$ipa' &n$tion. A $ont!a$t o (eposit 3a0 4e ente!e( into o!a''0 o! in #!itin2 8A!t. %+>+, Ci"i' Co(eI an(, p&!s&ant to A!ti$'e %;<> o the Ci"i' Co(e, the pa!ties the!eto 3a0 esta4'ish s&$h stip&'ations, $'a&ses, te!3s an( $on(itions as the0 3a0 (ee3 $on"enient, p!o"i(e( the0 a!e not $ont!a!0 to 'a#, 3o!a's, 2oo( $&sto3s, p&4'i$ o!(e! o! p&4'i$ po'i$0. The (eposita!0Ks !esponsi4i'it0 o! the sa e6eepin2 o the o4Be$ts (eposite( in the $ase at 4a! is 2o"e!ne( 40 Tit'e I, 5oo6 IV o the Ci"i' Co(e. A$$o!(in2'0, the (eposita!0 #o&'( 4e 'ia4'e i , in pe! o!3in2 its o4'i2ation, it is o&n( 2&i't0 o !a&(, ne2'i2en$e, (e'a0 o! $ont!a"ention o the teno! o the a2!ee3ent ?A!t. %%.<, id.I. In the a4sen$e o an0 stip&'ation p!es$!i4in2 the (e2!ee o (i'i2en$e !e:&i!e(, that o a 2oo( athe! o a a3i'0 is to 4e o4se!"e( ?A!t. %%.;, id.I. Hen$e, an0 stip&'ation eDe3ptin2 the (eposita!0 !o3 an0 'ia4i'it0 a!isin2 !o3 the 'oss o the thin2 (eposite( on a$$o&nt o !a&(, ne2'i2en$e o! (e'a0 #o&'( 4e "oi( o! 4ein2 $ont!a!0 to 'a# an( p&4'i$ po'i$0. In the instant $ase, petitione! 3aintains that $on(itions %; an( '1 o the :&estione( $ont!a$t o 'ease o the sa et0 (eposit 4oD, #hi$h !ea(: $han!o4'es "i!t&a' 'a# 'i4!a!0 N%;. The 4an6 is a (eposita!0 o the $ontents o the sa e an( it has neithe! the possession no! $ont!o' o the sa3e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 N%1. The 4an6 has no inte!est #hatsoe"e! in sai( $ontents, eD$ept as he!ein eDp!ess'0 p!o"i(e(, an( it ass&3es a4so'&te'0 no 'ia4i'it0 in $onne$tion the!e#ith.N $han!o4'es "i!t&a' 'a# 'i4!a!0 a!e "oi( as the0 a!e $ont!a!0 to 'a# an( p&4'i$ po'i$0. Ae in( O&!se'"es in a2!ee3ent #ith this p!oposition o! in(ee(, sai( p!o"isions a!e in$onsistent #ith the !espon(ent 5an6Ks !esponsi4i'it0 as a (eposita!0 &n(e! Se$tion .) 8a9 o the -ene!a' 5an6in2 A$t. 5oth eDe3pt the 'atte! !o3 an0 'ia4i'it0 eD$ept as $onte3p'ate( in $on(ition @ the!eo #hi$h 'i3its its (&t0 to eDe!$ise !easona4'e (i'i2en$e on'0 #ith !espe$t to #ho sha'' 4e a(3itte( to an0 !ente( sa e, to #it: N@. The 5an6 sha'' &se (&e (i'i2en$e that no &na&tho!i7e( pe!son sha'' 4e a(3itte( to an0 !ente( sa e an( 4e0on( this, the 5an6 #i'' not 4e !esponsi4'e o! the $ontents o an0 sa e !ente( !o3 it.N F&!the!3o!e $on(ition %; stan(s on a #!on2 p!e3ise an( is $ont!a!0 to the a$t&a' p!a$ti$e o the 5an6. It is not $o!!e$t to asse!t that the 5an6 has neithe! the possession no! $ont!o' o the $ontents o the 4oD sin$e in a$t, the sa et0 (eposit 4oD itse' is 'o$ate( in its p!e3ises an( is &n(e! its a4so'&te $ont!o'C 3o!eo"e!, the !espon(ent 5an6 6eeps the 2&a!( 6e0 to the sai( 4oD. As state( ea!'ie!, !ente!s $annot open thei! !espe$ti"e 4oDes &n'ess the 5an6 $oope!ates 40 p!esentin2 an( &sin2 this 2&a!( 6e0. C'ea!'0 then, to the eDtent a4o"e state(, the o!e2oin2 $on(itions in the $ont!a$t in :&estion a!e "oi( an( ine e$ti"e. It has 4een sai(: NAith !espe$t to p!ope!t0 (eposite( in a sa e,(eposit 4oD 40 a $&sto3e! o a sa e,(eposit $o3pan0, the pa!ties, sin$e the !e'ation is a $ont!a$t&a' one, 3a0 40 spe$ia' $ont!a$t (e ine thei! !espe$ti"e (&ties o! p!o"i(e o! in$!easin2 o! 'i3itin2 the 'ia4i'it0 o the (eposit $o3pan0, p!o"i(e( s&$h $ont!a$t is not in "io'ation o 'a# o! p&4'i$ po'i$0. It 3&st $'ea!'0 appea! that the!e a$t&a''0 #as s&$h a spe$ia' $ont!a$t, ho#e"e!, in o!(e! to "a!0 the o!(ina!0 o4'i2ations i3p'ie( 40 'a# !o3 the !e'ationship o the pa!tiesC 'ia4i'it0 o the (eposit $o3pan0 #i'' not 4e en'a!2e( o! !est!i$te( 40 #o!(s o (o&4t &' 3eanin2. The $o3pan0, in !entin2 sa e,

(eposit 4oDes, $annot eDe3pt itse' !o3 'ia4i'it0 o! 'oss o the $ontents 40 its o#n !a&( o! ne2'i2en$e o! that, o its a2ents o! se!"ants, an( i a p!o"ision o the $ont!a$t 3a0 4e $onst!&e( as an atte3pt to (o so, it #i'' 4e he'( ine e$ti"e o! the p&!pose. A'tho&2h it has 4een he'( that the 'esso! o a sa e,(eposit 4oD $annot 'i3it its 'ia4i'it0 o! 'oss o the $ontents the!eo th!o&2h its o#n ne2'i2en$e, the "ie# has 4een ta6en that s&$h a 'esso! 3a0 'i3it its 'ia4i'it0 to so3e eDtent 40 a2!ee3ent o! stip&'ation .N?%< A/ JUR )(., 1>>I. 8$itations o3itte(9 %> It 3&st 4e note( that $on(itions No. %; an( No. %1 in the Cont!a$t o Lease o Sa et0 Deposit 5oD in CA A#ro-;ndustrial Development Corp. a!e st!i6in2'0 si3i'a! to $on(ition No. %; in the instant $ase. On the othe! han(, 4oth $on(ition No. @ in CA A#ro-;ndustrial Development Corp. an( $on(ition No. + in the p!esent $ase 'i3it the s$ope o the eDe!$ise o (&e (i'i2en$e 40 the 4an6s in"o'"e( to 3e!e'0 seein2 to it that on'0 the !ente!, his a&tho!i7e( a2ent o! his 'e2a' !ep!esentati"e sho&'( open o! ha"e a$$ess to the sa et0 (eposit 4oD. In sho!t, in a'' othe! sit&ations, it #o&'( see3 that S5TC is not 4o&n( to eDe!$ise (i'i2en$e o an0 6in( at a''. Assa0e( in the 'i2ht o O&! a o!e3entione( p!ono&n$e3ents in CA A#ro-lndustrial Development Corp., it is not at a'' (i i$&'t to $on$'&(e that 4oth $on(itions No. + an( No. %; o the NLease A2!ee3entN $o"e!in2 the sa et0 (eposit 4oD in :&estion 8EDhi4its NAN an( N%N9 3&st 4e st!i$6en (o#n o! 4ein2 $ont!a!0 to 'a# an( p&4'i$ po'i$0 as the0 a!e 3eant to eDe3pt S5TC !o3 an0 'ia4i'it0 o! (a3a2e, 'oss o! (est!&$tion o the $ontents o the sa et0 (eposit 4oD #hi$h 3a0 a!ise !o3 its o#n o! its a2entsK !a&(, ne2'i2en$e o! (e'a0. A$$o!(in2'0, S5TC $annot ta6e !e &2e &n(e! the sai( $on(itions.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 P&4'i$ !espon(ent &!the! post&'ates that S5TC $annot 4e he'( !esponsi4'e o! the (est!&$tion o! 'oss o the sta3p $o''e$tion 4e$a&se the 'oo(in2 #as a o!t&ito&s e"ent an( the!e #as no sho#in2 o S5TCKs pa!ti$ipation in the a22!a"ation o the 'oss o! inB&!0. It states: A!ti$'e %%.1 o the Ci"i' Co(e p!o"i(es: NED$ept in $ases eDp!ess'0 spe$i ie( 40 the 'a#, o! #hen it is othe!#ise (e$'a!e( 40 stip&'ation, o! #hen the nat&!e o the o4'i2ation !e:&i!es the ass&3ption o !is6, no pe!son sha'' 4e !esponsi4'e o! those e"ents #hi$h $o&'( not 4e o!eseen, o! #hi$h, tho&2h o!eseen, #e!e ine"ita4'e.K In its (isse!tation o the ph!ase 6caso fortuito6 the "nciclopedia Jurisdicada "spaola 1Bsa0s: NIn a 'e2a' sense an(, $onse:&ent'0, a'so in !e'ation to $ont!a$ts, a 6caso fortuito6 p!e"ents 8sic9 1= the o''o#in2 essentia' $ha!a$te!isti$s: 8%9 the $a&se o the &n o!eseen an(s &neDpe$te( o$$&!!en$e, o! o the ai'&!e o the (e4to! to $o3p'0 #ith his o4'i2ation, 3&st 4e in(epen(ent o the h&3an #i''C 8)9 it 3&st 4e i3possi4'e to o!esee the e"ent #hi$h $onstit&tes the 6caso fortuito,6 o! i it $an 4e o!eseen, it 3&st 4e i3possi4'e to a"oi(C 8;9 the o$$&!!en$e 3&st 4e s&$h as to !en(e! it i3possi4'e o! one (e4to! to &' i'' his o4'i2ation in a no!3a' 3anne!C an( 819 the o4'i2o! 3&st 4e !ee !o3 an0 pa!ti$ipation in the a22!a"ation o the inB&!0 !es&'tin2 to the $!e(ito!.N 8$ite( in Se!"an(o vs. Phi'., Stea3 Na"i2ation Co., supra9. 19 $han!o4'es "i!t&a' 'a# 'i4!a!0 He!e, the &n o!eseen o! &neDpe$te( in&n(atin2 'oo(s #e!e in(epen(ent o the #i'' o the appe''ant 4an6 an( the 'atte! #as not sho#n to ha"e pa!ti$ipate( in a22!a"atin2 (a3a2e 8sic9 to the sta3ps $o''e$tion o the appe''ee. In a$t, the appe''ant 4an6 o e!e( its se!"i$es to se$&!e the assistan$e o an eDpe!t to sa"e 3ost o the then 2oo( sta3ps 4&t the appe''e !e &se( an( 'et 8 sic9 these !e$o"e!a4'e sta3ps insi(e the sa et0 (eposit 4oD &nti' the0 #e!e !&ine(. 20 $han!o4'es "i!t&a' 'a# 'i4!a!0 5oth the 'a# an( a&tho!it0 $ite( a!e $'ea! eno&2h an( !e:&i!e no &!the! e'&$i(ation. Un o!t&nate'0, ho#e"e!, the p&4'i$ !espon(ent ai'e( to $onsi(e! that in the instant $ase, as $o!!e$t'0 he'( 40 the t!ia' $o&!t, S5TC #as 2&i't0 o ne2'i2en$e. The a$ts $onstit&tin2 ne2'i2en$e a!e en&3e!ate( in the petition an( ha"e 4een s&33a!i7e( in this ponencia. S5TCKs ne2'i2en$e a##ravated the inB&!0 o! (a3a2e to the sta3p $o''e$tion. S5TC #as a#a!e o the 'oo(s o %+@* an( %+@>C it a'so 6ne# that the 'oo(#ate!s in&n(ate( the !oo3 #he!e Sa e Deposit 5oD No. *1 #as 'o$ate(. In "ie# the!eo , it sho&'( ha"e 'ost no ti3e in noti 0in2 the petitione! in o!(e! that the 4oD $o&'( ha"e 4een opene( to !et!ie"e the sta3ps, th&s sa"in2 the sa3e !o3 &!the! (ete!io!ation an( 'oss. In this !espe$t, it ai'e( to eDe!$ise the !easona4'e $a!e an( p!&(en$e eDpe$te( o a 2oo( athe! o a a3i'0, the!e40 4e$o3in2 a pa!t0 to the a22!a"ation o the inB&!0 o! 'oss. A$$o!(in2'0, the a o!e3entione( o&!th $ha!a$te!isti$ o a o!t&ito&s e"ent is a4sent A!ti$'e %%.< o the Ci"i' Co(e, #hi$h !ea(s: Those #ho in the pe! o!3an$e o thei! o4'i2ation a!e 2&i't0 o !a&(, ne2'i2en$e, o! (e'a0, an( those #ho in an0 3anne! $ont!a"ene the teno! the!eo , a!e 'ia4'e o! (a3a2es,

th&s $o3es to the s&$$o! o the petitione!. The (est!&$tion o! 'oss o the sta3p $o''e$tion #hi$h #as, in the 'an2&a2e o the t!ia' $o&!t, the Np!o(&$t o ). 0ea!s o patien$e an( (i'i2en$eN 21$a&se( the petitione! pe$&nia!0 'ossC hen$e, he 3&st 4e $o3pensate( the!e o!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ae $annot, ho#e"e!, p'a$e O&! i3p!i3at&! on the t!ia' $o&!tKs a#a!( o 3o!a' (a3a2es. Sin$e the !e'ationship 4et#een the petitione! an( S5TC is 4ase( on a $ont!a$t, eithe! o the3 3a0 4e he'( 'ia4'e o! 3o!a' (a3a2es o! 4!ea$h the!eo on'0 i sai( pa!t0 ha( a$te( !a&(&'ent'0 o! in 4a( aith. 22The!e is he!e no p!oo o !a&( o! 4a( aith on the pa!t o S5TC.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 AHEREFORE, the instant petition is he!e40 -RANTED. The $ha''en2e( De$ision an( Reso'&tion o the p&4'i$ !espon(ent Co&!t o Appea's o )% A&2&st %++% an( )% No"e34e! %++%, !espe$ti"e'0, in CA,-.R. CV No. )>.;., a!e he!e40 SET ASIDE an( the De$ision o %+ Fe4!&a!0 %++< o 5!an$h 1. o the Re2iona' T!ia' Co&!t o /ani'a in Ci"i' Case No. @.,1)><% is he!e40 REINSTATED in &'', eD$ept as to the a#a!( o 3o!a' (a3a2es #hi$h is he!e40 set asi(e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Costs a2ainst the p!i"ate !espon(ent.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 SO ORDERED. G.R. No. %932BB= No5e1ber 14, 1930 $'5o0u'+ary *'/o05e'3y o4 ;ar*a'o >e0a/3o a'- Co., e+ a0. CO;P L$ GR$CO% DE U%"R ; R, $'ai3ant,appe''ee, "s. >$CEN"E NEPO;UCENO, assi2nee,appe''ant.

OS"R ND, J.:$han!o4'es "i!t&a' 'a# 'i4!a!0 It appea!s !o3 the !e$o!( that on /a!$h %., %+)., the !e2iste!e( pa!tne!ships, /a!iano Ve'as$o J Co., /a!iano Ve'as$o, Sons, J Co., an( /a!iano Ve'as$o J Co., In$., #e!e, on petition o the $!e(ito!s, (e$'a!e( inso'"ent 40 the Co&!t o Fi!st Instan$e o /ani'a.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 On the %>th (a0 o Ap!i', %+)., the Co3pania A2!i$o'a (e U't!a3a! i'e( a $'ai3 a2ainst one o the inso'"ents /a!iano Ve'as$o J Co., $'ai3in2 the s&3 o P%<,<<<, #ith the a2!ee( inte!est the!eon at the !ate o > pe! $ent pe! ann&3 !o3 Ap!i' *, %+%@, &nti' its &'' pa03ent #as a (eposit #ith sai( /a!iano Ve'as$o J Co. an( as6e( the $o&!t to (e$'a!e it a p!e e!!e( $'ai3.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 The assi2nee o the inso'"en$0 ans#e!e( the $'ai3 40 inte!posin2 a 2ene!a' (enia'. The $'ai3 #as the!e&pon !e e!!e( 40 the $o&!t to a Co33issione! to !e$ei"e the e"i(en$e, an( on Septe34e! );, %+)+, the $o&!t !en(e!e( a (e$ision (e$'a!in2 that the a''e2e( (eposit #as a p!e e!!e( $'ai3 o! the s&3 3entione(, #ith inte!est at > pe! $ent pe! ann&3 !o3 Ap!i' *, %+%@, &nti' pai(. F!o3 this (e$ision the assi2nee appea'e(.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 The e"i(en$e p!esente( 40 the $'ai3ant Co3pania A2!i$o'a (e U't!a3a! $onsiste( o a !e$eipt in #!itin2, an( the testi3on0 o Jose Ve'as$o #ho #as 3ana2e! o /a!iano Ve'as$o J Co. at the ti3e the note #as eDe$&te(. The !e$eipt !ea(s as o''o# 8t!ans'ation9: /ANILA, P. I., April D, ,0,-.$han!o4'es "i!t&a' 'a# 'i4!a!0 Re$ei"e( !o3 the NCo3pania A2!i$o'a (e U't!a3a!N the s&3 o ten tho&san( Phi'ippine pesos as a (eposit at the inte!est o siD pe! $ent ann&a''0, o! the te!3 o th!ee 3onths !o3 (ate.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 In #itness the!eo , I si2n the p!esent.

ana#er. P%<,<<<.<<.

/ARIANO VELASCO J CO. 50 8S2(.9 JOSE VELASCO $han!o4'es "i!t&a' 'a# 'i4!a!0

In his testi3on0, Jose Ve'as$o state( that his si2nat&!e on the !e$eipt #as a&thenti$ an( that he !e$ei"e( the sai( s&3 o P%<,<<< !o3 the appe''ee an( (eposite( it #ith the 4an6 in the $&!!ent a$$o&nt o /a!iano Ve'as$o J Co.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 In o&! opinion the $o&!t 4e'o# e!!e( in in(in2 that the $'ai3 o the appe''ee sho&'( 4e $onsi(e!e( a (eposit an( a p!e e!!e( $'ai3. In the $ase o *avieres vs. De 2avera 8% Phi'., %.9, "e!0 si3i'a! to the p!esent $ase, this $o&!t he'( that the t!ansa$tion the!ein in"o'"e( #as a 'oan an( not a (eposit. The a$ts o the $ase #e!e that in %@*+ I2na$ia (e -o!!i$ho (e'i"e!e( P;,<<< to Fe'iD Pa!(o (e Ta"e!a. The a2!ee3ent 4et#een the3 !ea( as o''o#s 8t!ans'ation9: Re$ei"e( o SeSo!ita I2na$ia (e -o!!i$ho the s&3 o ;,<<< pesos, 2o'( 8;,<<< pesos9, as a (eposit pa0a4'e on t#o 3onthsK noti$e in a("an$e, #ith inte!est at > pe!$ent pe! ann&3 #ith a h0pothe$ation o the 2oo(s no# o#ne( 40 3e o! #hi$h 3a0 4e o#ne( he!ea te!, as se$&!it0 o the pa03ent.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 In #itness #he!eo I si2n in 5inon(o, Jan&a!0 ;%, %@*+.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 FELIH PARDO DE TAVERA A te! the (eath o 4oth pa!ties, -a"ie!es, as p'ainti an( s&$$esso! in inte!est o the (e$ease( I2na$ia (e -o!!i$ho, 4!o&2ht the a$tion a2ainst T!ini(a( H. Pa!(o (e Ta"e!a, the s&$$esso! in inte!est o the (e$ease( Fe'iD Pa!(o (e Ta"e!a, o! the $o''e$tion o the s&3 o P%,1);..*, the !e3ainin2 po!tion o the ;,<<< pesos. The p'ainti -a"ie!es a''e2e( that the 3one0 #as (e'i"e!e( to Fe'iD Pa!(o (e Ta"e!a as a (eposit, 4&t the (e en(ant insiste( that the a2!ee3ent a4o"e :&ote( #as not a $ont!a$t o (eposit 4&t one o 'oan. This $o&!t sai(: A'tho&2h in the (o$&3ent in :&estion a (eposit is spo6en o , ne"e!the'ess !o3 an eDa3ination o the enti!e (o$&3ent it $'ea!'0 appea!s that the $ont!a$t #as a 'oan an( that s&$h #as the intention o the pa!ties. It is &nne$essa!0 to !e$&! to the $annons o inte!p!etation to a!!i"e at this $on$'&sion. The o4'i2ation o the (eposito!0 to pa0 inte!est at the !ate o > pe! $ent to the (eposito! s& i$es to $a&se the o4'i2ation to 4e $onsi(e!e( as a 'oan an( 3a6es it 'i6e#ise e"i(ent that it #as the intention o the pa!ties that the (eposito!0 sho&'( ha"e the !i2ht to 3a6e &se o the a3o&nt (eposite(, sin$e it #as stip&'ate( that the a3o&nt $o&'( 4e $o''e$te( a te! noti$e o t#o 3onths in a("an$e. S&$h 4ein2 the $ase, the $ont!a$t 'ost the $ha!a$te! o a (eposit an( a$:&i!e( that o a 'oan. 8A!t. %.>@, Ci"i' Co(e.9 In the $ase o Javellana vs. Lim 8%% Phi'., %1%9 this $o&!t, spea6in2 th!o&2h J&sti$e To!!es sai(: A&tho!it0 !o3 the $o&!t ha"in2 4een p!e"io&s'0 o4taine(, the $o3p'aint #as a3en(e( on the %<th o Jan&a!0, %+<.C it #as then a''e2e(, that on the )>th o /a0, %@+., the (e en(ants eDe$&te( an( s&4s$!i4e( a (o$&3ent in a"o! o the p'ainti !ea(in2 as o''o#s:$han!o4'es "i!t&a' 'a# 'i4!a!0 Ae ha"e !e$ei"e( !o3 An2e' Ja"e''ana, as a (eposit #itho&t inte!est, the s&3 o t#o tho&san( siD h&n(!e( an( ei2ht0,siD pesos an( i t0,ei2ht $ents o pesos fuertes, #hi$h #e #i'' !et&!n to the sai( 2ent'e3an, Boint'0 an( se"e!a''0 on the )<th o Jan&a!0, %@+@. , Ja!o, )>th o /a0 %@.+. , Si2ne(: JOSE LI/. , Si2ne(: CEFERINO DO/IN-O LI/.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 That, #hen the o4'i2ation 4e$a3e (&e, the (e en(ants 4e22e( the p'ainti o! an eDtension o ti3e o! the pa03ent the!eo 4in(in2 the3se'"es to pa0 inte!est at the !ate o %* pe! $ent on the a3o&nt o thei! in(e4te(ness, to #hi$h the p'ainti a$$e(e(C that on the %*th o /a0, %+<), the (e4to!s pai( on a$$o&nt o inte!est (&e the s&3 o %,<<< pesos, #ith the eD$eption o #hi$h the0 ha( not pai( an0 othe! s&3 on a$$o&nt o eithe! $apita' o! inte!est, not#ithstan(in2 the !e:&ests 3a(e 40 the p'ainti , #ho ha( the!e40 4een s&4Be$te( to 'oss an( (a3a2es. DDD DDD D D D$han!o4'es "i!t&a' 'a# 'i4!a!0

The (o$&3ent o in(e4te(ness inse!te( in the $o3p'aint states that the p'ainti 'e t on (eposit #ith the (e en(ants a 2i"en s&3 o 3one0 #hi$h the0 #e!e Boint'0 an( se"e!a''0 o4'i2e( to !et&!n on a $e!tain (ate iDe( in the (o$&3entC 4&t that, ne"e!the'ess, #hen the (o$&3ent appea!in2 as EDhi4it ), #!itten in the Visa0an (ia'e$t an( o''o#e( 40 a t!ans'ation into Spanish #as eDe$&te(, it #as a$6no#'e(2e(, at the (ate the!eo , the %*th o No"e34e!, %+<) that the a3o&nt (eposite( ha( not 0et 4een !et&!ne( to the $!e(ito!, #he!e40 he #as s&4Be$te( to 'osses an( (a3a2es a3o&ntin2 to @;< pesos sin$e the )<th o Jan&a!0, %@+@, #hen the !et&!n #as a2ain stip&'ate( #ith the &!the! a2!ee3ent that the a3o&nt (eposite( sho&'( 4ea! inte!est at the !ate o %* pe! $ent pe! ann&3 !o3 the a o!esai( (ate o Jan&a!0 )<, an( that the %,<<< pesos pai( to the (eposito! on the %*th o /a0, %+<<, a$$o!(in2 to the !e$eipt iss&e( 40 hi3 to the (e4to!s, #o&'( 4e in$'&(e(, an( that the sai( !ate o inte!est #o&'( o4tain &nti' the (e4to!s pai( the $!e(ito! the sai( a3o&nt in &''. In this se$on( (o$&3ent the $ont!a$t 4et#een the pa!ties, #hi$h is a !ea' 'oan o 3one0 #ith inte!est, appea!s pe! e$t'0 (e ine(, not#ithstan(in2 the a$t that in the o!i2ina' (o$&3ent eDe$&te( 40 the (e4to!s on the )>th o /a0, %@+., it is $a''e( a (epositC so that #hen the0 4o&n( the3se'"es Boint'0 an( se"e!a''0 to !e &n( the s&3 o ),>@>.*@ pesos to the (eposito!, Ja"e''ana, the0 (i( not en2a2e to !et&!n the sa3e $oins !e$ei"e( an( o #hi$h the a3o&nt (eposite( $onsiste(, an( the0 $o&'( ha"e a$$o3p'ishe( the !et&!n a2!ee( &pon 40 the (e'i"e!0 o a s&3 e:&a' to the one !e$ei"e( 40 the3. Fo! this !eason it 3&st 4e &n(e!stoo( that the (e4to!s #e!e 'a# &''0 a&tho!i7e( to 3a6e &se o the a3o&nt (eposite(, #hi$h the0 ha"e (one, as s&4se:&ent'0 sho#n #hen as6in2 o! an eDtension o the ti3e o! the !et&!n the!eo , inas3&$h as, a$6no#'e(2in2 that the0 ha"e s&4Be$te( the 'en(e!, thei! $!e(ito!, to 'osses an( (a3a2es o! not $o3p'0in2 #ith #hat ha( 4een stip&'ate(, an( 4ein2 $ons$io&s that the0 ha( &se(, o! thei! o#n p!o it an( 2ain, the 3one0 that the0 !e$ei"e( appa!ent'0 as a (eposit, the0 en2a2e( to pa0 inte!est to the $!e(ito! !o3 the (ate na3e( &nti' the ti3e #hen the !e &n( sho&'( 4e 3a(e. S&$h $on(&$t on the pa!t o the (e4to!s is &n:&estiona4'e e"i(en$e that the t!ansa$tion ente!e( in to 4et#een the inte!este( pa!ties #as not a (eposit, 4&t a !ea' $ont!a$t o 'oan.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 A!ti$'e %.>. o the Ci"i' Co(e p!o"i(es that , NThe (eposito!0 $annot 3a6e &se o the thin2 (eposite( #itho&t the eDp!ess pe!3ission o the (eposito!.N$han!o4'es "i!t&a' 'a# 'i4!a!0 NOthe!#ise he sha'' 4e 'ia4'e o! 'osses an( (a3a2es.N A!ti$'e %.>@ a'so p!o"i(es that , NAhen the (eposito!0 has pe!3ission to 3a6e &se o the thin2 (eposite(, the $ont!a$t 'oses the $ha!a$te! o a (eposit an( 4e$o3es a 'oan o! 4ai'3ent.N$han!o4'es "i!t&a' 'a# 'i4!a!0 NThe pe!3ission not 4e p!es&3e(, an( its eDisten$e 3&st 4e p!o"en.N DDD DDD D D D$han!o4'es "i!t&a' 'a# 'i4!a!0

/o!eo"e!, o! the !easons a4o"e set o!th it 3a0, as a 3atte! o $o&!se, 4e in e!!e( that the!e #as no !ene#a' o the $ont!a$t o (eposit $on"e!te( into a 'oan, 4e$a&se, as has a'!ea(0 4een state(, the (e en(ants !e$ei"e( sai( a3o&nt 40 "i!t&e o a !ea' 'oan $ont!a$t &n(e! the na3e o a (eposit, sin$e the so,$a''e( 4ai'ees #e!e o!th#ith a&tho!i7e( to (ispose o the a3o&nt (eposite(. This the0 ha"e (one, as has 4een $'ea!'0 sho#n. The t#o $ases :&ote( a!e s& i$ient to sho# that the ten tho&san( pesos (e'i"e!e( 40 the appe''ee to /a!iano Ve'as$o J Co. $annot (e !e2a!(e( as a te$hni$a' (eposit. 5&t the appe''ee a!2&es that it is at 'east an Ni!!e2&'a! (eposit.N This a!2&3ent is, #e thin6, s& i$ient'0 ans#e!e( in the $ase o Ro2e!s "s. S3ith, 5e'' J Co. 8%< Phi'., ;%+9. The!e this $o&!t sai(: . . . /an!esa, in his Co33enta!ies on the Ci"i' Co(e 8"o'. %%, p. >>19, states that the!e a!e th!ee points o (i e!en$e 4et#een a 'oan an( an i!!e2&'a! (eposit. The i!st (i e!en$e #hi$h he points o&t $onsists in the a$t that in an i!!e2&'a! (eposit the on'0 4ene it is that #hi$h a$$!&es to the (eposito!, #hi'e in a 'oan the essentia' $a&se o! the t!ansa$tion is the ne$essit0 o the 4o!!o#e!. The $ont!a$t in :&estion (oes not &' i'' this !e:&i!e3ent o an i!!e2&'a! (eposit. It is "e!0 appa!ent that it #as not o! the so'e 4ene it o Ro2e!s. It, 'i6e an0 othe! 'oan o 3one0, #as o! the 4ene it o 4oth pa!ties. The 4ene it #hi$h S3ith, 5e'' J Co. !e$ei"e( #as the &se o the 3one0C the 4ene it #hi$h Ro2e!s !e$ei"e( #as the inte!est on his 3one0. In the 'ette! in #hi$h S3ith, 5e'' J Co. on the ;<th o J&ne, %@@@, noti ie( the p'ainti o the !e(&$tion o the inte!est, the0 sai(: NAe $a'' 0o&! attention to this 3atte! in o!(e! that 0o& 3a0 i 0o& thin6 4est e3p'o0 0o&! 3one0 in so3e othe! p'a$e.N$han!o4'es "i!t&a' 'a# 'i4!a!0

No! (oes the $ont!a$t in :&estion &' i'' the thi!( !e:&isite in(i$ate( 40 /an!esa, #hi$h is, that in an i!!e2&'a! (eposit, the (eposito! $an (e3an( the !et&!n o the a!ti$'e at an0 ti3e, #hi'e a 'en(e! is 4o&n( 40 the p!o"isions o the $ont!a$t an( $annot see6 !estit&tion &nti' the ti3e o! pa03ent, as p!o"i(e( in the $ont!a$t, has a!isen. It is appa!ent !o3 the te!3s o this (o$&3ents that the p'ainti $o&'( not (e3an( his 3one0 at an0 ti3e. He #as 4o&n( to 2i"e noti$e o his (esi!e o! its !et&!n an( then to #ait o! siD 3onths 4e o!e he $o&'( insist &pon pa03ent. In the p!esent $ase the t!ansa$tion in :&estion #as $'ea!'0 not o! the so'e 4ene it o the Co3pania A2!i$o'a (e U't!a3a!C it #as e"i(ent'0 o! the 4ene it o 4oth pa!ties. Neithe! $o&'( the a''e2e( (eposito! (e3an( pa03ent &nti' the eDpi!ation o the te!3 o th!ee 3onths.$han!o4'es"i!t&a'a#'i4!a!0$han!o4'es "i!t&a' 'a# 'i4!a!0 Fo! the !easons state(, the appea'e( B&(23ent is !e"e!se(, an( #e ho'( that the t!ansa$tion in :&estion 3&st 4e !e2a!(e( as a 'oan, #itho&t p!e e!en$e. Aitho&t $osts. So o!(e!e(. G.R. No. %911BB: u6u/+ 30, 195=

R ;ON GON@ %ES, Plaintiff-Appellee, "s. GO "$ONG a'- %U@ON SURE"A CO., $NC., Defendants-Appellants. ;ON"E; AOR, J.C $han!o4'es "i!t&a' 'a# 'i4!a!0 De en(ants -o Tion2 an( L&7on S&!et0 Co. a!e appea'in2 !o3 the (e$ision o the Co&!t o Fi!st Instan$e o /ani'a, J&(2e /a2no S. -at3aitan p!esi(in2, the (ispositi"e pa!t o #hi$h !ea(s as o''o#s: ;n vie% %hereof, B&(23ent is !en(e!e( $on(e3nin2 (e en(ant -o Tion2 an( L&7on S&!et0 Co., Boint'0 an( se"e!a''0, to pa0 p'ainti the s&3 o P1,+)< #ith 'e2a' inte!est !o3 the (ate o the i'in2 o the $o3p'aint &nti' &''0 pai(C B&(23ent is a'so !en(e!e( a2ainst -o Tion2 to pa0 the s&3 o P;,>@< &nto p'ainti , a'so #ith 'e2a' inte!est !o3 the (ate o the i'in2 o the $o3p'aint &nti' &''0 pai(. -o Tion2 is a'so $on(e3ne( to pa0 the s&3 o P%,<<< as atto!ne0Ks ees, p'&s $osts. The appea' #as i!st ta6en to the Co&!t o Appea's, the 'atte! in(o!sin2 the $ase to &s 'ate! &n(e! the p!o"isions o Se$tion %. 8>9 o Rep&4'i$ A$t No. )+>, on the 2!o&n( that the iss&es !aise( #e!e p&!e'0 :&estions o 'a#.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 -o Tion2 o#ne( a !i$e 3i'' an( #a!eho&se, 'o$ate( at /a4ini, U!(aneta, Pan2asinan. On Fe4!&a!0 1, %+*;, he o4taine( a 'i$ense to en2a2e in the 4&siness o a 4on(e( #a!eho&se3an 8EDhi4it N9. To se$&!e the pe! o!3an$e o his o4'i2ations as s&$h 4on(e( #a!eho&se3an, the L&7on S&!et0 Co. eDe$&te( -&a!ant0 5on( No. )+1 in the s&3 o P%@,;;1 8EDhi4it O9, $on(itione( pa!ti$&'a!'0 on the &' i''3ent 40 -o Tion2 o his (&t0 o! o4'i2ation to (e'i"e! to the (eposito!s in his sto!a2e #a!eho&se, the pa'a0 !e$ei"e( 40 hi3 o! sto!a2e, at an0 ti3e (e3an( is 3a(e, o! to pa0 the 3a!6et "a'&e the!eo , in $ase he #as &na4'e to !et&!n the sa3e. The 4on( #as eDe$&te( on Jan&a!0 )>, %+*;. -o Tion2 ins&!e( the #a!eho&se an( the pa'a0 (eposite( the!ein #ith the A''ian$e S&!et0 an( Ins&!an$e Co3pan0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 5&t p!io! to the iss&an$e o the 'i$ense to -o Tion2 to ope!ate as 4on(e( #a!eho&se3an, he ha( on se"e!a' o$$asions !e$ei"e( pa'a0 o! (eposit !o3 p'ainti -on7a'es, tota'in2 ;>@ sa$6s, o! #hi$h he iss&e( !e$eipts, EDhi4its A, 5, C, an( D. A te! he #as 'i$ense( as 4on(e( #a!eho&se3an, -o Tion2 a2ain !e$ei"e( "a!io&s (e'i"e!ies o pa'a0 !o3 p'ainti , tota'in2 1+) sa$6s, o! #hi$h he iss&e( the $o!!espon(in2 !e$eipts, a'' the 2!an( tota' o @>< sa$6s, "a'&e( at P@,><< at the !ate o P%< pe! sa$6.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 On o! a4o&t /a!$h %*, %+*;, p'ainti (e3an(e( !o3 -o Tion2 the "a'&e o his (eposits in the a3o&nt o P@,><<, 4&t he #as to'( to !et&!n a te! t#o (a0s, #hi$h he (i(, 4&t -o Tion2 a2ain to'( hi3 to $o3e 4a$6. A e# (a0s 'ate!, the #a!eho&se 4&!ne( to the 2!o&n(. 5e o!e the i!e, -o Tion2 ha( 4een a$$eptin2 (e'i"e!ies o pa'a0 !o3 othe! (eposito!s an( at the ti3e o the i!e, the!e #e!e *,@1. sa$6s o pa'a0 in the #a!eho&se, in eD$ess o the *,<<< sa$6s a&tho!i7e( &n(e! his 'i$ense. The !e$eipts iss&e( 40 -o Tion2 to the p'ainti #e!e o!(ina!0 !e$eipts, not the N#a!eho&se !e$eiptsN (e ine( 40 the Aa!eho&se Re$eipts A$t 8A$t No. )%;.9.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 A te! the 4&!nin2 o the #a!eho&se, the (eposito!s o pa'a0, in$'&(in2 p'ainti , i'e( thei! $'ai3s #ith the 5&!ea& o Co33e!$e, an( it #o&'( appea! that #ith the p!o$ee(s o the ins&!an$e po'i$0, the 5&!ea& o Co33e!$e pai( o so3e o the $'ai3. P'ainti Ks $o&nse' 'ate! #ith(!e# his $'ai3 #ith the 5&!ea& o Co33e!$e, a$$o!(in2 to -o Tion2, 4e$a&se his $'ai3 #as (enie( 40 the 5&!ea&, 4&t a$$o!(in2 to the (e$ision o the t!ia' $o&!t, 4e$a&se nothin2 $a3e !o3 p'ainti Ks e o!ts to ha"e his $'ai3

pai(. The!ea te!, -on7a'es i'e( the p!esent a$tion a2ainst -o Tion2 an( the L&7on S&!et0 o! the s&3 o P@,><<, the "a'&e o his pa'a0, #ith 'e2a' inte!est, (a3a2es in the s&3 o P*,<<< an( P%,*<< as atto!ne0Ks ees. -on7a'es 'ate! !ene#e( his $'ai3 #ith the 5&!ea& o Co33e!$e 8EDhi4it S9.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Ahi'e the $ase #as pen(in2 in $o&!t, -on7a'es an( -o Tion2 ente!e( into a $ont!a$t o a3i$a4'e sett'e3ent to the e e$t that &pon the sett'e3ent o a'' a$$o&nts (&e to hi3 40 -o Tion2, he, -on7a'es, #o&'( ha"e a'' a$tions pen(in2 a2ainst -o Tion2 (is3isse(. Inas3&$h as -o Tion2 ai'e( to sett'e the a$$o&nts, -on7a'es p!ose$&te( his $o&!t a$tion..$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Fo! p&!poses o !e e!en$e, #e !ep!o(&$e the assi2n3ent o e!!o!s o -o Tion2, as #e'' as the assi2n3ent o e!!o!s o the L&7on S&!et0, a'' !ea(in2 th&s: I. The t!ia' $o&!t e!!e( in in(in2 that p'ainti ,appe''eeKs $'ai3 is $o"e!e( 40 the 5on(e( Aa!eho&se La#, A$t ;@+;, as a3en(e(, an( not 40 the Ci"i' Co(e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 II. The t!ia' $o&!t e!!e( in not eDe3ptin2 (e en(ant,appe''ant -o Tion2 o! the 'oss o the pa'a0 (eposite(, p&!s&ant to the p!o"isions o the Ne# Ci"i' Co(e.N. DDD DDD D D D $han!o4'es "i!t&a' 'a# 'i4!a!0

I. The t!ia' $o&!t e!!e( in not (e$'a!in2 that the a3i$a4'e sett'e3ent 40 an( 4et#een p'ainti ,appe''ee an( (e en(ant -o Tion2 $onstit&te( a 3ate!ia' a'te!ation o the s&!et0 4on( o appe''ant L&7on S&!et0 #hi$h eDtin2&ishe( an( (is$ha!2e( its 'ia4i'it0.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 II. The t!ia' $o&!t e!!e( in 4o'(in2 that the !e$eipts o! the pa'a0 !e$ei"e( 40 -o Tion2, tho&2h not in the o!3 o N:&e(ansN o! #a!eho&se !e$eipts a!e $ha!2ea4'e a2ainst the s&!et0 4on( i'e( &n(e! the p!o"isions o the -ene!a' 5on(e( Aa!eho&se A$t 8A$t No. ;@+; as a3en(e( 40 Rep&4'i$ A$t No. )1.9 as a !es&'t o a 'oss.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 III. The t!ia' $o&!t e!!e( in not ho'(in2 that the p'ainti ha( !eno&n$e( an( a4an(one( his !i2hts &n(e! the 5on(e( Aa!eho&se A$t 40 the #ith(!a#a' o his $'ai3 !o3 the 5&!ea& o Co33e!$e an( the eDe$&tion o the Na3i$a4'e sett'e3entN.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 IV. The t!ia' $o&!t e!!e( in not ho'(in2 that the pa'a0 (e'i"e!e( to -o Tion2 $onstit&tes 2!at&ito&s (eposit #hi$h #as eDtin2&ishe( &pon the 'oss an( (est!&$tion o the s&4Be$t 3atte!.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 V. The t!ia' $o&!t e!!e( in not (e$'a!in2 that the t!ansa$tion 4et#een (e en(ant -o Tion2 an( p'ainti #as 3o!e o a sa'e !athe! than a (eposit.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 VI. The t!ia' $o&!t e!!e( in (e$'a!in2 that the L&7on S&!et0 Co., In$., ha( not $o3p'ie( #ith its &n(e!ta6in2 (espite the 'i:&i(ation o a'' the $'ai3s 40 the 5&!ea& o Co33e!$e.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 VII. The 'o#e! $o&!t e!!e( in a(B&(2in2 the he!ein s&!et0 'ia4'e &n(e! the te!3s o the 5on(. Ae sha'' (is$&ss the assi2ne( e!!o!s at the sa3e ti3e, $onsi(e!in2 the $'ose !e'ation 4et#een the3, a'tho&2h #e (o not p!opose to (is$&ss an( !&'e &pon a'' o the3. 5oth appe''ants &!2e that p'ainti Ks $'ai3 is 2o"e!ne( 40 the Ci"i' Co(e an( not 40 the 5on(e( Aa!eho&se A$t 8A$t No. ;@+;, as a3en(e( 40 Rep&4'i$ A$t No. )1.9, o! the !eason that, as a'!ea(0 state(, #hat -o Tion2 iss&e( to p'ainti #e!e o!(ina!0 !e$eipts, not the #a!eho&se !e$eipts $onte3p'ate( 40 the Aa!eho&se Re$eipts La#, an( 4e$a&se the (eposits o pa'a0 o p'ainti #e!e 2!at&ito&s.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 A$t No. ;@+; as a3en(e( is a spe$ia' 'a# !e2&'atin2 the 4&siness o !e$ei"in2 $o33o(ities o! sto!a2e an( (e inin2 the !i2hts an( o4'i2ations o a 4on(e( #a!eho&se3an an( those t!ansa$tin2 4&siness #ith hi3. Conse:&ent'0, an0 (eposit 3a(e #ith hi3 as a 4on(e( #a!eho&se3an 3&st ne$essa!i'0 4e 2o"e!ne( 40 the p!o"isions o A$t No. ;@+;. The 6in( o! nat&!e o the !e$eipts iss&e( 40 hi3 o! the (eposits is not "e!0 3ate!ia' 3&$h 'ess (e$isi"e. Tho&2h it is (esi!a4'e that !e$eipts iss&e( 40 a 4on(e( #a!eho&se3an sho&'( $on o!3 to the p!o"isions o the Aa!eho&se Re$eipts La#, sai( p!o"isions in o&! opinion a!e not 3an(ato!0 an( in(ispensa4'e in the sense that i the0 e'' sho!t o the !e:&i!e3ents o the Aa!eho&se Re$eipts A$t, then the

$o33o(ities (e'i"e!e( o! sto!a2e 4e$o3e o!(ina!0 (eposits an( #i'' not 4e 2o"e!ne( 40 the p!o"isions o the 5on(e( Aa!eho&se A$t. Un(e! Se$tion % o the Aa!eho&se Re$eipts A$t, one #o&'( 2athe! the i3p!ession that the iss&an$e o a #a!eho&se !e$eipt in the o!3 p!o"i(e( 40 it is 3e!e'0 pe!3issi"e an( (i!e$to!0 an( not o4'i2ato!0: SECTION %. Persons %ho ma) issue receipts. , Aa!eho&se !e$eipts 3a0 4e iss&e( 40 an0 #a!eho&se3an., an( the 5on(e( Aa!e4o&se A$t as a3en(e( pe!3its the #a!eho&se3an to iss&e an0 !e$eipt, th&s: . . . . N!e$eiptN as an0 !e$eipt iss&e( 40 a #a!eho&se3an o! $o33o(it0 (e'i"e!e( to hi3. As the t!ia' $o&!t #e'' o4se!"e(, as a! as -o Tion2 #as $on$e!ne(, the a$t that the !e$eipts iss&e( 40 hi3 #e!e not N:&e(ansN is no "a'i( 2!o&n( o! (e ense 4e$a&se he #as the p!in$ipa' o4'i2o!. F&!the!3o!e, as o&n( 40 the t!ia' $o&!t, -o Tion2 ha( !epeate('0 p!o3ise( p'ainti to iss&e to hi3 N:&e(ansN an( ha( ass&!e( hi3 that he sho&'( not #o!!0C an( that -o Tion2 #as in the ha4it o iss&in2 o!(ina!0 !e$eipts 8not N:&e(ansN9 to his (eposito!s.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 As to the $ontention that the (eposits 3a(e 40 the p'ainti #e!e !ee 4e$a&se he pai( no ees the!e o!, it #o&'( appea! that -o Tion2 in(&$e( p'ainti to (eposit his pa'a0 in the #a!eho&se !ee o $ha!2e in o!(e! to p!o3ote his 4&siness an( to att!a$t othe! (eposito!s, it 4ein2 &n(e!stoo( that 4e$a&se o this a$$o33o(ation, p'ainti #o&'( $on"in$e othe! pa'a0 o#ne!s to (eposit #ith -o Tion2.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 Appe''ants $onten( that the 4&!nin2 o the #a!eho&se #as a o!t&ito&s e"ent an( not (&e to an0 a&'t o -o Tion2 an( that $onse:&ent'0, he sho&'( not 4e he'( 'ia4'e, appe''ants s&ppo!tin2 the $ontention #ith the !&'in2 in the $ase o La 8ociedad Dalisa) vs. De los Re)es, ** Phi'. 1*), !ea(in2 as o''o#s: Inas3&$h as the i!e, a$$o!(in2 to the B&(23ent appea'e( !o3, #as neithe! intentiona' no! (&e to the ne2'i2en$e o the appe''ant $o3pan0 o! its o i$ia'sC an( it appea!in2 !o3 the e"i(en$e that the then 3ana2e! atte3pte( to sa"e the pa'a0, the appe''ant $o3pan0 sho&'( not 4e he'( !esponsi4'e o! (a3a2es !es&'tin2 !o3 sai( i!e. . . . . The t!ia' $o&!t $o!!e$t'0 (ispose( o this sa3e $ontention, th&s: The (e ense that the pa'a0 #as (est!o0e( 40 i!e neithe! (oes the Co&!t $onsi(e! to 4e 2oo( o! #hi'e the $ont!a$t #as in the nat&!e o a (eposit an( the 'oss o the thin2 #o&'( eDe3pt the o4'i2o! in a $ont!a$t o (eposit to !et&!n the 2oo(s, this eDe3ption !o3 the !esponsi4i'it0 o! the (a3a2es 3&st 4e $on(itione( in his p!oo that the 'oss #as 40 o!$e 3aBe&!e, an( #itho&t his a&'t. The Co&!t (oes not see !o3 the e"i(en$e that the p!oo is $'ea! on the 'e2a' eDe3ption. On the $ont!a!0, the a$t that he eD$ee(e( the 'i3it o the a&tho!i7e( (eposit 3&st ha"e in$!ease( the !is6 an( #o&'( 3i'itate a2ainst his (e ense o non,'ia4i'it0. Fo! this !eason, the Co&!t (oes not o''o# La So$ie(a( vs. De Los Santos, ** Phi'. 1) :&ote( 40 -o Tion2. 8p. ;, De$ision9. Consi(e!in2 the a$t, as a'!ea(0 state(, that p!io! to the 4&!nin2 o the #a!eho&se, p'ainti (e3an(e( the pa03ent o the "a'&e o his pa'a0 !o3 -o Tion2 on t#o o$$asions 4&t #as p&t o #itho&t an0 "a'i( !eason, &n(e! the $i!$&3stan$es, the 4ette! !&'e #hi$h #e a$$ept is the o''o#in2: . . . . This !&'e p!o$ee(s &pon the theo!0 that the a$ts s&!!o&n(in2 the $a!e o the p!ope!t0 40 a 4ai'ee a!e pe$&'ia!'0 #ithin his 6no#'e(2e an( po#e! to p!o"e, an( that the en o!$e3ent o an0 othe! !&'e #o&'( i3pose 2!eat (i i$&'ties &pon the 4ai'o!s. ... It is i''o2i$a' an( &n!easona4'e to ho'( that the p!es&3ption o ne2'i2en$e in $ase o this 6in( is !e4&tte( 40 the 4ai'ee 40 si3p'0 p!o"in2 that the p!ope!t0 4ai'e( #as (est!o0e( 40 an o!(ina!0 i!e #hi$h 4!o6e o&t on the 4ai'eeKs o#n p!e3ises, #itho&t !e2a!( to the $a!e eDe!$ise( 40 the 'atte! to p!e"ent the i!e, o! to sa"e the p!ope!t0 a te! the $o33en$e3ent o the i!e. A'' the a&tho!ities see3 to a2!ee that the !&'e that the!e sha'' 4e a p!es&3ption o ne2'i2en$e in 4ai'3ent $ases 'i6e the p!esent one, #he!e the!e is (e a&'t in (e'i"e!0 o! a$$o&ntin2, o! the 2oo(s is B&st a ne$essa!0 one. . . . 8+ A.L.R. *>>C see a'so Hanes vs. Shapi!o, @1 S.E. ;;C J. R&sse' / 2. Co. vs. Ne# Ha"en, S.5. Co., *< N.G. )%%C 5e$6 vs. Ai'6ins,Ri$6s Co., %<) S.E. ;%;, F'eish3an vs. So&the!n R. Co., *> S.E. +.19. 5esi(es, as o4se!"e( 40 the t!ia' $o&!t, the (e en(ant "io'ate( the te!3s o his 'i$ense 40 a$$eptin2 o! (eposit pa'a0 in eD$ess o the 'i3it a&tho!i7e( 40 his 'i$ense, #hi$h a$t 3&st ha"e in$!ease( the !is6.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0

The L&7on S&!et0 $'ai3s that the a3i$a4'e sett'e3ent 40 an( 4et#een -on7a'es an( -o Tion2 $onstit&te( a 3ate!ia' a'te!ation o its 4on(, the!e40 eDtin2&ishin2 an( (is$ha!2in2 its 'ia4i'it0. It is e"i(ent, ho#e"e!, that #hi'e the!e #as an atte3pt to sett'e the $ase a3i$a4'0, the sett'e3ent #as ne"e! $ons&33ate( 4e$a&se -o Tion2 ai'e( to sett'e the a$$o&nts o -on7a'es to the 'atte!Ks satis a$tion. Conse:&ent'0, sai( non,$ons&33ate( $o3p!o3ise sett'e3ent (oes not (is$ha!2e the s&!et0: A $o3p!o3ise o! sett'e3ent 4et#een the $!e(ito! o! o4'i2ee an( the p!in$ipa', 40 #hi$h the 'atte! is (is$ha!2e( !o3 'ia4i'it0, (is$ha!2es the s&!et0, . . . . 5&t an &n$ons&33ate( . . . a2!ee3ent to $o3p!o3ise, a''in2 sho!t o an e e$ti"e sett'e3ent, #i'' not (is$ha!2e the s&!et0. 8*< C. J. %@*9 In !e'ation to the ai'&!e o -o Tion2 to iss&e the #a!eho&se !e$eipts $onte3p'ate( 40 the Aa!eho&se Re$eipts A$t, #hi$h ai'&!e, a$$o!(in2 to appe''ants, p!e$'&(e( p'ainti !o3 s&in2 on the 4on(, !e e!en$e 3a0 4e 3a(e to Se$tion ) o A$t No. ;@+;, (e inin2 !e$eipt as an0 !e$eipt iss&e( 40 a #a!eho&se3an o! $o33o(it0 (e'i"e!e( to hi3, sho#in2 that the 'a# (oes not !e:&i!e as in(ispensa4'e that a #a!eho&se !e$eipt 4e iss&e(. F&!the!3o!e, Se$tion . o sai( 'a# p!o"i(es that as 'on2 as the (eposito! is inB&!e( 40 a 4!ea$h o an0 o4'i2ation o the #a!eho&se3an, #hi$h o4'i2ation is se$&!e( 40 a 4on(, sai( (eposito! 3a0 s&e on sai( 4on(. In othe! #o!(s, the s&!et0 $annot a"oi( 'ia4i'it0 !o3 the 3e!e ai'&!e o the #a!eho&se3an to iss&e the p!es$!i4e( !e$eipt. In the $ase o Andreson vs. Erue#er, )%) N.A. %+@, %++, it #as he'(: The s&!et0 $o3pan0 $on$e(es that the 4on( #hi$h it 2a"e $ontains the stat&to!0 $on(itions. The stat&te . . . !e:&i!es that the 4on( , sha'' 4e $on(itione( &pon the aith &' pe! o!3an$e o the p&4'i$ 'o$a' 2!ain #a!eho&se3an o a'' the p!o"isions o 'a# !e'atin2 to the sto!a2e o 2!ain 40 s&$h #a!eho&se3an.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 The s&!et0 $o3pan0 the!e40 3a(e itse' !esponsi4'e o! the pe! o!3an$e 40 the #a!eho&se3an o a'' the (&ties an( o4'i2ations i3pose( &pon hi3 40 the stat&teC an(, i he ai'e( to pe! o!3 an0 s&$h (&t0 to the 'oss o! (et!i3ent o those #ho (e'i"e!e( 2!ain o! sto!a2e, the s&!et0 $o3pan0 4e$a3e 'ia4'e the!e o!. Ahe!e the #a!eho&se3an !e$ei"es 2!ain o! sto!a2e an( !e &ses to !et&!n o! pa0 it, the a$t that he ai'e( to iss&e the !e$eipt, #hen the stat&te !e:&i!e( hi3 to iss&e on !e$ei"in2 it, is not a"ai'a4'e to the s&!et0 as a (e ense a2ainst an a$tion on the 4on(. The o4'i2ation o the s&!et0 $o"e!s the (&t0 o the #a!eho&se3an to iss&e the p!es$!i4e( !e$eipt, as #e'' as the othe! (&ties i3pose( &pon hi3 40 the stat&te. Ae (ee3 it &nne$essa!0 to (is$&ss an( !&'e &pon the othe! :&estions !aise( in the appea'.$han!o4'es"i!t&a'a#'i4!a!0 $han!o4'es "i!t&a' 'a# 'i4!a!0 In "ie# o the o!e2oin2, the appea'e( (e$ision is he!e40 a i!3e(, #ith $osts.

MANUEL M. SERRANO, Petitioner, G. R. No. L-30511 February 14, 1980 -versusCENTRAL BANK OF THE PHILIPPINES, OVERSEAS BANK OF MANILA, EMERITO M. RAMOS, SUSANA B. RAMOS, EMERITO B. RAMOS, JR., JOSEFA RAMOS DELA RAMA, HORACIO DELA RAMA, ANTONIO B. RAMOS, FILOMENA RAMOS LEDESMA, RODOLFO LEDESMA, VICTORIA RAMOS TANJUATCO, and TEOFILO TANJUATCO, Respondents.

RESOLUTION

CONCEPCION, JR., J. Pe!"!"o# $or %a#&a'us a#& Pro("b"!"o#, )"!( Pre*"'"#ary I#+u#,!"o#, !(a! see-s !(e es!ab*"s('e#! o$ +o"#! a#& so*"&ary *"ab"*"!y !o !(e a'ou#! o$ .(ree /u#&re& F"$!y .(ousa#& Pesos, )"!( "#!eres!, a0a"#s! res1o#&e#! Ce#!ra* 2a#- o$ !(e P("*"11"#es a#& Overseas 2a#- o$ %a#"*a a#& "!s s!o,-(o*&ers, o# !(e a**e0e& $a"*ure o$ !(e Overseas 2a#- o$ %a#"*a !o re!ur# !(e !"'e &e1os"!s 'a&e by 1e!"!"o#er a#& ass"0#e& !o ("', o# !(e 0rou#& !(a! res1o#&e#! Ce#!ra* 2a#- $a"*e& "# "!s &u!y !o e3er,"se s!r",! su1erv"s"o# over res1o#&e#! Overseas 2a#- o$ %a#"*a !o 1ro!e,! &e1os"!ors a#& !(e 0e#era* 1ub*",. [1]Pe!"!"o#er a*so 1rays !(a! bo!( res1o#&e#! ba#-s be or&ere& !o e3e,u!e !(e 1ro1er a#& #e,essary &o,u'e#!s !o ,o#s!"!u!e a** 1ro1er!"es *"s!e& "# 4##e3 565 o$ !(e 4#s)er o$ res1o#&e#! Ce#!ra* 2a#- o$ !(e P("*"11"#es "# G. R. No. L79357, e#!"!*e& 5E'er"!a %. Ra'os, e! a*. vs. Ce#!ra* 2a#- o$ !(e P("*"11"#es,5 "#!o a !rus! $u#& "# $avor o$ 1e!"!"o#er a#& a** o!(er &e1os"!ors o$ res1o#&e#! Overseas 2a#o$ %a#"*a. I! "s a*so 1raye& !(a! !(e res1o#&e#!s be 1ro("b"!e& 1er'a#e#!*y $ro' (o#or"#0, "'1*e'e#!"#0, or &o"#0 a#y a,! 1re&",a!e& u1o# !(e va*"&"!y or e$$",a,y o$ !(e &ee&s o$ 'or!0a0e, ass"0#'e#!. a#&8or ,o#veya#,e or !ra#s$er o$ )(a!ever #a!ure o$ !(e 1ro1er!"es *"s!e& "# 4##e3 565 o$ !(e 4#s)er o$ res1o#&e#! Ce#!ra* 2a#"# G. R. No. 79357. [2] 4 sou0(! $or ex-parte 1re*"'"#ary "#+u#,!"o# a0a"#s! bo!( res1o#&e#! ba#-s )as #o! 0"ve# by !("s Cour!. 9#&"s1u!e& 1er!"#e#! $a,!s are O# O,!ober 13, 19:: a#& ;e,e'ber 17, 19::, 1e!"!"o#er 'a&e a !"'e &e1os"!, $or o#e year )"!( :< "#!eres!, o$ O#e /u#&re& F"$!y .(ousa#& Pesos =P150,000.00> )"!( !(e res1o#&e#! Overseas 2a#- o$ %a#"*a. [3] Co#,e1,"o# %a#e+a a*so 'a&e a !"'e &e1os"!, $or o#e year )"!( :-?< "#!eres!, o# %ar,( :, 19:6, o$ .)o /u#&re& .(ousa#& Pesos =P700,000.00> )"!( !(e sa'e res1o#&e#! Overseas 2a#- o$ %a#"*a. [ ] O# 4u0us! 31, 19:8, Co#,e1,"o# %a#e+a, 'arr"e& !o Fe*"3ber!o %. @erra#o, ass"0#e& a#& ,o#veye& !o 1e!"!"o#er %a#ue* %. @erra#o, (er !"'e &e1os"! o$ P700,000.00 )"!( res1o#&e#! Overseas 2a#- o$ %a#"*a. [!] No!)"!(s!a#&"#0 ser"es o$ &e'a#&s $or e#,as('e#! o$ !(e a$ore'e#!"o#e& !"'e &e1os"!s $ro' !(e res1o#&e#! Overseas 2a#- o$ %a#"*a, &a!"#0 $ro' ;e,e'ber :, 19:6 u1 !o %ar,( 4, 19:8, #o! a s"#0*e o#e o$ !(e !"'e &e1os"! ,er!"$",a!es )as (o#ore& by res1o#&e#! Overseas 2a#- o$ %a#"*a. ["] Res1o#&e#! Ce#!ra* 2a#- a&'"!s !(a! "! "s ,(ar0e& )"!( !(e &u!y o$ a&'"#"s!er"#0 !(e ba#-"#0 sys!e' o$ !(e Re1ub*", a#& "! e3er,"ses su1erv"s"o# over a** &o"#0 bus"#ess "# !(e P("*"11"#es, bu! &e#"es !(e 1e!"!"o#erAs a**e0a!"o# !(a! !(e Ce#!ra* 2a#- (as !(e &u!y !o e3er,"se a 'os! r"0"& a#& s!r"#0e#! su1erv"s"o# o$ ba#-s, "'1*y"#0 !(a! res1o#&e#! Ce#!ra* 2a#- (as !o )a!,( every 'ove or a,!"v"!y o$ a** ba#-s, "#,*u&"#0 res1o#&e#! Overseas 2a#- o$ %a#"*a. Res1o#&e#! Ce#!ra* 2a#- ,*a"'s !(a! as o$ %ar,( 17, 19:5, !(e Overseas 2a#- o$ %a#"*a, )("*e o1era!"#0, )as o#*y o# a *"'"!e& &e0ree o$ ba#-"#0 o1era!"o#s s"#,e !(e %o#e!ary 2oar& &e,"&e& "# "!s Reso*u!"o# No. 377, &a!e& %ar,( 17, 19:5, !o 1ro("b"! !(e Overseas 2a#- o$ %a#"*a $ro' 'a-"#0 #e) *oa#s a#& "#ves!'e#!s "# v"e) o$ "!s ,(ro#", reserve &e$","e#,"es a0a"#s! "!s
,ra*a)

&e1os"! *"ab"*"!"es. .("s *"'"!e& o1era!"o# o$ res1o#&e#! Overseas 2a#- o$ %a#"*a ,o#!"#ue& u1 !o 19:8. [#] Res1o#&e#! Ce#!ra* 2a#- a*so &e#"e& !(a! "! "s 0uara#!or o$ !(e 1er'a#e#! so*ve#,y o$ a#y ba#-"#0 "#s!"!u!"o# as ,*a"'e& by 1e!"!"o#er. I! ,*a"'s !(a! #e"!(er !(e *a) #or sou#& ba#-"#0 su1erv"s"o# reBu"res res1o#&e#! Ce#!ra* 2a#- !o a&ver!"se or re1rese#! !o !(e 1ub*", a#y re'e&"a* 'easures "! 'ay "'1ose u1o# ,(ro#", &e*"#Bue#! ba#-s as su,( a,!"o# 'ay "#ev"!ab*y resu*! !o 1a#", or ba#- 5ru#s5. I# !(e years 19::-19:6, !(ere )ere #o $"#&"#0s !o &e,*are !(e res1o#&e#! Overseas 2a#- o$ %a#"*a as "#so*ve#!. [$] Res1o#&e#! Ce#!ra* 2a#- *"-e)"se &e#"e& !(a! a ,o#s!ru,!"ve !rus! )as ,rea!e& "# $avor o$ 1e!"!"o#er a#& ("s 1re&e,essor "# "#!eres! Co#,e1,"o# %a#e+a )(e# !(e"r !"'e &e1os"!s )ere 'a&e "# 19:: a#& 19:6 )"!( !(e res1o#&e#! Overseas 2a#- o$ %a#"*a as &ur"#0 !(a! !"'e !(e *a!!er )as #o! a# "#so*ve#! ba#- a#& "!s o1era!"o# as a ba#-"#0 "#s!"!u!"o# )as be"#0 sa*va0e& by !(e res1o#&e#! Ce#!ra* 2a#-. [%] Res1o#&e#! Ce#!ra* 2a#- avers #o -#o)*e&0e o$ 1e!"!"o#erAs ,*a"' !(a! !(e 1ro1er!"es 0"ve# by res1o#&e#! Overseas 2a#- o$ %a#"*a as a&&"!"o#a* ,o**a!era*s !o res1o#&e#! Ce#!ra* 2a#- o$ !(e P("*"11"#es $or !(e $or'erAs over&ra$!s a#& e'er0e#,y *oa#s )ere a,Bu"re& !(rou0( !(e use o$ &e1os"!orsA 'o#ey, "#,*u&"#0 !(a! o$ !(e 1e!"!"o#er a#& Co#,e1,"o# %a#e+a. [1&] I# G. R. No. L-793:7, e#!"!*e& 5E'er"!a %. Ra'os, e! a*. vs. Ce#!ra* 2a#- o$ !(e P("*"11"#es,5 a ,ase )as $"*e& by 1e!"!"o#er Ra'os, )(ere"# res1o#&e#! Overseas 2a#- o$ %a#"*a sou0(! !o 1reve#! res1o#&e#! Ce#!ra* 2a#- $ro' ,*os"#0, &e,*ar"#0 !(e $or'er "#so*ve#!, a#& *"Bu"&a!"#0 "!s asse!s. Pe!"!"o#er %a#ue* @erra#o "# !("s ,ase, $"*e& o# @e1!e'ber :, 19:8, a 'o!"o# !o "#!erve#e "# G. R. No. L-79357, o# !(e 0rou#& !(a! @erra#o (a& a rea* a#& *e0a* "#!eres! as &e1os"!or o$ !(e Overseas 2a#o$ %a#"*a "# !(e 'a!!er "# *"!"0a!"o# "# !(a! ,ase. Res1o#&e#! Ce#!ra* 2a#- "# G. R. No. L-79357 o11ose& 1e!"!"o#er %a#ue* @erra#oAs 'o!"o# !o "#!erve#e "# !(a! ,ase, o# !(e 0rou#& !(a! ("s ,*a"' as &e1os"!or o$ !(e Overseas 2a#- o$ %a#"*a s(ou*& 1ro1er*y be ve#!"*a!e& "# !(e Cour! o$ F"rs! I#s!a#,e, a#& "$ !("s Cour! )ere !o a**o) @erra#o !o "#!erve#e as &e1os"!or "# G. R. No. L-79357, !(ousa#&s o$ o!(er &e1os"!ors )ou*& $o**o) a#& !(us ,ause a# ava*a#,(e o$ ,ases "# !("s Cour!. I# !(e Reso*u!"o# &a!e& O,!ober 4, 19:8, !("s Cour! &e#"e& @erra#oAs 'o!"o# !o "#!erve#e. .(e ,o#!e#!s o$ sa"& 'o!"o# !o "#!erve#e are subs!a#!"a**y !(e sa'e as !(ose o$ !(e 1rese#! 1e!"!"o#. [11] .("s Cour! re#&ere& ;e,"s"o# "# G. R. No. L-79357 o# O,!ober 4, 1961, )(",( be,a'e $"#a* a#& e3e,u!ory o# %ar,( 3, 1967, $avorab*e !o !(e res1o#&e#! Overseas 2a#- o$ %a#"*a, )"!( !(e &"s1os"!"ve 1or!"o# !o )"! C/EREFORE, !(e )r"!s 1raye& $or "# !(e 1e!"!"o# are (ereby 0ra#!e& a#& res1o#&e#! Ce#!ra* 2a#-As Reso*u!"o# Nos. 17:3, 1790 a#& 1333 =!(a! 1ro("b"! !(e Overseas 2a#- o$ %a#"*a !o 1ar!","1a!e "# ,*ear"#0, &"re,! !(e sus1e#s"o# o$ "!s o1era!"o#, a#& or&er"#0 !(e *"Bu"&a!"o# o$ sa"& ba#-> are (ereby a##u**e& a#& se! as"&eD a#& sa"& res1o#&e#! Ce#!ra* 2a#- o$ !(e P("*"11"#es "s &"re,!e& !o ,o'1*y )"!( "!s ob*"0a!"o#s

u#&er !(e Eo!"#0 .rus! 40ree'e#!, a#& !o &es"s! $ro' !a-"#0 a,!"o# "# v"o*a!"o# !(ere$or. Cos!s a0a"#s! res1o#&e#! Ce#!ra* 2a#- o$ !(e P("*"11"#es. [12] 2e,ause o$ !(e above ;e,"s"o#, 1e!"!"o#er "# !("s ,ase $"*e& a 'o!"o# $or +u&0'e#! "# !("s ,ase, 1ray"#0 $or a &e,"s"o# o# !(e 'er"!s, a&+u&0"#0 res1o#&e#! Ce#!ra* 2a#+o"#!*y a#& severa**y *"ab*e )"!( res1o#&e#! Overseas 2a#- o$ %a#"*a !o !(e 1e!"!"o#er $or !(e P350,000 !"'e &e1os"! 'a&e )"!( !(e *a!!er ba#-, )"!( a** "#!eres!s &ue !(ere"#D a#& &e,*ar"#0 a** asse!s ass"0#e& or 'or!0a0e& by !(e res1o#&e#!s Overseas 2a#- o$ %a#"*a a#& !(e Ra'os 0rou1s "# $avor o$ !(e Ce#!ra* 2a#- as !rus! $u#&s $or !(e be#e$"! o$ 1e!"!"o#er a#& o!(er &e1os"!ors. [13] 2y !(e very #a!ure o$ !(e ,*a"'s a#& ,auses o$ a,!"o# a0a"#s! res1o#&e#!s, !(ey, "# rea*"!y are re,overy o$ !"'e &e1os"!s 1*us "#!eres! $ro' res1o#&e#! Overseas 2a#- o$ %a#"*a, a#& re,overy o$ &a'a0es a0a"#s! res1o#&e#! Ce#!ra* 2a#- $or "!s a**e0e& $a"*ure !o s!r",!*y su1erv"se !(e a,!s o$ !(e o!(er res1o#&e#! 2a#- a#& 1ro!e,! !(e "#!eres!s o$ "!s &e1os"!ors by v"r!ue o$ !(e ,o#s!ru,!"ve !rus! ,rea!e& )(e# res1o#&e#! Ce#!ra* 2a#- reBu"re& !(e o!(er res1o#&e#! !o "#,rease "!s ,o**a!era*s $or "!s over&ra$!s sa"& e'er0e#,y *oa#s, sa"& ,o**a!era*s a**e0e&*y a,Bu"re& !(rou0( !(e use o$ &e1os"!ors 'o#ey. .(ese ,*a"'s s(ou& be ve#!"*a!e& "# !(e Cour! o$ F"rs! I#s!a#,e o$ 1ro1er +ur"s&",!"o# as Ce a*rea&y 1o"#!e& ou! )(e# !("s Cour! &e#"e& 1e!"!"o#erAs 'o!"o# !o "#!erve#e "# G. R. No. L-79357. C*a"'s o$ !(ese #a!ure are #o! 1ro1er "# a,!"o#s $or 'a#&a'us a#& 1ro("b"!"o# as !(ere "s #o s(o)# ,*ear abuse o$ &"s,re!"o# by !(e Ce#!ra* 2a#- "# "!s e3er,"se o$ su1erv"s"o# over !(e o!(er res1o#&e#! Overseas 2a#- o$ %a#"*a, a#& "$ !(ere )as, 1e!"!"o#er (ere "s #o! !(e 1ro1er 1ar!y !o ra"se !(a! Bues!"o#, bu! ra!(er !(e Overseas 2a#- o$ %a#"*a, as "! &"& "# G. R. No. L79357. Ne"!(er "s !(ere a#y!("#0 !o 1ro("b"! "# !("s ,ase, s"#,e !(e Bues!"o#e& a,!s o$ !(e res1o#&e#! Ce#!ra* 2a#- =!(e a,!s o$ &"sso*v"#0 a#& *"Bu"&a!"#0 !(e Overseas 2a#- o$ %a#"*a>, )(",( 1e!"!"o#er (ere "#!e#&s !o use as ("s bas"s $or ,*a"'s o$ &a'a0es a0a"#s! res1o#&e#! Ce#!ra* 2a#-, (a& bee# a,,o'1*"s(e& a *o#0 !"'e a0o. Fur!(er'ore, bo!( 1ar!"es over*oo-e& o#e $u#&a'e#!a* 1r"#,"1*e "# !(e #a!ure o$ ba#- &e1os"!s )(e# !(e 1e!"!"o#er ,*a"'e& !(a! !(ere s(ou*& be ,rea!e& a ,o#s!ru,!"ve !rus! "# ("s $avor )(e# !(e res1o#&e#! Overseas 2a#- o$ %a#"*a "#,rease& "!s ,o**a!era*s "# $avor o$ res1o#&e#! Ce#!ra* 2a#- $or !(e $or'erAs over&ra$!s a#& e'er0e#,y *oa#s, s"#,e !(ese ,o**a!era*s )ere a,Bu"re& by !(e use o$ &e1os"!orsA 'o#ey. 2a#- &e1os"!s are "# !(e #a!ure o$ "rre0u*ar &e1os"!s. .(ey are rea**y *oa#s be,ause !(ey ear# "#!eres!. 4** -"#&s o$ ba#- &e1os"!s, )(e!(er $"3e&, sav"#0s, or ,urre#! are !o be !rea!e& as *oa#s a#& are !o be ,overe& by !(e *a) o# *oa#s. [1 ] Curre#! a#& sav"#0s &e1os"!s are *oa#s !o a ba#- be,ause "! ,a# use !(e sa'e. .(e 1e!"!"o#er (ere, "# 'a-"#0 !"'e &e1os"!s !(a! ear# "#!eres!s )"!( res1o#&e#! Overseas 2a#- o$ %a#"*a )as, "# rea*"!y, a ,re&"!or o$ !(e res1o#&e#! 2a#- a#& #o! a &e1os"!or. .(e res1o#&e#! 2a#- )as "# !ur# a &eb!or o$ 1e!"!"o#er. Fa"*ure o$ (e res1o#&e#! 2a#- !o (o#or !(e !"'e &e1os"! "s $a"*ure !o 1ay "!s ob*"0a!"o# as a &eb!or a#& #o! a brea,( o$ !rus! ar"s"#0 $ro' &e1os"!aryAs $a"*ure !o re!ur# !(e sub+e,! 'a!!er o$ !(e &e1os"! C/EREFORE, !(e 1e!"!"o# "s &"s'"sse& $or *a,- o$ 'er"!, )"!( ,os!s a0a"#s! 1e!"!"o#er.
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@O OR;ERE;.

'.R. N(. 11%231. A)*+, 1$, 1%%" PHILIPPINE NATIONAL BANK, Petitioner, vs. HON. PRES. JUD'E BENITO C. SE, JR., RTC, BR. 45, MANILA- NOAHS ARK SU'AR REFINER.- ALBERTO T. LOO.UKO, JIMM. T. 'O and /ILSON T. 'O, Respondent. .(e sour,e o$ ,o#$*",! (ere"# "s !(e Bues!"o# as !o )(e!(er !(e P("*"11"#e Na!"o#a* 2a#s(ou*& 1ay s!ora0e $ees $or su0ar s!o,-s ,overe& by $"ve F5G Care(ouse Re,e"1!s s!ore& "# !(e )are(ouse o$ 1r"va!e res1o#&e#!s "# !(e $a,e o$ !(e Cour! o$ 411ea*s &e,"s"o# Fa$$"r'e& by !(e @u1re'e Cour!G &e,*ar"#0 !(e P("*"11"#e Na!"o#a* 2a#- as !(e o)#er o$ !(e sa"& su0ar s!o,-s a#& or&er"#0 !(e"r &e*"very !o !(e sa"& ba#-. Fro' !(e sa'e $a,!s bu! o# a &"$$ere#! 1ers1e,!"ve, "! ,a# be sa"& !(a! !(e "ssue "s Ca# !(e )are(ouse'a# e#$or,e ("s )are(ouse'a#s *"e# be$ore &e*"ver"#0 !(e su0ar s!o,-s as or&ere& by !(e Cour! o$ 411ea*s or #ee& (e $"*e a se1ara!e a,!"o# !o e#$or,e 1ay'e#! o$ s!ora0e $eesH .(e (ere"# 1e!"!"o# see-s !o a##u* F1G !(e Reso*u!"o# o$ res1o#&e#! Ju&0e 2e#"!o C. @e, Jr. o$ !(e Re0"o#a* .r"a* Cour! o$ %a#"*a, 2ra#,( 45, &a!e& ;e,e'ber 70, 1994, "# C"v"* Case No. 90-53073, au!(or"I"#0 re,e1!"o# o$ ev"&e#,e !o es!ab*"s( !(e ,*a"' o$ res1o#&e#!s Noa(s 4r@u0ar Re$"#ery, e! a*., $or s!ora0e $ees a#& 1reserva!"o# e31e#ses over su0ar s!o,-s ,overe& by $"ve (5) Care(ouse Re,e"1!s )(",( "s "# !(e #a!ure o$ a )are(ouse'a#s *"e#D a#& F7G !(e Reso*u!"o# o$ !(e sa"& res1o#&e#! Ju&0e, &a!e& %ar,( 1, 1995, &e,*ar"#0 !(e va*"&"!y o$ 1r"va!e res1o#&e#!s )are(ouse'a#s *"e# u#&er @e,!"o# 76 o$ Re1ub*", 4,! No 7136 a#& or&er"#0 !(a! e3e,u!"o# o$ !(e Cour! o$ 411ea*s &e,"s"o#, &a!e& ;e,e'ber 13, 1991, be "# e$$e,! (e*& "# abeya#,e u#!"* !(e $u** a'ou#! o$ !(e )are(ouse'a#s *"e# o# !(e su0ar s!o,-s ,overe& by $"ve (5) Bue&a#s sub+e,! o$ !(e a,!"o# s(a** (ave bee# sa!"s$"e& ,o#$or'ab*y )"!( !(e 1rov"s"o#s o$ @e,!"o# 31 o$ Re1ub*", 4,! 7136. 4*so 1raye& $or by !(e 1e!"!"o# "s a Cr"! o$ Pro("b"!"o# !o reBu"re res1o#&e#! R.C Ju&0e !o &es"s! $ro' $ur!(er 1ro,ee&"#0 )"!( C"v"* Case No. 90-53073, e3,e1! or&er !(e e3e,u!"o# o$ !(e @u1re'e Cour! +u&0'e#!D a#& a Cr"! o$ %a#&a'us !o ,o'1e* res1o#&e#! R.C Ju&0e !o "ssue a Cr"! o$ E3e,u!"o# "# a,,or&a#,e )"!( !(e sa"& e3e,u!ory @u1re'e Cour! &e,"s"o#. ./E F4C.@ I# a,,or&a#,e )"!( 4,! No. 7136, !(e Care(ouse Re,e"1!s La), Noa(s 4r- @u0ar Re$"#ery "ssue& o# severa* &a!es, !(e $o**o)"#0 Care(ouse Re,e"1!s FJue&a#sG FaG %ar,( 1, 1989, Re,e"1! No. 180:7, ,over"#0 su0ar &e1os"!e& by Rosa @yD FbG %ar,( 6, 1989, Re,e"1! No. 18080, ,over"#0 su0ar &e1os"!e& by RN@ %er,(a#&"s"#0 FRosa N0 @yGD F,G %ar,( 71, 1989, Re,e"1! No. 18081, ,over"#0 su0ar &e1os"!e& by @!. .(erese %er,(a#&"s"#0D F&G%ar,( 31, 1989, Re,e"1! No. 1808:, ,over"#0 su0ar &e1os"!e& by @!. .(erese %er,(a#&"s"#0D a#& FeG 41r"* 1, 1989, Re,e"1! No. 18086, ,over"#0 su0ar &e1os"!e& by RN@ %er,(a#&"s"#0. .(e re,e"1!s are subs!a#!"a**y "# !(e $or', a#& ,o#!a"#s !(e !er's, 1res,r"be& $or #e0o!"ab*e )are(ouse re,e"1!s by @e,!"o# 7 o$ !(e *a).

@ubseBue#!*y, Care(ouse Re,e"1!s Nos. 18080 a#& 18081 )ere #e0o!"a!e& a#& e#&orse& !o Lu"s .. Ra'osD a#& Re,e"1!s Nos. 1808:, 18086 a#& 180:7 )ere #e0o!"a!e& a#& e#&orse& !o Crese#,"a K. Lo*e!a. Ra'os a#& Lo*e!a !(e# use& !(e Bue&a#s as se,ur"!y $or !)o *oa# a0ree'e#!s - o#e $or P15.: '"**"o# a#& !(e o!(er $or P73.5 '"**"o# - ob!a"#e& by !(e' $ro' !(e P("*"11"#e Na!"o#a* 2a#-. .(e a$ore'e#!"o#e& Bue&a#s )ere e#&orse& by !(e' !o !(e P("*"11"#e Na!"o#a* 2a#-. Lu"s .. Ra'os a#& Crese#,"a K. Lo*e!a $a"*e& !o 1ay !(e"r *oa#s u1o# 'a!ur"!y o# Ja#uary 9, 1990. Co#seBue#!*y, o#%ar,( 1:, 1990, !(e P("*"11"#e Na!"o#a* 2a#- )ro!e !o Noa(s 4r@u0ar Re$"#ery &e'a#&"#0 &e*"very o$ !(e su0ar s!o,-s ,overe& by !(e Bue&a#s e#&orse& !o "! by Lo*e!a a#& Ra'os. Noa(s 4r- @u0ar Re$"#ery re$use& !o ,o'1*y )"!( !(e &e'a#& a**e0"#0 o)#ers("1 !(ereo$, $or )(",( reaso# !(e P("*"11"#e Na!"o#a* 2a#- $"*e& )"!( !(e Re0"o#a* .r"a* Cour! o$ %a#"*a a ver"$"e& ,o'1*a"#! $or 5@1e,"$", Per$or'a#,e )"!( ;a'a0es a#& 411*",a!"o# $or Cr"! o$ 4!!a,('e#!5 a0a"#s! Noa(s 4r- @u0ar Re$"#ery, 4*ber!o .. Looyu-o, J"''y .. Go a#& C"*so# .. Go, !(e *as! !(ree be"#0 "&e#!"$"e& as !(e so*e 1ro1r"e!or, 'a#a0"#0 1ar!#er, a#& E3e,u!"ve E",e Pres"&e#! o$ Noa(s 4r-, res1e,!"ve*y. Res1o#&e#! Ju&0e 2e#"!o C. @e, Jr., "# )(ose sa*a !(e ,ase )as ra$$*e&, &e#"e& !(e 411*",a!"o# $or Pre*"'"#ary 4!!a,('e#!. Re,o#s"&era!"o# !(ere$or )as *"-e)"se &e#"e&. Noa(s 4r- a#& "!s ,o-&e$e#&a#!s $"*e& a# 4#s)er )"!( Cou#!er,*a"' a#& .("r&-Par!y Co'1*a"#! "# )(",( !(ey ,*a"'e& !(a! !(ey are !(e o)#ers o$ !(e sub+e,! Bue&a#s a#& !(e su0ar re1rese#!e& !(ere"#, averr"#0 as !(ey &"& !(a! "9.*** I# a# a0ree'e#! &a!e& 41r"* 1, 1989, &e$e#&a#!s a0ree& !o se** !o Rosa N0 @y o$ RN@ %er,(a#&"s"#0 a#& .eres"!a N0 o$ @!. .(erese %er,(a#&"s"#0 !(e !o!a* vo*u'e of sugar indicated in the quedans stored at oahs !r" #ugar Refiner$ for a tota% consideration of P&',(((,(((.((, MMM .(e ,orres1o#&"#0 1ay'e#!s "# !(e $or' o$ ,(e,-s "ssue& by !(e ve#&ees "# $avor o$ &e$e#&a#!s )ere subseBue#!*y &"s(o#ore& by !(e &ra)ee ba#-s by reaso# o$ 1ay'e#! s!o11e& a#& &ra)# a0a"#s! "#su$$","e#! $u#&s, MMM 91o# 1ro1er #o!"$",a!"o# !o sa"& ve#&ees a#& 1*a"#!"$$ "# &ue ,ourse, &e$e#&a#!s re$use& !o &e*"ver !o ve#&ees !(ere"# !(e Bua#!"!y o$ su0ar ,overe& by !(e sub+e,! Bue&a#s. 10. MMM Co#s"&er"#0 !(a! !(e ve#&ees a#& $"rs! e#&orsers o$ sub+e,! Bue&a#s &"& #o! a,Bu"re o)#ers("1 !(ereo$, !(e subseBue#! e#&orsers a#& 1*a"#!"$$ "!se*$ &"& #o! a,Bu"re a be!!er r"0(! o$ o)#ers("1 !(a# !(e or"0"#a* ve#&ees8$"rs! e#&orsers. 51 .(e 4#s)er "#,or1ora!e& a .("r&-Par!y Co'1*a"#! by 4*ber!o .. Looyu-o, J"''y .. Go a#& C"*so# .. Go, &o"#0 bus"#ess u#&er !(e !ra&e #a'e a#& s!y*e Noa(s 4r- @u0ar Re$"#ery a0a"#s! Rosa N0 @y a#& .eres"!a N0, 1ray"#0 !(a! !(e *a!!er be or&ere& !o &e*"ver or re!ur# !o !(e' !(e Bue&a#s F1rev"ous*y e#&orse& !o PN2 a#& !(e sub+e,! o$ !(e su"!G a#& 1ay &a'a0es a#& *"!"0a!"o# e31e#ses. .(e 4#s)er o$ Rosa N0 @y a#& .eres"!a N0, &a!e& @e1!e'ber :, 1990, o#e o$ avo"&a#,e, "s esse#!"a**y !o !(e e$$e,! !(a! !(e !ra#sa,!"o# be!)ee# !(e', o# !(e o#e (a#&, a#& J"''y .. Go, o# !(e o!(er, ,o#,er#"#0 !(e Bue&a#s a#& !(e su0ar s!o,-s ,overe& by !(e' )as 'ere*y

a s"'u*a!e& o#e be"#0 1ar! o$ !(e *a!!ers ,o'1*e3 ba#-"#0 s,(e'es a#& $"#a#,"a* 'a#euvers, a#& !(us, !(ey are #o! a#s)erab*e "# &a'a0es !o ("'. O# Ja#uary 31, 1991, !(e P("*"11"#e Na!"o#a* 2a#- $"*e& a %o!"o# $or @u''ary Ju&0'e#! "# $avor o$ !(e 1*a"#!"$$ as a0a"#s! !(e &e$e#&a#!s $or !(e re*"e$s 1raye& $or "# !(e ,o'1*a"#!. O# %ay 7, 1991, !(e Re0"o#a* .r"a* Cour! "ssue& a# or&er &e#y"#0 !(e %o!"o# $or @u''ary Ju&0'e#!. .(ereu1o#, !(e P("*"11"#e Na!"o#a* 2a#- $"*e& a Pe!"!"o# $or Cer!"orar" )"!( !(e Cour! o$ 411ea*s, &o,-e!e& as C4-G.R. @P. No. 75938 o# ;e,e'ber 13, 1991. Per!"#e#! 1or!"o#s o$ !(e &e,"s"o# o$ !(e Cour! o$ 411ea*s rea& ")n issuing the questioned *rders, the respondent +ourt ru%ed that questions of %a, shou%d -e reso%ved after and not -efore, the questions of fact are proper%$ %itigated. ! scrutin$ of defendants affir.ative defenses does not sho, .ateria% questions of fact as to the a%%eged nonpa$.ent of purchase price -$ the vendees/first endorsers, and ,hich nonpa$.ent is not disputed -$ P 0 as it does not .ateria%%$ affect P 0s tit%e to the sugar stoc"s as ho%der of the negotia-%e quedans. 1hat is deter.inative of the propriet$ of su..ar$ 2udg.ent is not the existence of conf%icting c%ai.s fro. prior parties -ut ,hether fro. an exa.ination of the p%eadings, depositions, ad.issions and docu.ents on fi%e, the defenses as to the .ain issue do not tender .ateria% questions of fact (see 3arcia vs. +ourt of !ppea%s, 4&5 #+R! 645) or the issues thus tendered are in fact sha., fictitious, contrived, set up in -ad faith or so unsu-stantia% as not to constitute genuine issues for tria%. (#ee 7ergara vs. #ue%to, et a%., 45& #+R! 55'8 9ercado, et a%. vs. +ourt of !ppea%s, 4&: #+R! 55). ;he questioned *rders the.se%ves do not specif$ ,hat .ateria% facts are in issue. (#ee #ec. <, Ru%e '<, Ru%es of +ourt). ;o require a tria% not,ithstanding pertinent a%%egations of the p%eadings and other facts appearing on the record, ,ou%d constitute a ,aste of ti.e and an in2ustice to the P 0 ,hose rights to re%ief to ,hich it is p%ain%$ entit%ed ,ou%d -e further de%a$ed to its pre2udice. )n issuing the questioned *rders, 1e find the respondent +ourt to have acted in grave a-use of discretion ,hich 2ustif$ ho%ding nu%% and void and setting aside the *rders dated 9a$ : and Ju%$ <, 499( of respondent +ourt, and that a su..ar$ 2udg.ent -e rendered forth,ith in favor of the P 0 against oahs !r" #ugar Refiner$, et a%., as pra$ed for in petitioners 9otion for #u..ar$ Judg.ent." : O# ;e,e'ber 13, 1991, !(e Cour! o$ 411ea*s #u**"$"e& a#& se! as"&e !(e or&ers o$ %ay 7 a#& Ju*y 4, 1990 o$ !(e Re0"o#a* .r"a* Cour! a#& or&ere& !(e !r"a* ,our! !o re#&er su''ary +u&0'e#! "# $avor o$ !(e PN2. O# Ju#e 18, 1997, !(e !r"a* ,our! re#&ere& +u&0'e#! &"s'"ss"#0 1*a"#!"$$s ,o'1*a"#! a0a"#s! 1r"va!e res1o#&e#!s $or *a,- o$ ,ause o$ a,!"o# a#& *"-e)"se &"s'"sse& 1r"va!e res1o#&e#!s ,ou#!er,*a"' a0a"#s! PN2 a#& o$ !(e .("r&-Par!y Co'1*a"#! a#& !(e .("r&-Par!y ;e$e#&a#!s Cou#!er,*a"'. O# @e1!e'ber 4, 1997, !(e !r"a* ,our! &e#"e& PN2s %o!"o# $or Re,o#s"&era!"o#. O# Ju#e 9, 1997, !(e PN2 $"*e& a# a11ea* $ro' !(e R.C &e,"s"o# )"!( !(e @u1re'e Cour!, G.R. No. 106743, by )ay o$ a Pe!"!"o# $or Rev"e) o# Cer!"orar" u#&er Ru*e 45 o$ !(e Ru*es o$

Cour!. .("s Cour! re#&ere& +u&0'e#! o# @e1!e'ber 1, 1993, !(e &"s1os"!"ve 1or!"o# o$ )(",( rea&s "1=>R>?*R>, the tria% 2udges decision in +ivi% +ase o. 9(-5'(:', dated June 46, 499:, is reversed and set aside and a ne, one rendered confor.a-%$ ,ith the fina% and executor$ decision of the +ourt of !ppea%s in +!-3.R #P. o. :59'6, ordering the private respondents oahs !r" #ugar Refiner$, !%-erto ;. @oo$u"o, Ji..$ ;. 3o and 1i%son ;. 3o, 2oint%$ and severa%%$A (a) to de%iver to the petitioner Phi%ippine ationa% 0an", the sugar stoc"s covered -$ the 1arehouse Receipts/ Buedans ,hich are no, in the %atters possession as ho%der for va%ue and in due course8 or a%ternative%$, to pa$ (said) p%aintiff actua% da.ages in the a.ount of P'9.4 .i%%ion, ,ith %ega% interest thereon fro. the fi%ing of the co.p%aint unti% fu%% pa$.ent8 and (-) to pa$ p%aintiff Phi%ippine ationa% 0an" attorne$s fees, %itigation expenses and 2udicia% costs here-$ fixed at the a.ount of *ne =undred ?ift$ ;housand Pesos (P45(,(((.(() as ,e%% as the costs. #* *RC>R>C.5 ' O# @e1!e'ber 79, 1993, 1r"va!e res1o#&e#!s 'ove& $or re,o#s"&era!"o# o$ !("s &e,"s"o#. 4 @u11*e'e#!a*8@e,o#& %o!"o# $or Re,o#s"&era!"o# )"!( *eave o$ ,our! )as $"*e& by 1r"va!e res1o#&e#!s o# Nove'ber 8, 1993. Ce &e#"e& 1r"va!e res1o#&e#!s 'o!"o# o# Ja#uary 10, 1994. . Pr"va!e res1o#&e#!s $"*e& a %o!"o# @ee-"#0 C*ar"$",a!"o# o$ !(e ;e,"s"o#, &a!e& @e1!e'ber 1, 1993. Ce &e#"e& !("s 'o!"o# "# !("s 'a##er ")t -ears stressing that the re%ief granted in this +ourts decision of #epte.-er 4, 499' is precise%$ that set out in the fina% and executor$ decision of the +ourt of !ppea%s in +!-3.R. #P o. :59'6, dated Cece.-er 4', 4994, ,hich ,as affir.ed in toto -$ this +ourt and ,hich -eca.e una%tera-%e upon -eco.ing fina% and executor$. " 4 Pr"va!e res1o#&e#!s !(ereu1o# $"*e& be$ore !(e !r"a* ,our! a# O'#"bus %o!"o# see-"#0 a'o#0 o!(ers !(e &e$er'e#! o$ !(e 1ro,ee&"#0s u#!"* 1r"va!e res1o#&e#!s are (ear& o# !(e"r ,*a"' $or )are(ouse'a#s *"e#. O# !(e o!(er (a#&, o# 4u0us! 77, 1994, !(e P("*"11"#e Na!"o#a* 2a#- $"*e& a %o!"o# $or !(e Issua#,e o$ a Cr"! o$ E3e,u!"o# a#& a# O11os"!"o# !o !(e O'#"bus %o!"o# $"*e& by 1r"va!e res1o#&e#!s. .(e !r"a* ,our! 0ra#!e& 1r"va!e res1o#&e#!s O'#"bus %o!"o# o# ;e,e'ber 70, 1994 a#& se! re,e1!"o# o$ ev"&e#,e o# !(e"r ,*a"' $or )are(ouse'a#s *"e#. .(e reso*u!"o# o$ !(e PN2s %o!"o# $or E3e,u!"o# )as or&ere& &e$erre& u#!"* !(e &e!er'"#a!"o# o$ 1r"va!e res1o#&e#!s ,*a"'. O# February 71, 1995, 1r"va!e res1o#&e#!s ,*a"' $or *"e# )as (ear& a#& ev"&e#,e )as re,e"ve& "# su11or! !(ereo$. .(e !r"a* ,our! !(erea$!er 0ave bo!( 1ar!"es $"ve (5) &ays !o $"*e res1e,!"ve 'e'ora#&a.

O# February 78, 1995, !(e P("*"11"#e Na!"o#a* 2a#- $"*e& a %a#"$es!a!"o# )"!( 9r0e#! %o!"o# !o Nu**"$y Cour! Pro,ee&"#0s. I# a&+u&",a!"o# !(ereo$, !(e !r"a* ,our! "ssue& !(e $o**o)"#0 or&er o# %ar,( 1, 1995 51=>R>?*R>, this court here-$ finds that there exists in favor of the defendants a va%id ,arehouse.ans %ien under #ection :5 of Repu-%ic !ct :4'5 and according%$, execution of the 2udg.ent is here-$ ordered sta$ed and/ or prec%uded unti% the fu%% a.ount of defendants %ien on the sugar stoc"s covered -$ the five (5) quedans su-2ect of this action sha%% have -een satisfied confor.a-%$ ,ith the provisions of #ection '4 of Repu-%ic !ct :4'5. 55 Co#seBue#!*y, !(e P("*"11"#e Na!"o#a* 2a#- $"*e& !(e (ere"# 1e!"!"o# !o see- !(e #u**"$",a!"o# o$ !(e above-assa"*e& or&ers o$ res1o#&e#! +u&0e. .(e PN2 sub'"!s !(a! ). P 0s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e "ssues 1rese#!e& be$ore us "# !("s 1e!"!"o# revo*ve arou#& !(e *e0a*"!y o$ !(e Bues!"o#e& or&ers o$ res1o#&e#! +u&0e, "ssue& as !(ey )ere a$!er )e (a& &e#"e& )"!( $"#a*"!y 1r"va!e res1o#&e#!s ,o#!e#!"o# !(a! !(e PN2 ,ou*& #o! ,o'1e* !(e' !o &e*"ver !(e s!o,-s o$ su0ar "# !(e"r )are(ouse ,overe& by !(e e#&orse& Bue&a#s or 1ay !(e va*ue o$ !(e sa"& s!o,-s o$ su0ar. Pe!"!"o#ers sub'"ss"o# "s o# a !e,(#",a*"!y, !(a! "s, !(a! 1r"va!e res1o#&e#!s (ave *os! !(e"r r"0(! !o re,over )are(ouse'a#s *"e# o# !(e su0ar s!o,-s ,overe& by !(e $"ve F5G Care(ouse Re,e"1!s $or !(e reaso# !(a! !(ey $a"*e& !o se! u1 sa"& ,*a"' "# !(e"r 4#s)er be$ore !(e !r"a* ,our! a#& !(a! 1r"va!e res1o#&e#!s &"& #o! a11ea* $ro' !(e &e,"s"o# "# !("s re0ar&, &a!e& Ju#e 18, 1997. Pe!"!"o#er assevera!es !(a! !(e &e#"a* by !("s Cour! o# %ar,( 9, 1994 o$ !(e

'o!"o# see-"#0 ,*ar"$",a!"o# o$ our &e,"s"o#, &a!e& @e1!e'ber 1, 1993, (as $ore,*ose& 1r"va!e res1o#&e#!s r"0(! !o e#$or,e !(e"r )are(ouse'a#s *"e# $or s!ora0e $ees a#& 1reserva!"o# e31e#ses u#&er !(e Care(ouse Re,e"1!s 4,!. O# !(e o!(er (a#&, 1r"va!e res1o#&e#!s 'a"#!a"# !(a! !(ey ,ou*& #o! (ave ,*a"'e& !(e r"0(! !o a )are(ouse'a# s *"e# "# !(e"r 4#s)er !o !(e ,o'1*a"#! be$ore !(e !r"a* ,our! as "! )ou*& (ave bee# "#,o#s"s!e#! )"!( !(e"r s!a#& !(a! !(ey ,*a"' o)#ers("1 o$ !(e s!o,-s ,overe& by !(e Bue&a#s s"#,e !(e ,(e,-s "ssue& $or 1ay'e#! !(ereo$ )ere &"s(o#ore&. I$ !(ey )ere s!"** !(e o)#ers, "! )ou*& (ave bee# absur& $or !(e' !o as- 1ay'e#! $or s!ora0e $ees a#& 1reserva!"o# e31e#ses. .(ey $ur!(er ,o#!e#& !(a! our reso*u!"o#, &a!e& %ar,( 9, 1994, &e#y"#0 !(e"r 'o!"o# $or ,*ar"$",a!"o# &"& #o! 1re,*u&e !(e"r r"0(! !o ,*a"' !(e"r )are(ouse'a#s *"e# u#&er @e,!"o#s 76 a#& 31 o$ Re1ub*", 4,! 7136, as our reso*u!"o# 'ere*y a$$"r'e& a#& a&o1!e& !(e ear*"er &e,"s"o#, &a!e& ;e,e'ber 13, 1991, o$ !(e Cour! o$ 411ea*s F:!( ;"v"s"o#G "# C4-G.R. @P. No. 75938 a#& &"& #o! 'a-e a#y $"#&"#0 o# !(e 'a!!er o$ !(e )are(ouse'a# s *"e#. Ce $"#& $or 1r"va!e res1o#&e#!s o# !(e $ore0o"#0 "ssue a#& so !(e 1e!"!"o# #e,essar"*y 'us! $a"*. Ce (ave ,are$u**y e3a'"#e& our reso*u!"o#, &a!e& %ar,( 9, 1994, )(",( &e#"e& Noa(s 4r-s 'o!"o# $or ,*ar"$",a!"o# o$ our &e,"s"o#, &a!e& @e1!e'ber 1, 1993, )(ere"# )e a$$"r'e& "# $u** a#& a&o1!e& !(e Cour! o$ 411ea*s ear*"er &e,"s"o#, &a!e& ;e,e'ber 13, 1991, "# C4-G.R. @P. No. 75938. Ce are #o! 1ersua&e& by !(e 1e!"!"o#ers ar0u'e#! !(a! our sa"& reso*u!"o# ,arr"e& )"!( "! !(e &e#"a* o$ !(e )are(ouse'a#s *"e# over !(e su0ar s!o,-s ,overe& by !(e sub+e,! Care(ouse Re,e"1!s. Ce (ave s"'1*y reso*ve& a#& u1(e*& "# our &e,"s"o#, &a!e& @e1!e'ber 1, 1993, !(e 1ro1r"e!y o$ su''ary +u&0'e#! )(",( )as !(e# assa"*e& by 1r"va!e res1o#&e#!s. I# e$$e,!, )e ru*e& !(ere"# !(a!, ,o#s"&er"#0 !(e ,"r,u's!a#,es ob!a"#"#0 be$ore !(e !r"a* ,our!, !(e "ssua#,e o$ !(e Care(ouse Re,e"1!s #o! be"#0 &"s1u!e& by !(e 1r"va!e res1o#&e#!s, a su''ary +u&0'e#! "# $avor o$ PN2 )as 1ro1er. Ce "# e$$e,! $ur!(er a$$"r'e& !(e $"#&"#0 !(a! Noa(s 4r- "s a )are(ouse'a# )(",( )as ob*"0e& !o &e*"ver !(e su0ar s!o,-s ,overe& by !(e Care(ouse Re,e"1!s 1*e&0e& by Crese#,"a K. Lo*e!a a#& Lu"s .. Ra'os !o !(e 1e!"!"o#er 1ursua#! !o !(e 1er!"#e#! 1rov"s"o#s o$ Re1ub*", 4,! 7136. I# &"s1os"#0 o$ !(e 1r"va!e res1o#&e#!s 'o!"o# $or ,*ar"$",a!"o#, )e ,ou*& #o! ,o#!e'1*a!e !(e 'a!!er o$ )are(ouse'a#s *"e# be,ause !(e "ssue !o be $"#a**y reso*ve& !(e# )as !(e ,*a"' o$ 1r"va!e res1o#&e#!s $or re!a"#"#0 o)#ers("1 o$ !(e s!o,-s o$ su0ar ,overe& by !(e e#&orse& Bue&a#s. @!a!e& o!(er)"se, !(ere )as #o 1o"#! "# !a-"#0 u1 !(e "ssue o$ )are(ouse'a#s *"e# s"#,e !(e 'a!!er o$ o)#ers("1 )as as ye! be"#0 &e!er'"#e&. Ne"!(er ,ou*& s!ora0e $ees be &ue !(e# )("*e #o o#e (as bee# &e,*are& !(e o)#er o$ !(e su0ar s!o,-s "# Bues!"o#. O$ ,o#s"&erab*e re*eva#,e "s !(e 1er!"#e#! s!"1u*a!"o# "# !(e sub+e,! Care(ouse Re,e"1!s )(",( 1rov"&es $or res1o#&e#! Noa(s 4r-s r"0(! !o "'1ose a#& ,o**e,! )are(ouse'a#s *"e# "#torage of the refined sugar quantities .entioned herein sha%% -e free up to one (4) ,ee" fro. the date of the quedans covering said sugar and thereafter, storage fees sha%% -e charged in accordance ,ith the Refining +ontract under ,hich the refined sugar covered -$ this Buedan ,as produced. " & I! "s #o! &"s1u!e&, !(ere$ore, !(a!, u#&er !(e sub+e,! Care(ouse Re,e"1!s 1rov"s"o#, s!ora0e $ees are ,(ar0eab*e.

Pe!"!"o#er a#,(ors "!s ,*a"' a0a"#s! 1r"va!e res1o#&e#!s o# !(e $"ve F5G Care(ouse Re,e"1!s "ssue& by !(e *a!!er !o !("r&-1ar!y &e$e#&a#!s Rosa N0 @y o$ RN@ %er,(a#&"s"#0 a#& .eres"!a N0 o$ @!. .(erese %er,(a#&"s"#0, )(",( $ou#& !(e"r )ay !o 1e!"!"o#er a$!er !(ey )ere #e0o!"a!e& !o !(e' by Lu"s .. Ra'os a#& Crese#,"a K. Lo*e!a $or a *oa# o$ P39.1 %"**"o#. 4,,or&"#0*y, 1e!"!"o#er PN2 "s *e0a**y bou#& !o s!a#& by !(e e31ress !er's a#& ,o#&"!"o#s o# !(e $a,e o$ !(e Care(ouse Re,e"1!s as !o !(e 1ay'e#! o$ s!ora0e $ees. Eve# "# !(e abse#,e o$ su,( a 1rov"s"o#, *a) a#& eBu"!y &",!a!e !(e 1ay'e#! o$ !(e )are(ouse'a# s *"e# 1ursua#! !o @e,!"o#s 76 a#& 31 o$ !(e Care(ouse Re,e"1!s La) FR.4. 7136G, !o )"! "#>+;)* :5. 1hat c%ai.s are inc%uded in the ,arehouse.ans %ien. - #u-2ect to the provisions of section thirt$, a ,arehouse.an sha%% have %ien on goods deposited or on the proceeds thereof in his hands, for a%% %a,fu% charges for storage and preservation of the goods8 a%so for a%% %a,fu% c%ai.s for .one$ advanced, interest, insurance, transportation, %a-or, ,eighing coopering and other charges and expenses in re%ation to such goods8 a%so for a%% reasona-%e charges and expenses for notice, and advertise.ent of sa%e, and for sa%e of the goods ,here defau%t has -een .ade in satisf$ing the ,arehouse.ans %ien. #>+;)* '4. 1arehouse.an need not de%iver unti% %ien is satisfied. - ! ,arehouse.an having a %ien va%id against the person de.anding the goods .a$ refuse to de%iver the goods to hi. unti% the %ien is satisfied." 4$!er be"#0 &e,*are& #o! !(e o)#er, bu! !(e )are(ouse'a#, by !(e Cour! o$ 411ea*s o# ;e,e'ber 13, 1991 "# C4-G.R. @P. No. 75938, !(e &e,"s"o# (av"#0 bee# a$$"r'e& by us o# ;e,e'ber 1, 1993, 1r"va!e res1o#&e#!s ,a##o! *e0a**y be &e1r"ve& o$ !(e"r r"0(! !o e#$or,e !(e"r ,*a"' $or )are(ouse'a#s *"e#, $or reaso#ab*e s!ora0e $ees a#& 1reserva!"o# e31e#ses. Pursua#! !o @e,!"o# 31 )(",( )e Buo!e (ereu#&er, !(e 0oo&s u#&er s!ora0e 'ay #o! be &e*"vere& u#!"* sa"& *"e# "s sa!"s$"e&. "#>+;)* '4. 1arehouse.an need not de%iver unti% %ien is satisfied. - ! ,arehouse.an having a %ien va%id against the person de.anding the goods .a$ refuse to de%iver the goods to hi. unti% the %ien is satisfied." Co#s"&er"#0 !(a! 1e!"!"o#er &oes #o! &e#y !(e e3"s!e#,e, va*"&"!y a#& 0e#u"#e#ess o$ !(e Care(ouse Re,e"1!s o# )(",( "! a#,(ors "!s ,*a"' $or 1ay'e#! a0a"#s! 1r"va!e res1o#&e#!s, "! ,a##o! &"s,*a"' *"ab"*"!y $or !(e 1ay'e#! o$ !(e s!ora0e $ees s!"1u*a!e& !(ere"#. 4s ,o#!ra,!s, !(e re,e"1!s 'us! be res1e,!e& by au!(or"!y o$ 4r!",*e 1159 o$ !(e C"v"* Co&e, !o )"! "!R;. 4459. *-%igations arising fro. contracts have the force of %a, -et,een the contracting parties and shou%d -e co.p%ied ,ith in good faith." Pe!"!"o#er "s "# es!o11e* "# &"s,*a"'"#0 *"ab"*"!y $or !(e 1ay'e#! o$ s!ora0e $ees &ue !(e 1r"va!e res1o#&e#!s as )are(ouse'a# )("*e ,*a"'"#0 !o be e#!"!*e& !o !(e su0ar s!o,-s ,overe& by !(e sub+e,! Care(ouse Re,e"1!s o# !(e bas"s o$ )(",( "! a#,(ors "!s ,*a"' $or 1ay'e#! or &e*"very o$ !(e su0ar s!o,-s. .(e u#,o#&"!"o#a* 1rese#!'e#! o$ !(e re,e"1!s by !(e 1e!"!"o#er $or 1ay'e#! a0a"#s! 1r"va!e res1o#&e#!s o# !(e s!re#0!( o$ !(e 1rov"s"o#s o$ !(e Care(ouse Re,e"1!s La) FR.4. 7136G ,arr"e& )"!( "! !(e a&'"ss"o# o$ !(e e3"s!e#,e a#& va*"&"!y o$ !(e !er's, ,o#&"!"o#s a#& s!"1u*a!"o#s )r"!!e# o# !(e $a,e o$ !(e Care(ouse Re,e"1!s, "#,*u&"#0 !(e u#Bua*"$"e& re,o0#"!"o# o$ !(e 1ay'e#! o$ )are(ouse'a#s *"e# $or s!ora0e $ees a#& 1reserva!"o# e31e#ses. Pe!"!"o#er 'ay #o! #o) re!r"eve !(e su0ar s!o,-s )"!(ou! 1ay"#0 !(e *"e# &ue 1r"va!e res1o#&e#!s as )are(ouse'a#.

I# v"e) o$ !(e $ore0o"#0, !(e ru*e 'ay be s"'1*"$"e& !(us C("*e !(e PN2 "s e#!"!*e& !o !(e s!o,-s o$ su0ar as !(e e#&orsee o$ !(e Bue&a#s, &e*"very !o "! s(a** be e$$e,!e& o#*y u1o# 1ay'e#! o$ !(e s!ora0e $ees. I'1era!"ve "s !(e r"0(! o$ !(e )are(ouse'a# !o &e'a#& 1ay'e#! o$ ("s *"e# a! !("s +u#,!ure, be,ause, "# a,,or&a#,e )"!( @e,!"o# 79 o$ !(e Care(ouse Re,e"1!s La), !(e )are(ouse'a# *oses ("s *"e# u1o# 0oo&s by surre#&er"#0 1ossess"o# !(ereo$. I# o!(er )or&s, !(e *"e# 'ay be *os! )(ere !(e )are(ouse'a# surre#&ers !(e 1ossess"o# o$ !(e 0oo&s )"!(ou! reBu"r"#0 1ay'e#! o$ ("s *"e#, be,ause a )are(ouse'a#s *"e# "s 1ossessory "# #a!ure. Ce, !(ere$ore, u1(o*& a#& sus!a"# !(e va*"&"!y o$ !(e assa"*e& or&ers o$ 1ub*", res1o#&e#!, &a!e& ;e,e'ber 70, 1994 a#& %ar,( 1, 1995. I# $"#e, )e $a"* !o see a#y !a"#! o$ abuse o$ &"s,re!"o# o# !(e 1ar! o$ !(e 1ub*", res1o#&e#! "# "ssu"#0 !(e Bues!"o#e& or&ers )(",( re,o0#"Ie& !(e *e0"!"'a!e r"0(! o$ Noa(s 4r-, a$!er be"#0 &e,*are& as )are(ouse'a#, !o re,over s!ora0e $ees be$ore "! )ou*& re*ease !o !(e PN2 su0ar s!o,-s ,overe& by !(e $"ve F5G Care(ouse Re,e"1!s. Our reso*u!"o#, &a!e& %ar,( 9, 1994, &"& #o! 1re,*u&e 1r"va!e res1o#&e#!s u#Bua*"$"e& r"0(! !o es!ab*"s( "!s ,*a"' !o re,over s!ora0e $ees )(",( "s re,o0#"Ie& u#&er Re1ub*", 4,! No. 7136. Ne"!(er &"& !(e Cour! o$ 411ea*s &e,"s"o#, &a!e& ;e,e'ber 13, 1991, res!r",! su,( r"0(!. Our Reso*u!"o#s re$ere#,e !o !(e &e,"s"o# by !(e Cour! o$ 411ea*s, &a!e& ;e,e'ber 13, 1991, "# C4-G.R. @P. No. 75938, )as "#!e#&e& !o 0u"&e !(e 1ar!"es "# !(e subseBue#! &"s1os"!"o# o$ !(e ,ase !o "!s $"#a* e#&. Ce ,er!a"#*y &"& #o! $ore,*ose 1r"va!e res1o#&e#!s "#(ere#! r"0(! as )are(ouse'a# !o ,o**e,! s!ora0e $ees a#& 1reserva!"o# e31e#ses as s!"1u*a!e& # !(e $a,e o$ ea,( o$ !(e Care(ouse Re,e"1!s a#& as 1rov"&e& $or "# !(e Care(ouse Re,e"1!s La) FR.4. 7136G. /HEREFORE, !(e 1e!"!"o# s(ou*& be, as "! "s, (ereby &"s'"sse& $or *a,- o$ 'er"!. .(e Bues!"o#e& or&ers "ssue& by 1ub*", res1o#&e#! +u&0e are a$$"r'e&. Cos!s a0a"#s! !(e 1e!"!"o#er.

'. R. N(. 1 && # 0 J1,2 13, 2&& PHILIPPINE E3PORT AND FOREI'N LOAN 'UARANTEE CORPORATION, Petitioner, "s. V.P. EUSEBIO CONSTRUCTION, INC.- 30PLE3 INTERNATIONAL, INC.- VICENTE P. EUSEBIOSOLEDAD C. EUSEBIO- EDUARDO E. SANTOS- ILUMINADA SANTOS- AND FIRST INTE'RATED BONDIN' AND INSURANCE COMPAN., INC., Respondents. .("s ,ase "s a# o$$s(oo! o$ a serv",e ,o#!ra,! e#!ere& "#!o by a F"*"1"#o ,o#s!ru,!"o# $"r' )"!( !(e IraB" Gover#'e#! $or !(e ,o#s!ru,!"o# o$ !(e I#s!"!u!e o$ P(ys",a* .(era1y-%e&",a* Ce#!er, P(ase II, "# 2a0(&a&, IraB, a! a !"'e )(e# !(e Ira#-IraB )ar )as o#0o"#0. I# a ,o'1*a"#! $"*e& )"!( !(e Re0"o#a* .r"a* Cour! o$ %a-a!" C"!y, &o,-e!e& as C"v"* Case No. 91-190: a#& ass"0#e& !o 2ra#,( 58, 1e!"!"o#er P("*"11"#e E31or! a#& Fore"0# Loa# Guara#!ee Cor1ora!"o#1 F(ere"#a$!er P("*0uara#!eeG sou0(! re"'burse'e#! $ro' !(e res1o#&e#!s o$ !(e su' o$ 'o#ey "! 1a"& !o 4* 4(*" 2a#- o$ Ku)a"! 1ursua#! !o a 0uara#!ee "! "ssue& $or res1o#&e#! E.P. Euseb"o Co#s!ru,!"o#, I#,. FEPECIG. .(e $a,!ua* a#& 1ro,e&ura* a#!e,e&e#!s "# !("s ,ase are as $o**o)s O# 8 Nove'ber 1980, !(e @!a!e Or0a#"Ia!"o# o$ 2u"*&"#0s F@O2G, %"#"s!ry o$ /ous"#0 a#& Co#s!ru,!"o#, 2a0(&a&, IraB, a)ar&e& !(e ,o#s!ru,!"o# o$ !(e I#s!"!u!e o$ P(ys",a* .(era1y%e&",a* Re(ab"*"!a!"o# Ce#!er, P(ase II, "# 2a0(&a&, IraB, F(ere"#a$!er !(e Pro+e,!G !o 4+ya* .ra&"#0 a#& Co#!ra,!"#0 Co'1a#y F(ere"#a$!er 4+ya*G, a $"r' &u*y *",e#se& )"!( !(e Ku)a"! C(a'ber o$ Co''er,e $or a !o!a* ,o#!ra,! 1r",e o$ I;5,41:,089804: For abou! 9@N18,639,::8G. 7 O# 6 %ar,( 1981, res1o#&e#! s1ouses E&uar&o a#& I*u'"#a&a @a#!os, "# be(a*$ o$ res1o#&e#! 3-P*e3 I#!er#a!"o#a*, I#,. F(ere"#a$!er 3-P*e3G, a *o,a* ,o#!ra,!or e#0a0e& "# ,o#s!ru,!"o# bus"#ess, e#!ere& "#!o a +o"#! ve#!ure a0ree'e#! )"!( 4+ya* )(ere"# !(e $or'er u#&er!oo- !(e e3e,u!"o# o$ !(e e#!"re Pro+e,!, )("*e !(e *a!!er )ou*& be e#!"!*e& !o a ,o''"ss"o# o$ 4< o$ !(e ,o#!ra,! 1r",e.3 La!er, or o# 8 41r"* 1981, res1o#&e#! 3-P*e3, #o! be"#0 a,,re&"!e& by or re0"s!ere& )"!( !(e P("*"11"#e Overseas Co#s!ru,!"o# 2oar& FPOC2G, ass"0#e& a#& !ra#s$erre& a** "!s r"0(!s a#& "#!eres!s u#&er !(e +o"#! ve#!ure a0ree'e#! !o EPECI, a ,o#s!ru,!"o# a#& e#0"#eer"#0 $"r' &u*y re0"s!ere& )"!( !(e POC2.4 /o)ever, o# 7 %ay 1981, 3-P*e3 a#& EPECI e#!ere& "#!o a# a0ree'e#! !(a! !(e e3e,u!"o# o$ !(e Pro+e,! )ou*& be u#&er !(e"r +o"#! 'a#a0e'e#!.5 .(e @O2 reBu"re& !(e ,o#!ra,!ors !o sub'"! F1G a 1er$or'a#,e bo#& o$ I;761,8088:10 re1rese#!"#0 5< o$ !(e !o!a* ,o#!ra,! 1r",e a#& F7G a# a&va#,e 1ay'e#! bo#& o$ I;541,:088901 re1rese#!"#0 10< o$ !(e a&va#,e 1ay'e#! !o be re*ease& u1o# s"0#"#0 o$ !(e ,o#!ra,!.: .o ,o'1*y )"!( !(ese reBu"re'e#!s, res1o#&e#!s 3-P*e3 a#& EPECI a11*"e& $or !(e "ssua#,e o$ a 0uara#!ee )"!( 1e!"!"o#er P("*0uara#!ee, a 0over#'e#! $"#a#,"a* "#s!"!u!"o# e'1o)ere& !o "ssue 0uara#!ees $or Bua*"$"e& F"*"1"#o ,o#!ra,!ors !o se,ure !(e 1er$or'a#,e o$ a11rove& serv",e ,o#!ra,!s abroa&. 6 Pe!"!"o#er P("*0uara#!ee a11rove& res1o#&e#!sA a11*",a!"o#. @ubseBue#!*y, *e!!ers o$ 0uara#!ee 8 )ere "ssue& by P("*0uara#!ee !o !(e Ra$"&a"# 2a#- o$ 2a0(&a& ,over"#0 100< o$ !(e 1er$or'a#,e a#& a&va#,e 1ay'e#! bo#&s, bu! !(ey )ere #o! a,,e1!e& by @O2. C(a! @O2 reBu"re& )as a *e!!er0uara#!ee $ro' Ra$"&a"# 2a#-, !(e 0over#'e#! ba#- o$ IraB. Ra$"&a"# 2a#- !(e# "ssue& a 1er$or'a#,e bo#& "# $avor o$ @O2 o# !(e ,o#&"!"o# !(a! a#o!(er $ore"0# ba#-, #o! P("*0uara#!ee, )ou*& "ssue a ,ou#!er-0uara#!ee !o ,over "!s e31osure. 4* 4(*" 2a#- o$ Ku)a"! )as, !(ere$ore, e#0a0e& !o 1rov"&e a

,ou#!er-0uara#!ee !o Ra$"&a"# 2a#-, bu! "! reBu"re& a s"'"*ar ,ou#!er-0uara#!ee "# "!s $avor $ro' !(e 1e!"!"o#er. .(us, !(ree *ayers o$ 0uara#!ees (a& !o be arra#0e&.9 91o# !(e a11*",a!"o# o$ res1o#&e#!s 3-P*e3 a#& EPECI, 1e!"!"o#er P("*0uara#!ee "ssue& "# $avor o$ 4* 4(*" 2a#- o$ Ku)a"! Le!!er o$ Guara#!ee No. 81-194-F 10 FPer$or'a#,e 2o#& Guara#!eeG "# !(e a'ou#! o$ I;761,8088:10 a#& Le!!er o$ Guara#!ee No. 81-195-F11 F4&va#,e Pay'e#! Guara#!eeG "# !(e a'ou#! o$ I;541,:088901, bo!( $or a !er' o$ e"0(!ee# 'o#!(s $ro' 75 %ay 1981. .(ese *e!!ers o$ 0uara#!ee )ere se,ure& by F1G a ;ee& o$ 9#&er!a-"#017e3e,u!e& by res1o#&e#!s EPECI, @1ouses E",e#!e P. Euseb"o a#& @o*e&a& C. Euseb"o, 3-P*e3, a#& @1ouses E&uar&o E. @a#!os a#& I*u'"#a&a @a#!osD a#& F7G a sure!y bo#&13 "ssue& by res1o#&e#! F"rs! I#!e0ra!e& 2o#&"#0 a#& I#sura#,e Co'1a#y, I#,. FFI2ICIG. .(e @ure!y 2o#& )as *a!er a'e#&e& o# 73 Ju#e 1981 !o "#,rease !(e a'ou#! o$ ,overa0e $ro' P:.4 '"**"o# !o P:.9:6 '"**"o# a#& !o ,(a#0e !(e ba#- "# )(ose $avor !(e 1e!"!"o#erAs 0uara#!ee )as "ssue&, $ro' Ra$"&a"# 2a#- !o 4* 4(*" 2a#- o$ Ku)a"!.14 O# 11 Ju#e 1981, @O2 a#& !(e +o"#! ve#!ure EPECI a#& 4+ya* e3e,u!e& !(e serv",e ,o#!ra,! 15 $or !(e ,o#s!ru,!"o# o$ !(e I#s!"!u!e o$ P(ys",a* .(era1y %e&",a* Re(ab"*"!a!"o# Ce#!er, P(ase II, "# 2a0(&a&, IraB, )(ere"# !(e +o"#! ve#!ure ,o#!ra,!or u#&er!oo- !o ,o'1*e!e !(e Pro+e,! )"!("# a 1er"o& o$ 546 &ays or 18 'o#!(s. 9#&er !(e Co#!ra,!, !(e Jo"#! Ee#!ure )ou*& su11*y 'a#1o)er a#& 'a!er"a*s, a#& @O2 )ou*& re$u#& !o !(e $or'er 75< o$ !(e 1ro+e,! ,os! "# IraB" ;"#ar a#& !(e 65< "# 9@ &o**ars a! !(e e3,(a#0e ra!e o$ 1 ;"#ar !o 3.36666 9@ ;o**ars.1: .(e ,o#s!ru,!"o#, )(",( )as su11ose& !o s!ar! o# 7 Ju#e 1981, ,o''e#,e& o#*y o# !(e *as! )ee- o$ 4u0us! 1981. 2e,ause o$ !("s &e*ay a#& !(e s*o) 1ro0ress o$ !(e ,o#s!ru,!"o# )or- &ue !o so'e se!ba,-s a#& &"$$",u*!"es, !(e Pro+e,! )as #o! ,o'1*e!e& o# 15 Nove'ber 1987 as s,(e&u*e&. 2u! "# O,!ober 1987, u1o# $oresee"#0 !(e "'1oss"b"*"!y o$ 'ee!"#0 !(e &ea&*"#e a#& u1o# !(e reBues! o$ 4* 4(*" 2a#-, !(e +o"#! ve#!ure ,o#!ra,!or )or-e& $or !(e re#e)a* or e3!e#s"o# o$ !(e Per$or'a#,e 2o#& a#& 4&va#,e Pay'e#! Guara#!ee. Pe!"!"o#erAs Le!!ers o$ Guara#!ee Nos. 81-194-F FPer$or'a#,e 2o#&G a#& 81-195-F F4&va#,e Pay'e#! 2o#&G )"!( e31"ry &a!e o$ 75 Nove'ber 1987 )ere !(e# re#e)e& or e3!e#&e& !o 9 February 1983 a#& 9 %ar,( 1983, res1e,!"ve*y. 16 .(e sure!y bo#& )as a*so e3!e#&e& $or a#o!(er 1er"o& o$ o#e year, $ro' 17 %ay 1987 !o 17 %ay 1983.18 .(e Per$or'a#,e 2o#& )as $ur!(er e3!e#&e& !)e*ve !"'es )"!( va*"&"!y o$ u1 !o 8 ;e,e'ber 198:, 19 )("*e !(e 4&va#,e Pay'e#! Guara#!ee )as e3!e#&e& !(ree !"'es 'ore u1 !o 74 %ay 1984 )(e# !(e *a!!er )as ,a#,e**e& a$!er $u** re$u#& or re"'burse'e#! by !(e +o"#! ve#!ure ,o#!ra,!or. 70 .(e sure!y bo#& )as *"-e)"se e3!e#&e& !o 8 %ay 1986.71 4s o$ %ar,( 198:, !(e s!a!us o$ !(e Pro+e,! )as 51< a,,o'1*"s(e&, 'ea#"#0 !(e s!ru,!ures )ere a*rea&y $"#"s(e&. .(e re'a"#"#0 46< ,o#s"s!e& "# e*e,!ro-'e,(a#",a* )or-s a#& !(e 7<, sa#"!ary )or-s, )(",( bo!( reBu"re& "'1or!a!"o# o$ eBu"1'e#! a#& 'a!er"a*s. 77 O# 7: O,!ober 198:, 4* 4(*" 2a#- o$ Ku)a"! se#! a !e*e3 ,a** !o !(e 1e!"!"o#er &e'a#&"#0 $u** 1ay'e#! o$ "!s 1er$or'a#,e bo#& ,ou#!er-0uara#!ee. 91o# re,e"v"#0 a ,o1y o$ !(a! !e*e3 'essa0e o# 76 O,!ober 198:, res1o#&e#! EPECI reBues!e& IraB .ra&e a#& E,o#o'", ;eve*o1'e#! %"#"s!er %o(a''a& Fa&(" /usse"# !o re,a** !(e !e*e3 ,a** o# !(e 1er$or'a#,e 0uara#!ee $or be"#0 a &ras!", a,!"o# "# ,o#!rave#!"o# o$ "!s 'u!ua* a0ree'e#! )"!( !(e *a!!er !(a! F1G !(e "'1os"!"o# o$ 1e#a*!y )ou*& be (e*& "# abeya#,e u#!"* !(e ,o'1*e!"o# o$ !(e 1ro+e,!D a#& F7G !(e !"'e e3!e#s"o# )ou*& be o1e#, &e1e#&"#0 o# !(e &eve*o1'e#!s o# !(e #e0o!"a!"o#s $or a $ore"0# *oa# !o $"#a#,e !(e ,o'1*e!"o# o$ !(e 1ro+e,!.73 I! a*so )ro!e @O2 1ro!es!"#0 !(e ,a** $or *a,- o$ $a,!ua* or *e0a* bas"s, s"#,e !(e $a"*ure !o ,o'1*e!e !(e Pro+e,! )as &ue !o F1G !(e IraB" 0over#'e#!As *a,- o$ $ore"0# e3,(a#0e )"!( )(",( !o 1ay "!s FEPECIAsG a,,o'1*"s('e#!s a#& F7G @O2As #o#,o'1*"a#,e $or !(e 1as! severa* years )"!( !(e 1rov"s"o# "# !(e ,o#!ra,! !(a! 65< o$ !(e b"**"#0s )ou*& be 1a"& "# 9@ &o**ars.74 @ubseBue#!*y, or o# 19 Nove'ber 198:, res1o#&e#! EPECI a&v"se& !(e 1e!"!"o#er #o! !o 1ay ye! 4* 4(*" 2a#- be,ause e$$or!s )ere be"#0 e3er!e& $or !(e a'",ab*e se!!*e'e#! o$ !(e Pro+e,!.75

O# 14 41r"* 1986, !(e 1e!"!"o#er re,e"ve& a#o!(er !e*e3 'essa0e $ro' 4* 4(*" 2a#- s!a!"#0 !(a! "! (a& a*rea&y 1a"& !o Ra$"&a"# 2a#- !(e su' o$ 9@N86:,5:4 u#&er "!s *e!!er o$ 0uara#!ee, a#& &e'a#&"#0 re"'burse'e#! by !(e 1e!"!"o#er o$ )(a! "! 1a"& !o !(e *a!!er ba#- 1*us "#!eres! !(ereo# a#& re*a!e& e31e#ses.7: 2o!( 1e!"!"o#er P("*0uara#!ee a#& res1o#&e#! EPECI sou0(! !(e ass"s!a#,e o$ so'e 0over#'e#! a0e#,"es o$ !(e P("*"11"#es. O# 10 4u0us! 1986, EPECI reBues!e& !(e Ce#!ra* 2a#- !o (o*& "# abeya#,e !(e 1ay'e#! by !(e 1e!"!"o#er 5!o a**o) !(e &"1*o'a!", 'a,("#ery !o !a-e "!s ,ourse, $or o!(er)"se, !(e P("*"11"#e 0over#'e#! , !(rou0( !(e P("*0uara#!ee a#& !(e Ce#!ra* 2a#-, )ou*& be,o'e "#s!ru'e#!s o$ !(e IraB" Gover#'e#! "# ,o#su''a!"#0 a ,*ear a,! o$ "#+us!",e a#& "#eBu"!y ,o''"!!e& a0a"#s! a F"*"1"#o ,o#!ra,!or.576 O# 76 4u0us! 1986, !(e Ce#!ra* 2a#- au!(or"Ie& !(e re'"!!a#,e $or "!s a,,ou#! o$ !(e a'ou#! o$ 9@N86:,5:4 FeBu"va*e#! !o I;761, 8088:10G !o 4* 4(*" 2a#- re1rese#!"#0 $u** 1ay'e#! o$ !(e 1er$or'a#,e ,ou#!er-0uara#!ee $or EPECIAs 1ro+e,! "# IraB. 78 O# : Nove'ber 1986, P("*0uara#!ee "#$or'e& EPECI !(a! "! )ou*& re'"! 9@N86:,5:4 !o 4* 4(*" 2a#-, a#& re"!era!e& !(e +o"#! a#& so*"&ary ob*"0a!"o# o$ !(e res1o#&e#!s !o re"'burse !(e 1e!"!"o#er $or !(e a&va#,es 'a&e o# "!s ,ou#!er-0uara#!ee.79 .(e 1e!"!"o#er !(us 1a"& !(e a'ou#! o$ 9@N86:,5:4 !o 4* 4(*" 2a#- o$ Ku)a"! o# 71 Ja#uary 1988.30 .(e#, o# : %ay 1988, !(e 1e!"!"o#er 1a"& !o 4* 4(*" 2a#- o$ Ku)a"! 9@N59,179.83 re1rese#!"#0 "#!eres! a#& 1e#a*!y ,(ar0es &e'a#&e& by !(e *a!!er ba#-.31 O# 19 Ju#e 1991, !(e 1e!"!"o#er se#! !o !(e res1o#&e#!s se1ara!e *e!!ers &e'a#&"#0 $u** 1ay'e#! o$ !(e a'ou#! o$P46,867,363.98 1*us a,,ru"#0 "#!eres!, 1e#a*!y ,(ar0es, a#& 10< a!!or#eyAs $ees 1ursua#! !o !(e"r +o"#! a#& so*"&ary ob*"0a!"o#s u#&er !(e &ee& o$ u#&er!a-"#0 a#& sure!y bo#&.37 C(e# !(e res1o#&e#!s $a"*e& !o 1ay, !(e 1e!"!"o#er $"*e& o# 9 Ju*y 1991 a ,"v"* ,ase $or ,o**e,!"o# o$ a su' o$ 'o#ey a0a"#s! !(e res1o#&e#!s be$ore !(e R.C o$ %a-a!" C"!y. 4$!er &ue !r"a*, !(e !r"a* ,our! ru*e& a0a"#s! P("*0uara#!ee a#& (e*& !(a! !(e *a!!er (a& #o va*"& ,ause o$ a,!"o# a0a"#s! !(e res1o#&e#!s. I! o1"#e& !(a! a! !(e !"'e !(e ,a** )as 'a&e o# !(e 0uara#!ee )(",( )as e3e,u!e& $or a s1e,"$", 1er"o&, !(e 0uara#!ee (a& a*rea&y *a1se& or e31"re&. .(ere )as #o va*"& re#e)a* or e3!e#s"o# o$ !(e 0uara#!ee $or $a"*ure o$ !(e 1e!"!"o#er !o se,ure res1o#&e#!sA e31ress ,o#se#! !(ere!o. .(e !r"a* ,our! a*so $ou#& !(a! !(e +o"#! ve#!ure ,o#!ra,!or "#,urre& #o &e*ay "# !(e e3e,u!"o# o$ !(e Pro+e,!. Co#s"&er"#0 !(e Pro+e,! o)#erAs v"o*a!"o#s o$ !(e ,o#!ra,! )(",( re#&ere& "'1oss"b*e !(e +o"#! ve#!ure ,o#!ra,!orAs 1er$or'a#,e o$ "!s u#&er!a-"#0, #o va*"& ,a** o# !(e 0uara#!ee ,ou*& be 'a&e. Fur!(er'ore, !(e !r"a* ,our! (e*& !(a! #o va*"& #o!",e )as $"rs! 'a&e by !(e Pro+e,! o)#er @O2 !o !(e +o"#! ve#!ure ,o#!ra,!or be$ore !(e ,a** o# !(e 0uara#!ee. 4,,or&"#0*y, "! &"s'"sse& !(e ,o'1*a"#!, as )e** as !(e ,ou#!er,*a"'s a#& ,ross-,*a"', a#& or&ere& !(e 1e!"!"o#er !o 1ay a!!or#eyAs $ees o$P100,000 !o res1o#&e#!s EPECI a#& Euseb"o @1ouses a#& P100,000 !o 3-P*e3 a#& !(e @a#!os @1ouses, 1*us ,os!s.33 I# "!s 14 Ju#e 1999 ;e,"s"o#,34 !(e Cour! o$ 411ea*s a$$"r'e& !(e !r"a* ,our!As &e,"s"o#, ra!"o,"#a!"#0 as $o**o)s ?irst, a11e**a#! ,a##o! &e#y !(e $a,! !(a! "! )as $u**y a)are o$ !(e s!a!us o$ 1ro+e,! "'1*e'e#!a!"o# as )e** as !(e 1rob*e's bese!!"#0 !(e ,o#!ra,!ors, be!)ee# 1987 !o 1985, (av"#0 se#! so'e o$ "!s 1eo1*e !o 2a0(&a& &ur"#0 !(a! 1er"o&. .(e su,,ess"ve re#e)a*s8e3!e#s"o#s o$ !(e 0uara#!ees "# $a,!, )as 1ro'1!e& by &e*ays, #o! so*e*y a!!r"bu!ab*e !o !(e ,o#!ra,!ors, a#& su,( e3!e#s"o# u#&ers!a#&ab*y a**o)e& by !(e @O2 F1ro+e,! o)#erG )(",( (a& #o! a#y)ay ,o'1*"e& )"!( "!s ,o#!ra,!ua* ,o''"!'e#! !o !e#&er 65< o$ 1ay'e#! "# 9@ ;o**ars, a#& )(",( s!"** re!a"#e& over&ue a'ou#!s ,o**e,!"b*e by EPECI.

#econd, a11e**a#! )as very 'u,( a)are o$ !(e v"o*a!"o#s ,o''"!!e& by !(e @O2 o$ "!s ,o#!ra,!ua* u#&er!a-"#0s )"!( EPECI, 1r"#,"1a**y, !(e 1ay'e#! o$ $ore"0# ,urre#,y F9@NG $or 65< o$ !(e !o!a* ,o#!ra,! 1r",e, as )e** as o$ !(e ,o'1*",a!"o#s a#& "#+us!",e !(a! )"** resu*! $ro' "!s 1ay'e#! o$ !(e $u** a'ou#! o$ !(e 1er$or'a#,e 0uara#!ee, as ev"&e#! "# P/ILG94R4N.EEAs *e!!er &a!e& 13 %ay 1986 . ;hird, a11e**a#! )as $u**y a)are !(a! @O2 )as "# $a,! s!"** ob*"0a!e& !o !(e Jo"#! Ee#!ure a#& !(ere )as s!"** a# a'ou#! ,o**e,!"b*e $ro' a#& s!"** be"#0 re!a"#e& by !(e 1ro+e,! o)#er, )(",( a'ou#! ,a# be se!-o$$ )"!( !(e su' ,overe& by !(e 1er$or'a#,e 0uara#!ee. ?ourth, )e**-a11r"se& o$ !(e above ,o#&"!"o#s ob!a"#"#0 a! !(e Pro+e,! s"!e a#& ,o0#"Ia#! o$ !(e )ar s"!ua!"o# a! !(e !"'e "# IraB, a11e**a#!, !(ou0( ear*"er (as 'a&e re1rese#!a!"o#s )"!( !(e @O2 re0ar&"#0 a 1oss"b*e a'",ab*e !er'"#a!"o# o$ !(e Pro+e,! as su00es!e& by EPECI, 'a&e a ,o'1*e!e !ur#-arou#& a#& "#s"s!e& o# a,!"#0 "# $avor o$ !(e u#+us!"$"e& 5,a**5 by !(e $ore"0# ba#-s. 35 .(e 1e!"!"o#er !(e# ,a'e !o !("s Cour! v"a Ru*e 45 o$ !(e Ru*es o$ Cour! ,*a"'"#0 !(a! !(e Cour! o$ 411ea*s erre& "# a$$"r'"#0 !(e !r"a* ,our!As ru*"#0 !(a! I RE@PON;EN.@ 4RE NO. LI42LE 9N;ER ./E ;EE; OF 9N;ER.4KING ./EO EPEC9.E; IN F4EOR OF PE.I.IONER IN CON@I;ER4.ION FOR ./E I@@94NCE OF I.@ CO9N.ER-G94R4N.EE 4N; ./4. PE.I.IONER C4NNO. P4@@ ON .O RE@PON;EN.@ C/4. I. /4; P4I; 9N;ER ./E @4I; CO9N.ERG94R4N.EE. II PE.I.IONER C4NNO. CL4I% @92ROG4.ION. III I. I@ INIJ9I.O9@ 4N; 9NJ9@. FOR PE.I.IONER .O /OL; RE@PON;EN.@ LI42LE 9N;ER ./EIR ;EE; OF 9N;ER.4KING.3: .(e 'a"# "ssue "# !("s ,ase "s )(e!(er !(e 1e!"!"o#er "s e#!"!*e& !o re"'burse'e#! o$ )(a! "! 1a"& u#&er Le!!er o$ Guara#!ee No. 81-194-F "! "ssue& !o 4* 4(*" 2a#- o$ Ku)a"! base& o# !(e &ee& o$ u#&er!a-"#0 a#& sure!y bo#& $ro' !(e res1o#&e#!s. .(e 1e!"!"o#er asser!s !(a! s"#,e !(e 0uara#!ee "! "ssue& )as abso*u!e, u#,o#&"!"o#a*, a#& "rrevo,ab*e !(e #a!ure a#& e3!e#! o$ "!s *"ab"*"!y are a#a*o0ous !o !(ose o$ sure!ys("1. I!s *"ab"*"!y a,,rue& u1o# !(e $a"*ure o$ !(e res1o#&e#!s !o $"#"s( !(e ,o#s!ru,!"o# o$ !(e I#s!"!u!e o$ P(ys",a* .(era1y 2u"*&"#0s "# 2a0(&a&. 2y 0uara#!y a 1erso#, ,a**e& !(e 0uara#!or, b"#&s ("'se*$ !o !(e ,re&"!or !o $u*$"** !(e ob*"0a!"o# o$ !(e 1r"#,"1a* &eb!or "# ,ase !(e *a!!er s(ou*& $a"* !o &o so. I$ a 1erso# b"#&s ("'se*$ so*"&ar"*y )"!( !(e 1r"#,"1a* &eb!or, !(e ,o#!ra,! "s ,a**e& sure!ys("1. 36 @!r",!*y s1ea-"#0, 0uara#!y a#& sure!y are #ear*y re*a!e&, a#& 'a#y o$ !(e 1r"#,"1*es are ,o''o# !o bo!(. I# bo!( ,o#!ra,!s, !(ere "s a 1ro'"se !o a#s)er $or !(e &eb! or &e$au*! o$ a#o!(er. /o)ever, "# !("s +ur"s&",!"o#, !(ey 'ay be &"s!"#0u"s(e& !(us 1. 4 sure!y "s usua**y bou#& )"!( ("s 1r"#,"1a* by !(e sa'e "#s!ru'e#! e3e,u!e& a! !(e sa'e !"'e a#& o# !(e sa'e ,o#s"&era!"o#. O# !(e o!(er (a#&, !(e ,o#!ra,! o$ 0uara#!y "s !(e 0uara#!orAs o)#

se1ara!e u#&er!a-"#0 o$!e# su11or!e& by a ,o#s"&era!"o# se1ara!e $ro' !(a! su11or!"#0 !(e ,o#!ra,! o$ !(e 1r"#,"1a*D !(e or"0"#a* ,o#!ra,! o$ ("s 1r"#,"1a* "s #o! ("s ,o#!ra,!. 7. 4 sure!y assu'es *"ab"*"!y as a re0u*ar 1ar!y !o !(e u#&er!a-"#0D )("*e !(e *"ab"*"!y o$ a 0uara#!or "s ,o#&"!"o#a* &e1e#&"#0 o# !(e $a"*ure o$ !(e 1r"'ary &eb!or !o 1ay !(e ob*"0a!"o#. 3. .(e ob*"0a!"o# o$ a sure!y "s 1r"'ary, )("*e !(a! o$ a 0uara#!or "s se,o#&ary. 4. 4 sure!y "s a# or"0"#a* 1ro'"ssor a#& &eb!or $ro' !(e be0"##"#0, )("*e a 0uara#!or "s ,(ar0e& o# ("s o)# u#&er!a-"#0. 5. 4 sure!y "s, or&"#ar"*y, (e*& !o -#o) every &e$au*! o$ ("s 1r"#,"1a*D )(ereas a 0uara#!or "s #o! bou#& !o !a-e #o!",e o$ !(e #o#-1er$or'a#,e o$ ("s 1r"#,"1a*. :. 9sua**y, a sure!y )"** #o! be &"s,(ar0e& e"!(er by !(e 'ere "#&u*0e#,e o$ !(e ,re&"!or !o !(e 1r"#,"1a* or by )a#! o$ #o!",e o$ !(e &e$au*! o$ !(e 1r"#,"1a*, #o 'a!!er (o) 'u,( (e 'ay be "#+ure& !(ereby. 4 0uara#!or "s o$!e# &"s,(ar0e& by !(e 'ere "#&u*0e#,e o$ !(e ,re&"!or !o !(e 1r"#,"1a*, a#& "s usua**y #o! *"ab*e u#*ess #o!"$"e& o$ !(e &e$au*! o$ !(e 1r"#,"1a*. 38 I# &e!er'"#"#0 1e!"!"o#erAs s!a!us, "! "s #e,essary !o rea& Le!!er o$ Guara#!ee No. 81-194-F, )(",( 1rov"&es "# 1ar! as $o**o)s I# ,o#s"&era!"o# o$ your "ssu"#0 !(e above 1er$or'a#,e 0uara#!ee8,ou#!er-0uara#!ee, )e (ereby u#,o#&"!"o#a**y a#& "rrevo,ab*y 0uara#!ee, u#&er our Re$. No. LG-81-194 F !o 1ay you o# your $"rs! )r"!!e# or !e*e3 &e'a#& IraB ;"#ars .)o /u#&re& @eve#!y O#e .(ousa#& E"0(! /u#&re& E"0(! a#& $"*s s"3 (u#&re& !e# FI;761,8088:10G re1rese#!"#0 100< o$ !(e 1er$or'a#,e bo#& reBu"re& o$ E.P. E9@E2IO $or !(e ,o#s!ru,!"o# o$ !(e P(ys",a* .(era1y I#s!"!u!e, P(ase II, 2a0(&a&, IraB, 1*us "#!eres! a#& o!(er "#,"&e#!a* e31e#ses re*a!e& !(ere!o. In 456 676n4 (8 d68a1,4 92 V.P. EUSEBIO, :6 ;5a,, )a2 2(1 1&&< (8 456 (9,+=a4+(n 1n)a+d bu! "# #o ,ase s(a** su,( a'ou#! e3,ee& IraB ;"#ars FI;G 761,8088:10 1*us "#!eres! a#& o!(er "#,"&e#!a* e31e#ses. F>.phasis supp%iedG39 Gu"&e& by !(e above'e#!"o#e& &"s!"#,!"o#s be!)ee# a sure!y a#& a 0uara#!y, as )e** as !(e $a,!ua* '"*"eu o$ !("s ,ase, )e $"#& !(a! !(e Cour! o$ 411ea*s a#& !(e !r"a* ,our! )ere ,orre,! "# ru*"#0 !(a! !(e 1e!"!"o#er "s a 0uara#!or a#& #o! a sure!y. .(a! !(e 0uara#!ee "ssue& by !(e 1e!"!"o#er "s u#,o#&"!"o#a* a#& "rrevo,ab*e &oes #o! 'a-e !(e 1e!"!"o#er a sure!y. 4s a 0uara#!y, "! "s s!"** ,(ara,!er"Ie& by "!s subs"&"ary a#& ,o#&"!"o#a* Bua*"!y be,ause "! &oes #o! !a-e e$$e,! u#!"* !(e $u*$"**'e#! o$ !(e ,o#&"!"o#, #a'e*y, !(a! !(e 1r"#,"1a* ob*"0or s(ou*& $a"* "# ("s ob*"0a!"o# a! !(e !"'e a#& "# !(e $or' (e bou#& ("'se*$.40 I# o!(er )or&s, a# u#,o#&"!"o#a* 0uara#!ee "s s!"** sub+e,! !o !(e ,o#&"!"o# !(a! !(e 1r"#,"1a* &eb!or s(ou*& &e$au*! "# ("s ob*"0a!"o# $"rs! be$ore resor! !o !(e 0uara#!or ,ou*& be (a&. 4 ,o#&"!"o#a* 0uara#!y, as o11ose& !o a# u#,o#&"!"o#a* 0uara#!y, "s o#e )(",( &e1e#&s u1o# so'e e3!ra#eous eve#!, beyo#& !(e 'ere &e$au*! o$ !(e 1r"#,"1a*, a#& 0e#era**y u1o# #o!",e o$ !(e 1r"#,"1a*As &e$au*! a#& reaso#ab*e &"*"0e#,e "# e3(aus!"#0 1ro1er re'e&"es a0a"#s! !(e 1r"#,"1a*.41 I! a11ear"#0 !(a! Le!!er o$ Guara#!ee No. 81-194-F 'ere*y s!a!e& !(a! "# !(e eve#! o$ &e$au*! by res1o#&e#! EPECI !(e 1e!"!"o#er s(a** 1ay, !(e ob*"0a!"o# assu'e& by !(e 1e!"!"o#er )as s"'1*y !(a! o$ a# u#,o#&"!"o#a* 0uara#!y, #o! ,o#&"!"o#a* 0uara#!y. 2u! as ear*"er ru*e& !(e $a,! !(a! 1e!"!"o#erAs 0uara#!y "s u#,o#&"!"o#a* &oes #o! 'a-e "! a sure!y. 2es"&es, sure!y "s #ever 1resu'e&. 4 1ar!y s(ou*& #o! be ,o#s"&ere& a sure!y )(ere !(e ,o#!ra,! "!se*$ s!"1u*a!es !(a! (e "s a,!"#0 o#*y as a 0uara#!or. I! "s o#*y )(e# !(e 0uara#!or b"#&s ("'se*$ so*"&ar"*y )"!( !(e 1r"#,"1a* &eb!or !(a! !(e ,o#!ra,! be,o'es o#e o$ sure!ys("1.47

/av"#0 &e!er'"#e& 1e!"!"o#erAs *"ab"*"!y as 0uara#!or, !(e #e3! Bues!"o# )e (ave !o 0ra11*e )"!( "s )(e!(er !(e res1o#&e#! ,o#!ra,!or (as d68a1,46d "# "!s ob*"0a!"o#s !(a! )ou*& +us!"$y resor! !o !(e 0uara#!y. .("s "s a '"3e& Bues!"o# o$ $a,! a#& *a) !(a! "s be!!er a&&resse& by !(e *o)er ,our!s, s"#,e !("s Cour! "s #o! a !r"er o$ $a,!s. I! "s a $u#&a'e#!a* a#& se!!*e& ru*e !(a! !(e $"#&"#0s o$ $a,! o$ !(e !r"a* ,our! a#& !(e Cour! o$ 411ea*s are b"#&"#0 or ,o#,*us"ve u1o# !("s Cour! u#*ess !(ey are #o! su11or!e& by !(e ev"&e#,e or u#*ess s!ro#0 a#& ,o0e#! reaso#s &",!a!e o!(er)"se.43 .(e $a,!ua* $"#&"#0s o$ !(e Cour! o$ 411ea*s are #or'a**y #o! rev"e)ab*e by us u#&er Ru*e 45 o$ !(e Ru*es o$ Cour! e3,e1! )(e# !(ey are a! var"a#,e )"!( !(ose o$ !(e !r"a* ,our!. 44 .(e !r"a* ,our! a#& !(e Cour! o$ 411ea*s )ere "# u#"so# !(a! !(e res1o#&e#! ,o#!ra,!or ,a##o! be ,o#s"&ere& !o (ave &e$au*!e& "# "!s ob*"0a!"o#s be,ause !(e ,ause o$ !(e &e*ay )as #o! 1r"'ar"*y a!!r"bu!ab*e !o "!. 4 ,oro**ary "ssue "s )(a! *a) s(ou*& be a11*"e& "# &e!er'"#"#0 )(e!(er !(e res1o#&e#! ,o#!ra,!or (as d68a1,46d "# !(e 1er$or'a#,e o$ "!s ob*"0a!"o#s u#&er !(e serv",e ,o#!ra,!. .(e Bues!"o# o$ )(e!(er !(ere "s a brea,( o$ a# a0ree'e#!, )(",( "#,*u&es d68a1,4 or .ora,45 1er!a"#s !o !(e esse#!"a* or "#!r"#s", va*"&"!y o$ a ,o#!ra,!. 4: No ,o#$*",!s ru*e o# esse#!"a* va*"&"!y o$ ,o#!ra,!s "s e31ress*y 1rov"&e& $or "# our *a)s. .(e ru*e $o**o)e& by 'os! *e0a* sys!e's, (o)ever, "s !(a! !(e "#!r"#s", va*"&"!y o$ a ,o#!ra,! 'us! be 0over#e& by !(e %ex contractus or 51ro1er *a) o$ !(e ,o#!ra,!.5 .("s "s !(e *a) vo*u#!ar"*y a0ree& u1o# by !(e 1ar!"es F!(e %ex %oci vo%untatisG or !(e *a) "#!e#&e& by !(e' e"!(er e31ress*y or "'1*","!*y F!(e %ex %oci intentionisG. .(e *a) se*e,!e& 'ay be "'1*"e& $ro' su,( $a,!ors as subs!a#!"a* ,o##e,!"o# )"!( !(e !ra#sa,!"o#, or !(e #a!"o#a*"!y or &o'","*e o$ !(e 1ar!"es.46 P("*"11"#e ,our!s )ou*& &o )e** !o a&o1! !(e $"rs! a#& 'os! bas", ru*e "# 'os! *e0a* sys!e's, #a'e*y, to a%%o, the parties to se%ect the %a, app%ica-%e to their contract, su-2ect to the %i.itation that it is not against the %a,, .ora%s, or pu-%ic po%ic$ of the foru. and that the chosen %a, .ust -ear a su-stantive re%ationship to the transaction . 48 I! 'us! be #o!e& !(a! !(e serv",e ,o#!ra,! be!)ee# @O2 a#& EPECI ,o#!a"#s #o e31ress ,(o",e o$ !(e *a) !(a! )ou*& 0over# "!. I# !(e 9#"!e& @!a!es a#& Euro1e, !(e !)o ru*es !(a! #o) see' !o (ave e'er0e& as 5-"#0s o$ !(e ("**5 are F1G !(e 1ar!"es 'ay ,(oose !(e 0over#"#0 *a)D a#& F7G "# !(e abse#,e o$ su,( a ,(o",e, !(e a11*",ab*e *a) "s !(a! o$ !(e @!a!e !(a! 5(as !(e 'os! s"0#"$",a#! re*a!"o#s("1 !o !(e !ra#sa,!"o# a#& !(e 1ar!"es.549 4#o!(er au!(or"!y 1ro1ose& !(a! a** 'a!!ers re*a!"#0 !o !(e !"'e, 1*a,e, a#& 'a##er o$ 1er$or'a#,e a#& va*"& e3,uses $or #o#-1er$or'a#,e are &e!er'"#e& by !(e *a) o$ !(e 1*a,e o$ 1er$or'a#,e or %ex %oci so%utionis, )(",( "s use$u* be,ause "! "s u#&oub!e&*y a*)ays ,o##e,!e& !o !(e ,o#!ra,! "# a s"0#"$",a#! )ay.50 I# !("s ,ase, !(e *a)s o$ IraB bear subs!a#!"a* ,o##e,!"o# !o !(e !ra#sa,!"o#, s"#,e o#e o$ !(e 1ar!"es "s !(e IraB" Gover#'e#! a#& !(e 1*a,e o$ 1er$or'a#,e "s "# IraB. /e#,e, !(e "ssue o$ )(e!(er res1o#&e#! EPECI &e$au*!e& "# "!s ob*"0a!"o#s 'ay be &e!er'"#e& by !(e *a)s o$ IraB. /o)ever, s"#,e !(a! $ore"0# *a) )as #o! 1ro1er*y 1*ea&e& or 1rove&, !(e 1resu'1!"o# o$ "&e#!"!y or s"'"*ar"!y, o!(er)"se -#o)# as !(e processua% presu.ption, ,o'es "#!o 1*ay. C(ere $ore"0# *a) "s #o! 1*ea&e& or, eve# "$ 1*ea&e&, "s #o! 1rove&, !(e 1resu'1!"o# "s !(a! $ore"0# *a) "s !(e sa'e as ours.51 Our *a), s1e,"$",a**y 4r!",*e 11:9, *as! 1ara0ra1(, o$ !(e C"v"* Co&e, 1rov"&es 5I# re,"1ro,a* ob*"0a!"o#s, #e"!(er 1ar!y "#,urs "# &e*ay "$ !(e o!(er 1ar!y &oes #o! ,o'1*y or "s #o! rea&y !o ,o'1*y "# a 1ro1er 'a##er )"!( )(a! "s "#,u'be#! u1o# ("'.5 ;e$au*! or .ora o# !(e 1ar! o$ !(e &eb!or "s !(e &e*ay "# !(e $u*$"**'e#! o$ !(e 1res!a!"o# by reaso# o$ a ,ause "'1u!ab*e !o !(e $or'er. 57 I! "s !(e #o#-$u*$"**'e#! o$ a# ob*"0a!"o# )"!( res1e,! !o !"'e.53 I! "s u#&"s1u!e& !(a! o#*y 51.6< o$ !(e !o!a* )or- (a& bee# a,,o'1*"s(e&. .(e 48.3< u#$"#"s(e& 1or!"o# ,o#s"s!e& "# !(e 1ur,(ase a#& "#s!a**a!"o# o$ e*e,!ro-'e,(a#",a* eBu"1'e#! a#& 'a!er"a*s, )(",( )ere ava"*ab*e $ro' $ore"0# su11*"ers, !(us reBu"r"#0 9@ ;o**ars $or !(e"r "'1or!a!"o#. .(e

'o#!(*y b"**"#0s a#& 1ay'e#!s 'a&e by @O254 revea* !(a! !(e a0ree'e#! be!)ee# !(e 1ar!"es )as a 1er"o&", 1ay'e#! by !(e Pro+e,! o)#er !o !(e ,o#!ra,!or &e1e#&"#0 o# !(e 1er,e#!a0e o$ a,,o'1*"s('e#! )"!("# !(e 1er"o&. 55 .(e 1ay'e#!s )ere, "# !ur#, !o be use& by !(e ,o#!ra,!or !o $"#a#,e !(e subseBue#! 1(ase o$ !(e )or-. 5: /o)ever, as e31*a"#e& by EPECI "# "!s *e!!er !o !(e ;e1ar!'e#! o$ Fore"0# 4$$a"rs F;F4G, !(e 1ay'e#! by @O2 1ure*y "# ;"#ars a&verse*y a$$e,!e& !(e ,o'1*e!"o# o$ !(e 1ro+e,!D !(us 4. ;es1"!e 1ro!es!s $ro' !(e 1*a"#!"$$, @O2 ,o#!"#ue& 1ay"#0 !(e a,,o'1*"s('e#! b"**"#0s o$ !(e Co#!ra,!or 1ure*y "# IraB" ;"#ars a#& )(",( 1ay'e#! ,a'e o#*y a$!er so'e &e*ays. 5. @O2 "s $u**y a)are o$ !(e $o**o)"#0 5.7 .(a! P*a"#!"$$ "s a $ore"0# ,o#!ra,!or "# IraB a#& as su,(, )ou*& #ee& $ore"0# ,urre#,y F9@NG, !o $"#a#,e !(e 1ur,(ase o$ var"ous eBu"1'e#!, 'a!er"a*s, su11*"es, !oo*s a#& !o 1ay $or !(e ,os! o$ 1ro+e,! 'a#a0e'e#!, su1erv"s"o# a#& s-"**e& *abor #o! ava"*ab*e "# IraB a#& !(ere$ore (ave !o be "'1or!e& a#& or ob!a"#e& $ro' !(e P("*"11"#es a#& o!(er sour,es ou!s"&e IraB. 5.3 .(a! !(e %"#"s!ry o$ Labor a#& E'1*oy'e#! o$ !(e P("*"11"#es reBu"res !(e re'"!!a#,e "#!o !(e P("*"11"#es o$ 60< o$ !(e sa*ar"es o$ F"*"1"#o )or-ers )or-"#0 abroa& "# 9@ ;o**arsD 5.5 .(a! !(e IraB" ;"#ar "s #o! a $ree*y ,o#ver!"b*e ,urre#,y su,( !(a! !(e sa'e ,a##o! be use& !o 1ur,(ase eBu"1'e#!, 'a!er"a*s, su11*"es, e!,. ou!s"&e o$ IraBD 5.: .(a! 'os! o$ !(e 'a!er"a*s s1e,"$"e& by @O2 "# !(e CON.R4C. are #o! ava"*ab*e "# IraB a#& !(ere$ore (ave !o be "'1or!e&D 5.6 .(a! !(e 0over#'e#! o$ IraB 1ro("b"!s !(e br"#0"#0 o$ *o,a* ,urre#,y FIraBu" ;"#arsG ou! o$ IraB a#& (e#,e, "'1or!e& 'a!er"a*s, eBu"1'e#!, e!,., ,a##o! be 1ur,(ase& or ob!a"#e& us"#0 IraBu" ;"#ars as 'e&"u' o$ a,Bu"s"!"o#. 8. Fo**o)"#0 !(e a11rove& ,o#s!ru,!"o# 1ro0ra' o$ !(e CON.R4C., u1o# ,o'1*e!"o# o$ !(e ,"v"* )or-s 1or!"o# o$ !(e "#s!a**a!"o# o$ eBu"1'e#! $or !(e bu"*&"#0, s(ou*& "''e&"a!e*y $o**o), (o)ever, !(e CON.R4C. s1e,"$"e& !(a! !(ese eBu"1'e#! )(",( are !o be "#s!a**e& a#& !o $or' 1ar! o$ !(e PROJEC. (ave !o be 1ro,ure& ou!s"&e IraB s"#,e !(ese are #o! be"#0 *o,a**y 'a#u$a,!ure&. Co1y $ !(e re*eva#! 1or!"o# o$ !(e .e,(#",a* @1e,"$",a!"o# "s (ere!o a!!a,(e& as 4##e3 5C5 a#& 'a&e a# "#!e0ra* 1ar! (ereo$D 10. ;ue !o !(e *a,- o$ Fore"0# ,urre#,y "# IraB $or !("s 1ur1ose, a#& "$ o#*y !o ass"s! !(e IraB" 0over#'e#! "# ,o'1*e!"#0 !(e PROJEC., !(e Co#!ra,!or )"!(ou! a#y ob*"0a!"o# o# "!s 1ar! !o &o so bu! )"!( !(e -#o)*e&0e a#& ,o#se#! o$ @O2 a#& !(e %"#"s!ry o$ /ous"#0 Q Co#s!ru,!"o# o$ IraB, o$$ere& !o arra#0e o# be(a*$ o$ @O2, a $ore"0# ,urre#,y *oa#, !(rou0( !(e $a,"*"!"es o$ C"r,*e I#!er#a!"o#a* @.4., !(e Co#!ra,!orAs @ub-,o#!ra,!or a#& @4CE %E;IO CRE;I.O )(",( )"** a,! as !(e 0uara#!or $or !("s $ore"0# ,urre#,y *oa#. 4rra#0e'e#!s )ere $"rs! 'a&e )"!( 2a#,o &" Ro'a. Ne0o!"a!"o# s!ar!e& "# Ju#e 1985. @O2 "s "#$or'e& o$ !(e &eve*o1'e#!s o$ !("s #e0o!"a!"o#, a!!a,(e& "s a ,o1y o$ !(e &ra$! o$ !(e *oa# 40ree'e#! be!)ee# @O2 as !(e 2orro)er a#& 40e#!. .(e @evera* 2a#-s, as Le#&er, a#& ,ou#!er-0uara#!ee& by Is!"!u!o Ce#!ra*e Per II Cre&"!o 4 %e&"o .er'"#e F%e&"o,re&"!oG @eI"o#e @1e,"a*e Per LA4ss",uraI"o#e ;e* Cre&"!o 4**AE31or!aI"o#e F@a,eG. Ne0o!"a!"o#s )e#! o# a#& ,o#!"#ue& u#!"* "! su&&e#*y ,o**a1se& &ue !o !(e re1or!e& &e$au*! by IraB "# !(e 1ay'e#! o$ "!s ob*"0a!"o#s )"!( I!a*"a# 0over#'e#!, ,o1y o$ !(e #e)s ,*"11"#0 &a!e& Ju#e 18, 198: "s (ere!o a!!a,(e& as 4##e3 5;5 !o $or' a# "#!e0ra* 1ar! (ereo$D

15. O# @e1!e'ber 15, 198:, Co#!ra,!or re,e"ve& "#$or'a!"o# $ro' C"r,*e I#!er#a!"o#a* @.4. !(a! be,ause o$ !(e #e)s re1or! !(a! IraB &e$au*!e& "# "!s ob*"0a!"o#s )"!( Euro1ea# ba#-s, !(e a11rova* by 2a#,o &" Ro'a o$ !(e *oa# !o @O2 s(a** be &e$erre& "#&e$"#"!e*y, a ,o1y o$ !(e *e!!er o$ C"r,*e I#!er#a!"o#a* !o0e!(er )"!( !(e #e)s ,*"11"#0s are (ere!o a!!a,(e& as 4##e3es 5F5 a#& 5F-15, res1e,!"ve*y.56 4s $ou#& by bo!( !(e Cour! o$ 411ea*s a#& !(e !r"a* ,our!, !(e &e*ay or !(e #o#-,o'1*e!"o# o$ !(e Pro+e,! )as ,ause& by $a,!ors #o! "'1u!ab*e !o !(e res1o#&e#! ,o#!ra,!or. I! )as ra!(er &ue 'a"#*y !o !(e 1ers"s!e#! v"o*a!"o#s by @O2 o$ !(e !er's a#& ,o#&"!"o#s o$ !(e ,o#!ra,!, 1ar!",u*ar*y "!s $a"*ure !o 1ay 65< o$ !(e a,,o'1*"s(e& )or- +n US D(,,a*;. I#&ee&, )(ere o#e o$ !(e 1ar!"es !o a ,o#!ra,! &oes #o! 1er$or' "# a 1ro1er 'a##er !(e 1res!a!"o# )(",( (e "s bou#& !o 1er$or' u#&er !(e ,o#!ra,!, (e "s #o! e#!"!*e& !o &e'a#& !(e 1er$or'a#,e o$ !(e o!(er 1ar!y. 4 1ar!y &oes #o! "#,ur "# &e*ay "$ !(e o!(er 1ar!y $a"*s !o 1er$or' !(e ob*"0a!"o# "#,u'be#! u1o# ("'. .(e 1e!"!"o#er, (o)ever, 'a"#!a"#s !(a! !(e 1ay'e#!s by @O2 o$ !(e 'o#!(*y b"**"#0s "# 1ure*y IraB" ;"#ars &"& #o! re#&er "'1oss"b*e !(e 1er$or'a#,e o$ !(e Pro+e,! by EPECI. @u,( 1os!ure "s Bu"!e ,o#!rary !o "!s 1rev"ous re1rese#!a!"o#s. I# ("s 7: %ar,( 1986 *e!!er !o !(e O$$",e o$ !(e %"&&*e Eas!er# a#& 4$r",a# 4$$a"rs FO%E44G, ;F4, %a#"*a, 1e!"!"o#erAs E3e,u!"ve E",e-Pres"&e#! Jesus %. .aRe&o s!a!e& !(a! )("*e EPECI (a& !a-e# every 1oss"b*e 'easure !o ,o'1*e!e !(e Pro+e,!, !(e )ar s"!ua!"o# "# IraB, 1ar!",u*ar*y !(e *a,- o$ $ore"0# e3,(a#0e, )as 1rov"#0 !o be a 0rea! obs!a,*eD !(us EPECI (as !a-e# every 1oss"b*e 'easure $or !(e ,o'1*e!"o# o$ !(e 1ro+e,! bu! !(e )ar s"!ua!"o# "# IraB 1ar!",u*ar*y !(e *a,- o$ $ore"0# e3,(a#0e "s 1rov"#0 !o be a 0rea! obs!a,*e. Our 1er$or'a#,e ,ou#!er0uara#!ee )as ,a**e& *as! 7: O,!ober 198: )(e# !(e #e0o!"a!"o#s $or a $ore"0# ,urre#,y *oa# )"!( !(e I!a*"a# 0over#'e#! !(rou0( 2a#,o &e Ro'a bo00e& &o)# $o**o)"#0 #e)s re1or! !(a! IraB (as &e$au*!e& "# "!s ob*"0a!"o# )"!( 'a+or Euro1ea# ba#-s. 9#*ess !(e s"!ua!"o# "# IraB "s "'1rove& as !o a**ay !(e ba#-As a11re(e#s"o#, !(ere "s #o assura#,e !(a! !(e 1ro+e,! )"** ever be ,o'1*e!e&. 58 I# or&er !(a! !(e &eb!or 'ay be "# &e$au*! "! "s #e,essary !(a! !(e $o**o)"#0 reBu"s"!es be 1rese#! F1G !(a! !(e ob*"0a!"o# be &e'a#&ab*e a#& a*rea&y *"Bu"&a!e&D F7G !(a! !(e &eb!or &e*ays 1er$or'a#,eD a#& F3G !(a! !(e ,re&"!or reBu"res !(e 1er$or'a#,e be,ause "! 'us! a11ear !(a! !(e !o*era#,e or be#evo*e#,e o$ !(e ,re&"!or 'us! (ave e#&e&. 59 4s s!a!e& ear*"er, @O2 ,a##o! ye! &e'a#& ,o'1*e!e 1er$or'a#,e $ro' EPECI be,ause "! (as #o! ye! "!se*$ 1er$or'e& "!s ob*"0a!"o# "# a 1ro1er 'a##er, 1ar!",u*ar*y !(e 1ay'e#! o$ !(e 65< o$ !(e ,os! o$ !(e Pro+e,! "# 9@ ;o**ars. .(e EPECI ,a##o! ye! be sa"& !o (ave "#,urre& "# &e*ay. Eve# assu'"#0 !(a! !(ere )as &e*ay a#& !(a! !(e &e*ay )as a!!r"bu!ab*e !o EPECI, s!"** !(e e$$e,!s o$ !(a! &e*ay ,ease& u1o# !(e re#u#,"a!"o# by !(e ,re&"!or, @O2, )(",( ,ou*& be "'1*"e& )(e# !(e *a!!er 0ra#!e& severa* e3!e#s"o#s o$ !"'e !o !(e $or'er. :0 2es"&es, #o &e'a#& (as ye! bee# 'a&e by @O2 a0a"#s! !(e res1o#&e#! ,o#!ra,!or. ;e'a#& "s 0e#era**y #e,essary eve# "$ a 1er"o& (as bee# $"3e& "# !(e ob*"0a!"o#. 4#& &e$au*! 0e#era**y be0"#s $ro' !(e 'o'e#! !(e ,re&"!or &e'a#&s +u&","a**y or e3!ra+u&","a**y !(e 1er$or'a#,e o$ !(e ob*"0a!"o#. C"!(ou! su,( &e'a#&, !(e e$$e,!s o$ &e$au*! )"** #o! ar"se.:1 %oreover, !(e 1e!"!"o#er as a 0uara#!or "s e#!"!*e& !o !(e be#e$"! o$ e3,uss"o#, !(a! "s, "! ,a##o! be ,o'1e**e& !o 1ay !(e ,re&"!or @O2 u#*ess !(e 1ro1er!y o$ !(e &eb!or EPECI (as bee# e3(aus!e& a#& a** *e0a* re'e&"es a0a"#s! !(e sa"& &eb!or (ave bee# resor!e& !o by !(e ,re&"!or.:7 I! ,ou*& a*so se! u1 ,o'1e#sa!"o# as re0ar&s )(a! !(e ,re&"!or @O2 'ay o)e !(e 1r"#,"1a* &eb!or EPECI. :3 I# !("s ,ase, (o)ever, !(e 1e!"!"o#er (as ,*ear*y )a"ve& !(ese r"0(!s a#& re'e&"es by 'a-"#0 !(e 1ay'e#! o$ a# ob*"0a!"o# !(a! )as ye! !o be s(o)# !o be r"0(!$u**y &ue !(e ,re&"!or a#& &e'a#&ab*e o$ !(e 1r"#,"1a* &eb!or. 4s $ou#& by !(e Cour! o$ 411ea*s, !(e 1e!"!"o#er $u**y -#e) !(a! !(e +o"#! ve#!ure ,o#!ra,!or (a& ,o**e,!"b*es $ro' @O2 )(",( ,ou*& be se! o$$ )"!( !(e a'ou#! ,overe& by !(e 1er$or'a#,e 0uara#!ee.

I# February 1986, !(e O%E44 !ra#s'"!!e& !o !(e 1e!"!"o#er a ,o1y o$ a !e*e3 &a!e& 10 February 1986 o$ !(e P("*"11"#e 4'bassa&or "# 2a0(&a&, IraB, "#$or'"#0 "! o$ !(e note ver-a%e se#! by !(e IraB" %"#"s!ry o$ Fore"0# 4$$a"rs s!a!"#0 !(a! !(e 1as! &ue ob*"0a!"o#s o$ !(e +o"#! ve#!ure ,o#!ra,!or $ro' !(e 1e!"!"o#er )ou*& 5be &e&u,!e& $ro' !(e &ues o$ !(e !)o ,o#!ra,!ors.5 :4 4*so, "# !(e pro2ect situationer a!!a,(e& !o !(e *e!!er !o !(e O%E44 &a!e& 7: %ar,( 1986, !(e 1e!"!"o#er ra"se& as a'o#0 !(e ar0u'e#!s !o be 1rese#!e& "# su11or! o$ !(e ,a#,e**a!"o# o$ !(e ,ou#!er-0uara#!ee !(e $a,! !(a! !(e a'ou#! o$ I;781,41480:: re!a"#e& by @O2 $ro' !(e Pro+e,! )as 'ore !(a# e#ou0( !o ,over !(e ,ou#!er-0uara#!ee o$ I;761,8088:10D !(us :.1 Prese#! !(e $o**o)"#0 ar0u'e#!s "# ,a#,e**"#0 !(e ,ou#!er0uara#!ee .(e IraB" Gover#'e#! &oes #o! (ave !(e $ore"0# e3,(a#0e !o $u*$"** "!s ,o#!ra,!ua* ob*"0a!"o#s o$ 1ay"#0 65< o$ 1ro0ress b"**"#0s "# 9@ &o**ars. I! ,ou*& a*so be ar0ue& !(a! !(e a'ou#! o$ I;781,41480:: re!a"#e& by @O2 $ro' !(e 1ro1ose& 1ro+e,! "s 'ore !(a# !(e a'ou#! o$ !(e ou!s!a#&"#0 ,ou#!er0uara#!ee.:5 I# a #u!s(e**, s"#,e !(e 1e!"!"o#er )as a)are o$ !(e ,o#!ra,!orAs ou!s!a#&"#0 re,e"vab*es $ro' @O2, "! s(ou*& (ave se! u1 ,o'1e#sa!"o# as )as 1ro1ose& "# "!s pro2ect situationer. %oreover, !(e 1e!"!"o#er )as very 'u,( a)are o$ !(e 1re&",a'e#! o$ !(e res1o#&e#!s. I# $a,!, "# "!s 13 %ay 1986 *e!!er !o !(e O%E44, ;F4, %a#"*a, "! s!a!e& EPECI a*so 'a"#!a"#s !(a! !(e &e*ay "# !(e ,o'1*e!"o# o$ !(e 1ro+e,! )as 'a"#*y &ue !o @O2As v"o*a!"o# o$ ,o#!ra,! !er's a#& as su,(, ,a** o# !(e 0uara#!ee (as #o bas"s. C("*e P/ILG94R4N.EE "s 1re1are& !o (o#or "!s ,o''"!'e#! u#&er !(e 0uara#!ee, P/ILG94R4N.EE &oes #o! )a#! !o be a# "#s!ru'e#! "# a#y ,ase o$ "#eBu"!y ,o''"!!e& a0a"#s! a F"*"1"#o ,o#!ra,!or. I! "s $or !("s reaso# !(a! )e are ,o#s!ra"#e& !o see- your ass"s!a#,e #o! o#*y "# as,er!a"#"#0 !(e vera,"!y o$ 4* 4(*" 2a#-As ,*a"' !(a! "! (as 1a"& Ra$"&a"# 2a#- bu! 1oss"b*y aver!"#0 su,( a# eve#!. 4s a#y 1ay'e#! e$$e,!e& by !(e ba#-s )"** ,o'1*",a!e 'a!!ers, )e ,a##o! (e*1 u#&ers,ore !(e ur0e#,y o$ EPECIAs b"& $or 0over#'e#! "#!erve#!"o# $or !(e a'",ab*e !er'"#a!"o# o$ !(e ,o#!ra,! a#& re*ease o$ !(e 1er$or'a#,e 0uara#!ee. :: 2u! sur1r"s"#0*y, !(ou0( $u**y ,o0#"Ia#! o$ @O2As v"o*a!"o#s o$ !(e serv",e ,o#!ra,! a#& EPECIAs ou!s!a#&"#0 re,e"vab*es $ro' @O2, as )e** as !(e s"!ua!"o# ob!a"#"#0 "# !(e Pro+e,! s"!e ,o'1ou#&e& by !(e Ira#-IraB )ar, !(e 1e!"!"o#er o1!e& !o 1ay !(e se,o#& *ayer 0uara#!or #o! o#*y !(e $u** a'ou#! o$ !(e 1er$or'a#,e bo#& ,ou#!er-0uara#!ee bu! a*so "#!eres!s a#& 1e#a*!y ,(ar0es. .("s br"#0s us !o !(e #e3! Bues!"o# %ay !(e 1e!"!"o#er as a 0uara#!or se,ure re"'burse'e#! $ro' !(e res1o#&e#!s $or )(a! "! (as 1a"& u#&er Le!!er o$ Guara#!ee No. 81-194-FH 4s a ru*e, a 0uara#!or )(o 1ays $or a &eb!or s(ou*& be "#&e'#"$"e& by !(e *a!!er:6 a#& )ou*& be *e0a**y subro0a!e& !o !(e r"0(!s )(",( !(e ,re&"!or (as a0a"#s! !(e &eb!or.:8 /o)ever, a 1erso# )(o 'a-es 1ay'e#! )"!(ou! !(e -#o)*e&0e or a0a"#s! !(e )"** o$ !(e &eb!or (as !(e r"0(! !o re,over o#*y "#so$ar as !(e 1ay'e#! (as bee# be#e$","a* !o !(e &eb!or.:9 I$ !(e ob*"0a!"o# )as sub+e,! !o &e$e#ses o# !(e 1ar! o$ !(e &eb!or, !(e sa'e &e$e#ses )(",( ,ou*& (ave bee# se! u1 a0a"#s! !(e ,re&"!or ,a# be se! u1 a0a"#s! !(e 1ay"#0 0uara#!or.60 Fro' !(e $"#&"#0s o$ !(e Cour! o$ 411ea*s a#& !(e !r"a* ,our!, "! "s ,*ear !(a! !(e 1ay'e#! 'a&e by !(e 1e!"!"o#er 0uara#!or &"& #o! "# a#y )ay be#e$"! !(e 1r"#,"1a* &eb!or, 0"ve# !(e 1ro+e,! s!a!us a#& !(e ,o#&"!"o#s ob!a"#"#0 a! !(e Pro+e,! s"!e a! !(a! !"'e. %oreover, !(e res1o#&e#! ,o#!ra,!or )as $ou#& !o

(ave va*"& &e$e#ses a0a"#s! @O2, )(",( are $u**y su11or!e& by ev"&e#,e a#& )(",( (ave bee# 'er"!or"ous*y se! u1 a0a"#s! !(e 1ay"#0 0uara#!or, !(e 1e!"!"o#er "# !("s ,ase. 4#& eve# "$ !(e &ee& o$ u#&er!a-"#0 a#& !(e sure!y bo#& se,ure& 1e!"!"o#erAs 0uara#!y, !(e 1e!"!"o#er "s 1re,*u&e& $ro' e#$or,"#0 !(e sa'e by reaso# o$ !(e 1e!"!"o#erAs u#&ue 1ay'e#! o# !(e 0uara#!y. R"0(!s u#&er !(e &ee& o$ u#&er!a-"#0 a#& !(e sure!y bo#& &o #o! ar"se be,ause !(ese ,o#!ra,!s &e1e#& o# !(e va*"&"!y o$ !(e e#$or,e'e#! o$ !(e 0uara#!y. .(e 1e!"!"o#er 0uara#!or s(ou*& (ave )a"!e& $or !(e #a!ura* ,ourse o$ 0uara#!y !(e &eb!or EPECI s(ou*& (ave, "# !(e $"rs! 1*a,e, &e$au*!e& "# "!s ob*"0a!"o# a#& !(a! !(e ,re&"!or @O2 s(ou*& (ave $"rs! 'a&e a &e'a#& $ro' !(e 1r"#,"1a* &eb!or. I! "s o#*y )(e# !(e &eb!or &oes #o! or ,a##o! 1ay, "# )(o*e or "# 1ar!, !(a! !(e 0uara#!or s(ou*& 1ay.61 C(e# !(e 1e!"!"o#er 0uara#!or "# !("s ,ase 1a"& a0a"#s! !(e )"** o$ !(e &eb!or EPECI, !(e &eb!or EPECI 'ay se! u1 a0a"#s! "! &e$e#ses ava"*ab*e a0a"#s! !(e ,re&"!or @O2 a! !(e !"'e o$ 1ay'e#!. .("s "s !(e (ar& *esso# !(a! !(e 1e!"!"o#er 'us! *ear#. 4s !(e 0over#'e#! ar' "# 1ursu"#0 "!s ob+e,!"ve o$ 1rov"&"#0 5!(e #e,essary su11or! a#& ass"s!a#,e "# or&er !o e#ab*e =F"*"1"#o e31or!ers a#& ,o#!ra,!ors !o o1era!e v"ab*y u#&er !(e 1reva"*"#0 e,o#o'", a#& bus"#ess ,o#&"!"o#s,567 !(e 1e!"!"o#er s(ou*& (ave e3er,"se& 1ru&e#,e a#& ,au!"o# u#&er !(e ,"r,u's!a#,es. 4s a1!*y 1u! by !(e Cour! o$ 411ea*s, "! )ou*& be !(e (e"0(! o$ "#eBu"!y !o a**o) !(e 1e!"!"o#er !o 1ass o# "!s *osses !o !(e F"*"1"#o ,o#!ra,!or EPECI )(",( (a& s!er#*y )ar#e& a0a"#s! 1ay"#0 !(e 4* 4(*" 2a#- a#& ,o#s!a#!*y a11r"se& "! o$ !(e &eve*o1'e#!s "# !(e Pro+e,! "'1*e'e#!a!"o#. /HEREFORE, !(e 1e!"!"o# $or rev"e) o# certiorari "s (ereby ;ENIE; $or *a,- o$ 'er"!, a#& !(e &e,"s"o# o$ !(e Cour! o$ a11ea*s "# C4-G.R. CE No. 39307 "s 4FFIR%E;. No 1ro#ou#,e'e#! as !o ,os!s.