1. THE CONSOLIDATED BANK and TRUST CORPORATION, petitioner, vs.

COURT OF APPEALS
and L.C. DIAZ and COMPANY, CPAs, respondents.
D E C I S I O N - CARPIO, J.:
T! Cas!
Before us is a petition for review of the Decision
[1]
of the Court of Appeals dated 27 October 1998 and its
esolution dated 11 !a" 1999# $he assailed decision reversed the Decision
[2]
of the e%ional $rial Court of
!anila& Branch 8& absolvin% petitioner Consolidated Ban' and $rust Corporation& now 'nown as (olidban'
Corporation )*(olidban'+,& of an" liabilit"# $he -uestioned resolution of the appellate court denied the .otion
for reconsideration of (olidban' but .odified the decision b" deletin% the award of e/e.plar" da.a%es&
attorne"0s fees& e/penses of liti%ation and cost of suit#
T! Fa"#s
(olidban' is a do.estic ban'in% corporation or%ani1ed and e/istin% under 2hilippine laws# 2rivate
respondent 3#C# Dia1 and Co.pan"& C2A0s )*3#C# Dia1+,& is a professional partnership en%a%ed in the practice
of accountin%#
(o.eti.e in !arch 1974& 3#C# Dia1 opened a savin%s account with (olidban'& desi%nated as (avin%s
Account 5o# (6A 27781487284#
On 19 Au%ust 1991& 3#C# Dia1 throu%h its cashier& !ercedes !acara"a )*!acara"a+,& filled up a savin%s
)cash, deposit slip for 2997 and a savin%s )chec's, deposit slip for 2:7# !acara"a instructed the .essen%er
of 3#C# Dia1& ;s.ael Calapre )*Calapre+,& to deposit the .one" with (olidban'# !acara"a also %ave Calapre
the (olidban' passboo'#
Calapre went to (olidban' and presented to $eller 5o# 4 the two deposit slips and the passboo'# $he
teller ac'nowled%ed receipt of the deposit b" returnin% to Calapre the duplicate copies of the two deposit
slips# $eller 5o# 4 sta.ped the deposit slips with the words *D<23;CA$=+ and *(A>;5? $=33= 4
(O3;DBA5@ A=AD OBB;C=#+ (ince the transaction too' ti.e and Calapre had to .a'e another deposit for
3#C# Dia1 with Allied Ban'& he left the passboo' with (olidban'# Calapre then went to Allied Ban'# Chen
Calapre returned to (olidban' to retrieve the passboo'& $eller 5o# 4 infor.ed hi. that *so.ebod" %ot the
passboo'#+
[D]
Calapre went bac' to 3#C# Dia1 and reported the incident to !acara"a#
!acara"a i..ediatel" prepared a deposit slip in duplicate copies with a chec' of 2277&777# !acara"a&
to%ether with Calapre& went to (olidban' and presented to $eller 5o# 4 the deposit slip and chec'# $he teller
sta.ped the words *D<23;CA$=+ and *(A>;5? $=33= 4 (O3;DBA5@ A=AD OBB;C=+ on the duplicate
cop" of the deposit slip# Chen !acara"a as'ed for the passboo'& $eller 5o# 4 told !acara"a that so.eone %ot
the passboo' but she could not re.e.ber to who. she %ave the passboo'# Chen !acara"a as'ed $eller 5o#
4 if Calapre %ot the passboo'& $eller 5o# 4 answered that so.eone shorter than Calapre %ot the passboo'#
Calapre was then standin% beside !acara"a#
$eller 5o# 4 handed to !acara"a a deposit slip dated 19 Au%ust 1991 for the deposit of a chec'
for 297&777 drawn on 2hilippine Ban'in% Corporation )*2BC+,# $his 2BC chec' of 3#C# Dia1 was a chec' that it
had *lon% closed#+
[9]
2BC subse-uentl" dishonored the chec' because of insufficient funds and because the
si%nature in the chec' differed fro. 2BC0s speci.en si%nature# Bailin% to %et bac' the passboo'& !acara"a
went bac' to her office and reported the .atter to the 2ersonnel !ana%er of 3#C# Dia1& =..anuel Alvare1#
$he followin% da"& 1: Au%ust 1991& 3#C# Dia1 throu%h its Chief =/ecutive Officer& 3uis C# Dia1 )*Dia1+,&
called up (olidban' to stop an" transaction usin% the sa.e passboo' until 3#C# Dia1 could open a new
account#
[:]
On the sa.e da"& Dia1 for.all" wrote (olidban' to .a'e the sa.e re-uest# ;t was also on the
sa.e da" that 3#C# Dia1 learned of the unauthori1ed withdrawal the da" before& 19 Au%ust 1991& of 2D77&777
fro. its savin%s account# $he withdrawal slip for the 2D77&777 bore the si%natures of the authori1ed
si%natories of 3#C# Dia1& na.el" Dia1 and ustico 3# !urillo# $he si%natories& however& denied si%nin% the
withdrawal slip# A certain 5oel $a.a"o received the 2D77&777#
;n an ;nfor.ation
[4]
dated : (epte.ber 1991& 3#C# Dia1 char%ed its .essen%er& =.erano ;la%an )*;la%an+,
and one oscon >erda1ola with =stafa throu%h Balsification of Co..ercial Docu.ent# $he e%ional $rial
Court of !anila dis.issed the cri.inal case after the Cit" 2rosecutor filed a !otion to Dis.iss on 9 Au%ust
1992#
On 29 Au%ust 1992& 3#C# Dia1 throu%h its counsel de.anded fro. (olidban' the return of its
.one"# (olidban' refused#
On 2: Au%ust 1992& 3#C# Dia1 filed a Co.plaint
[7]
for ecover" of a (u. of !one" a%ainst (olidban' with
the e%ional $rial Court of !anila& Branch 8# After trial& the trial court rendered on 28 Dece.ber 1999 a
decision absolvin% (olidban' and dis.issin% the co.plaint#
3#C# Dia1 then appealed
[8]
to the Court of Appeals# On 27 October 1998& the Court of Appeals issued its
Decision reversin% the decision of the trial court#
On 11 !a" 1999& the Court of Appeals issued its esolution den"in% the .otion for reconsideration of
(olidban'# $he appellate court& however& .odified its decision b" deletin% the award of e/e.plar" da.a%es
and attorne"0s fees#
T! R$%&n' () #! T*&a% C($*#
;n absolvin% (olidban'& the trial court applied the rules on savin%s account written on the passboo'# $he
rules state that *possession of this boo' shall raise the presu.ption of ownership and an" pa".ent or
pa".ents .ade b" the ban' upon the production of the said boo' and entr" therein of the withdrawal shall
have the sa.e effect as if .ade to the depositor personall"#+
[9]
At the ti.e of the withdrawal& a certain 5oel $a.a"o was not onl" in possession of the passboo'& he also
presented a withdrawal slip with the si%natures of the authori1ed si%natories of 3#C# Dia1# $he speci.en
si%natures of these persons were in the si%nature cards# $he teller sta.ped the withdrawal slip with the words
*(avin% $eller 5o# :#+ $he teller then passed on the withdrawal slip to ?enere !anuel )*!anuel+, for
authentication# !anuel verified the si%natures on the withdrawal slip# $he withdrawal slip was then %iven to
another officer who co.pared the si%natures on the withdrawal slip with the speci.en on the si%nature cards#
$he trial court concluded that (olidban' acted with care and observed the rules on savin%s account when it
allowed the withdrawal of 2D77&777 fro. the savin%s account of 3#C# Dia1#
$he trial court pointed out that the burden of proof now shifted to 3#C# Dia1 to prove that the si%natures on
the withdrawal slip were for%ed# $he trial court ad.onished 3#C# Dia1 for not offerin% in evidence the 5ational
Bureau of ;nvesti%ation )*5B;+, report on the authenticit" of the si%natures on the withdrawal slip
for 2D77&777# $he trial court believed that 3#C# Dia1 did not offer this evidence because it is dero%ator" to its
action#
Another provision of the rules on savin%s account states that the depositor .ust 'eep the passboo' *under
loc' and 'e"#+
[17]
Chen another person presents the passboo' for withdrawal prior to (olidban'0s receipt of the
notice of loss of the passboo'& that person is considered as the owner of the passboo'# $he trial court ruled
that the passboo' presented durin% the -uestioned transaction was *now out of the loc' and 'e" and
presu.ptivel" read" for a business transaction#+
[11]
(olidban' did not have an" participation in the custod" and care of the passboo'# $he trial court believed
that (olidban'0s act of allowin% the withdrawal of 2D77&777 was not the direct and pro/i.ate cause of the loss#
$he trial court held that 3#C# Dia10s ne%li%ence caused the unauthori1ed withdrawal# $hree facts establish 3#C#
Dia10s ne%li%enceE )1, the possession of the passboo' b" a person other than the depositor 3#C# Dia1F )2, the
presentation of a si%ned withdrawal receipt b" an unauthori1ed personF and )D, the possession b" an
unauthori1ed person of a 2BC chec' *lon% closed+ b" 3#C# Dia1& which chec' was deposited on the da" of the
fraudulent withdrawal#
$he trial court debun'ed 3#C# Dia10s contention that (olidban' did not follow the precautionar" procedures
observed b" the two parties whenever 3#C# Dia1 withdrew si%nificant a.ounts fro. its account# 3#C# Dia1
clai.ed that a letter .ust acco.pan" withdrawals of .ore than227&777# $he letter .ust re-uest (olidban' to
allow the withdrawal and convert the a.ount to a .ana%er0s chec'# $he bearer .ust also have a letter
authori1in% hi. to withdraw the sa.e a.ount# Another person drivin% a car .ust acco.pan" the bearer so
that he would not wal' fro. (olidban' to the office in .a'in% the withdrawal# $he trial court pointed out that
3#C# Dia1 disre%arded these precautions in its past withdrawal# On 14 Gul" 1991& 3#C# Dia1 withdrew 282&::9
without an" separate letter of authori1ation or an" co..unication with (olidban' that the .one" be converted
into a .ana%er0s chec'#
$he trial court further Hustified the dis.issal of the co.plaint b" holdin% that the case was a last ditch effort
of 3#C# Dia1 to recover 2D77&777 after the dis.issal of the cri.inal case a%ainst ;la%an#
$he dispositive portion of the decision of the trial court readsE
;5 >;=C OB $A= BO=?O;5?& Hud%.ent is hereb" rendered D;(!;((;5? the co.plaint#
$he Court further renders Hud%.ent in favor of defendant ban' pursuant to its counterclai. the a.ount of
$hirt" $housand 2esos )2D7&777#77, as attorne"0s fees#
Cith costs a%ainst plaintiff# (O OD==D#
[12]
T! R$%&n' () #! C($*# () A++!a%s
$he Court of Appeals ruled that (olidban'0s ne%li%ence was the pro/i.ate cause of the unauthori1ed
withdrawal of 2D77&777 fro. the savin%s account of 3#C# Dia1# $he appellate court reached this conclusion
after appl"in% the provision of the Civil Code on -uasi8delict& to witE
Article 2174# Choever b" act or o.ission causes da.a%e to another& there bein% fault or ne%li%ence& is
obli%ed to pa" for the da.a%e done# (uch fault or ne%li%ence& if there is no pre8e/istin% contractual relation
between the parties& is called a -uasi8delict and is %overned b" the provisions of this chapter#
$he appellate court held that the three ele.ents of a -uasi8delict are present in this case& na.el"E )a, da.a%es
suffered b" the plaintiffF )b, fault or ne%li%ence of the defendant& or so.e other person for whose acts he .ust
respondF and )c, the connection of cause and effect between the fault or ne%li%ence of the defendant and the
da.a%e incurred b" the plaintiff#
$he Court of Appeals pointed out that the teller of (olidban' who received the withdrawal slip for 2D77&777
allowed the withdrawal without .a'in% the necessar" in-uir"# $he appellate court stated that the teller& who
was not presented b" (olidban' durin% trial& should have called up the depositor because the .one" to be
withdrawn was a si%nificant a.ount# Aad the teller called up 3#C# Dia1& (olidban' would have 'nown that the
withdrawal was unauthori1ed# $he teller did not even verif" the identit" of the i.postor who .ade the
withdrawal# $hus& the appellate court found (olidban' liable for its ne%li%ence in the selection and supervision
of its e.plo"ees#
$he appellate court ruled that while 3#C# Dia1 was also ne%li%ent in entrustin% its deposits to its .essen%er
and its .essen%er in leavin% the passboo' with the teller& (olidban' could not escape liabilit" because of the
doctrine of *last clear chance#+ (olidban' could have averted the inHur" suffered b" 3#C# Dia1 had it called up
3#C# Dia1 to verif" the withdrawal#
$he appellate court ruled that the de%ree of dili%ence re-uired fro. (olidban' is .ore than that of a %ood
father of a fa.il"# $he business and functions of ban's are affected with public interest# Ban's are obli%ated to
treat the accounts of their depositors with .eticulous care& alwa"s havin% in .ind the fiduciar" nature of their
relationship with their clients# $he Court of Appeals found (olidban' re.iss in its dut"& violatin% its fiduciar"
relationship with 3#C# Dia1#
$he dispositive portion of the decision of the Court of Appeals readsE
CA==BO=& pre.ises considered& the decision appealed fro. is hereb" =>=(=D and a new one
entered#
1# Orderin% defendant8appellee Consolidated Ban' and $rust Corporation to pa" plaintiff8appellant
the su. of $hree Aundred $housand 2esos )2D77&777#77,& with interest thereon at the rate of
12I per annu. fro. the date of filin% of the co.plaint until paid& the su. of 227&777#77 as
e/e.plar" da.a%es& and 227&777#77 as attorne"0s fees and e/penses of liti%ation as well as
the cost of suitF and
2# Orderin% the dis.issal of defendant8appellee0s counterclai. in the a.ount of 2D7&777#77 as
attorne"0s fees#
(O OD==D#
[1D]
Actin% on the .otion for reconsideration of (olidban'& the appellate court affir.ed its decision but .odified the
award of da.a%es# $he appellate court deleted the award of e/e.plar" da.a%es and attorne"0s fees#
;nvo'in% Article 22D1
[19]
of the Civil Code& the appellate court ruled that e/e.plar" da.a%es could be %ranted if
the defendant acted with %ross ne%li%ence# (ince (olidban' was %uilt" of si.ple ne%li%ence onl"& the award of
e/e.plar" da.a%es was not Hustified# Conse-uentl"& the award of attorne"0s fees was also disallowed
pursuant to Article 2278 of the Civil Code# $he e/penses of liti%ation and cost of suit were also not i.posed on
(olidban'#
$he dispositive portion of the esolution reads as followsE
CA==BO=& fore%oin% considered& our decision dated October 27& 1998 is affir.ed with .odification b"
deletin% the award of e/e.plar" da.a%es and attorne"0s fees& e/penses of liti%ation and cost of suit#
(O OD==D#
[1:]
Aence& this petition#
T! Iss$!s
(olidban' see's the review of the decision and resolution of the Court of Appeals on these %roundsE
;# $A= CO<$ OB A22=A3( ==D ;5 AO3D;5? $AA$ 2=$;$;O5= BA5@ (AO<3D
(<BB= $A= 3O(( B=CA<(= ;$( $=33= (AO<3D AA>= B;($ CA33=D 2;>A$=
=(2O5D=5$ BJ $=3=2AO5= B=BO= ;$ A33OC=D $A= C;$ADACA3 OB2D77&777#77
$O =(2O5D=5$0( !=((=5?= =!=A5O ;3A?A5& (;5C= $A== ;( 5O A?==!=5$
B=$C==5 $A= 2A$;=( ;5 $A= O2=A$;O5 OB $A= (A>;5?( ACCO<5$& 5O ;(
$A== A5J BA5@;5? 3AC& CA;CA !A5DA$=( $AA$ A BA5@ $=33= (AO<3D B;($
CA33 <2 $A= D=2O(;$O B=BO= A33OC;5? A C;$ADACA3 OB A B;? A!O<5$ ;5 A
(A>;5?( ACCO<5$#
;;# $A= CO<$ OB A22=A3( ==D ;5 A223J;5? $A= DOC$;5= OB 3A($ C3=A
CAA5C= A5D ;5 AO3D;5? $AA$ 2=$;$;O5= BA5@0( $=33= AAD $A= 3A($
O22O$<5;$J $O C;$AAO3D $A= C;$ADACA3 CA=5 ;$ ;( <5D;(2<$=D $AA$ $A=
$CO (;?5A$<=( OB =(2O5D=5$ O5 $A= C;$ADACA3 (3;2 A= ?=5<;5= A5D
2;>A$= =(2O5D=5$0( 2A((BOO@ CA( D<3J 2=(=5$=D& A5D CO5$A;C;(=
=(2O5D=5$ CA( 5=?3;?=5$ ;5 $A= (=3=C$;O5 A5D (<2=>;(;O5 OB ;$(
!=((=5?= =!=A5O ;3A?A5& A5D ;5 $A= (AB=@==2;5? OB ;$( CA=C@( A5D
O$A= B;5A5C;A3 DOC<!=5$(#
;;;# $A= CO<$ OB A22=A3( ==D ;5 5O$ B;5D;5? $AA$ $A= ;5($A5$ CA(= ;( A 3A($
D;$CA =BBO$ OB 2;>A$= =(2O5D=5$ $O =CO>= ;$( 2D77&777#77 AB$=
BA;3;5? ;5 ;$( =BBO$( $O =CO>= $A= (A!= BO! ;$( =!23OJ== =!=A5O
;3A?A5#
;># $A= CO<$ OB A22=A3( ==D ;5 5O$ !;$;?A$;5? $A= DA!A?=( ACAD=D
A?A;5($ 2=$;$;O5= <5D= A$;C3= 2197 OB $A= C;>;3 COD=& 5O$C;$A($A5D;5?
;$( B;5D;5? $AA$ 2=$;$;O5= BA5@0( 5=?3;?=5C= CA( O53J CO5$;B<$OJ#
[14]
T! R$%&n' () #! C($*#
$he petition is partl" .eritorious#
Solidbanks Fiduciary Duty under the Law
$he rulin%s of the trial court and the Court of Appeals conflict on the application of the law# $he trial court
pinned the liabilit" on 3#C# Dia1 based on the provisions of the rules on savin%s account& a reco%nition of the
contractual relationship between (olidban' and 3#C# Dia1& the latter bein% a depositor of the for.er# On the
other hand& the Court of Appeals applied the law on -uasi8delict to deter.ine who between the two parties was
ulti.atel" ne%li%ent# $he law on -uasi8delict or culpa aquiliana is %enerall" applicable when there is no pre8
e/istin% contractual relationship between the parties#
Ce hold that (olidban' is liable for breach of contract due to ne%li%ence& or culpa contractual.
$he contract between the ban' and its depositor is %overned b" the provisions of the Civil Code on si.ple
loan#
[17]
Article 1987 of the Civil Code e/pressl" provides that */ / / savin%s / / / deposits of .one" in ban's
and si.ilar institutions shall be %overned b" the provisions concernin% si.ple loan#+ $here is a debtor8creditor
relationship between the ban' and its depositor# $he ban' is the debtor and the depositor is the creditor# $he
depositor lends the ban' .one" and the ban' a%rees to pa" the depositor on de.and# $he savin%s deposit
a%ree.ent between the ban' and the depositor is the contract that deter.ines the ri%hts and obli%ations of the
parties#
$he law i.poses on ban's hi%h standards in view of the fiduciar" nature of ban'in%# (ection 2 of epublic
Act 5o# 8791 )*A 8791+,&
[18]
which too' effect on 1D Gune 2777& declares that the (tate reco%ni1es the
*fiduciar" nature of ban'in% that re-uires hi%h standards of inte%rit" and perfor.ance#+
[19]
$his new provision in
the %eneral ban'in% law& introduced in 2777& is a statutor" affir.ation of (upre.e Court decisions& startin% with
the 1997 case of Simex International v. ourt o! "ppeals&
[27]
holdin% that *the ban' is under obli%ation to
treat the accounts of its depositors with .eticulous care& alwa"s havin% in .ind the fiduciar" nature of their
relationship#+
[21]
$his fiduciar" relationship .eans that the ban'0s obli%ation to observe *hi%h standards of inte%rit" and
perfor.ance+ is dee.ed written into ever" deposit a%ree.ent between a ban' and its depositor# $he fiduciar"
nature of ban'in% re-uires ban's to assu.e a de%ree of dili%ence hi%her than that of a %ood father of a
fa.il"# Article 1172 of the Civil Code states that the de%ree of dili%ence re-uired of an obli%or is that
prescribed b" law or contract& and absent such stipulation then the dili%ence of a %ood father of a fa.il"#
[22]
(ection 2 of A 8791 prescribes the statutor" dili%ence re-uired fro. ban's K that ban's .ust observe
*hi%h standards of inte%rit" and perfor.ance+ in servicin% their depositors# Althou%h A 8791 too' effect
al.ost nine "ears after the unauthori1ed withdrawal of the 2D77&777 fro. 3#C# Dia10s savin%s account&
Hurisprudence
[2D]
at the ti.e of the withdrawal alread" i.posed on ban's the sa.e hi%h standard of dili%ence
re-uired under A 5o# 8791#
Aowever& the fiduciar" nature of a ban'8depositor relationship does not convert the contract between the
ban' and its depositors fro. a si.ple loan to a trust a%ree.ent& whether e/press or i.plied# Bailure b" the
ban' to pa" the depositor is failure to pa" a si.ple loan& and not a breach of trust#
[29]
$he law si.pl" i.poses
on the ban' a hi#her standard of inte%rit" and perfor.ance in co.pl"in% with its obli%ations under the
contract of si.ple loan& be"ond those re-uired of non8ban' debtors under a si.ilar contract of si.ple loan#
$he fiduciar" nature of ban'in% does not convert a si.ple loan into a trust a%ree.ent because ban's do
not accept deposits to enrich depositors but to earn .one" for the.selves# $he law allows ban's to offer the
lowest possible interest rate to depositors while char%in% the hi%hest possible interest rate on their own
borrowers# $he interest spread or differential belon%s to the ban' and not to the depositors who are notcestui
que trust of ban's# ;f depositors are cestui que trust of ban's& then the interest spread or inco.e belon%s to
the depositors& a situation that Con%ress certainl" did not intend in enactin% (ection 2 of A 8791#
Solidbanks $reach o! its ontractual %bli#ation
Article 1172 of the Civil Code provides that *responsibilit" arisin% fro. ne%li%ence in the perfor.ance of
ever" 'ind of obli%ation is de.andable#+ Bor breach of the savin%s deposit a%ree.ent due to ne%li%ence&
or culpa contractual& the ban' is liable to its depositor#
Calapre left the passboo' with (olidban' because the *transaction too' ti.e+ and he had to %o to Allied
Ban' for another transaction# $he passboo' was still in the hands of the e.plo"ees of (olidban' for the
processin% of the deposit when Calapre left (olidban'# (olidban'0s rules on savin%s account re-uire that the
*deposit boo' should be carefull" %uarded b" the depositor and 'ept under loc' and 'e"& if possible#+ Chen the
passboo' is in the possession of (olidban'0s tellers durin% withdrawals& the law i.poses on (olidban' and its
tellers an even hi%her de%ree of dili%ence in safe%uardin% the passboo'#
3i'ewise& (olidban'0s tellers .ust e/ercise a hi%h de%ree of dili%ence in insurin% that the" return the
passboo' onl" to the depositor or his authori1ed representative# $he tellers 'now& or should 'now& that the
rules on savin%s account provide that an" person in possession of the passboo' is presu.ptivel" its owner# ;f
the tellers %ive the passboo' to the wron% person& the" would be clothin% that person presu.ptive ownership
of the passboo'& facilitatin% unauthori1ed withdrawals b" that person# Bor failin% to return the passboo' to
Calapre& the authori1ed representative of 3#C# Dia1& (olidban' and $eller 5o# 4 presu.ptivel" failed to observe
such hi%h de%ree of dili%ence in safe%uardin% the passboo'& and in insurin% its return to the part" authori1ed to
receive the sa.e#
;n culpa contractual& once the plaintiff proves a breach of contract& there is a presu.ption that the
defendant was at fault or ne%li%ent# $he burden is on the defendant to prove that he was not at fault or
ne%li%ent# ;n contrast& in culpa aquiliana the plaintiff has the burden of provin% that the defendant was
ne%li%ent# ;n the present case& 3#C# Dia1 has established that (olidban' breached its contractual obli%ation to
return the passboo' onl" to the authori1ed representative of 3#C# Dia1# $here is thus a presu.ption that
(olidban' was at fault and its teller was ne%li%ent in not returnin% the passboo' to Calapre# $he burden was
on (olidban' to prove that there was no ne%li%ence on its part or its e.plo"ees#
(olidban' failed to dischar%e its burden# (olidban' did not present to the trial court $eller 5o# 4& the teller
with who. Calapre left the passboo' and who was supposed to return the passboo' to hi.# $he record does
not indicate that $eller 5o# 4 verified the identit" of the person who retrieved the passboo'# (olidban' also
failed to adduce in evidence its standard procedure in verif"in% the identit" of the person retrievin% the
passboo'& if there is such a procedure& and that $eller 5o# 4 i.ple.ented this procedure in the present case#
(olidban' is bound b" the ne%li%ence of its e.plo"ees under the principle of respondeat superior or
co..and responsibilit"# $he defense of e/ercisin% the re-uired dili%ence in the selection and supervision of
e.plo"ees is not a co.plete defense in culpa contractual& unli'e in culpa aquiliana#
[2:]
$he ban' .ust not onl" e/ercise *hi%h standards of inte%rit" and perfor.ance&+ it .ust also insure that its
e.plo"ees do li'ewise because this is the onl" wa" to insure that the ban' will co.pl" with its fiduciar"
dut"# (olidban' failed to present the teller who had the dut" to return to Calapre the passboo'& and thus failed
to prove that this teller e/ercised the *hi%h standards of inte%rit" and perfor.ance+ re-uired of (olidban'0s
e.plo"ees#
&roximate ause o! the 'nauthori(ed )ithdrawal
Another point of disa%ree.ent between the trial and appellate courts is the pro/i.ate cause of the
unauthori1ed withdrawal# $he trial court believed that 3#C# Dia10s ne%li%ence in not securin% its passboo'
under loc' and 'e" was the pro/i.ate cause that allowed the i.postor to withdraw the 2D77&777# Bor the
appellate court& the pro/i.ate cause was the teller0s ne%li%ence in processin% the withdrawal without first
verif"in% with 3#C# Dia1# Ce do not a%ree with either court#
2ro/i.ate cause is that cause which& in natural and continuous se-uence& unbro'en b" an" efficient
intervenin% cause& produces the inHur" and without which the result would not have occurred#
[24]
2ro/i.ate
cause is deter.ined b" the facts of each case upon .i/ed considerations of lo%ic& co..on sense& polic" and
precedent#
[27]
3#C# Dia1 was not at fault that the passboo' landed in the hands of the i.postor# (olidban' was in
possession of the passboo' while it was processin% the deposit# After co.pletion of the transaction& (olidban'
had the contractual obli%ation to return the passboo' onl" to Calapre& the authori1ed representative of 3#C#
Dia1# (olidban' failed to fulfill its contractual obli%ation because it %ave the passboo' to another person#
(olidban'0s failure to return the passboo' to Calapre .ade possible the withdrawal of the 2D77&777 b" the
i.postor who too' possession of the passboo'# <nder (olidban'0s rules on savin%s account& .ere possession
of the passboo' raises the presu.ption of ownership# ;t was the ne%li%ent act of (olidban'0s $eller 5o# 4 that
%ave the i.postor presu.ptive ownership of the passboo'# Aad the passboo' not fallen into the hands of the
i.postor& the loss of 2D77&777 would not have happened# $hus& the pro/i.ate cause of the unauthori1ed
withdrawal was (olidban'0s ne%li%ence in not returnin% the passboo' to Calapre#
Ce do not subscribe to the appellate court0s theor" that the pro/i.ate cause of the unauthori1ed
withdrawal was the teller0s failure to call up 3#C# Dia1 to verif" the withdrawal# (olidban' did not have the dut"
to call up 3#C# Dia1 to confir. the withdrawal# $here is no arran%e.ent between (olidban' and 3#C# Dia1 to
this effect# =ven the a%ree.ent between (olidban' and 3#C# Dia1 pertainin% to .easures that the parties .ust
observe whenever withdrawals of lar%e a.ounts are .ade does not direct (olidban' to call up 3#C# Dia1#
$here is no law .andatin% ban's to call up their clients whenever their representatives withdraw
si%nificant a.ounts fro. their accounts# 3#C# Dia1 therefore had the burden to prove that it is the usual
practice of (olidban' to call up its clients to verif" a withdrawal of a lar%e a.ount of .one"# 3#C# Dia1 failed to
do so#
$eller 5o# : who processed the withdrawal could not have been put on %uard to verif" the
withdrawal# 2rior to the withdrawal of 2D77&777& the i.postor deposited with $eller 5o# 4 the 297&777 2BC
chec'& which later bounced# $he i.postor apparentl" deposited a lar%e a.ount of .one" to deflect suspicion
fro. the withdrawal of a .uch bi%%er a.ount of .one"# $he appellate court thus erred when it i.posed on
(olidban' the dut" to call up 3#C# Dia1 to confir. the withdrawal when no law re-uires this fro. ban's and
when the teller had no reason to be suspicious of the transaction#
(olidban' continues to foist the defense that ;la%an .ade the withdrawal# (olidban' clai.s that since
;la%an was also a .essen%er of 3#C# Dia1& he was fa.iliar with its teller so that there was no .ore need for the
teller to verif" the withdrawal# (olidban' relies on the followin% state.ents in the Boo'in% and ;nfor.ation
(heet of =.erano ;la%anE
/// ;la%an also had with hi. )before the withdrawal, a for%ed chec' of 2BC and indicated the a.ount of
297&777 which he deposited in favor of 3#C# Dia1 and Co.pan"# After successfull" withdrawin% this lar%e su.
of .one"& accused ;la%an %ave alias e" )5oel $a.a"o, his share of the loot# ;la%an then hired a ta/icab in
the a.ount of 21&777 to transport hi. );la%an, to his ho.e province at Bauan& Batan%as# ;la%an e/trava%antl"
and lavishl" spent his .one" but a bi% part of his loot was wasted in coc'fi%ht and horse racin%# ;la%an was
apprehended and .ee'l" ad.itted his %uilt#
[28]
)=.phasis supplied#,
3#C# Dia1 refutes (olidban'0s contention b" pointin% out that the person who withdrew the 2D77&777 was a
certain 5oel $a.a"o# Both the trial and appellate courts stated that this 5oel $a.a"o presented the passboo'
with the withdrawal slip#
Ce uphold the findin% of the trial and appellate courts that a certain 5oel $a.a"o withdrew
the 2D77&777# $he Court is not a trier of facts# Ce find no Hustifiable reason to reverse the factual findin% of
the trial court and the Court of Appeals# $he tellers who processed the deposit of the297&777 chec' and the
withdrawal of the 2D77&777 were not presented durin% trial to substantiate (olidban'0s clai. that ;la%an
deposited the chec' and .ade the -uestioned withdrawal# !oreover& the entr" -uoted b" (olidban' does not
cate%oricall" state that ;la%an presented the withdrawal slip and the passboo'#
Doctrine o! Last lear hance
$he doctrine of last clear chance states that where both parties are ne%li%ent but the ne%li%ent act of one
is appreciabl" later than that of the other& or where it is i.possible to deter.ine whose fault or ne%li%ence
caused the loss& the one who had the last clear opportunit" to avoid the loss but failed to do so& is char%eable
with the loss#
[29]
(tated differentl"& the antecedent ne%li%ence of the plaintiff does not preclude hi. fro.
recoverin% da.a%es caused b" the supervenin% ne%li%ence of the defendant& who had the last fair chance to
prevent the i.pendin% har. b" the e/ercise of due dili%ence#
[D7]
Ce do not appl" the doctrine of last clear chance to the present case# (olidban' is liable for breach of
contract due to ne%li%ence in the perfor.ance of its contractual obli%ation to 3#C# Dia1# $his is a case of culpa
contractual& where neither the contributor" ne%li%ence of the plaintiff nor his last clear chance to avoid the loss&
would e/onerate the defendant fro. liabilit"#
[D1]
(uch contributor" ne%li%ence or last clear chance b" the plaintiff
.erel" serves to reduce the recover" of da.a%es b" the plaintiff but does not e/culpate the defendant fro. his
breach of contract#
[D2]
*iti#ated Dama#es
<nder Article 1172& *liabilit" )for culpa contractual, .a" be re%ulated b" the courts& accordin% to the
circu.stances#+ $his .eans that if the defendant e/ercised the proper dili%ence in the selection and
supervision of its e.plo"ee& or if the plaintiff was %uilt" of contributor" ne%li%ence& then the courts .a" reduce
the award of da.a%es# ;n this case& 3#C# Dia1 was %uilt" of contributor" ne%li%ence in allowin% a withdrawal
slip si%ned b" its authori1ed si%natories to fall into the hands of an i.postor# $hus& the liabilit" of (olidban'
should be reduced#
;n &hilippine $ank o! ommerce v. ourt o! "ppeals&
[DD]
where the Court held the depositor %uilt" of
contributor" ne%li%ence& we allocated the da.a%es between the depositor and the ban' on a 97847
ratio# Appl"in% the sa.e rulin% to this case& we hold that 3#C# Dia1 .ust shoulder 97I of the actual da.a%es
awarded b" the appellate court# (olidban' .ust pa" the other 47I of the actual da.a%es#
,HEREFORE& the decision of the Court of Appeals is ABB;!=D with !OD;B;CA$;O5# 2etitioner
(olidban' Corporation shall pa" private respondent 3#C# Dia1 and Co.pan"& C2A0s onl" 47I of the actual
da.a%es awarded b" the Court of Appeals# $he re.ainin% 97I of the actual da.a%es shall be borne b"
private respondent 3#C# Dia1 and Co.pan"& C2A0s# 2roportionate costs#
SO ORDERED.
-. BEN.UET MANA.EMENT CORPORATION, petitioner, vs. COURT OF APPEALS, KEPPEL BANK PHILIPPINES,
INC., as T*$s#!! )(* METROPOLITAN BANK AND TRUST COMPANY, UNITED COCONUT PLANTERS
BANK, RIZAL COMMERCIAL BANKIN. CORPORATION, FAR EAST BANK AND TRUST COMPANY and
BANK OF THE PHILIPPINE ISLANDS $nd!* #! M(*#'a'! T*$s# Ind!n#$*!, and THE RE.ISTER OF DEEDS
OF CALAMBA, respondents.
Assailed in this petition for certiorari under ule 4: of the evised ules of Court is the
esolution of the Court of Appeals in CA8?## (2 5o# 49:7D dated April :& 2772&
[1]
which
denied petitioner0s application for the issuance of a te.porar" restrainin% order& as well as
its !a" 28& 2772
[2]
esolution den"in% the .otion for reconsideration#
$he antecedent facts reveal that on 5ove.ber 29& 1999& petitioner Ben%uet
!ana%e.ent Corporation )B!C, and @eppel Ban' 2hilippines& ;nc# )@B2;,&
[D]
actin% as
trustee of the other respondent ban's& entered into a 3oan A%ree.ent and !ort%a%e $rust
;ndenture )!$;, whereb" B!C& in consideration of the s"ndicated loan of
2197&777&777#77& constituted in favor of @B2; a .ort%a%e on several lots located in
Ala.inos& 3a%una and ;ba& La.bales#
On (epte.ber 28& 2771& for failure of B!C to pa" in full the install.ents due on the
3oan A%ree.ent and !ort%a%e $rust ;ndenture& @B2; filed an application
[9]
for e/tra8Hudicial
foreclosure of .ort%a%e before the Office of the Cler' of Court of the e%ional $rial Court
of ;ba& La.bales# On October 29& 2771& a si.ilar application
[:]
for e/tra8Hudicial foreclosure
of .ort%a%e was filed b" @B2; with the Office of the Cler' of Court of the e%ional $rial
Court of (an 2ablo Cit"& doc'eted as =GB 5o# (p82:94 )71,# Acco.pan"in% the latter
application was a certification
[4]
fro. the Cler' of Court of the e%ional $rial Court of ;ba&
La.bales& statin% that @B2; had paid the correspondin% foreclosure fees coverin% B!C0s
properties situated in La.bales and 3a%una#
On October D1& 2771& B!C filed with the Office of the =/ecutive Gud%e of the e%ional
$rial Court of (an 2ablo Cit" a *e-uest 5ot $o ?ive Due Course $o $he Application for
=/tra8Gudicial BoreclosureM+
[7]
in =GB 5o# (p82:94 )71,# B!C clai.ed that the application
should be denied because it is insufficient in for. and substance and there is no need to
proceed with the foreclosure of its properties situated in 3a%una because it was willin% to
e/ecute a dacion en pago in place of the .ort%a%ed properties# (ubse-uentl"& B!C filed
a *Co.pliance and (upple.entar" ?rounds to Disapprove Application for =/tra8Hudicial
Boreclosure of eal =state !ort%a%e+
[8]
and a !e.orandu.#
[9]
B!C contended that the
application for foreclosure should be denied because @B2; included unauthori1ed
penalties in the state.ent of accounts and it did not co.pl" with its obli%ation to %ive B!C
a 478da" %race period# B!C further clai.ed that the !$; securin% the principal loan of
2197 !illion cannot be foreclosed because it was not re%istered with the e%ister of
Deeds#
@B2; opposed the letter8re-uest of B!C on the %round& inter alia& of wron% re.ed"
and foru. shoppin%#
[17]
!eanwhile& on 5ove.ber 7& 2771& B!C filed with the e%ional $rial Court of ;ba&
La.bales& Branch 77& a co.plaint for da.a%es& accountin% and nullification of foreclosure
of its properties in La.bales& with pra"er for the issuance of a te.porar" restrainin% order&
doc'eted as Civil Case 5o# $C818:28;#
[11]
B!C averred that the foreclosure of its
properties should be annulled because @B2; i.posed unauthori1ed penalties& interest and
char%es# Assu.in% that the a.ount clai.ed is due and de.andable& B!C .aintained
that the sa.e cannot be enforced because @B2; did not co.pl" with the 478da" %race
period# B!C added that dacion en pago should be preferred over the foreclosure of the
collaterals because the other respondent ban's are a%reeable to such proposal#
On the sa.e date& the e%ional $rial Court of ;ba& La.bales issued a te.porar"
restrainin% order enHoinin% the sale at public auction of B!C0s properties in La.bales#
[12]
On Bebruar" 4& 2772& @B2;0s application for e/traHudicial foreclosure of .ort%a%e was
found to be sufficient in for. and substance& and was %ranted#
[1D]
B!C filed a .otion for
reconsideration& which was denied on !arch 9& 2772#
[19]
Aence& B!C filed a petition for certiorari with the Court of Appeals&
[1:]
reiteratin% its
ar%u.ents in =GB 5o# (p82:94 )71, and assailin% the validit" of the foreclosure of its
properties in 3a%una# ;t pra"ed for the issuance of a preli.inar" inHunction and6or
te.porar" restrainin% order to enHoin the scheduled sale of its properties in 3a%una on
!arch 19& 2772 at 17E77 p.# (ince no inHunction or restrainin% order was issued b" the
Court of Appeals& the auction sale proceeded as scheduled with @B2; as the hi%hest
bidder#
$o restrain the re%istration of the certificate of sale&
[14]
B!C filed a (upple.ental
2etition
[17]
which was favorabl" acted upon b" the Court of Appeals on !arch 22& 2772#
[18]
On the sa.e da"& a te.porar" restrainin% order enHoinin% the re%istration of the
certificate of sale was issued b" the appellate court& albeit& late as the certificate was
alread" re%istered at 2E1: p#.# of !arch 22& 2772#
(ubse-uentl"& B!C filed with the appellate court an A.ended (upple.ental 2etition&
[19]
followed b" an <r%ent !anifestation
[27]
pra"in% for the issuance of a writ of preli.inar"
inHunction and6or te.porar" restrainin% order to enHoin the consolidation of titles over the
foreclosed properties in the na.e of respondent ban's# B!C contended that the
foreclosure sale should be annulled because K )1, the bid price was %rossl" inade-uateF
)2, the sale was conducted in violation of (ections 2 and D of Act 5o# D1D: on the
re-uire.ents of place of sale and postin% of noticeF and )D, the other creditor ban's are
a.enable to the proposed dacion en pago instead of the foreclosure#
;n its esolution dated April :& 2772& the Court of Appeals denied B!C0s pra"er to
restrain the consolidation of title in the na.e of @B2;& thusE
The petitioners filing of an Amended Supplemental Petition dated March 25, 2002, and an Urgent
Manifestation dated March 27, 2002 is hereb noted!
"o#e$er, #e see no %ustifiable reason to grant an in%uncti$e relief at this point in time, since the
acts sought to be restrained or en%oined are positi$e rights of a buer in a foreclosure sale! Unless
the petitioner could pro$e the nullit of such sale, there is no reason to stop the &egister of 'eeds
concerned from performing its ministerial dut under the la#!
(")&)*+&), the application for temporar restraining order in the Amended Supplemental
Petition is hereb '),-)'!
The respondents are directed to also file their comment thereto #ithin ten ./00 das from notice
hereof! Should the parties prefer, the case shall be set for hearing to enable the parties to pro$e
their respecti$e positions as to issues in the petition as #ell as subse1uent Supplemental Petition
and Amended Supplemental Petition!
-n the meantime, the 2hief of the Mailing Section is directed to in$estigate and report to us #ithin
fifteen ./50 das from notice, ho# and #ho made the unauthori3ed insertion of the 4&egister of
'eeds of 5aguna6 to the 2ourts ,otice of &esolution of March 22, 2002!
S+ +&')&)'!
72/8
B!C filed a .otion for reconsideration clai.in%& a.on% others& that (ection 97 of the
?eneral Ban'in% Act )epublic Act 5o# 8791,& which reduced the period of rede.ption for
e/tra8Hudiciall" foreclosed properties of Huridical persons fro. one "ear to K *until& but not
after& the re%istration of the certificate of foreclosure saleMwhich in no case shall be .ore
than three )D, .onths after foreclosure& whichever is earlier&+ is undul" discri.inator" and
therefore unconstitutional#
On !a" 28& 2772& the Court of Appeals denied B!C0s .otion for reconsideration#
[22]
Aence& B!C filed the instant petition& contendin% that K
I
T") 2+U&T +* APP)A5S A2T)' (-T" 9&A:) A;US) +* '-S2&)T-+, -, '),<-,9
P)T-T-+,)&S APP5-2AT-+, *+& T&+ T+ &)ST&A-, T") 2+,S+5-'AT-+, +* T-T5)S
A*T)& -T "A' )A&5-)& &)ST&A-,)', A5;)-T T++ 5AT), T") &)9-ST&AT-+, +*
T") S")&-**S 2)&T-*-2AT) +* SA5), ')M+,ST&AT-:)5< "A:-,9 ;)),
2+,:-,2)' +* T") M)&-T +* T") 5)9A5 9&+U,'S &A-S)' ;< T") P)T-T-+,)&
-, SUPP+&T +* T") APP5-2AT-+, *+& T)MP+&A&< &)ST&A-,-,9 +&')&!
II
T") ,)( 5A( .9),&A5 ;A,=-,9 5A( +* 20000 A;&+9AT-,9 T") &-9"T T+ +,)
<)A& &)')MPT-+, P)&-+' +* 2+&P+&AT) M+&T9A9+&S -S U,2+,ST-TUT-+,A5!
III
ASSUM-,9 T"AT T") ,)( 5A( -S 2+,ST-TUT-+,A5, -T S"+U5' ;) 9-:),
P&+SP)2T-:) APP5-2AT-+,!
I/
T") ;-' P&-2) +* +,5< P/>2,?5@,?2A!@> *+& T") *+U,'&< P&+B)2T (-T" A *A-&
MA&=)T :A5U) +* P@@@,/C@,000!00, S+U,' :A5U) +* P@A?,7?2,000!00 2+ST +*
&)P&+'U2T-+, +* PACA,>05,000!00 -S S+ 9&+SS5< -,A')DUAT) AS T+ &),')& T")
SA5) ,U55 A,' :+-' -, 5A( A,' -, )DU-T<!
/
T") AU2T-+, SA5) 2+,'U2T)' -, SA, PA;5+ 2-T< -S ,U55 A,' :+-' *+& ;)-,9
-, :-+5AT-+, +* S)2T-+, 2 +* A2T ?/?5, AS AM),')' A,' T") )EP&)SS
P&+:-S-+, +* T") M+&T9A9) T&UST -,'),TU&) T"ATF -, A,< )ET&AGBU'-2-A5
*+&)25+SU&) U,')& A2T ?/?5, AS AM),')'HT") AU2T-+, SA5) S"A55 TA=)
P5A2) -, T") 2-T< +& 2AP-TA5 +* T") P&+:-,2) (")&) T") 2+55AT)&A5 -S
S-TUAT)'!
/I
T") &)DU-&)M),TS +* S)2T-+, ? +* A2T ?/?5, AS AM),')', *+& P+ST-,9 +*
,+T-2)S ()&) ,+T 2+MP5-)' (-T" -, T") *+&)25+SU&) P&+2))'-,9S -,
DU)ST-+,!
/II
T") -,T)&)ST ;AS)' +, T") *5+AT-,9 &AT) ST-PU5AT)' -, T") P&+M-SS+&<
,+T)S -S ,U55 A,' :+-' *+& ;)-,9 P+T)STAT-:) -, 2"A&A2T)& A,' *+&
;)-,9 :-+5AT-:) +* T") P&-,2-P5) +* MUTUA5-T< +* 2+,T&A2T, "),2) T")
*+&)25+SU&) MA< P&+2))' +,5< +,2) T") 2+&&)2T 5)9A5 AM+U,T +* T")
5+A, -S ')T)&M-,)' A,' +,5< -* T") M+&T9A9+& 2A,,+T PA< *+55+(-,9
T"AT ')T)&M-,AT-+,!
72?8
On Gune 24& 2772& a status quo order was issued enHoinin% the cancellation of titles
over the .ort%a%ed properties in the na.e of B!C as well as the issuance of new titles
and the consolidation thereof in the na.e of private respondent ban's
[29]
Ce dee. it proper to resolve the issue of foru. shoppin% raised b" private
respondents#
<nder the 2rocedure on =/tra8Gudicial Boreclosure of !ort%a%e )A#!# 5o# 9981787:8
7,&
[2:]
the applicant in an e/tra8Hudicial foreclosure coverin% properties located in different
provinces is re-uired to pa" onl" one filin% fee re%ardless of the nu.ber of properties to
be foreclosed so lon% as the application covers onl" one transaction or indebtedness# $he
venue& however& of the e/tra8Hudicial foreclosure proceedin%s is the place where each of
the .ort%a%ed propert" is located# 2ertinent portion thereof states K
(here the application concerns the eItra%udicial foreclosure of mortgages of real estates andJor
chattels in different locations co$ering one indebtedness, onl one filing fee corresponding to such
indebtedness shall be collected! The collecting 2lerK of 2ourt shall, apart from the official receipt
of the fees, issue a certificate of pament indicating the amount of indebtedness, the filing fees
collected, the mortgages sought to be foreclosed, the real estates andJor chattels mortgaged and
their respecti$e locations, #hich certificate shall ser$e the purpose of ha$ing the application
docKeted #ith the 2lerKs of 2ourt of the places #here the other properties are located and of
allo#ing the eItra%udicial foreclosures to proceed thereat!
;n Spouses Caviles v. Court of Appeals&
[24]
we reco%ni1ed the predica.ent that
confronts a .ort%a%or see'in% to restrain the e/tra8Hudicial foreclosure of .ort%a%es
arisin% fro. a sin%le transaction but concernin% properties found in different
provinces# $hus K
H7(8e find it necessar to d#ell on the issue of #hether or not the act of petitioners in filing three
ci$il actions G one #ith the &T2 of MaKati, another #ith the &T2 of ;iLan, 5aguna .;ranch 2@0
and the third one, #ith the ;iLan Assisting 2ourt, constitutes forum shopping!
The problem of petitioners is an offGshoot of the eIpress pro$isions of ;!P! ;lg! /2A, to #itF
4Sec! 2/! +riginal %urisdiction in other cases! G &egional Trial 2ourts shall eIercise original
%urisdictionF
4./0 -n the issuance of #rits of certiorari, prohibition, mandamus, 1uo #arranto, habeas corpus
and injunction which may be enforced in any part of their respective regionsM .)mphasis,
supplied0
and Section ?, &ule 2 of the &ules of 2ourt #hich pro$ides that a part may not institute more
than one suit for a single cause of action! .)mphasis supplied0
;n the said case& the .ort%a%ors filed separate actions for breach of .ort%a%e contract
with inHunction to restrain the e/tra8Hudicial foreclosure proceedin%s co..enced b" the
.ort%a%ee in !a'ati and BiNan& 3a%una where the properties were situated# $he Court
did not find the .ort%a%ors %uilt" of foru. shoppin% insofar as the cases filed with the
!a'ati and BiNan& 3a%una )Branch 29, courts were concerned# $he obvious reason is
that since inHunction is enforceable onl" within the territorial li.its of the trial court& the
.ort%a%or is left without re.ed" as to the properties located outside the Hurisdiction of the
issuin% court& unless an application for inHunction is .ade with another court which has
Hurisdiction over the latter properties#
;n the case at bar& B!C is not %uilt" of foru. shoppin% precisel" because the re.ed"
available to the. under the law was the filin% of separate inHunction suits# ;t is .andated
to file onl" one case for a sin%le cause of action& e.g#& breach of .ort%a%e contract& "et& it
cannot enforce an" inHunctive writ issued b" the court to protect its properties situated
outside the Hurisdiction of said court# Besides& B!C was honest enou%h to infor. the
La.bales court in the certification
[27]
of its co.plaint that it has a pendin% re-uest not to
%ive due course to the foreclosure proceedin%s with the (an 2ablo court& in the sa.e
.anner that its petition for certiorari with the Court of Appeals notified the appellate court
of the pendenc" of its co.plaint with the La.bales court#
[28]
;t would therefore be unfair to
dis.iss the cases filed b" B!C on the %round of foru. shoppin% where under the
circu.stances the law %ives it no other re.ed"#
$he issues involved in the instant petition for certiorari are not onl" li.ited to the
propriet" of the Court of Appeals0 denial of B!C0s pra"er to enHoin the consolidation of title
of the foreclosed properties in the na.e of private respondents# $here are li'ewise raised
factual issues& i.e.& the validit" of the foreclosure and the sale at public auction of its
properties& which are "et to be resolved b" the Court of Appeals# (ince this Court is not a
trier of facts& the re.and of this case to the appellate court is necessar"#
Anent the constitutional issue raised b" B!C& we have repeatedl" held that the
constitutionalit" of a law .a" be passed upon b" the Court& where there is an actual case
and that the resolution of the constitutional -uestion .ust be necessar" in decidin% the
controvers"#
[29]
;n this case& the resolution of the constitutionalit" of (ection 97 of the
?eneral Ban'in% Act )epublic Act 5o# 8791, which reduced the period of rede.ption of
e/tra8Hudiciall" foreclosed properties of Huridical persons is not the ver" lis mota of the
controvers"# B!C is not assertin% a le%al ri%ht for which it is entitled to a Hudicial
deter.ination at this ti.e inas.uch as it .a" not even be entitled to redee. the
foreclosed properties# <ntil an actual controvers" is brou%ht to test the constitutionalit" of
epublic Act 5o# 8791& the presu.ption of validit"& which inheres in ever" statute& .ust be
accorded to it#
,HEREFORE& in view of all the fore%oin%& the petition is 2A$3J ?A5$=D# $he
esolutions of the Court of Appeals dated April :& 2772 and !a" 28& 2772& in CA8?## (2
5o# 49:7D& insofar as the" denied B!C0s application for te.porar" restrainin% order& are
=>=(=D and (=$ A(;D=# $he status quo order issued b" the Court on Gune 24& 2772
shall stand until further order of the Court& and the instant case is =!A5D=Dto the Court
of Appeals for deter.ination of the case on its .erits# 2etitioner B!C is ordered to infor.
the appellate court of the present status of Civil Case 5o# $C818:28;& then pendin% with
the e%ional $rial Court of ;ba& La.bales& Branch 77& and if it had been decided and the
decision is on appeal in the Court of Appeals& the latter .a" consider its consolidation with
CA8?## (2 5o# 49:7D if warranted#
5o pronounce.ent as to costs#
SO ORDERED.
0. PHILIPPINE BANKIN. CORPORATION, petitioner, vs. COURT OF APPEALS
and LEONILO MARCOS,respondents.
Before us is a petition for review of the Decision
[1]
of the Court of Appeals in CA8?## C>
5o# D9D82 dated 17 Dece.ber 1994 .odif"in% the Decision
[2]
of the e%ional $rial Court&
Bourth Gudicial e%ion& Assistin% Court& BiNan& 3a%una in Civil Case 5o# B8D198 entitled
*3eonilo !arcos v# 2hilippine Ban'in% Corporation#+
BAC$(E On D7 Au%ust 1989& 3eonilo !arcos )*!arcos+, filed with the trial court a
Co.plaint for (u. of !one" with Da.a%es
[D]
a%ainst petitioner 2hilippine Ban'in%
Corporation )*BA5@+,#
[9]
!arcos alle%ed that so.eti.e in 1982& the BA5@ throu%h Blorencio B# 2a%sali%an
)*2a%sali%an+,& one of the officials of the BA5@ and a close friend of !arcos& persuaded
hi. to deposit .one" with the BA5@# !arcos "ielded to 2a%sali%an0s persuasion and
clai.ed he .ade a ti.e deposit with the BA5@ on two occasions# $he first was on 11
!arch 1982 for 2449&897#47# $he BA5@ issued eceipt 5o# 4D:7D9 for this ti.e
deposit# On 12 !arch 1982& !arcos clai.ed he a%ain .ade a ti.e deposit with the
BA5@ for 2749&897#47# $he BA5@ did not issue an official receipt for this ti.e deposit but
it ac'nowled%ed a deposit of this a.ount throu%h a letter8certification 2a%sali%an issued#
$he ti.e deposits earned interest at 17I per annum and had a .aturit" period of 97
da"s#
!arcos alle%ed that 2a%sali%an 'ept the various ti.e deposit certificates on the
assurance that the BA5@ would ta'e care of the certificates& interests and renewals#
!arcos clai.ed that fro. the ti.e of the deposit& he had not received the principal a.ount
or its interest#
(o.eti.e in !arch 198D& !arcos wanted to withdraw fro. the BA5@ his ti.e
deposits and the accu.ulated interests to bu" .aterials for his construction
business# Aowever& the BA5@ throu%h 2a%sali%an convinced !arcos to 'eep his ti.e
deposits intact and instead to open several do.estic letters of credit# $he BA5@ re-uired
!arcos to %ive a .ar%inal deposit of D7I of the total a.ount of the letters of credit# $he
ti.e deposits of !arcos would secure 77I of the letters of credit# (ince !arcos trusted
the BA5@ and 2a%sali%an& he si%ned blan' printed for.s of the application for the
do.estic letters of credit& trust receipt a%ree.ents and pro.issor" notes#
!arcos e/ecuted three $rust eceipt A%ree.ents totallin% 28:1&2:7& bro'en down as
followsE )1, $rust eceipt 5o# CD 8D#7 dated 8 !arch 198D for 2D77&777F )2, $rust
eceipt 5o# CD 8D#9 dated 1: !arch 198D for 2D77&777F and )D, $rust eceipt 5o# CD
8D#17 dated 1: !arch 198D for 22:1&2:7# !arcos deposited the re-uired D7I .ar%inal
deposit for the trust receipt a%ree.ents# !arcos clai.ed that his obli%ation to the BA5@
was therefore onl" 2:9:&87: representin% 77I of the letters of credit#
!arcos believed that he and the BA5@ beca.e creditors and debtors of each
other# !arcos e/pected the BA5@ to offset auto.aticall" a portion of his ti.e deposits
and the accu.ulated interest with the a.ount covered b" the three trust receipts
totallin% 28:1&2:7 less the D7I .ar%inal deposit that he had paid# !arcos ar%ued that if
onl" the BA5@ applied his ti.e deposits and the accu.ulated interest to his re.ainin%
obli%ation& which is 77I of the total a.ount of the letters of credit& he would have paid
co.pletel" his debt# !arcos further pointed out that since he did not appl" for a renewal of
the trust receipt a%ree.ents& the BA5@ had no ri%ht to renew the sa.e#
!arcos accused the BA5@ of unHustl" de.andin% pa".ent for the total a.ount of the
trust receipt a%ree.ents without deductin% the D7I .ar%inal deposit that he had alread"
.ade# Ae decried the BA5@0s unlawful char%in% of accu.ulated interest because he
clai.ed there was no a%ree.ent as to the pa".ent of interest# $he interest arose fro.
nu.erous alle%ed e/tensions and penalties# !arcos reiterated that there was no
a%ree.ent to this effect because his ti.e deposits served as the collateral for his
re.ainin% obli%ation#
!arcos also denied that he obtained another loan fro. the BA5@ for 2:77&777 with
interest at 2:I per annum supposedl" covered b" 2ro.issor" 5ote 5o# 27897988D dated
29 October 198D# !arcos bewailed the BA5@0s belated clai. that his ti.e deposits were
applied to this void pro.issor" note on 12 !arch 198:#
;n su.& !arcos clai.ed thatE
)1, his ti.e deposit with the BA5@ *in the total su. of 21&928&79:#D9
[:]
has
earned accu.ulated interest since !arch 1982 up to the present in the total a.ount
of 21&727&D7:#9: at the rate of 17I per annum so his total .one" with defendant )the
BA5@, is 2D&1:4&177#79 less the a.ount of 2:9:&87: representin% the 77I balance of
the .ar%inal deposit and6or balance of the trust a%ree.entsF+ and
)2, his indebtedness was onl" 28:1&2:7 less the D7I paid as .ar%inal deposit
or a balance of 2:9:&87:& which the BA5@ should have auto.aticall" deducted fro. his
ti.e deposits and accu.ulated interest& leavin% the BA5@0s indebtedness to hi.
at 22&:47&72:#79#
!arcos pra"ed the trial court to declare 2ro.issor" 5ote 5o# 27897988D void and to
order the BA5@ to pa" the a.ount of his ti.e deposits with interest# Ae also sou%ht the
award of .oral and e/e.plar" da.a%es as well as attorne"0s fees for 2277&777 plus 2:I
of the a.ount due#
On 18 (epte.ber 1989& su..ons and a cop" of the co.plaint were served on the
BA5@#
[4]
On 9 October 1989& the BA5@ filed its Answer with Counterclai.# $he BA5@ denied
the alle%ations in the co.plaint# $he BA5@ believed that the suit was !arcos0 desperate
atte.pt to avoid liabilit" under several trust receipt a%ree.ents that were the subHect of a
cri.inal co.plaint#
$he BA5@ alle%ed that as of 12 !arch 1982& the total a.ount of the various ti.e
deposits of !arcos was onl" 2749&897#47 and not21&928&79:#D:
[7]
as alle%ed in the
co.plaint# $he 2749&897#47 included the 2449&897#47 that !arcos deposited on 11
!arch 1982#
$he BA5@ pointed out that !arcos delivered to the BA5@ the ti.e deposit certificates
b" virtue of the Deed of Assi%n.ent dated 2 Gune 1989# !arcos e/ecuted the Deed of
Assi%n.ent to secure his various loan obli%ations# $he BA5@ clai.ed that these loans
are covered b" 2ro.issor" 5ote 5o# 2787:4882 dated 2 Gune 1982 for 2927&777 and
2ro.issor" 5ote 5o# 27897988D dated 29 October 198D for 2:77&777# $he BA5@
stressed that these obli%ations are separate and distinct fro. the trust receipt
a%ree.ents#
Chen !arcos defaulted in the pa".ent of 2ro.issor" 5ote 5o# 27897988D& the BA5@
debited his ti.e deposits and applied the sa.e to the obli%ation that is now considered
full" paid#
[8]
$he BA5@ insisted that the Deed of Assi%n.ent authori1ed it to appl" the ti.e
deposits in pa".ent of 2ro.issor" 5ote 5o# 27897988D#
;n !arch 1982& the wife of !arcos& Consolacion !arcos& sou%ht the advice of
2a%sali%an# Consolacion infor.ed 2a%sali%an that she and her husband needed to
finance the purchase of construction .aterials for their business& 3#A# !arcos
Construction Co.pan"# 2a%sali%an su%%ested the openin% of the letters of credit and the
e/ecution of trust receipts& whereb" the BA5@ would a%ree to purchase the %oods needed
b" the client throu%h the letters of credit# $he BA5@ would then entrust the %oods to the
client& as entrustee& who would underta'e to deliver the proceeds of the sale or the %oods
the.selves to the entrustor within a specified ti.e#
$he BA5@ clai.ed that !arcos freel" entered into the trust receipt a%ree.ents# Chen
!arcos failed to account for the %oods delivered or for the proceeds of the sale& the BA5@
filed a co.plaint for violation of 2residential Decree 5o# 11: or the $rust eceipts
3aw# ;nstead of initiatin% ne%otiations for the settle.ent of the account& !arcos filed this
suit#
$he BA5@ denied falsif"in% 2ro.issor" 5ote 5o# 27897988D# $he BA5@ clai.ed that
the pro.issor" note is supported b" docu.entar" evidence such as !arcos0 application
for this loan and the .icrofil. of the cashier0s chec' issued for the loan# $he BA5@
insisted that !arcos could not den" the a%ree.ent for the pa".ent of interest and
penalties under the trust receipt a%ree.ents# $he BA5@ pra"ed for the dis.issal of the
co.plaint& pa".ent of da.a%es& attorne"0s fees and cost of suit#
On 1: Dece.ber 1989& the trial court on .otion of !arcos0 counsel issued an order
declarin% the BA5@ in default for filin% its answer five da"s after the 1:8da" period to file
the answer had lapsed#
[9]
$he trial court also held that the answer is a .ere scrap of paper
because a cop" was not furnished to !arcos# ;n the sa.e order& the trial court allowed
!arcos to present his evidence ex parte on 18 Dece.ber 1989# On that date& !arcos
testified and presented docu.entar" evidence# $he case was then sub.itted for decision#
On 19 Dece.ber 1989& !arcos received a cop" of the BA5@0s Answer with
Co.pulsor" Counterclai.#
On 29 Dece.ber 1989& the BA5@ filed an opposition to !arcos0 .otion to declare the
BA5@ in default# On 9 Ganuar" 1997& the BA5@ filed a .otion to lift the order of default
clai.in% that it had onl" then learned of the order of default# $he BA5@ e/plained that its
dela"ed filin% of the Answer with Counterclai. and failure to serve a cop" of the answer
on !arcos was due to e/cusable ne%li%ence# $he BA5@ as'ed the trial court to set aside
the order of default because it had a valid and .eritorious defense#
On 7 Bebruar" 1997& the trial court issued an order settin% aside the default order and
ad.ittin% the BA5@0s Answer with Co.pulsor" Counterclai.# $he trial court ordered the
BA5@ to present its evidence on 12 !arch 1997#
On : !arch 1997& the BA5@ filed a .otion pra"in% to cross8e/a.ine !arcos who had
testified durin% the ex-parte hearin% of 18 Dece.ber 1989# On 12 !arch 1997& the trial
court denied the BA5@0s .otion and directed the BA5@ to present its evidence# $rial then
ensued#
$he BA5@ presented two witnesses& odolfo (ales& the Branch !ana%er of the
BA5@0s Cubao Branch since 1987& and 2a%sali%an& the Branch !ana%er of the sa.e
branch fro. 1982 to 1984#
On 29 April 1997& the counsel of !arcos cross8e/a.ined 2a%sali%an# Due to lac' of
.aterial ti.e& the trial court reset the continuation of the cross8e/a.ination and
presentation of other evidence# $he succeedin% hearin%s were postponed& specificall" on
29& 27 and 28 of Au%ust 1997& because of the BA5@0s failure to produce its witness&
2a%sali%an# $he BA5@ on these scheduled hearin%s also failed to present other
evidence#
On 7 (epte.ber 1997& the BA5@ .oved to postpone the hearin% on the %round that
2a%sali%an could not attend the hearin% because of illness# $he trial court denied the
.otion to postpone and on .otion of !arcos0 counsel ruled that the BA5@ had waived its
ri%ht to present further evidence# $he trial court considered the case sub.itted for
decision# $he BA5@ .oved for reconsideration& which the trial court denied#
On 8 October 1997& the trial court rendered its decision in favor of !arcos# A%%rieved&
the BA5@ appealed to the Court of Appeals#
On 17 Dece.ber 1994& the Court of Appeals .odified the decision of the trial court b"
reducin% the a.ount of actual da.a%es and deletin% the attorne"0s fees awarded to
!arcos#
T! R$%&n' () #! T*&a% C($*#
$he trial court ruled that the total a.ount of ti.e deposits of !arcos
was 21&929&79:#D9 and not onl" 2749&897#47 as clai.ed b" the BA5@# $he trial court
found that !arcos .ade a ti.e deposit on two occasions# $he first ti.e deposit was
.ade on 11 !arch 1982 for 2449&897#47 as shown b" eceipt 5o# 4D:79D# On 12 !arch
1982& !arcos a%ain .ade a ti.e deposit for 2749&897#47 as ac'nowled%ed b"
2a%sali%an in a letter of certification# $he two ti.e deposits thus a.ounted
to 21&929&79:#D9#
$he trial court pointed out that no receipt was issued for the 12 !arch 1982 ti.e
deposit because the letter of certification was sufficient# $he trial court .ade a findin% that
the certification letter did not include the ti.e deposit .ade on 11 !arch 1982# $he 12
!arch 1982 deposit was in cash while the 11 !arch 1982 deposit was in chec's which still
had to clear# $he chec's were not included in the certification letter since the BA5@ could
not credit the a.ounts of the chec's prior to clearin%# $he trial court declared that even
the Deed of Assi%n.ent ac'nowled%ed that !arcos .ade several ti.e deposits as the
Deed stated that the assi%.ent was char%ed a%ainst *various+ ti.e deposits#
$he trial court reco%ni1ed the e/istence of the Deed of Assi%n.ent and the two loans
that !arcos supposedl" obtained fro. the BA5@ on 28 !a" 1982 for 2D97&777 and on 2
Gune 1982 for 2927&777# $he two loans a.ounted to 2747&777# On 2 Gune 1982& the
sa.e da" that he secured the second loan& !arcos e/ecuted a Deed of Assi%n.ent
assi%nin% to the BA5@ 2747&777 of his ti.e deposits# $he trial court concluded that
obviousl" the two loans were i..ediatel" paid b" virtue of the Deed of Assi%n.ent#
$he trial court found it stran%e that !arcos borrowed .one" fro. the BA5@ at a
hi%her rate of interest instead of Hust withdrawin% his ti.e deposits# $he trial court saw no
rh".e or reason wh" !arcos had to secure the loans fro. the BA5@# $he trial court was
convinced that !arcos did not 'now that what he had si%ned were loan applications and a
Deed of Assi%n.ent in pa".ent for his loans# 5onetheless& the trial court reco%ni1ed *the
said loan of 2747&777 and its correspondin% pa".ent b" virtue of the Deed of Assi%n.ent
for the e-ual su.#+
[17]
;f the BA5@0s clai. is true that the ti.e deposits of !arcos a.ounted onl"
to 2749&897#47 and he had alread" assi%ned 2747&777 of this a.ount& the trial court
pointed out that what would be left as of D Gune 1982 would onl" be 29&847#47#
[11]
Jet& after
the ti.e deposits had .atured& the BA5@ allowed !arcos to open letters of credit three
ti.es# $he three letters of credit were all secured b" the ti.e deposits of !arcos after he
had paid the D7I .ar%inal deposit# $he trial court opined that if !arcos0 ti.e deposit was
onl" 2749&897#47& then the letters of credit totallin%2:9:&87: )less D7I .ar%inal deposit,
was %uaranteed b" onl" 29&847#47&
[12]
the re.ainin% ti.e deposits after !arcos had
e/ecuted the Deed of Assi%n.ent for 2747&777#
Accordin% to the trial court& a securit" of onl" 29&847#47
[1D]
for a loan worth 2:9:&87:
)less D7I .ar%inal deposit, is not onl" preposterous& it is also co.ical# Corse& aside fro.
allowin% !arcos to have unsecured trust receipts& the BA5@ still clai.ed to have %ranted
!arcos another loan for2:77&777 on 2: October 198D covered b" 2ro.issor" 5ote 5o#
27897988D# $he BA5@ is a co..ercial ban' en%a%ed in the business of lendin%
.one"# Allowin% a loan of .ore than a .illion pesos without collateral is in the words of
the trial court& *an i.possibilit" and a %ross violation of Central Ban' ules and
e%ulations& which no Ban' !ana%er has such authorit" to %rant#+
[19]
$hus& the trial court
held that the BA5@ could not have %ranted !arcos the loan covered b" 2ro.issor" 5ote
5o# 27897988D because it was unsecured b" an" collateral#
$he trial court re-uired the BA5@ to produce the ori%inal copies of the loan application
and 2ro.issor" 5ote 5o# 27897988D so that it could deter.ine who applied for this loan#
Aowever& the BA5@ presented to the trial court onl" the *.achine copies of the duplicate+
of these docu.ents#
Based on the *.achine copies of the duplicate+ of the two docu.ents& the trial court
noticed the followin% discrepanciesE )1, !arcos0 si%nature on the two docu.ents are
.erel" initials unli'e in the other docu.ents sub.itted b" the BA5@F )2, it is hi%hl"
unnatural for the BA5@ to onl" have duplicate copies of the two docu.ents in its custod"F
)D, the address of !arcos in the docu.ents is different fro. the place of residence as
stated b" !arcos in the other docu.ents anne/ed b" the BA5@ in its AnswerF )9,
2a%sali%an .ade it appear that a chec' for the loan proceeds of2977&:88 less ban'
char%es was issued to !arcos but the chec'0s pa"ee was one A$$J# 3=O5;3O !ACO(
and& as the trial court noted& !arcos is not a law"erF and ):, 2a%sali%an was not sure what
branch of the BA5@ issued the chec' for the loan proceeds# $he trial court was
convinced that !arcos did not e/ecute the -uestionable docu.ents coverin%
the 2:77&777 loan and 2a%sali%an used these docu.ents as a .eans to Hustif" his
inabilit" to e/plain and account for the ti.e deposits of !arcos#
$he trial court noted the BA5@0s *defective+ docu.entation of its transaction with
!arcos# Birst& the BA5@ was not in possession of the ori%inal copies of the docu.ents li'e
the loan applications# (econd& the BA5@ did not have a led%er of the accounts of !arcos
or of his various transactions with the BA5@# 3ast& the BA5@ did not issue a certificate of
ti.e deposit to !arcos# A%ain& the trial court attributed the BA5@0s lapses to 2a%sali%an0s
sche.e to defraud !arcos of his ti.e deposits#
$he trial court also too' note of 2a%sali%an0s de.eanor on the witness
stand# 2a%sali%an evaded the -uestions b" %ivin% unresponsive or inconsistent answers
co.pellin% the trial court to ad.onish hi.# Chen the trial court ordered 2a%sali%an to
produce the docu.ents& he *convenientl" beca.e sic'+
[1:]
and thus failed to attend the
hearin%s without presentin% proof of his ph"sical condition#
$he trial court disre%arded the BA5@0s assertion that the ti.e deposits were converted
into a savin%s account at 19I or 17I per annumupon .aturit"# $he BA5@ never
infor.ed !arcos that his ti.e deposits had alread" .atured and these were converted
into a savin%s account# As to the interest due on the trust receipts& the trial court ruled that
there is no basis for such a char%e because the docu.ents do not stipulate an" interest#
;n co.putin% the a.ount due to !arcos& the trial court too' into account the .ar%inal
deposit that !arcos had alread" paid which is e-uivalent to D7I of the total a.ount of the
three trust receipts# $he three trust receipts totallin% 28:1&2:7 would then have a balance
of 2:9:&87:# $he balance beca.e due in !arch 1987 and on the sa.e date& !arcos0
ti.e deposits of 2449&9D2#D7 had alread" earned interest fro. 198D to 1987
totallin% 2:49&D2D#21 at 17I per annum# $hus& the trial court ruled that the ti.e deposits
in 1987 totalled 21&2D9&11:# Bro. this a.ount& the trial court deducted 2:9:&87:& the
a.ount of the trust receipts& leavin% a balance on the ti.e deposits of 249D&297 as of
!arch 1987# Aowever& since the BA5@ failed to return the ti.e deposits of !arcos& which
a%ain .atured in !arch 1997& the ti.e deposits with interest& less the a.ount of trust
receipts paid in 1987& a.ounted to 2971&292#99 as of !arch 1997#
;n the alternative& the trial court ruled that even if !arcos had onl" one ti.e deposit
of 2749&897#47 as clai.ed b" the BA5@& the ti.e deposit would have still earned interest
at the rate of 17I per annum# $he ti.e deposit of 24:7&14D would have increased
to 21&91:&747 in 1987 after earnin% interest# Deductin% the a.ount of the three trust
receipts& !arcos0 ti.e deposits still totalled 21&2D4&949#D7 plus interest#
$he dispositive portion of the decision of the trial court readsE
(")&)*+&), under the foregoing circumstances, %udgment is hereb rendered in fa$or of
Plaintiff, directing 'efendant ;anK as follo#sF
/0 to return to Plaintiff his time deposit in the sum of PA7/,2A2!@A #ith interest
thereon at the legal rate, until full restitutedM
20 to pa attornes fees of P200,000!00M 7and8
?0 7to pa the8 cost of these proceedings!
-T -S S+ +&')&)'!
7/>8
T! R$%&n' () #! C($*# () A++!a%s
$he Court of Appeals addressed the procedural and substantive issues that the BA5@
raised#
$he appellate court ruled that the trial court co..itted a reversible error when it
denied the BA5@0s .otion to cross8e/a.ine !arcos# $he appellate court ruled that the
ri%ht to cross8e/a.ine is a funda.ental ri%ht that the BA5@ did not waive because the
BA5@ vi%orousl" asserted this ri%ht# $he BA5@0s failure to serve a notice of the .otion to
!arcos is not a valid %round to den" the .otion to cross8e/a.ine# $he appellate court
held that the .otion to cross8e/a.ine is one of those non8liti%ated .otions that do not
re-uire the .ovant to provide a notice of hearin% to the other part"#
$he Court of Appeals pointed out that when the trial court lifted the order of default& it
had the dut" to afford the BA5@ its ri%ht to cross8e/a.ine !arcos# $his dut" assu.ed
%reater i.portance because the onl" evidence supportin% the co.plaint is !arcos0 ex-
parte testi.on"# $he trial court should have tested the veracit" of !arcos0 testi.on"
throu%h the distillin% process of cross8e/a.ination# $he Court of Appeals& however&
believed that the case should not be re.anded to the trial court because !arcos0
testi.on" on the ti.e deposits is supported b" evidence on record fro. which the
appellate court could .a'e an intelli%ent Hud%.ent#
On the second procedural issue& the Court of Appeals held that the trial court did not
err when it declared that the BA5@ had waived its ri%ht to present its evidence and had
sub.itted the case for decision# $he appellate court a%reed with the %rounds relied upon
b" the trial court in its Order dated 7 (epte.ber 1997#
$he Court of Appeals& however& differed with the findin% of the trial court as to the total
a.ount of the ti.e deposits# $he appellate court ruled that the total a.ount of the ti.e
deposits of !arcos is onl" 2749&897#47 and not 21&929&79:#D9 as found b" the trial court#
$he certification letter issued b" 2a%sali%an showed that !arcos .ade a ti.e deposit on
12 !arch 1982 for 2749&897#47# $he certification letter shows that the a.ount .entioned
in the letter was the a%%re%ate or total a.ount of the ti.e deposits of !arcos as of that
date# $herefore& the 2749&897#47 alread" included the 2449&897#47 ti.e deposit .ade b"
!arcos on 11 !arch 1982#
$he Court of Appeals further e/plainedE
;esides, the +fficial &eceipt .)Ih! 4;6, p! ?2, &ecords0 dated March //, /AC2 co$ering the sum
of P>>@,AC7!>7 time deposit did not pro$ide for a maturit date impling clearl that the amount
co$ered b said receipt forms part of the total sum sho#n in the letterGcertification #hich contained
a maturit date! Moreo$er, it taIes ones credulit to belie$e that appellee #ould maKe a time
deposit on March /2, /AC2 in the sum of P 764,897.67 #hich eIcept for the additional sum
of P/00,000!00 is practicall identical .see underlined figures0 to the sum of P 664,897.67 deposited
the da before March //, /AC2!
Additionall, (e agree #ith the contention of the appellant that the lo#er court #rongl
appreciated the testimon of Mr! Pagsaligan! +ur finding is strengthened #hen #e consider the
alleged application for loan b the appellee #ith the appellant in the sum of P500,000!00 dated
+ctober 2@, /AC?! .)Ih! 4B6, p! @0, &ecords0, #herein it #as stated that the loan is for additional
#orKing capital $ersus the $arious time deposit amounting to P 7>0,000!00!
7/78
.)mphasis supplied0
$he Court of Appeals sustained the factual findin%s of the trial court in rulin% that
2ro.issor" 5ote 5o# 27897988D is void# $here is no evidence of a ban' led%er or
co.putation of interest of the loan# $he appellate court bla.ed the BA5@ for failin% to
co.pl" with the orders of the trial court to produce the docu.ents on the loan# $he BA5@
also .ade inconsistent state.ents# ;n its Answer to the Co.plaint& the BA5@ alle%ed that
the loan was full" paid when it debited the ti.e deposits of !arcos with the
loan# Aowever& in its discussion of the assi%ned errors& the BA5@ clai.ed that !arcos
had "et to pa" the loan#
$he appellate court deleted the award of attorne"0s fees# ;t noted that the trial court
failed to Hustif" the award of attorne"0s fees in the te/t of its decision# $he dispositive
portion of the decision of the Court of Appeals readsE
!"#"$%#", premises considered, the appealed decision is &"' (&)*"! A ne# %udgment is
hereb rendered ordering the appellant banK to return to the appellee his time deposit in the sum
of P764,897.67 with +7, interest within 9- days from .arch ++, +98/ in accordance with the
letter0certification and with legal interest thereafter until fully paid! 2osts against the
appellant!
S+ +&')&)'!
7/C8
.)mphasis supplied0
T! Iss$!s
$he BA5@ anchors this petition on the followin% issuesE
/0 (")T")& +& ,+T T") P)T-T-+,)& 7sic8 A;5) T+ P&+:) T") P&-:AT)
&)SP+,'),TS +UTSTA,'-,9 +;5-9AT-+,S S)2U&)' ;< T") ASS-9,M),T +*
T-M) ')P+S-TSN
/!/0 2+&+55A&-5<, (")T")& +& ,+T T") P&+:-S-+,S +* S)2T-+, C &U5) /0
+* 7sic8 T"), &):-S)' &U5)S +* 2+U&T ;) APP5-)' 7sic8 S+ AS T+ 2&)AT) A
BU'-2-A5 A'M-SS-+, +, T") 9),U-,),)SS A,' 'U) )E)2UT-+, +* T")
A2T-+,A;5) '+2UM),TS APP),')' T+ T") P)T-T-+,)&S A,S()&N
20 (")T")& +& ,+T P)T-T-+,)& 7sic8 ')P&-:)' +* 'U) P&+2)SS ("), T")
5+()& 2+U&T "AS 7sic8 ')25A&)' P)T-T-+,)& T+ "A:) (A-:)' P&)S),TAT-+,
+* *U&T")& ):-'),2) A,' 2+,S-')&)' T") 2AS) SU;M-TT)' *+&
&)S+5UT-+,N
7/A8
T! R$%&n' () #! C($*#
$he petition is without .erit#
&rocedural Issues
$here was no violation of the BA5@0s ri%ht to procedural due process when the trial
court denied the BA5@0s .otion to cross8e/a.ine !arcos# 2rior to the denial of the
.otion& the trial court had properl" declared the BA5@ in default# (ince the BA5@ was in
default& !arcos was able to present his evidence ex-parte includin% his own
testi.on"# Chen the trial court lifted the order of default& the BA5@ was restored to its
standin% and ri%hts in the action# Aowever& as a rule& the proceedin%s alread" ta'en
should not be disturbed#
[27]
5evertheless& it is within the trial court0s discretion to reopen the
evidence sub.itted b" the plaintiff and allow the defendant to challen%e the sa.e& b"
cross8e/a.inin% the plaintiff0s witnesses or introducin% countervailin% evidence#
[21]
$he
1949 ules of Court& the rules then in effect at the ti.e of the hearin% of this case&
reco%ni1ed the trial court0s e/ercise of this discretion# $he 1997 ules of Court retained
this discretion#
[22]
(ection D& ule 18 of the 1949 ules of Court readsE
Sec! ?! &elief from order of default! O A part declared in default ma an time after
disco$er thereof and before %udgment file a motion under oath to set aside the order of default
upon proper sho#ing that his failure to ans#er #as due to fraud, accident, mistaKe or eIcusable
neglect and that he has a meritorious defense! -n such case the order of default ma be set aside on
such terms and conditions as the judge may impose in the interest of %ustice! .)mphasis supplied0
$he records show that the BA5@ did not as' the trial court to restore its ri%ht to cross8
e/a.ine !arcos when it sou%ht the liftin% of the default order on 9 Ganuar" 1997# $hus&
the order dated 7 Bebruar" 1997 settin% aside the order of default did not confer on the
BA5@ the ri%ht to cross8e/a.ine !arcos# ;t was onl" on 2 !arch 1997 that the BA5@
filed the .otion to cross8e/a.ine !arcos# Durin% the 12 !arch 1997 hearin%& the trial
court denied the BA5@0s oral .anifestation to %rant its .otion to cross8e/a.ine !arcos
because there was no proof of service on !arcos# $he BA5@0s counsel pleaded for
reconsideration but the trial court denied the plea and ordered the BA5@ to present its
evidence# ;nstead of presentin% its evidence& the BA5@ .oved for the resettin% of the
hearin% and when the trial court denied the sa.e& the BA5@ infor.ed the trial court that it
was elevatin% the denial to the *upper court#+
[2D]
$o repeat& the trial court had previousl" declared the BA5@ in default# $he trial court
therefore had the ri%ht to decide whether or not to disturb the testi.on" of !arcos that
had alread" been ter.inated even before the trial court lifted the order of default#
Ce do not a%ree with the appellate court0s rulin% that a .otion to cross8e/a.ine is a
non8liti%ated .otion and that the trial court %ravel" abused its discretion when it denied the
.otion to cross8e/a.ine# A .otion to cross8e/a.ine is adversarial# $he adverse part" in
this case had the ri%ht to resist the .otion to cross8e/a.ine because the .ovant had
previousl" forfeited its ri%ht to cross8e/a.ine the witness# $he purpose of a notice of a
.otion is to avoid surprises on the opposite part" and to %ive hi. ti.e to stud" and .eet
the ar%u.ents#
[29]
;n a .otion to cross8e/a.ine& the adverse part" has the ri%ht not onl" to
prepare a .eanin%ful opposition to the .otion but also to be infor.ed that his witness is
bein% recalled for cross8e/a.ination# $he proof of service was therefore indispensable
and the trial court was correct in den"in% the oral .anifestation to %rant the .otion for
cross8e/a.ination#
Ce find no Hustifiable reason to rela/ the application of the rule on notice of
.otions
[2:]
to this case# $he BA5@ could have easil" re8filed the .otion to cross8e/a.ine
with the re-uisite notice to !arcos# ;t did not do so# $he BA5@ did not .a'e %ood its
threat to elevate the denial to a hi%her court# $he BA5@ waited until the trial court
rendered a Hud%.ent on the .erits before -uestionin% the interlocutor" order of denial#
Chile the ri%ht to cross8e/a.ine is a vital ele.ent of procedural due process& the ri%ht
does not necessaril" re-uire an actual cross8e/a.ination& but .erel" an opportunit" to
e/ercise this ri%ht if desired b" the part" entitled to it#
[24]
Clearl"& the BA5@0s failure to cross8
e/a.ine is i.putable to the BA5@ when it lost this ri%ht
[27]
as it was in default and failed
thereafter to e/haust the re.edies to secure the e/ercise of this ri%ht at the earliest
opportunit"#
$he two other procedural lapses that the BA5@ attributes to the appellate and trial
courts deserve scant consideration#
$he BA5@ raises for the ver" first ti.e the issue of Hudicial ad.ission on the part of
!arcos# $he BA5@ even has the audacit" to fault the Court of Appeals for not rulin% on
this issue when it never raised this .atter before the appellate court or before the trial
court# Obviousl"& this issue is onl" an afterthou%ht# An issue raised for the first ti.e on
appeal and not raised ti.el" in the proceedin%s in the lower court is barred b" estoppel#
[28]
$he BA5@ cannot clai. that !arcos had ad.itted the due e/ecution of the docu.ents
attached to its answer because the BA5@ filed its answer late and even failed to serve it
on !arcos# $he BA5@0s answer& includin% the actionable docu.ents it pleaded and
attached to its answer& was a .ere scrap of paper# $here was nothin% that !arcos could
specificall" den" under oath# !arcos had alread" co.pleted the presentation of his
evidence when the trial court lifted the order of default and ad.itted the BA5@0s answer#
$he provision of the ules of Court %overnin% ad.ission of actionable docu.ents was not
enacted to reward a part" in default# Ce will not allow a part" to %ain an advanta%e fro.
its disre%ard of the rules#
As to the issue of its ri%ht to present additional evidence& we a%ree with the Court of
Appeals that the trial court correctl" ruled that the BA5@ had waived this ri%ht# $he BA5@
cannot now clai. that it was deprived of its ri%ht to conduct a re8direct e/a.ination of
2a%sali%an# $he BA5@ postponed the hearin%s three ti.es
[29]
because of its inabilit" to
secure 2a%sali%an0s presence durin% the hearin%s# $he BA5@ could have presented
another witness or its other evidence but it obstinatel" insisted on the resettin% of the
hearin% because of 2a%sali%an0s absence alle%edl" due to illness#
$he BA5@0s propensit" for postpone.ents had lon% dela"ed the case# ;ts .otion for
postpone.ent based on 2a%sali%an0s illness was not even supported b" docu.entar"
evidence such as a .edical certificate# Docu.entar" evidence of the illness is necessar"
before the trial court could rule that there is a sufficient basis to %rant the postpone.ent#
[D7]
+he $",-s Fiduciary Duty to its Depositor
$he BA5@ is liable to !arcos for offsettin% his ti.e deposits with a fictitious
pro.issor" note# $he e/istence of 2ro.issor" 5ote 5o# 27897988D could have been
easil" proven had the BA5@ presented the ori%inal copies of the pro.issor" note and its
supportin% evidence# ;n lieu of the ori%inal copies& the BA5@ presented the *.achine
copies of the duplicate+ of the docu.ents# $hese substitute docu.ents have no
evidentiar" value# $he BA5@0s failure to e/plain the absence of the ori%inal docu.ents
and to .aintain a record of the offsettin% of this loan with the ti.e deposits brin% to fore
the BA5@0s dis.al failure to fulfill its fiduciar" dut" to !arcos#
(ection 2 of epublic Act 5o# 8791 )?eneral Ban'in% 3aw of 2777, e/pressl" i.poses
this fiduciar" dut" on ban's when it declares that the (tate reco%ni1es the *fiduciar"
nature of ban'in% that re-uires hi%h standards of inte%rit" and perfor.ance#+ $his
statutor" declaration .erel" echoes the earlier pronounce.ent of the (upre.e Court
in Simex International .*anila/ Inc. v. ourt o! "ppeals
[D1]
re-uirin% ban's to *treat the
accounts of its depositors with .eticulous care& alwa"s havin% in .ind the fiduciar" nature
of their relationship#+
[D2]
$he Court reiterated this fiduciar" dut" of ban's in subse-uent
cases#
[DD]
Althou%h A 5o# 8791 too' effect onl" in the "ear 2777&
[D9]
at the ti.e that the BA5@
transacted with !arcos& Hurisprudence had alread" i.posed on ban's the sa.e hi%h
standard of dili%ence re-uired under A 5o# 8791#
[D:]
$his fiduciar" relationship .eans that
the ban'0s obli%ation to observe *hi%h standards of inte%rit" and perfor.ance+ is dee.ed
written into ever" deposit a%ree.ent between a ban' and its depositor#
$he fiduciar" nature of ban'in% re-uires ban's to assu.e a de%ree of dili%ence hi%her
than that of a %ood father of a fa.il"# $hus& the BA5@0s fiduciar" dut" i.poses upon it a
hi%her level of accountabilit" than that e/pected of !arcos& a business.an& who
ne%li%entl" si%ned blan' for.s and entrusted his certificates of ti.e deposits to
2a%sali%an without retainin% copies of the certificates#
$he business of ban'in% is i.bued with public interest# $he stabilit" of ban's lar%el"
depends on the confidence of the people in the honest" and efficienc" of
ban's# ;n Simex International (Manila) Inc. v. Court of Appeals
[D4]
we pointed out the
depositor0s reasonable e/pectations fro. a ban' and the ban'0s correspondin% dut" to its
depositor& as followsE
-n e$er case, the depositor eIpects the banK to treat his account #ith the utmost fidelit, #hether
such account consists onl of a fe# hundred pesos or of millions! The banK must record e$er
single transaction accuratel, do#n to the last centa$o, and as promptl as possible! This has to be
done if the account is to reflect at an gi$en time the amount of mone the depositor can dispose of
as he sees fit, confident that the banK #ill deli$er it as and to #home$er he directs!
As the BA5@0s depositor& !arcos had the ri%ht to e/pect that the BA5@ was accuratel"
recordin% his transactions with it# <pon the .aturit" of his ti.e deposits& !arcos also had
the ri%ht to withdraw the a.ount due hi. after the BA5@ had correctl" debited his
outstandin% obli%ations fro. his ti.e deposits#
B" the ver" nature of its business& the BA5@ should have had in its possession the
ori%inal copies of the disputed pro.issor" note and the records and led%ers evidencin%
the offsettin% of the loan with the ti.e deposits of !arcos# $he BA5@ ine/plicabl" failed
to produce the ori%inal copies of these docu.ents# Clearl"& the BA5@ failed to treat the
account of !arcos with .eticulous care#
$he BA5@ clai.s that it is a reputable ban'in% institution and that it has no reason to
for%e 2ro.issor" 5ote 5o# 27897988D# $he trial court and appellate court did not rule that
it was the ban' that for%ed the pro.issor" note# ;t was 2a%sali%an& the BA5@0s branch
.ana%er and a close friend of !arcos& who. the trial court cate%oricall" bla.ed for the
fictitious loan a%ree.ents# $he trial court held that 2a%sali%an .ade up the loan
a%ree.ent to cover up his inabilit" to account for the ti.e deposits of !arcos#
Chether it was the BA5@0s ne%li%ence and inefficienc" or 2a%sali%an0s .isdeed that
deprived !arcos of the a.ount due hi. will not e/cuse the BA5@ fro. its obli%ation to
return to !arcos the correct a.ount of his ti.e deposits with interest# $he dut" to
observe *hi%h standards of inte%rit" and perfor.ance+ i.poses on the BA5@ that
obli%ation# $he BA5@ cannot also unHustl" enrich itself b" 'eepin% !arcos0 .one"#
Assu.in% 2a%sali%an was behind the spurious pro.issor" note& the BA5@ would still
be accountable to !arcos# Ce have held that a ban' is liable for the wron%ful acts of its
officers done in the interest of the ban' or in their dealin%s as ban' representatives but not
for acts outside the scope of their authorit"#
[D7]
$hus& we heldE
A banK holding out its officers and agents as #orth of confidence #ill not be permitted to profit b
the frauds the ma thus be enabled to perpetrate in the apparent scope of their emplomentM nor
#ill it be permitted to shirK its responsibilit for such frauds, e$en though no benefit ma accrue to
the banK therefrom ./0 Am Bur 2d, p! //@0! Accordingl, a banKing corporation is liable to innocent
third persons #here the representation is made in the course of its business b an agent acting
#ithin the general scope of his authorit e$en though, in the particular case, the agent is secretl
abusing his authorit and attempting to perpetrate a fraud upon his principal or some other person,
for his o#n ultimate benefit!
7?C8
+he 0xistence o! &romissory ,ote ,o. 123454367 was not &roven
$he BA5@ failed to produce the best evidence O the ori%inal copies of the loan
application and pro.issor" note# $he Best =vidence ule provides that the court shall not
receive an" evidence that is .erel" substitutionar" in its nature& such as photocopies& as
lon% as the ori%inal evidence can be had#
[D9]
Absent a clear showin% that the ori%inal writin%
has been lost& destro"ed or cannot be produced in court& the photocop" .ust be
disre%arded& bein% unworth" of an" probative value and bein% an inad.issible piece of
evidence#
[97]
Chat the BA5@ presented were .erel" the *.achine copies of the duplicate+ of the
loan application and pro.issor" note# 5o e/planation was ever offered b" the BA5@ for
its inabilit" to produce the ori%inal copies of the docu.entar" evidence# $he BA5@ also
did not co.pl" with the orders of the trial court to sub.it the ori%inals#
$he purpose of the rule re-uirin% the production of the best evidence is the prevention
of fraud#
[91]
;f a part" is in possession of evidence and withholds it& and see's to substitute
inferior evidence in its place& the presu.ption naturall" arises that the better evidence is
withheld for fraudulent purposes& which its production would e/pose and defeat#
[92]
$he absence of the ori%inal of the docu.entar" evidence casts suspicion on the
e/istence of 2ro.issor" 5ote 5o# 27897988D considerin% the BA5@0s fiduciar" dut" to
'eep efficientl" a record of its transactions with its depositors# !oreover& the
circu.stances enu.erated b" the trial court bolster the conclusion that 2ro.issor" 5ote
5o# 27897988D is bo%us# $he BA5@ has onl" itself to bla.e for the dearth of co.petent
proof to establish the e/istence of 2ro.issor" 5ote 5o# 27897988D#
+otal "mount Due to *arcos
$he BA5@ and !arcos do not now dispute the rulin% of the Court of Appeals that the
total a.ount of ti.e deposits that !arcos placed with the BA5@ is onl" 2749&897#47 and
not 21&929&79:#D9 as found b" the trial court# $he BA5@ has alwa"s ar%ued that !arcos0
ti.e deposits onl" totalled 2749&897#47#
[9D]
Chat the BA5@ insists on in this petition is the
trial court0s violation of its ri%ht to procedural due process and the absence of an"
obli%ation to pa" or return an"thin% to !arcos# !arcos& on the other hand& .erel" pra"s
for the affir.ation of either the trial court or appellate court decision#
[99]
Ce uphold the
findin% of the Court of Appeals as to the a.ount of the ti.e deposits as such findin% is in
accord with the evidence on record#
!arcos clai.ed that the certificates of ti.e deposit were with 2a%sali%an for
safe'eepin%# !arcos was onl" able to present the receipt dated 11 !arch 1982 and the
letter8certification dated 12 !arch 1982 to prove the total a.ount of his ti.e deposits with
the BA5@# $he letter8certification issued b" 2a%sali%an readsE
March /2, /AC2
'ear Mr! MarcosF
This is to certif that #e are taKing care in our behalf $arious Time 'eposit 2ertificates #ith an
aggregate $alue of P)S+SF S):), "U,'&)' S-ET< *+U& T"+USA,' )-9"T "U,'&)'
,-,)T< S):), A,' >7J/00 .P7>@,CA7!>70 +,5<, issued toda for A0 das at /7P p!a! #ith the
interest paable at maturit on Bune /0, /AC2!
ThanK ou!
Sgd! *5+&),2-+ ;! PA9SA5-9A,
;ranch Manager
7@58
$he fore%oin% certification is clear# $he total a.ount of ti.e deposits of !arcos as of
12 !arch 1982 is 2749&897#47& inclusive of the su. of2449&987#47 that !arcos placed on
ti.e deposit on 11 !arch 1982# $his is plainl" seen fro. the use of the word *a%%re%ate#+
Ce are not swa"ed b" !arcos0 testi.on" that the certification is actuall" for the first
ti.e deposit that he placed on 11 !arch 1982# $he letter8certification spea's of *various
$i.e Deposits Certificates with an Pa%%re%ate value0 of 2749&897#47#+ ;f the a.ount stated
in the letter8certification is for a sin%le ti.e deposit onl"& and did not include the 11 !arch
1982 ti.e deposit& then !arcos should have de.anded a new letter of certification fro.
2a%sali%an# !arcos is a business.an# Chile he alread" .ade an error in Hud%.ent in
entrustin% to 2a%sali%an the certificates of ti.e deposits& !arcos should have 'nown the
i.portance of .a'in% the letter8certification reflect the true nature of the
transaction# !arcos is bound b" the letter8certification since he was the one who prodded
2a%sali%an to issue it#
Ce .odif" the a.ount that the Court of Appeals ordered the BA5@ to return to
!arcos# $he appellate court did not offset !arcos0 outstandin% debt with the BA5@
covered b" the three trust receipt a%ree.ents even thou%h !arcos ad.its his obli%ation
under the three trust receipt a%ree.ents# $he total a.ount of the trust receipts
is 28:1&2:7 less the D7I .ar%inal deposit of 22::&D7: that !arcos had alread" paid the
BA5@# $his reduced !arcos0 total debt with the BA5@ to 2:9:&87: under the trust
receipts#
$he trial and appellate courts found that the parties did not a%ree on the i.position of
interest on the loan covered b" the trust receipts and thus no interest is due on this
loan# Aowever& the records show that the three trust receipt a%ree.ents contained
stipulations for the pa".ent of interest but the parties failed to fill up the blan' spaces on
the rate of interest# 2ut differentl"& the BA5@ and !arcos e/pressl" a%reed in writin% on
the pa".ent of interest
[94]
without& however& specif"in% the rate of interest# Ce& therefore&
i.pose the le%al interest of 12I per annum& the le%al interest for the forbearance of
.one"&
[97]
on each of the three trust receipts#
Based on !arcos0 testi.on"
[98]
and the BA5@0s letter of de.and&
[99]
the trust receipt
a%ree.ents beca.e due in !arch 1987# $he records do not show e/actl" when in !arch
1987 the obli%ation beca.e due# ;n accordance with Article 2212 of the Civil Code& in
such a case the court shall fi/ the period of the duration of the obli%ation#
[:7]
$he BA5@0s
letter of de.and is dated 4 !arch 1989# Ce hold that the trust receipts beca.e due on 4
!arch 1987#
!arcos0 pa".ent of the .ar%inal deposit of 22::&D7: for the trust receipts resulted in
the proportionate reduction of the three trust receipts# $he reduced value of the trust
receipts and their respective interest as of 4 !arch 1987 are as followsE
/! Trust &eceipt ,o! 2' C?!7 issued on C March /AC? originall for P?00,000 #as
reduced to P2/0,>/C!75 #ith interest of P/0/,027!7>!
75/8
2! Trust &eceipt ,o! 2' C?!A issued on /5 March /AC? originall for P?00,000 #as
reduced to P2/0,>/C!75 #ith interest of P/00,5@?!0@!
7528
?! Trust &eceipt ,o! 2' C?!/0 issued on /5 March /AC? originall for P25/,250 #as
reduced to P/7@,>?7!5 #ith interest of PC?,?>>!>C!
75?8
Chen the trust receipts beca.e due on 4 !arch 1987& !arcos owed the
BA5@ 2887&812#98# $his a.ount included 2:9:&87:& the principal value of the three trust
receipts after pa".ent of the .ar%inal deposit& and 2289&9D7#98& the interest then due on
the three trust receipts#
<pon .aturit" of the three trust receipts& the BA5@ should have auto.aticall"
deducted& b" wa" of offsettin%& !arcos0 outstandin% debt to the BA5@ fro. his ti.e
deposits and its accu.ulated interest# !arcos0 ti.e deposits of 2749&897#47 had alread"
earned interest
[:9]
of 2414&D18#92 as of 4 !arch 1987#
[::]
$hus& !arcos0 total funds with the
BA5@ a.ounted to 21&D81&214#:9 as of the .aturit" of the trust receipts# After
deductin%2887&812#98& the a.ount !arcos owed the BA5@& fro. !arcos0 funds with the
BA5@ of 21&D81&214#:9& !arcos0 re.ainin% ti.e deposits as of 4 !arch 1987 is
onl" 2:77&979#11# $he accu.ulated interest on this 2:77&979#11 as of D7 Au%ust 1989&
the date of filin% of !arcos0 co.plaint with the trial court& is 2211&422#94#
[:4]
Bro. D7 Au%ust
1989& the interest due on the accu.ulated interest of 2211&422#94 should earn le%al
interest at 12I per annum pursuant to Article 2212
[:7]
of the Civil Code#
$he BA5@0s dis.al failure to account for !arcos0 .one" Hustifies the award of
.oral
[:8]
and e/e.plar" da.a%es#
[:9]
Certainl"& the BA5@& as e.plo"er& is liable for the
ne%li%ence or the .isdeed of its branch .ana%er which caused !arcos .ental an%uish
and serious an/iet"#
[47]
!oral da.a%es of 2177&777 is reasonable and is in accord with our
rulin%s in si.ilar cases involvin% ban's0 ne%li%ence with re%ard to the accounts of their
depositors#
[41]
Ce also award 227&777 to !arcos as e/e.plar" da.a%es# $he law allows the %rant of
e/e.plar" da.a%es b" wa" of e/a.ple for the public %ood#
[42]
$he public relies on the
ban's0 fiduciar" dut" to observe the hi%hest de%ree of dili%ence# $he ban'in% sector is
e/pected to .aintain at all ti.es this hi%h level of .eticulousness#
[4D]
,HEREFORE& the decision of the Court of Appeals is ABB;!=D with
!OD;B;CA$;O5# 2etitioner 2hilippine Ban'in% Corporation is ordered to return to private
respondent 3eonilo !arcos 2:77&979#11& the re.ainin% principal a.ount of his ti.e
deposits& with interest at 17I per annumfro. D7 Au%ust 1989 until full
pa".ent# 2etitioner 2hilippine Ban'in% Corporation is also ordered to pa" to private
respondent 3eonilo !arcos2211&422#94& the accu.ulated interest as of D7 Au%ust 1989&
plus 12I le%al interest per annum fro. D7 Au%ust 1989 until full pa".ent# 2etitioner
2hilippine Ban'in% Corporation is further ordered to pa" 2177&777 b" wa" of .oral
da.a%es and 227&777 as e/e.plar" da.a%es to private respondent 3eonilo !arcos#
Costs a%ainst petitioner# SO ODERED.
1. PNB v. Pike, G.R. No. 157845, Sept. 20, 2005
This petition for re$ie# on certiorari under &ule @5 of the /AA7 &ules of
2i$il Procedure, as amended, seeKs to re$erse the 'ecision
7 /8
dated /A 'ecember
2002, and the &esolution
7 28
dated 02 April 200?, both of the 2ourt of Appeals, in
2AG9!&! 2: ,o! 5A?CA, #hich affirmed #ith modification the
'ecision
7 ?8
rendered b the &egional Trial 2ourt .&T20, ;ranch 07 of Manila,
dated /0 Banuar /AA7, in 2i$il 2ase ,o! A@G>CC2/ in fa$or of herein respondent
,orman PiKe .PiKe0!

The case stemmed from a complaint
7 @8
filed b herein respondent PiKe
for damages
7 58
against Philippine ,ational ;anK .P,;0 on 0@ Banuar /AA@!

2omplainant PiKe often tra$eled to and from Bapan as a ga entertainer in
said countr! Sometime in /AA/, he opened U!S! 'ollar Sa$ings Account ,o!
02>5G70@5A/G0 #ith herein petitioner P,; ;uendia branch for #hich he #as
issued a corresponding passbooK! The complaint alleged in substance that before
complainant PiKe left for Bapan on /C March /AA?, he Kept the aforementioned
passbooK inside a cabinet under locK and Ke, in his homeM that on /A April /AA?,
a fe# hours after he arri$ed from Bapan, he disco$ered that some of his $aluables
#ere missing including the passbooKM that he immediatel reported the incident to
the police #hich led to the arrest and prosecution of a certain Mr! Bo Manuel
'a$asolM that complainant PiKe also disco$ered that 'a$asol made t#o .20
unauthori3ed #ithdra#als from his U!S! 'ollar Sa$ings Account ,o! 02>5G
70@5A/G0, both times at the P,; ;uendia branch on the follo#ing datesF

'AT) AM+U,T
?/ March /AA? Q?, 500! 00
05 April /AA? @, 000! 00
T+TA5 Q7, 500! 00




that on se$eral occasions, complainant PiKe #ent to defendant P,;s ;uendia
branch and $erball protested the unauthori3ed #ithdra#als and liKe#ise
demanded the return of the total #ithdra#n amount of U!S! Q7,500!00, on the
ground that he ne$er authori3ed anbod to #ithdra# from his account as the
signatures appearing on the sub%ect #ithdra#al slips #ere clearl forgeriesM that
defendant P,; refused to credit said amount bacK to complainants U!S! 'ollar
Sa$ings Account #ithout %ustifiable reason, and instead, defendant banK #rote
him that it eIercised due diligence in the handling of said accountM and that on 0>
Ma /AA?, complainant PiKe #rote defendant P,; simpl to re1uest that the
holdGaccount be lifted so that he ma #ithdra# the remaining balance left in his
U!S!Q Sa$ings Account and nothing else!

+n the other hand, defendant P,; alleged, in its Motion to 'ismiss
7 >8
of /C
April /AA@, a counterstatement of facts! -ts factual allegations readF

! ! ! +n March /5, /AA? at P,; ;uendia ;ranch, Mr! ,orman <! PiKe,
together #ith a certain Bo 'a$asol #ent to see P,; A:P Mr! 5oren3o T!
:al .sic0, Br! purposel to #ithdra# the amount of Q2, 000! 00! Mr! PiKe also
informed A:P :al that he is lea$ing for abroad .Bapan0 and made $erbal
instruction to honor all #ithdra#als to be transmitted b his Talent
Manager and 2horeographer, Bo 'a$asol #ho shall present preGsigned
#ithdra#al slips bearing his .PiKes0 signature! ! !

+n April /A, /AA?, a certain Bosephine ;almaceda, #ho claimed to be
plaintiffs sister eIecuted an affida$it ! ! ! ! stating therein that the
disco$ered toda .April /A, /AA?0 the lost .sic0 of her brothers passbooK
issued b P,; on account of robber, committed in the residenceJoffice of
her brother, promptl reporting the matter to the police authorities and her
brother cannot report the matter to the ;anK because he #as currentl in
Bapan and therefore re1uesting the ;anK to issue a holdGorder on her
brothers passbooK!

;ut a cop of an alarm .Police0 &eport dated April /A, /AA?! ! ! stated
that plaintiff .#ho #as the one #ho reported the matter0 after one month in
Bapan, he .complainant0 arri$ed esterda! ! !

+n April 2>, /AA?, Att! ,athaniel -furung #ho claims to be
plaintiffs counsel sent a demand letter to :P :ioleta T! Su1uila .then :P
and Manager of P,; ;uendia ;ranch0 demanding the banK to credit bacK
the amount of USQ7, 500! 00 #hich #ere #ithdra#n on March ?/, /AA? and
April 5, /AA?, because his clients signatures #ere forged and the
#ithdra#al made thereon #ere unauthori3ed! ! !

+n Ma 5, /AA?, Mr! ,orman <! PiKe eIecuted an affida$it of loss
.sic0 'ollar Account PassbooK H and re1uested the P,; to replace the
same and allo# him to maKe #ithdra#als thereon! "e stated that his
passbooK #as stolen together #ith other $aluables #hich he disco$ered
onl in the earl morning of April /A, /AA?! ! !
+n Ma >, /AA?, plaintiff ,orman <! PiKe #rote a letter! ! ! addressed
to the Manager of P,;, ;uendia ;ranch the full contents of said letter
hereto 1uoted as follo#sF
Ma >, /AA?

The Manager
Philippine ,ational ;anK
;uendia ;ranch
Paseo de &oIas cor! 9il Puat Street
MaKati, Metro Manila

SirF

-n connection #ith the re1uest of m sister, Mrs! Bosephine P!
;al maceda for the holdGorder on m dollar sa$ings passbooK ,o!
2>5G70@5A/G0, - am no# re1uesting our good office to lift the same
so - can #ithdra# the remaining balance of m passbooK #hich #as
reported lost sometime in March of this ear!

- also promise not to hold responsible the banK and its
officers for the #ithdra#al made on m dollar sa$ings passbooK on
March /A and April 5, /AA? respecti$el as a result of the lost .sic0
of m passbooK!

Sgd! ,+&MA, <! P-=)
'epositor
Philippine Passport
,o! "A/C022
-ssued at Manila on
Sept! >, /AA0
Place of -ssuance

+n the same da Ma >, /AA? Plaintiff ,orman <! PiKe #as allo#ed
b defendant banK to #ithdra# the remaining balance from his passbooK H
!

A letter dated Ma /C, /AA? #as sent to Plaintiffs counsel H b
P,; H stating that the ;anK regrets that it cannot accede to such re1uest
inasmuch as the ;anK eIercised due diligence of a good father to his famil
in the handling of transactions co$ering the deposit account of Mr! PiKe
H !

+n Bul 2, /AA?, Plaintiffs counsel sent a letter to P,; :ice Pres!
Su1uila dening that his client made an such promise not to hold
responsible the banK and its officers for the #ithdra#al made H !

A letter dated Bul 2A, /AA? H #as sent to Plaintiffs counsel b :P
Su1uila stating that plaintiffs #ithdra#al of the remaining balance of his
account #ith the ;anK effecti$el estops him from claiming on the alleged
unauthori3ed #ithdra#als!



The trial court, in its decision dated /0 Banuar /AA7, made the follo#ing
findings of factF

! ! ! 7T8hat the banK is responsible for such unauthori3ed #ithdra#als!
The court is not impressed #ith the defense put up b the banK! -ts
contention that the #ithdra#als #ere authori3ed b the plaintiff because
there #as an arrangement bet#een the banK represented b its Asst! :ice
President 5oren3o ;al, Br! and the depositor ,orman <! PiKe to the effect
that preGsigned #ithdra#al slips, that is, #ithdra#al slip signed b the
depositor in the presence of Mr! ;al #hereb it #ould be made to appear
that it #as the depositor himself #ho presented the same to the banK
despite the fact that it #as another person #ho presented the same should
be honored b the banK cannot be sanctioned b the court! *irstl, the court
is not satisfied that there #as indeed such an arrangement! ! ! -t is Mr!
;als contention that such an arrangement although not ordinaril entered
into is still a legal procedure of the banK and is resorted to accommodate
the depositors speciall honored and $alued depositor at that .

! ! !

The court compared the signatures in the 1uestioned #ithdra#al slips
#ith the Kno#n signatures of the depositor and is con$inced that the
signatures in the unauthori3ed #ithdra#al slips do not correspond to the
true signatures of the depositor!

*rom the e$idence that it recei$ed, the court is con$inced that the
banK #as negligent in the performance of its duties such that unauthori3ed
#ithdra#als #ere made in the deposit of plaintiff ,orman <! PiKe!
7 78



The dispositi$e portion of the trial courts decision readsF



(")&)*+&) and considering the foregoing, %udgment is hereb
rendered in fa$or of the plaintiff and against the defendant and ordering the
defendant to pa the follo#ingF

/! USQ7, 500! 00 plus interest thereon at the rate of /2P per
annum until the full amount is paidM
2! P25, 000! 00 for and as attornes feesM
?! P50, 000! 00 as moral damages and P50, 000! 00 as eIemplar
damagesM and
@! Plus the costs of suit!
7 C8



'efendant P,;s motion for reconsideration #as subse1uentl denied b
the court a quo.
[ 9]

+n appeal, the 2ourt of Appeals issued the assailed decision dated /A
'ecember 2002, affirming the findings of the &T2 that indeed defendantG
appellant P,; #as negligent in eIercising the diligence re1uired of a business
imbued #ith public interest such as that of the banKing industr, ho#e$er, it
modified the rate of interest and a#ard for damages, to #itF

(")&)*+&), premises considered, the 'ecision dated Banuar /0,
/AA7 issued b the &egional Trial 2ourt of Manila, ;ranch 7, in 2i$il 2ase
,o! A@G>CC2/, is hereb A**-&M)' #ith M+'-*-2AT-+,, as follo#sF

/! +rdering appellant, the Philippine ,ational ;anK, ;uendia
;ranch, to refund appellee the amount of Q7, 500! 00 plus
interest of >P per annum to be computed from the date of the
filing of the complaint #hich interest rate shall become /2P
per annum from the time the %udgment in this case becomes
final and eIecutor until its satisfactionM

2! The a#ard for moral damages is reduced to P20, 000! 00M and

?! The a#ard for eIemplar damages is liKe#ise reduced to
P20, 000! 00!

2osts against appellant!
7 /08



The appellate court held thatF

Appellant claims that appellee personall talKed to its officers to
allo# Bo Manuel 'a$asol to maKe #ithdra#als! Appellee e$en left preG
signed #ithdra#al slips before he #ent to Bapan! "o#e$er, appellant could
ha$e told appellee to authori3e the #ithdra#al b a representati$e b
indicating the same at the space pro$ided at the bacK portion of the
#ithdra#al slip! This operational fla# #as obser$ed b the trial court,
#hen it ruledF

The court cannot also understand #h the banK did not
re1uire the correct, proper and the usual procedure of re1uiring
a depositor #ho is #ithdra#ing the mone through a
representati$e to fill up the bacK portion of the #ithdra#al
slips, #hich form #as issued b the banK itself!

A perusal of the records discloses that appellee had pre$iousl
authori3ed #ithdra#als b a representati$e! "o#e$er, these #ithdra#als
#ere properl accompanied b a 4#ithdra#al b a representati$e6 form
aside from a hand#ritten re1uest b appellee to allo# such #ithdra#als b
his representati$e, or a tpe#ritten letterGre1uest for #ithdra#al b a
representati$e! 2ertainl, appellant lacKed the due care and caution
re1uired of managers and emploees of a firm engaged in so sensiti$e and
demanding business as banKing! H

-n its desire to be eIonerated from liabilit, appellant ad$ances the
argument that, granting negligence on its part, appellee condoned this
negligence as sho#n in his letter dated Ma >, /AA?, #herein appellee
purportedl undertooK, not to hold the banK and its officers responsible for
the unauthori3ed #ithdra#als from his account!

(e do not agree! -t should be emphasi3ed that #hile the appellee
admitted signing the letter dated Ma >, /AA?, he, ho#e$er, denied ha$ing
undertooK .sic0 to eIonerate the appellant from liabilit for the
unauthori3ed #ithdra#als! Appellee 1uestioned the second paragraph of the
said letter as being superimposed so that his signature o$erlapped the teIt
of the second paragraph of said letter! A #ai$er of right, in order to be
$alid, should be in a language that clearl manifests his desire to do so! H
-n the instant case, appellees filing of the instant action is inconsistent
#ith appellants contention that he had #ai$ed his right to 1uestion
appellants negligent act of allo#ing the unauthori3ed #ithdra#als from his
account!
7 //8



'efendantGappellant P,; filed a motion for reconsideration! -n a &esolution
dated 02 April 200?, the 2ourt of Appeals denied said motion!

"ence, this petition!

Petitioner P,; no# seeKs the re$ie# of the afore1uoted decision and
resolution of the 2ourt of Appealspredicated on the follo#ing issuesF

-!

(")T")& +& ,+T T") P&-,2-P5) +* )ST+PP)5 (AS ,+T
P&+P)&5< APP5-)' -, T"-S 2AS)M

--!

(")T")& +& ,+T &)SP+,'),T "A:) SU;STA,T-A55< P&+:),
T"AT T") S-9,ATU&)S APP)A&-,9 +, T") T(+ .20 DU)ST-+,)'
P&)GS-9,)' (-T"'&A(A5 S5-P *+&MS A&) A55 *+&9)&-)S -,
A22+&'A,2) (-T" S)2T-+, 22, &U5) /?2 +* T") &):-S)'
&U5)S +* 2+U&TM and

---!

(")T")& +& ,+T M+&A5 A,' )E)MP5A&< 'AMA9)S 2A, ;)
A(A&')' A9A-,ST A PA&T< -, 9++' *A-T"!



Petitioner P,; contends that due to the $erbal instructions
7 /28
of respondent
PiKe, a $alued depositor, it allo#ed the #ithdra#al b another person! Plus, the
fact that said respondent #ithdre# the remaining balance in his US Sa$ings
Account and eIecuted a #ai$er releasing petitioner P,; from an liabilit due to
the loss of the funds should rightl negate a finding of negligence on its part!
Accordingl, petitioner P,; claims that the appellate court, as #ell as the trial
court erred in holding that the #ithdra#als in 1uestion #ere unauthori3ed as the
signatures appearing on the sub%ect #ithdra#al slips #ere forgeries! Petitioner
P,;, therefore, argues that it should not be held liable for the amount #ithdra#n
from the account of respondent PiKe in the sum of Q7,500!00, as #ell as for moral
and eIemplar damages!

A priori , it is 1uite e$ident that the petition is anchored on a plea to re$ie#
or reGeIamine the factual conclusions reached b the trial court and affirmed b
the 2ourt of Appeals, and for this 2ourt to hold other#ise! (hetherF

/0 respondent PiKes signatures appearing on the pertinent
#ithdra#al slips used b Bo Manuel 'a$asol
7 /?8
to #ithdra# the amount of
Q7, 500! 00, #ere forgeries, as found b the trial court and affirmed b the
2ourt of Appeals, or #ere authentic as claimed b petitioner banKM and

20 respondent PiKe in fact eIecuted a #ai$er absol$ing petitioner
banK from an legal responsibilit due to the unauthori3ed #ithdra#als, as
maintained b petitioner banK, or the paragraph containing said #ai$er #as
intercalated b some other person, thus, amounting no #ai$er at all, as held
b the courts a quo!



are 1uestions of fact and not of la#! -neIorabl, these issues call for an in1uir
into the facts and e$idence on record! This, as #e ha$e so often held, #e cannot
do!

)lementar is the rule that this 2ourt is not the appropriate $enue to
consider ane# the factual issues as it is not a trier of facts, and, it generall does
not #eigh ane# the e$idence alread passed upon b the 2ourt of Appeals!
7 /@8
(hen this 2ourt is tasKed to go o$er once more the e$idence presented b
both parties, and anal3e, assess and #eigh them to ascertain if the trial court and
the appellate court #ere correct in according superior credit to this or that piece
of e$idence of one part or the other, the 2ourt cannot and #ill not do the same!
7 /58
Such tasK is foreclosed b the rule enunciated under Section / of &ule
@5
7 />8
of the &ules of 2ourtF

S)2T-+, /! Filing of petition with Supreme 2ourt! G ! ! ! The petition
shall raise onl 1uestions of la#
7 /78
#hich must be distinctl set forth!



(e ha$e oft 4ruled that factual findings of the 2ourt of Appeals are
conclusi$e on the parties and not re$ie#able b this 2ourt R and the carr e$en
more #eight #hen the 2ourt of Appeals affirms the factual findings of the trial
court,6
7 /C8
and in the absence of an sho#ing that the findings complained of are
totall de$oid of support in the e$idence on record, or that the are so glaringl
erroneous as to constitute serious abuse of discretion, such findings must stand!
The courts a quo are in a much better position to e$aluate properl the e$idence!

*inding no other alternati$e but to affirm their finding that petitioner P,;
negligentl allo#ed the unauthori3ed #ithdra#als sub%ect of the case at bar, the
instant petition for re$ie# must necessaril fail!

At this %uncture, it bears emphasi3ing that negligence of banKing
institutions should ne$er be countenanced! The negligence here lies in the
lacKadaisical attitude eIhibited b emploees of petitioner P,; in their treatment
of respondent PiKes US 'ollar Sa$ings Account that resulted in the unauthori3ed
#ithdra#al of Q7,500!00! ,e$ertheless, though its emploees ma be the ones
negligent, a banKs liabilit as an obligor is not merel $icarious but primar, as
banKs are eIpected to eIercise the highest degree of diligence in the selection and
super$ision of their emploees,
7 /A8
and ha$ing such obligation, this 2ourt cannot
ignore the circumstances surrounding the case at bar R ho# the emploees of
petitioner P,; turned their heads, na, closed their ees to the suspicious
circumstances enfolding the t#o #ithdra#als sub%ect of the case at bar! -t ma
e$en be said that the #ent out of their #as to disregard standard operating
procedures formulated to ensure the securit of each and e$er account that the
are handling! Petitioner P,; does not den that the #ithdra#al slips used #ere in
breach of standard operating procedures of banKs in the ordinar and usual course
of banKing operations as testified to b one of its #itnesses, Mr! 5oren3o T! ;al,
Assistant :ice President of Petitioner P,;s ;uendia branch, on crossG
eIamination
7 208
he stated thusF

DF Mr. Witness, when the original of Exhibit !
[ 21]


was presented to
"ou for appro#al, how man" signatures of depositor appears thereon$

AF %wo &'( signatures appears &sic( on the face of the withdrawal slip.

DF (hen it .sic0 #as .sic0 presented to ou immediatelN

AF <es, sir!

DF Are ou sure of thatN

AF <es, sir! ;ecause it #as pre signed #ithdra#al slip!

DF What does the signature appear, the word recipient means$

AF )ecei#ed.

DF So, what "ou are sa"ing is that, the depositor here signed this e#en
before recei#ing the amount$

AF ;ecause before the #ithdra#al #as made, Mr! PiKe, the depositor
came to the banK #hen he #ithdre# the Q2, 000! 00 and instructed me
or re1uested us e$en the super$isor to honor all #ithdra#al slip!

DF And this is a regular procedure$

AF *es, sir.

DF Are ou sure of thatN

AF <es, sir!

DF 'o ou ha$e #ritten manual on this particular procedure, Mr!
(itnessN

AF +f course, that includes in the &ules and regulations of the banK!

DF Are "ou are &sic( are #er" sure of that$

AF And ban+ing is a fast transaction between the depositor and the
ban+.

DF And then, is the use of the bac+ portion of the withdrawal slip ,
with a heading of authori-ation$

AF ,ormall, a depositor and the banK agrees on certain terms that if
ou allo# #ithdra#al from his account, his or her account, its
enough that the signature of the depositor appears on both spaces in
the front side of the withdrawal slip. E#en if "ou do not ha#e the
bac+ portion of the withdrawal slip.

DF <ou are $er sure of thatN

AF <es, sir!

DF And that has been done #ith the other #ithdra#al slip of ,orman
PiKe as stated or as sho#n in the Statement of AccountN

AF <es, sir!

DF That #ithdra#al made b representati$eN

AF <es, sir!



*rom the foregoing, petitioner P,;s #itness #as utterl remiss in
protecting the banKs client, as #ell as the banK itself, #hen he allo#ed an
account holder to maKe it appear as if he #as the one actuall #ithdra#ing from
an account and actuall recei$ing the #ithdra#n amount! +rdinaril, banKs allo#
#ithdra#al b someone #ho is not the account holder so long as the account
holder authori3es his representati$e to #ithdra# and recei$e from his account b
signing on the space pro$ided particularl for such transactions, usuall found at
the bacK of #ithdra#al slips! As fittingl found b the courts a quo, if indeed,
respondent PiKe signed the #ithdra#al slips in the presence of Mr! 5oren3o ;al,
petitioner P,;s A:P at its ;uendia branch, #h did he not call respondent
PiKes attention and refer him to the space pro$ided for authori3ing
representati$es to #ithdra# from and recei$e the proceeds of such #ithdra#alN
+r, at the $er least, sign or initial the same so that he could identif the preG
signed #ithdra#al slips made b Mr! PiKeN

DF <ou are also saing that on March /5, /AA?, ou liKe#ise met Bo
Manuel 'abasolN

AF <es, sir!

DF And ou .sic0 also saing on March /5, /AA?, ou also met ,orman
PiKe, the depositor,

AF <es, sir!

DF And when did "ou first met &sic( .orman /i+e$

AF March 01 when he withdrew 2', 333. 33.

DF %hat was the first time$

AF First time, "es.

DF And Mr. .orman /i+e was alread" transacting with "ou long before
that da", is this correct$ For how long was he transacting with "ou$

AF %hat was m" first time.

DF %hat was the first time. What 4 mean is, that he was transacting with
the /., uendia ranch long before "ou met him$

AF Ma"be.

H

DF And the #ithdra#al made on April 5, /AA? #hich ou appro$ed, ou
did not looK at )Ihibit 426, the Sa$ings Signature 2ard -ndi$idualN

AF (e do not looK at that, that is Kept in the $ault!

DF <es or noN

AF ,o, sir!

H

DF And Mr! #itness, )Ihibit 42G/6
7 228
#hich is being Kept at our $ault,
also contains a pictureN

AF <es, sir!

DF And the picture of the depositorN

AF <es, sir!

DF And are "ou familiar with the identit" of the depositor .orman /i+e$

AF (hat particular identitN

DF 5is appearance$

AF "e is ga looKing fello#!

2+U&TF Ans#er! <ou are familiar #ith his phsical appearanceN

AF .ot so much. ecause there are so much depositor .sic0 in the ban+ .
[ 23]
7)mphasis ours! 8



; his o#n testimon, the #itness negated the $er reason for the banKs
bi3arre 4accommodation6 of the alleged $erbal re1uest of respondent PiKe R that
he #as a 4$alued client!6 *rom the afore1uoted, it appears that the #itness,
5oren3o ;al, #as not e$en reasonabl familiar #ith respondent PiKe, et, he #as
read, #illing and able to accommodate the #erbal re1uest of said depositor!
(orse still, the #itness still appro$ed the #ithdra#al transaction #ithout asKing
for an proof of identification for the reason thatF /0 'a$asol #as in possession
of a preGsigned #ithdra#al slipM and 20 the #itness 4recogni3ed6 the signature of
respondent PiKe R e$en after admitting that he did not bother to counter checK the
signature on the slip #ith the specimen signature card of respondent PiKe and that
he met respondent PiKe %ust once so that he cannot seem to recall #hat the latter
looKs liKe! The ensuing 1uoted testimon of the same #itness #ill %ustif a
finding of negligence amounting to bad faith, to #itF

DF And ou also met Bo Manuel 'abasol on March /5N

AF <es, sir!

DF And can ou describe Bo Manuel 'abasolN

AF - cannot recall his face but then he is a Talent manager, because
there are so man depositors in the banK!

! ! !

DF Mr! #itness, ou are saing that Mr! PiKe, the depositor ga$e ou
$erbal authorit to honor #ithdra#al b Bo Manuel 'abasolN

AF <es, sir!

DF Wh" did "ou not require then that Mr. /i+e instead sign the
authori-ation portion and that the name of 6o" Manuel 7abasol
appear thereon with his signature$

! ! !

AF 4 required Mr. .orman /i+e to sign the withdrawal slip on the face
of the withdrawal slip.

DF ut not the authori-ation portion of the said withdrawal slip$

! ! !

AF .o, because that is sufficient alread".

DF And is this "our normal procedure, Mr. witness$ %his particular
procedure that "ou conducted$

AF 4 don8t thin+ so.

DF Mr. witness, when 9 on April 1, 0::;, when 6o" 7abasol came to the
office and according to "ou, "ou do not remember him, is that
correct$

AF 4 cannot recall his face.

! ! !

DF And he %ust sho#ed ou a #ithdra#al slip, is this correctN

AF <es, on April 5!

DF 7id "ou require him to produce an" 4dentification <ard, "es or no$

AF .o.

DF And how did "ou +now then that it was 6o" 7abasol who was ma+ing
the withdrawal on April 1$

AF ecause the presigned withdrawal slip was presented to me.

DF 4s that all "our basis$

AF *es, sir. ecause his signature appears.

! ! !

DF Mr! #itness, this alleged authorit gi$en to ou b ,orman PiKe to
honor #ithdra#al b Bo Manuel 'abasol, #as that in #ritingN

AF -t #as $erball re1uested!

DF And that is SP+ .sic0 of P,;, ;uendia ;ranch to accept $erbal
authoritiesN

AF <es!

DF -s that Standard +perating ProcedureN

AF -t is not SP+, but #hen ou Kne# the client, <our "onor, ou ha$e
to honor also the trust and confidence! 5et us sa if ouH

DF According to "ou, "ou met .orman /i+e onl" on March 01, 0::; and
immediatel" "ou allowed him to withdraw through pre=signed
withdrawal slip$

AF *es, *our 5onor. ecause a depositor requested "ou to honor his
signature, "ou ha#e to do that or else will,and besides the request is
for purpose of expedienc", *our 5onor. ;ecause most often than that,
he is out of the countr, in Bapan! And his Talent Manager is the one
managing the recruiting agenc! The mone #ill be used in the
operating eIpenses!

! ! !

DF *ou did not e#en bother to loo+ at the Sa#ings Signature <ard
4ndi#idual, "es or no$

AF .o, sir .
[ 24]
7)mphases supplied! 8


"a$ing admitted that preGsigned #ithdra#al slips do not constitute the
normal procedure #ith respect to #ithdra#als b representati$es should ha$e
alread put petitioner P,;s emploees on guard! &ather than readil
$alidating and permitting said #ithdra#als, the should ha$e proceeded more
cautiousl! 2learl, petitioner banKs emploee, 5oren3o T! ;al, an Assistant
:ice President at that, #as eIceedingl careless in his treatment of
respondent PiKes sa$ings account!

*rom the foregoing, the e$idence clearl sho#ed that the petitioner banK did
not eIercise the degree of diligence that it ought to ha$e eIercised in dealing
#ith their clients!

(ith banKs, the degree of diligence re1uired, contrar to the position of
petitioner P,;, is more than that of a good father of a famil considering that
the business of banKing is imbued #ith public interest due to the nature of their
functions! The stabilit of banKs largel depends on the confidence of the people
in the honest and efficienc of banKs! Thus, the la# imposes on banKs a high
degree of obligation to treat the accounts of its depositors #ith meticulous care,
al#as ha$ing in mind the fiduciar nature of banKing! Section 2 of &epublic Act
,o! C7A/,
7 258
#hich tooK effect on /? Bune 2000, maKes a categorical declaration
that the State recogni3es the 4fiduciar nature of banKing that re1uires high
standards of integrit and performance! 6
7 2>8

Though passed long after the unauthori3ed #ithdra#als in this case, the
afore1uoted pro$ision is a statutor affirmation of Supreme 2ourt decisions
alread in esse at the time of such #ithdra#als! (e elucidated in the /AA0 case
of Simex 4nternational, 4nc. #. <ourt of Appeals ,
7 278
that 4the banK is under
obligation to treat the accounts of its depositors #ith meticulous care, al#as
ha$ing in mind the fiduciar nature of their relationship!6
7 2C8

5iKe#ise, in the case of %he <onsolidated an+ and %rust <orporation #.
<ourt of Appeals,
7 2A8
#e clarified that said fiduciar relationship means that the
banKs obligation to obser$e 4highest standards of integrit and performance6 is
deemed #ritten into e$er deposit agreement bet#een a banK and its depositor!
The fiduciar nature of banKing re1uires banKs to assume a degree of diligence
higher than that of a good father of a famil! Article //72 of the ,e# 2i$il 2ode
states that the degree of diligence re1uired of an obligor
7 ?08
is that prescribed b
la# or contract, and absent such stipulation then the diligence of a famil! -n
e$er case, the depositor eIpects the banK to treat his account #ith the utmost
fidelit, #hether such accounts consist onl of a fe# hundred pesos or of millions
of pesos!
7 ?/8

Anent the issue of the propriet of the a#ard of damages in this case,
petitioner P,; asse$erates that there #as no e$idence to pro$e that respondent
PiKe 4suffered anguish, embarrassment and mental sufferings6
7 ?28
due to its acts in
allo#ing the alleged unauthori3ed #ithdra#als! And, ha$ing relied on the
instructions of a $alued depositor, petitioner P,; liKe#ise a$ers that its actions
#ere made in good faith, for this reason, there is no factual basis for said a#ard!

Petitioner P,;s assertions fail to impress us!

The a#ard of moral and eIemplar damages is left to the sound discretion
of the court, and if such discretion is #ell eIercised, as in this case, it #ill not be
disturbed on appeal!
7 ??8
-n the case of /hilippine %elegraph > %elephone
<orporation #. <ourt of Appeals ,
7 ?@8
#e had the occasion to reiterate the
conditions to be met in order that moral damages ma be reco$ered! -n said case
#e statedF

An a#ard of moral damages #ould re1uire, firstl, e$idence of
besmirched reputation, or phsical, mental or pschological suffering
sustained b the claimantM secondl, a culpable act or omission factuall
establishedM thirdl, proof that the #rongful act or omission of the
defendant is the proIimate cause of the damages sustained b the
claimantM and fourthl, that the case is predicated on an of the instances
eIpressed or en$isioned b Articles 22/A
7 ?58
and 2220
7 ?>8
of the 2i$il 2ode!



Specificall, in culpa contractual or breach of contract, as here, moral
damages are reco$erable onl if the defendant has acted fraudulentl or in bad
faith,
7 ?78
or is found guilt of gross negligence amounting to bad faith,
7 ?C8
or in
#anton disregard of his contractual obligations!
7 ?A8
:eril, the breach must be
#anton, recKless, malicious, or in bad faith, oppressi$e or abusi$e!
7 @08

There is no reason to disturb the trial courts finding of petitioner banKs
emploees negligence in their treatment of respondent PiKes account! -n the
case on hand, the 2ourt of Appeals sustained, and rightl so, that an a#ard of
moral damages is #arranted! *or, as found b said appellate court, citing the
case of /rudential an+ #. <ourt of Appeals,
7 @/8
4the banKs negligence is a result
of lacK of due care and caution re1uired of managers and emploees of a firm
engaged in so sensiti$e and demanding business, as banKing, hence, the a#ard
of P 20,000!00 as moral damages, is proper!

The a#ard of eIemplar damages is also proper as a #arning to petitioner
P,; and all concerned not to recKlessl disregard their obligation to eIercise the
highest and strictest diligence in ser$ing their depositors!

*inall, the aforestated grant of eIemplar damages entitles respondent PiKe
the a#ard of attorneS s fees in the amount of P20,000!00 and the a#ard of
P/0,000!00 for litigation eIpenses!
7 @28


(")&)*+&), the instant petition is '),-)'! The assailed 'ecision dated
/A 'ecember 2002, and the &esolution dated 02 April 200?, both of the 2ourt of
Appeals, in 2AG9!&! 2: ,o! 5A?CA, #hich affirmed #ith modification the
'ecision rendered b the &egional Trial 2ourt .&T20, ;ranch 07 of Manila, dated
/0 Banuar /AA7, in 2i$il 2ase ,o! A@G>CC2/, are hereb A**-&M)' #ith
the M+'-*-2AT-+, that petitioner P,; is directed to pa respondent PiKe
additional /0 P 20,000!00 representing attornes feesM and 20 P /0,000!00
representing eIpenses of litigation! 2osts against petitioner P,;!

S+ +&')&)'!
2. BPI v. Lifetime Marketin, G.R. No. 17!4"4, #$ne 25, 2008
The ;anK of the Philippine -slands .;P-0 seeKs the re$ersal of the 'ecision
7/8
of the 2ourt of
Appeals dated ?/ Bul 200> in 2AG9!&! 2: ,o! >27>A #hich ordered it to pa 5ifetime
MarKeting 2orporation .5M20 actual damages in the amount ofP2,075,>A5!50 on account of its
gross negligence in handling 5M2s account!



The follo#ing facts, 1uoted from the decision of the 2ourt of Appeals, are undisputedF


+n +ctober 22, /AC/, 5ifetime MarKeting 2orporation .5M2, for bre$it0,
opened a current account #ith the ;anK of the Philippine -slands .;P-, for bre$it0,
9reenhillsG)dsa branch, denominated as Account ,o! ?/0/G0>C0G>?! -n this account,
the 4sales agents6 of 5M2 #ould ha$e to deposit their collections or paments to the
latter! As a result, 5M2 and ;P-, made a special arrangement that the formers agents
#ill accomplish three .?0 copies of the deposit slips, the third cop to be retained and
held b the teller until 5M2s authori3ed representati$es, Mrs! :irginia Mongon and
Mrs! :ioleta Anca%as, shall retrie$e them on the follo#ing banKing da!

Sometime in /AC>, 5M2 a$ailed of the ;P-s interGbranch banKing net#orK
ser$ices in Metro Manila, #hereb the formers agents could maKe 7a8 deposit to an
;P- branch in Metro Manila under the same account! Under this sstem, ;P-s banK
tellers #ere no longer obliged to retain the eItra cop of the deposit slips instead, the
#ill rel on the machineG$alidated deposit slip, to be submitted b 5M2s agents! *or
its part, ;P- #ould send to 5M2 a monthl banK statement relating to the sub%ect
account! This practice #as obser$ed and complied #ith b the parties!

As a business practice, the registered sales agents or the 5ifetime )ducational
2onsultants of 5M2, can get the booKs from the latter on consignment basis, then
the #ould go directl to their clients to sell! These agents or 5ifetime )ducational
2onsultants #ould then pa to 5M2, se$en .70 das after the picK up all the booKs to
be sold! Since 5M2 ha$e se$eral agents around the Philippines, it re1uired to remit
their paments through ;P-, #here 5M2 maintained its current account! -t has been
5M2s practice to re1uire its agents to present a $alidated deposit slip and, on that
basis, 5M2 #ould issue to the latter an acKno#ledgement receipt!

Alice 5aurel, is one of 5M2s 4)ducational 2onsultants6 or agents! +n $arious
dates co$ering the period from Ma, 7sic8 /AA/ up to August, /AA2, Alice 5aurel
deposited checKs to 5M2s sub%ect account at different branches of ;P-, specificallF
at the "arrisonJ;uendia branchGC checKsM at Arrangue branchG@ checKsM at Araneta
branchG/ checKM at ;inondo branchG? checKsM at )rmita branchG5 checKsM at 2ubao
Shopping branchG/ checKM at )scolta branchG@ checKsM at the Malate branchG2 checKsM
at Taft A$enue branchG2 checKsM at Paseo de &oIas branchG/ checKM at B! &ui3, San
Buan branch, at (est A$enue and 2ommon#ealth Due3on 2it branchG 2 checKsM and
at :ito 2ru3 branchG2 checKs!

)ach checK thus deposited #ere retrie$ed b Alice 5aurel after the deposit slips
#ere machineG$alidated, eIcept the follo#ing thirteen ./?0 checKs, #hich bore no
machine $alidation, to #itF 2;2 2hecK ,o! @C@00@, &2;2 2hecK ,o! @/AC/C, 2;2
2hecK ,o! @C@0@2, *);T2 2hecK ,o! /7/C57, &2;2 2hecK ,o! @/AC@7, 2;2
2hecK ,o! @C@05?, M;T2 2hecK ,o! 0C072>, 2;2 2hecK ,o! @C@0>2, P;2 2hecK
,o! /5C07>, 2;2 2hecK ,o! @C@027, 2;2 2hecK ,o! @C@0/7, 2;2 2hecK ,o!
@C@02? and 2;2 2hecK ,o! 2/C/A0!

A $erification #ith ;P- b 5M2 sho#ed that Alice 5aurel made checK deposits
#ith the named ;P- branches and, after the checK deposit slips #ere machineG
$alidated, re1uested the teller to re$erse the transactions! ;ased on general banKing
practices, ho#e$er, the cancellation of deposit or pament transactions upon re1uest
b an depositor or paor, re1uires that all copies of the deposit slips must be
retrie$ed or surrendered to the banK! This practice, in effect, cancels the deposit or
pament transaction, thus, it lea$es no e$idence for an subse1uent claim or
misrepresentation made b an innocent third person! ,ot#ithstanding this, the $erbal
re1uests of Alice 5aurel and her husband to re$erse the deposits e$en after the deposit
slips #ere alread recei$ed and consummated #ere accommodated b ;P- tellers!

Alice 5aurel presented the machineG$alidated deposit slips to 5M2 #hich, on
the strength thereof, considered her account paid! 5M2 e$en granted her certain
pri$ileges or pri3es based on the deposits she made!

The total aggregate amount co$ered b Alice 5aurels deposit slips #as T#o
Million Se$en "undred SiIt Se$en Thousand, *i$e "undred ,inet *our Pesos
.P2,7>7,5A@!000 and, for #hich, 5M2 paid 5aurel the total sum of *i$e "undred SiIt
Thousand Se$en "undred T#ent SiI Pesos .P5>0,72>!000 b #a of 4sales discount
and promo pri3es!6

The abo$e fraudulent transactions of Alice 5aurel and her husband #as made
possible through ;P- tellers failure to retrie$e the duplicate original copies of the
deposit slips from the former, e$er time the asK for cancellation or re$ersal of the
deposit or pament transaction!

Upon disco$er of this fraud in earl August /AA2, 5M2 made 1ueries from the
;P- branches in$ol$ed! -n repl to said 1ueries, ;P- branch managers formall
admitted that the cancelled, #ithout the permission of or due notice to 5M2, the
deposit transactions made b Alice and her husband, and based onl upon the latters
$erbal re1uest or representation!

Thereafter, 5M2 immediatel instituted a criminal action for )stafa against
Alice 5aurel and her husband Thomas 5imoanco, before the &egional Trial 2ourt of
MaKati, ;ranch >5, docKeted as 2riminal 2ase ,o! A?G7A70 to 7/, entitled People of
the Philippines $! Thomas 5imoanco and Alice 5aurel! This case for estafa, ho#e$er,
#as archi$ed because summons could not be ser$ed upon the spouses as the ha$e
absconded! Thus, the ;P-s apparent reluctance to admit liabilit and settle 5M2s
claim for damages, and a hopeless case of reco$er from Alice 5aurel and her
husband, has left 5M2, #ith no option but to reco$er damages from ;P-!

+n Bul 2@, /AA5, 5M2, through its representati$e, Miss 2onsolacion 2!
&ogacion, the President of the compan, filed a 2omplaint for 'amages against ;P-,
docKeted as 2i$il 2ase ,o! A5G//0>, and #as raffled to &egional Trial 2ourt of
MaKati 2it, ;ranch /@/!

After trial on the merits, the court a quo rendered a 'ecision in fa$or of 5M2!
The dispositi$e portion of #hich reads, as follo#sF

WHEREFORE, decision is hereb" rendered ordering defendant ban+ to pa"
plaintiff actual damages equitabl" reduced to one &0( million pesos plus
attorne"8s fees of /033,333.33.

.o pronouncement as to costs.

S? ?)7E)E7.
728



+nl ;P- filed an appeal! The 2ourt of Appeals affirmed the decision of the trial court
but increased the a#ard of actual damages to P2,075,>A5!50 and deleted the a#ard
of P/00,000!00 as attornes fees!
7?8
2iting public interest, the appellate court denied
reconsideration in a &esolution
7@8
dated ?0 Banuar 2007!


-n this Petition for &e$ie#
758
dated /A March 2007, ;P- insists that 5M2 should ha$e
presented e$idence to pro$e not onl the amount of the checKs that #ere deposited and
subse1uentl re$ersed, but also the actual deli$er of the booKs and the pament of 4sales and
promo pri3es6 to Alice 5aurel! *ailing this, there #as allegedl no basis for the a#ard of actual
damages! Moreo$er, the actual damages should not ha$e been increased because the decision of
the trial court became conclusi$e as regards 5M2 #hen it did not appeal the said decision!

;P- further a$ers that 5M2s negligence in considering the machineG$alidated checK
deposit slips as e$idence of Alice 5aurels pament #as the proIimate cause of its o#n
loss! Allegedl, b allo#ing its agents to maKe deposits #ith other ;P- branches, 5M2 $iolated
its o#n special arrangement #ith ;P-s 9reenhillsG)'SA branch for the latter to hold on to an
eItra cop of the deposit slip for picK up b 5M2s authori3ed representati$es! ;P- points out
that the deposits #ere in checK and not in cash! As such, 5M2 should ha$e borne in mind that
the machine $alidation in the deposit slips is still sub%ect to the sufficienc of the funds in the
dra#ers account! *urthermore, 5M2 allegedl ignored the eIpress notice indicated in its
monthl banK statements and conse1uentl failed to checK the accurac of the transactions
reflected therein!

-n its Manifestation of 2ompliance b &espondent on the +rder 'ated 20 Bune
2007 &ecei$ed on 2A Bul 2007 to Submit 2omment,
7>8
dated A August 2007, 5M2 insists that it
is indeed entitled to the actual damages a#arded to it b the appellate court!

;P- filed a &epl
778
dated /5 Banuar 200C, in reiteration of its submissions!

(e ha$e repeatedl emphasi3ed that the banKing industr is impressed #ith public
interest! +f paramount importance thereto is the trust and confidence of the public in general!
Accordingl, the highest degree of diligence is eIpected, and high standards of integrit and
performance are re1uired of it! ; the nature of its functions, a banK is under obligation to treat
the accounts of its depositors #ith meticulous care, al#as ha$ing in mind the fiduciar nature
of its relationship #ith them!
7C8
The fiduciar nature of banKing, pre$iousl imposed b case
la#, is no# enshrined in &epublic Act ,o! C7A/ or the 9eneral ;anKing 5a# of 2000! Section
2 thereof specificall sas that the state recogni3es the fiduciar nature of banKing that re1uires
high standards of integrit and performance!
7A8


(hether ;P- obser$ed the highest degree of care in handling 5M2s account is the
sub%ect of the in1uir in this case!

5M2 sought reco$er from ;P- on a cause of action based on tort! Article 2/7> of the
2i$il 2ode pro$ides, 4(hoe$er b act or omission causes damage to another, there being fault
or negligence, is obliged to pa for the damage done! Such fault or negligence if there is no preG
eIisting contractual relation bet#een the parties, is called a 1uasiGdelict and is go$erned b the
pro$isions of this 2hapter!T There are three elements of quasi=delictF .a0 fault or negligence of
the defendant, or some other person for #hose acts he must respondM .b0 damages suffered b
the plaintiffM and .c0 the connection of cause and effect bet#een the fault or negligence of the
defendant and the damages incurred b the plaintiff!
7/08

-n this case, both the trial court and the 2ourt of Appeals found that the re$ersal of the
transactions in 1uestion #as unilaterall undertaKen b ;P-s tellers #ithout follo#ing normal
banKing procedure #hich re1uires them to ensure that all copies of the deposit slips are
surrendered b the depositor! The machineG$alidated deposit slips do not sho# that the
transactions ha$e been cancelled, leading 5M2 to rel on these slips and to consider Alice
5aurels account as alread paid!

,egligence is the omission to do something #hich a reasonable man, guided b those
considerations #hich ordinaril regulate the conduct of human affairs, #ould do, or the doing of
something #hich a prudent and reasonable man #ould not do!
7//8
,egligence in this case lies in
the tellers disregard of the $alidation procedures in place and ;P-s utter failure to super$ise its
emploees! ,otabl, ;P-s managers admitted in se$eral correspondences #ith 5M2 that the
deposit transactions #ere cancelled #ithout 5M2s Kno#ledge and consent and based onl
upon the re1uest of Alice 5aurel and her husband!
7/28


-t is #ell to reiterate that the degree of diligence re1uired of banKs is more than that of a
reasonable man or a good father of a famil! -n $ie# of the fiduciar nature of their relationship
#ith their depositors, banKs are dutGbound to treat the accounts of their clients #ith the highest
degree of care!
7/?8


;P- cannot escape liabilit because of 5M2s failure to scrutini3e the monthl statements
sent to it b the banK! This omission does not change the fact that #ere it not for the #anton
and recKless negligence of ;P-s tellers in failing to re1uire the surrender of the machineG
$alidated deposit slips before re$ersing the deposit transactions, the loss #ould not ha$e
occurred! ;P-s negligence is undoubtedl the proIimate cause of the loss! ProIimate cause is
that cause #hich, in a natural and continuous se1uence, unbroKen b an efficient inter$ening
cause, produces the in%ur, and #ithout #hich the result #ould not ha$e occurred!
7/@8

-t is also true, ho#e$er, that 5M2 should ha$e been more $igilant in managing and
o$erseeing its o#n financial affairs! The damages a#arded to it #ere correctl reduced on
account of its o#n contributor negligence in accordance #ith Article //72 of the 2i$il 2ode!
7/58

Parentheticall, #e find no merit in ;P-s allegation that 5M2 should ha$e presented
e$idence of deli$er of the booKs and pament of sales and promo pri3es to Alice 5aurel! The
e$idence presented b 5M2 in the form of ;P-s o#n admission that the deposit transactions
#ere
re$ersed at the instance of Alice 5aurel and her husband, coupled #ith the machineG$alidated
deposit slips
7/>8
#hich #ere supposed to ha$e been deposited to 5M2s account but #ere
cancelled #ithout its Kno#ledge and consent, sufficientl form the bases for the actual damages
claimed because the are the $er same documents relied upon b 5M2 in considering Alice
5aurels account paid and in granting her monetar pri$ileges and pri3es!

;e that as it ma, #e find the appellate courts decision increasing the a#ard of actual
damages in fa$or of 5M2 improper since the latter did not appeal from the decision of the trial
court! -t is #ellGsettled that a part #ho does not appeal from the decision ma not obtain an
affirmati$e relief from the appellate court other than #hat he has obtained from the lo#er court
#hose decision is brought up on appeal! The eIceptions to this rule, such as #here there are ./0
errors affecting the lo#er courts %urisdiction o$er the sub%ect matter, .20 plain errors not
specified, and .?0 clerical errors, do not appl in this case!
7/78

(")&)*+&), the 'ecision of the 2ourt of Appeals in 2AG9!&! 2: ,o! >27>A dated ?/
Bul 200> and its &esolution dated Banuar ?0, 2007 are A**-&M)' #ith the
M+'-*-2AT-+, that the ;anK
of the Philippine -slands is ordered to pa actual damages to 5ifetime MarKeting
2orporation in the amount of +ne Million Pesos .P/,000,000!000! ,o pronouncement as to
costs!

S+ +&')&)'!
3. %entra& Bank v'. %it(tr$'t Bank, G.R. No. 1418"5, )e*r$ar( 4, 200+
Pursuant to &epublic Act ,o! >25, the old 2entral ;anK 5a#, respondent 2ittrust
;anKing 2orporation .2ittrust0, formerl *eati ;anK, maintained a demand deposit account
#ith petitioner 2entral ;anK of the Philippines, no# ;angKo Sentral ng Pilipinas!

As re1uired, 2ittrust furnished petitioner #ith the names and corresponding signatures
of fi$e of its officers authori3ed to sign checKs and ser$e as dra#ers and indorsers for its
account! And it pro$ided petitioner #ith the list and corresponding signatures of its ro$ing
tellers authori3ed to #ithdra#, sign receipts and perform other transactions on its
behalf! Petitioner later issued securit identification cards to the ro$ing tellers one of #hom
#as 4&ounce$al *lores6 .*lores0!

+n Bul /5, /A77, *lores presented for pament to petitioners Senior Teller -luminada
dela 2ru3 .-luminada0 t#o 2ittrust checKs of e$en date, paable to 2ittrust, one in the amount
of PC50,000 and the other in the amount of PA00,000, both of #hich #ere signed and indorsed
b 2ittrusts authori3ed signatorGdra#ers!

After the checKs #ere certified b petitioners Accounting 'epartment, -luminada
$erified them, prepared the cash transfer slip on #hich she affiIed her signature, stamped the
checKs #ith the notation 4&ecei$ed Pament6 and asKed *lores to, as he did, sign on the space
abo$e such notation! -nstead of signing his name, ho#e$er, *lores signed as 4&osauro 2!
2aabab6 R a fact -luminada failed to notice!

-luminada thereupon sent the cash transfer slip and checKs to petitioners 2ash
'epartment #here an officer $erified and compared the dra#ers signatures on the checKs
against their specimen signatures pro$ided b 2ittrust, and finding the same in order, appro$ed
the cash transfer slip and paid the corresponding amounts to *lores! Petitioner then debited the
amount of the checKs totaling P/,750,000 from 2ittrusts demand deposit account!

More than a ear and nine months later, 2ittrust, b letter dated April 2?, /A7A, alleging
that the checKs #ere alread cancelled because the #ere stolen, demanded petitioner to restore
the amounts co$ered thereb to its demand deposit account! Petitioner did not heed the
demand, ho#e$er!

2ittrust later filed a complaint for estafa, #ith reser$ation on the filing of a separate ci$il
action, against *lores! *lores #as con$icted!

2ittrust thereafter filed before the &egional Trial 2ourt .&T20 of Manila a complaint for
reco$er of sum of mone #ith damages against petitioner #hich it alleged erred in encashing
the checKs and in charging the proceeds thereof to its account, despite the lacK of authorit of
4&osauro 2! 2aabab!6

; 'ecision
7/8
of ,o$ember /?, /AA/, ;ranch ?2 of the &T2 of Manila found both
2ittrust and petitioner negligent and accordingl held them e1uall liable for the loss! ;oth
parties appealed to the 2ourt of Appeals #hich, b 'ecision
728
dated Bul />, /AAA, affirmed the
trial courts decision, it holding that both parties contributed e1uall to the fraudulent
encashment of the checKs, hence, the should e1uall share the loss in consonance #ith Article
2/7A
7?8
#is a #is Article //72
7@8
of the 2i$il 2ode!

-n arri$ing at its 'ecision, the appellate court noted that #hile 42ittrust failed to taKe
ade1uate precautionar measures to pre$ent the fraudulent encashment of its checKs,6 petitioner
#as not entirel blameGfree in light of its failure to $erif the signature of 2ittrusts agent
authori3ed to recei$e pament!

;rushing aside petitioners contention that it cannot be sued, the appellate court held that
petitioners 2harter specificall clothes it #ith the po#er to sue and be sued!

Also brushing aside petitioners assertion that 2ittrusts reser$ation of the filing of a
separate ci$il action against *lores precluded 2ittrust from filing the ci$il action against it, the
appellate court held that the 4action for the reco$er of sum of mone is separate and distinct
and is grounded on a separate cause of action from that of the criminal case for estafa!6

"ence, the present appeal, petitioner maintaining that *lores ha$ing been an authori3ed
ro$ing teller, 2ittrust is bound b his acts! Also maintaining that it #as not negligent in
releasing the proceeds of the checKs to *lores, the failure of its teller to properl $erif his
signature not#ithstanding, petitioner contends that $erification could be dispensed #ith, *lores
ha$ing been Kno#n to be an authori3ed ro$ing teller of 2ittrust #ho had had numerous
transactions #ith it .petitioner0 on its .2ittrusts0 behalf for fi$e ears prior to the 1uestioned
transaction!

Attributing negligence solel to 2ittrust, petitioner harps on 2ittrusts allo#ing *lores
to steal the checKs and failing to timel cancel themM allo#ing *lores to #ear the issued
identification card issued b it .petitioner0M failing to report *lores absence from #orK on
the da of the incidentM and failing to eIplain the circumstances surrounding the supposed theft
and cancellation of the checKs!

'ra#ing attention to 2ittrusts considerable dela in demanding the restoration of the
proceeds of the checKs, petitioners argue that, assuming arguendo that its teller #as negligent,
2ittrusts negligence, #hich preceded that committed b the teller, #as the proIimate cause of
the loss or fraud!

The petition is bereft of merit!

Petitioners teller -luminada did not $erif *lores signature on the flims eIcuse that
*lores had had pre$ious transactions #ith it for a number of ears! That circumstance did not
eIcuse the teller from focusing attention to or at least glancing at *lores as he #as signing, and
to satisf herself that the signature he had %ust affiIed matched that of his specimen
signature! "ad she done that, she #ould ha$e readil been put on notice that *lores #as
affiIing, not his but a fictitious signature!

9i$en that petitioner is the go$ernment bod mandated to super$ise and regulate banKing
and other financial institutions, this 2ourts ruling in <onsolidated an+ and %rust <orporation
#. <ourt of Appeals
758
illuminesF

The contract bet#een the banK and its depositor is go$erned b the pro$isions
of the 2i$il 2ode on simple loan! Article /AC0 of the 2i$il 2ode eIpressl pro$ides
that 4I I I sa$ings I I I deposits of mone in banKs and similar institutions shall be
go$erned b the pro$isions concerning simple loan!6 There is a debtorGcreditor
relationship bet#een the banK and its depositor! The banK is the debtor and the
depositor is the creditor! The depositor lends the banK mone and the banK agrees to
pa the depositor on demand! The sa$ings deposit agreement bet#een the banK and
the depositor is the contract that determines the rights and obligations of the parties!

The la# imposes on banKs high standards in $ie# of the fiduciar nature of
banKing! Section 2 of &epublic Act ,o! C7A/ .4&A C7A/60, #hich tooK effect on /?
Bune 2000, declares that the State recogni3es the 4fiduciar nature of banKing that
re1uires high standards of integrit and performance!6 This ne# pro$ision in the
general banKing la#, introduced in 2000, is a statutor affirmation of Supreme 2ourt
decisions, starting #ith the /AA0 case of Simex 4nternational #. <ourt of
Appeals, holding that 4the banK is under obligation to treat the accounts of its
depositors #ith meticulous care, al#as ha$ing in mind the fiduciar nature of their
relationship!6

'his fiduciary relationship means that the ban12s obligation to observe
3high standards of integrity and performance4 is deemed written into every
deposit agreement between a ban1 and its depositor. 'he fiduciary nature of
ban1ing re5uires ban1s to assume a degree of diligence higher than that of a
good father of a family! Article //72 of the 2i$il 2ode states that the degree of
diligence re1uired of an obligor is that prescribed b la# or contract, and absent such
stipulation then the diligence of a good father of a famil! Section 2 of &A C7A/
prescribes the statutor diligence re1uired from banKs R that banKs must obser$e 4high
standards of integrit and performance6 in ser$icing their depositors! (lthough #(
879+ too1 effect almost nine years after the unauthori6ed withdrawal of
the P7--,--- from 8.9. *ia62s savings account, jurisprudence at the time of the
withdrawal already imposed on ban1s the same high standard of diligence
re5uired under #( :o. 879+! .)mphasis supplied0
2ittrusts failure to timel" eIamine its account, cancel the checKs and notif petitioner of
their alleged lossJtheft should mitigate petitioners liabilit, in accordance #ith Article 2/7A of
the 2i$il 2ode #hich pro$ides that if the plaintiffs negligence #as onl contributor, the
immediate and proIimate cause of the in%ur being the defendants lacK of due care, the plaintiff
ma reco$er damages, but the courts shall mitigate the damages to be a#arded! *or had
2ittrust timel disco$ered the lossJtheft andJor subse1uent encashment, their proceeds or part
thereof could ha$e been reco$ered!

-n line #ith the ruling in <onsolidated an+, the 2ourt deems it proper to allocate the
loss bet#een petitioner and 2ittrust on a >0G@0 ratio!

!"#"$%#", the assailed 2ourt of Appeals 'ecision of Bul />, /AAA is
hereb ($$)#."* #ith .%*)$)9(')%:, in that petitioner and 2ittrust should bear the
loss on a >0G@0 ratio!

&% %#*"#"*!
4. San )ernan,o R$ra& Bank v'. Pampana -mni*$', G.R. No. 1!8088, .pri& ", 2007
Before the Court is a 2etition for eview under ule 9: of the ules of Court& assailin% the Decision
1
of the Court of
Appeals )CA, in CA8?## (2 5o# 7:787 as well as the esolution
2
which denied the .otion for reconsideration
thereof# $he appellate court set aside the Order
D
of the e%ional $rial Court )$C,& (an Bernando& 2a.pan%a&
Branch 99& in 3C 5o# 897& which in turn had %ranted the petition of (an Bernando ural Ban'& ;nc# )petitioner, for
the issuance of a writ of possession#
$he Antecedents
2a.pan%a O.nibus Develop.ent Corporation )respondent 2ODC, was the re%istered owner of a parcel of land in
(an Bernando& 2a.pan%a )now (an Bernando Cit",# $he 41&:798s-uare8.eter lot was covered b" $ransfer
Certificate of $itle )$C$, 5o# 27:79:8#
espondent 2ODC secured two loans fro. petitioner and !asantol ural Ban'& ;nc# )!B;, at an annual interest of
29IE 27:7&777#77 on April 27& 1989& to .ature on April 1:& 1997F
9
and another 27:7&777#77 on !a" D& 1989&
pa"able on April 28& 1997#
:
$he loans were evidenced b" separate pro.issor" notes e/ecuted b" Bederico #
!endo1a and Anastacio =# de >era# $o secure pa".ent of the loans& respondent 2ODC e/ecuted a real estate
.ort%a%e over the subHect lot in favor of the creditor ban's#
4
$he contract provided that in case of failure or refusal of
the .ort%a%or to pa" the obli%ation secured thereb"& the real estate .ort%a%e .a" be e/traHudiciall" foreclosed in
accordance with Act 5o# D1D:& as a.ended#
7
=li1a !# ?arbes )2ODC 2resident and dau%hter of Bederico !endo1a,& to%ether with her husband Aristedes
?arbes& secured a 29:7&777#77 loan fro. petitioner on !arch 27& 1992# $he loan was to .ature after 187 da"s or
on (epte.ber 2D& 1992#
8
!endo1a si%ned as co8borrower in the pro.issor" note e/ecuted b" the spouses# $he
spouses also e/ecuted a chattel .ort%a%e over their personal propert" as securit" for the pa".ent of their loan
account#
9
<pon respondent 2ODC0s failure to pa" its loan to petitioner& the latter filed a petition for e/traHudicial foreclosure of
real estate .ort%a%e and at the auction on April 2D& 2771& petitioner e.er%ed as the winnin% bidder
for21&29:&982#7:# $he =/8Officio (heriff e/ecuted a Certificate of (ale
17
on !a" 9& 2771 which stated that Qthe
period of rede.ption of the propert" shall e/pire one )1, "ear after re%istration in the e%ister of Deeds#Q $he
certificate was annotated at the dorsal portion of $C$ 5o# 27:79:8 on Gune 7& 2771# 2etitioner did not file a petition
for a writ of possession durin% the rede.ption period#
On !a" 11& 2772& petitioner& throu%h =li1a ?arbes )with the authorit" of petitioner0s board of directors,&
11
e/ecuted a
notari1ed deed of assi%n.ent
12
in favor of respondent Do.inic ?# A-uino over its ri%ht to redee. the propert"# On
!a" 29& 2772& respondent A-uino offered to redee. the propert" for 21&:88&799#28& but petitioner reHected the offer
and de.anded the pa".ent of 214&87:&919#71 )includin% the loan of the spouses ?arbes,
1D
as rede.ption .one"#
espondent A-uino reHected the de.and of petitioner#
On !a" D7& 2772& respondent A-uino re.itted Cashier0s Chec' 5o# 77772727:4
19
for 21&:88&799#28 to the =/8
Officio (heriff as rede.ption .one" for the propert" for which he was issued eceipt 5o# 1::82974 dated !a" D1&
2772#
1:
;n a letter
14
dated Gune 9& 2772& the =/8Officio (heriff infor.ed petitioner that the propert" had been redee.ed b"
respondent A-uino for 21&:88&799#28# (he re-uested petitioner for the co.putation of the correct rede.ption price
before the lapse of the re%le.entar" period to redee. the propert"# 2etitioner then sub.itted a state.ent of
account indicatin% that the rede.ption price was 29&7:2&D79#2D& and includin% the loan of the spouses ?arbes
)27&7:D&17:#98,& a total of 214&87:&919#71#
17
$hereafter& the =/8Officio (heriff co.puted the rede.ption price
)based on the ?eneral Ban'in% Act [#A# 5o# 8791]& and $he ural Ban' Act of 1992 #A# 5o# 7D:D, to
be2:&199&792#:7#
18
Chen respondent A-uino was apprised of this& he re.itted on Gune 7& 2772 a cashier0s chec'
for 2D&474&498#:2& representin% the difference between the rede.ption price co.puted b" the =/8Officio (heriff
)2:&199&792#:7, and the a.ount he had earlier paid )21&:88&799#28,# $he =/8Officio (heriff issued Official eceipt
5o# 1::82977 to respondent A-uino& and on Gune 7& 2772& a Certificate of ede.ption#
19
$he certificate reads in
partE
CA==A(& before the e/piration of the one )1, "ear period to redee.& b" virtue of the Deed of Assi%n.ent
e/ecuted b" the 2resident of the 2a.pan%a O.nibus Dev0t# Corp#& !r# DO!;5;C ?# AR<;5O redee.ed the said
propert" in the total a.ount of B;>= !;33;O5 O5= A<5D=D 5;5=$J8BO< $AO<(A5D (=>=5 A<5D=D
BO$J8$CO and :76177 )2:&199&792#:7, paid under Official eceipts 5os# 1::82974 and 1::82977 dated !a"
D1& 2772 and Gune 7& 2772& respectivel"& and have issued this C=$;B;CA$= OB =D=!2$;O5 under the
%uarantees prescribed b" law#
Cit" of (an Bernando )2,& Gune 7& 2772#
27
On the sa.e da"& petitioner0s representative =lvin e"es went to the office of the =/8Officio (heriff and in-uired how
the a.ount of 2:&199&792#:7 was arrived at# $he =/8Officio (heriff e/plained to hi. that she had accepted the
rede.ption price in accordance with the provisions of #A# 5os# 8791 and 7D:D# (he further e/plained that she had
furnished petitioner with a cop" of the Certificate of ede.ption she had earlier e/ecutedF however& e"es refused
to receive a cop" of the Certificate of ede.ption#
21
On Gune 17& 2772& petitioner& throu%h its president o%elio D# e"es& e/ecuted an Affidavit of Consolidation
22
over
the propert"# ;t was alle%ed therein that respondent 2ODC or an" other person6entit" with the ri%ht of rede.ption did
not e/ercise their ri%ht to repurchase within one "ear fro. Gune 7& 2771# $he affidavit was filed with the Office of the
e%ister of Deeds on the sa.e da"# $he penulti.ate para%raph readsE
$hat the aforesaid !ort%a%ors nor an" other persons or entit" entitled with the ri%ht of rede.ption did not e/ercise
their ri%ht of repurchase and a period of .ore than one )1, "ear fro. Gune 7& 2771 has alread" elapsed and b"
reason thereof& the (an Bernando ural Ban'& ;nc# do hereb" re-uest the e%istr" of Deeds of the province of
2a.pan%a& after the pa".ent of the lawful fees of this office to cancel $ransfer Certificate of $itle 5o# 27:79:8 and
to issue a new Certificate of $itle in favor of the (an Bernando ural Ban'& ;nc#
2D
$he affidavit was entered in the e%istr" Boo' in the Office of the e%ister of Deeds as =ntr" 5o# 789# Aowever& no
new title was issued in favor of petitioner#
;n a letter
29
dated Gune 17& 2772& the =/8Officio (heriff infor.ed petitioner that respondent A-uino had redee.ed the
propert" and re-uested petitioner& throu%h its president& to turn over the owner0s duplicate of $C$ 5o# 27:79:8
before the rede.ption price of 2:&199&792#:7 would be re.itted# (he appended to the letter a cop" of the
Certificate of ede.ption she had e/ecuted in favor of respondent A-uino# Aowever& petitioner refused to do so#
!eanwhile& the =/8Officio (heriff fell ill and failed to report for wor' up to Gune 19& 2772# (he then wrote petitioner&
reiteratin% her re-uest for the deliver" of $C$ 5o# 27:79:8# (he& however& failed to file the Certificate of
ede.ption with the e%ister of Deeds#
2:
Chen respondent A-uino learned that petitioner had filed an Affidavit of Consolidation& he sent a letter
24
dated Gune
19& 2772 to the e%ister of Deeds& infor.in% the latter that he was the assi%nee under the Deed of Assi%n.ent
e/ecuted b" respondent 2ODC& and that as shown b" the appended Certificate of ede.ption he had redee.ed
the propert" on Gune 7& 2772# Ae also insisted that he had redee.ed the propert" within the period therefor& and
re-uested the e%ister of Deeds not to re%ister the Affidavit of Consolidation and to cancel $C$ 5o# 27:79:8#
27
On Gune 17& 2772& respondent A-uino filed the Certificate of ede.ption e/ecuted b" the =/8Officio (heriff with the
Office of the e%ister of Deeds# $he e%ister of Deeds entered the Certificate of ede.ption in the 2ri.ar" =ntr"
Boo' of =ntries under =ntr" 5o# 127:#
28
On even date& the e%ister of Deeds entered the deed of assi%n.ent
e/ecuted b" respondent 2ODC in favor of A-uino in the 2ri.ar" Boo' of =ntries as =ntr" 5o# 1278#
!eanwhile& the e%istrar of Deeds was in a -uandar"F he was not certain whether it was proper for hi. to issue a
new title to petitioner# ;n a letter
29
dated Gune 18& 2772& he re-uested the Ad.inistrator of the 3and e%istration
Authorit" )3A,& b" wa" of consulta& to issue an opinion on whether a new title should be issued to petitioner& or the
Certificate of ede.ption in favor of respondent A-uino should be annotated at the dorsal portion of $C$ 5o#
27:79:8#
On October 1:& 2772& petitioner filed a 2etition for a Crit of 2ossession in the $C of 2a.pan%a# 2etitioner alle%ed
that it had purchased the propert" at public auction as evidenced b" the Certificate of (ale appended theretoF the
Certificate of (ale was annotated at the dorsal portion of $C$ 5o# 27:79:8 on Gune 7& 2771F as far as he was
concerned& the ri%ht of respondent 2ODC to redee. the propert" had alread" e/piredF and under Act 5o# D1D:& as
a.ended& it is entitled to the possession of the propert" durin% or even after the rede.ption period# ;t pra"ed that
the correspondin% writ of possession over the propert" be issued in its favor upon the filin% of the re-uisite bond in
an a.ount e-uivalent to the .ar'et value of the propert" or in an a.ount as the court .a" direct#
D7
2etitioner
appended to its petition a certified true cop" of the Certificate of (ale e/ecuted b" the =/8Officio (heriff in its favor
over the propert"# $he case was doc'eted as 3C 5o# 897#
$he court set the hearin% of the petition at 8ED7 a#.# on 5ove.ber 28& 2772 and sent the correspondin% notices to
respondent 2ODC#
D1
Durin% the hearin%& respondent 2ODC opposed the petition on the followin% %roundsE petitioner deliberatel"
concealed the fact that the propert" had been redee.ed on Gune 7& 2772F respondent A-uino had
paid2:&199&792#77 as rede.ption .one" based on the co.putation of petitionerF the =/8Officio (heriff had
e/ecuted a Certificate of ede.ption in favor of respondent A-uino on Gune 7& 2772& a cop" of which petitioner
refused to receiveF respondent A-uino& as assi%nee& had offered to redee. the propert" on !a" 29& 2772 and
tendered the a.ount of 21&:88&799#28& but petitioner insisted that the rede.ption price was 214&87:&919#71&
includin% the loan account of the spouses ?arbesF that since respondent A-uino had redee.ed the propert" fro.
the =/8Officio (heriff on Gune 7& 2772 within the one8"ear period after pa"in% the total a.ount of 2:&199&792#:7& it
was respondent A-uino& and not petitioner& who is entitled to a writ of possessionF
D2
and that besides& he was alread"
in possession of the propert"#
DD
;t insisted that petitioner filed its petition to pree.pt the resolution of the 3A on the
consulta of the e%ister of Deeds# $he oppositor pra"ed that the petition be denied and that it be %ranted such other
relief and re.edies Hust and e-uitable under the pre.ises#
;n its epl"& petitioner averred that since respondent A-uino had offered an a.ount short of the rede.ption price
of 214&87:&919#71& under (ection 97 of #A# 5o# 8791 there was no valid rede.ption of the propert"# $he loan of
the spouses ?arbes was intended for respondent 2ODC as borrower# 2etitioner alle%ed that it would have been
foolhard" for it to %rant a 29:7&777#77 loan to the spouses without an" securit"# Aence& unless the entire loan
account of respondent 2ODC and the spouses ?arbes )214&87:&919#71, was paid& the .ort%a%e persisted#
D9
;t
further posited that& since respondent 2ODC had alread" assi%ned its ri%ht to redee. the propert"& the oppositor
had no .ore ri%ht or interest over the propert"F it was thus not the proper part" as oppositor#
B" wa" of reHoinder& respondent 2ODC averred that the Certificate of ede.ption e/ecuted b" the =/8Officio (heriff
is presu.ed valid and le%alF the $C& actin% as a 3and e%istration Court& had no Hurisdiction to pass upon the
validit" of the Certificate of ede.ptionF
D:
upon the e/ecution of the Deed of Assi%n.ent in favor of respondent
A-uino and the pa".ent of rede.ption .one"& the latter had ta'en actual possession of the propert"F based on the
Certificate of ede.ption& he had developed the propert" and introduced a lot of i.prove.entsF and since a third
part" was in possession of the propert"& possession could no lon%er be %iven to petitioner via a writ of possession#
espondent 2ODC .aintained that petitioner was not entitled to a writ of possession until the title was consolidated
in its na.e#
On Dece.ber 12& 2772& the 3A resolved the consulta of the e%ister of Deeds as followsE
Chile it is clear fro. the records that an a%ent of the assi%nee tried to redee. the propert" within the one )1, "ear
period of rede.ption and& in fact& the Certificate of ede.ption was e/ecuted b" the Cler' of Court and =/8Officio
(heriff of the e%ional $rial Court of (an Bernando Cit"& 2a.pan%a on the last da" of the rede.ption period& the
sa.e was not re%istered before the e%istr" of Deeds within the one )1, "ear period of rede.ption# Borne b" the
records is the receipt before the re%istr" of the Certificate of ede.ption and other related docu.ents on Gune 17&
2772 for annotation# Aence& the sa.e was not re%istered within the aforesaid one )1, "ear rede.ption period#
Considerin% that the docu.ent first presented and entered in the 2ri.ar" =ntr" Boo' of the re%istr" is the Affidavit of
Consolidation in favor of the creditors& the .ort%a%ee ban' and not the Certificate of ede.ption in favor of the
assi%nee of the debtor8.ort%a%or& althou%h ad.ittedl"& the latter instru.ent was e/ecuted on the last da" of the
rede.ption period but not& in fact& re%istered within the sa.e period& under the pre.ises& the consolidatin%
.ort%a%ee is possessed with a superior ri%ht than the rede.ptioner# <nder the law& the first in re%istration is the first
in law#
D4
$he dispositive portion of the esolution of the 3A Ad.inistrator readsE
CA==BO=& pre.ises considered& this Authorit" is of the opinion and so holds that the Affidavit of Consolidation
is superior over the Certificate of ede.ption& hence& re%istrable on $C$ 5o# 27:79:8#
(O OD==D#
D7
espondents filed a .otion for reconsideration of the esolution of the 3A Ad.inistrator#
On Dece.ber 27& 2772& the court in 3C 5o# 897 issued an Order %rantin% the petition and ordered the issuance of
a writ of possession& on a bond e-uivalent to the .ar'et value of the propert"# ;t ruled that petitioner& as purchaser at
the foreclosure sale& was entitled to a writ of possession# $he -uestion of the validit" of the rede.ption .ade b"
respondent A-uino& to who. respondent 2ODC had assi%ned its ri%ht to redee. the propert"& as well as the
re%istrabilit" of the Affidavit of Consolidation e/ecuted b" petitioner& throu%h its president& and the validit" of the
Certificate of ede.ption e/ecuted b" the cler' of court and =/8Officio (heriff of the $C cannot be raised as a
Hustification for opposin% the petition# ;t declared that the proceedin%s for the issuance of a writ of possession were
e/8parte and it was the court0s .inisterial dut" to issue the writ#
Burther.ore& the court held that petitioner0s ri%ht to the possession of the foreclosed propert" is bolstered b" the fact
that no third part" was actuall" holdin% the propert" adverse to respondent 2ODC# espondent A-uino& as assi%nee
of respondent 2ODC0s ri%ht to redee. could not be considered a part" holdin% the propert" adversel" to respondent
2ODC# 5either was there an" pendin% civil case involvin% the ri%hts of third parties# Conse-uentl"& it was the
.inisterial dut" of the $C to issue a writ of possession in favor of petitioner& as the winnin% bidder in the public
auction#
$he court declared that the purpose of the law in re-uirin% the filin% of a bond is to answer for the reasonable rental
for a period of twelve .onths for the use of the propert" durin% the period of rede.ption# (ince the period of
rede.ption had alread" e/pired& a bond was no lon%er necessar"# 5evertheless& the court %ranted petitioner0s
pra"er to put up a bond in the a.ount e-uivalent to the .ar'et value of the propert"# $he court ruled that petitioner
was entitled to the possession of the propert"& to%ether with i.prove.ents e/istin% thereon& as a .ere incident of its
ri%ht of ownership#
D8
espondents filed a .otion for reconsideration of the order& contendin% that petitioner was entitled to a writ of
possession after the lapse of the period for rede.ption onl" if a $orrens title had been issued in its favor# (ince the
one8"ear rede.ption period had lapsed without petitioner havin% been issued an" $orrens title& the court erred when
it %ranted the petition for a writ of possession# ;t also pointed out that petitioner had failed to present an" title under
its na.e#
Bor its part& petitioner stated in its Opposition to respondents0 .otion for reconsideration& that it was not necessar"
that a bu"er in a public auction be issued a title in its na.e before it could be entitled to a writ of possession upon
the e/piration of the rede.ption period# $he title is .erel" an evidence of ownershipF it is the Certificate of (ale that
vests ownership in the bu"er over the propert" sold# ;t insisted that the purchaser was entitled to the possession of
the propert" even after the lapse of the rede.ption period#
D9
On Bebruar" 18& 277D& the court issued an Order den"in% the .otion for reconsideration of respondents# $he court
ruled that petitioner& as purchaser at public auction& ac-uired the ri%ht to possess the propert"& and the ri%ht of the
.ort%a%or fro. the ti.e it purchased the propert" and not fro. the issuance of the title over the propert" in its
na.e#
97
On !arch 4& 277D& respondents filed a 2etition for Certiorari with the CA& assailin% the orders of the $C as followsE
;# 2ublic respondent co..itted %rave abuse of discretion a.ountin% to lac' or e/cess of Hurisdiction when it
%ranted private respondent0s pra"er for an issuance of writ of possession in its favor when serious issues
affectin% private respondent0s ri%ht to possess the subHect lot is still pendin% deter.ination b" the 3and
e%istration Authorit"#
;;# 2ublic respondent co..itted %rave abuse of discretion a.ountin% to lac' or e/cess of Hurisdiction when it
allowed private respondent to post a rede.ption bond be"ond the rede.ption period#
91
$he" averred that the $C should have denied the petition for a writ of possession pendin% the resolution of the
consulta b" the 3A# $he" asserted that the issues before the $C were substantial& na.el"E )a, whether
respondent A-uino& as the assi%nee of the ri%ht of respondent 2ODC to redee. the propert"& had the ri%ht to do soF
)b, whether he had redee.ed the propert" as evidenced b" the Certificate of ede.ption e/ecuted b" the =/8
Officio (heriffF and )c, the rede.ption price# $he" insisted that the obli%ation of the $C to issue the writ of
possession ceased to be .inisterial#
espondents .aintained that the" had the ri%ht to redee. the propert"# (ince there were %rave doubts about the
parties0 contentions as to who had the ri%ht to possess the propert"& the $C should have dis.issed the petition for
a writ of possession pendin% deter.ination of the substantial issues b" the 3A# $he trial court should have relied
on the rulin%s of this Court in ivero de Orte%a v# 5atividad&
92
Barican v# ;nter.ediate Appellate Court&
9D
and (ulit v#
Court of Appeals#
99
espondents asserted that petitioner was not entitled to a writ of possession because contrar" to
(ection 7 of Act 5o# D1D:& it posted a bond be"ond the period for rede.ption# $he case was doc'eted as CA8?##
(2 5o# 7:787#
;n its Co..ent on the petition& petitioner insisted on its ri%ht to a writ of possession and that the trial court acted in
accordance with law and the facts of the case# !oreover& it averred that the $C& sittin% as a land re%istration court&
had Hurisdiction over the petition for a writ of possessionF thus& the re.ed" of respondents was to appeal the
assailed order and not to file a petition for certiorari in the CA#
$he CA failed to resolve the plea of respondents for a te.porar" restrainin% order# 2etitioner filed a .otion for
e/ecution of the Dece.ber 27& 2772 Order of the trial court in 3C 5o# 897# $he $C %ranted the .otion and
issued a writ of possession on !a" 19& 277D#
9:
$he (heriff i.ple.ented the writ and placed petitioner in possession
of the propert"#
On (epte.ber 9& 277D& petitioner filed a Co.plaint
94
a%ainst respondents and the =/8Officio (heriff in the $C of
2a.pan%a& for the nullification of the Deed of Assi%n.ent e/ecuted b" 2ODC in favor of A-uino and of the
Certificate of ede.ption e/ecuted b" the =/8Officio (heriff& and for da.a%es with a plea for inHunctive relief#
2etitioner filed an A.ended6(upple.ental Co.plaint and pra"ed that Hud%.ent be rendered in its favor& thusE
CA==BO=& it is pra"ed that a Hud%.ent be rendered in favor of the plaintiff and a%ainst the defendantsE
a, Annullin% the Deed of Assi%n.ent dated !a" 11& 2772 e/ecuted b" and between defendants 2ODC and
AR<;5O#
b, Declarin% the Certificate of ede.ption dated Gune 7& 2771 issued b" the defendant Cler' of Court and
=/8Officio (heriff as null and void ab initio#
c, Orderin% the defendants& Hointl" and severall"& to pa" the plaintiff the a.ount ofE
A# 2177&777#77 as and for .oral da.a%es#
B# 2177&777#77 as and for e/e.plar" da.a%es#
C# 2:7&777#77 as and for attorne"0s fees plus the costs of suit#
O$A= =3;=B and re.edies Hust e-uitable are also pra"ed for#
97
$he case was doc'eted as Civil Case 5o# 1278:#
!eanwhile& the 3A Ad.inistrator issued a esolution recallin% the esolution dated Dece.ber 12& 2772 and
declared that the Certificate of ede.ption e/ecuted b" the =/8Officio (heriff was superior to the Affidavit of
Consolidation filed b" petitioner# Based on the Gune 19& 2772 letter of the =/8Officio (heriff and the Certificate of
ede.ption& respondent A-uino& who was the assi%nee of respondent 2ODC& had redee.ed the propert" on Gune
7& 2772# 2etitioner was alread" aware as earl" as Gune 7& 2772 of the rede.ption of the propert" b" respondent
A-uinoF hence& the date of re%istration of the Certificate of ede.ption on Gune 17& 2772 was of no le%al
conse-uence#
Accordin%l"& on (epte.ber 17& 277D& respondents filed )in 3C 5o# 897, a Goint !otion to -uash the writ of
possession issued b" the trial court and for the issuance of a new $C$# $he" averred that the 3A Ad.inistrator
finall" resolved that the Certificate of ede.ption issued b" the =/8Officio (heriff was superior to the Affidavit of
Consolidation of petitioner# On the basis of the 3A Order& the e%ister of Deeds issued $C$ 5o# :999788A over the
propert" in the na.e of respondent A-uino as the re%istered owner#
$he court denied the Hoint .otion on 5ove.ber 17& 277D& holdin% that respondent A-uino& as the re%istered owner
of the subHect propert"& should initiate the appropriate action in the proper court in order to e/clude petitioner or an"
other person fro. the ph"sical possession of his propert"#
98
$he court ruled that after placin% petitioner in
possession of the propert"& the court had lost Hurisdiction over the case#
On 5ove.ber 27& 277D& respondents filed before the CA their Goint 5otice of Appeal
99
fro. the 5ove.ber 17& 277D
Order of the $C in 3C 5o# 897# $he appeal was doc'eted as CA8?## C> 5o# 81477#
On 5ove.ber 28& 277D& petitioner filed a !anifestation&
:7
statin% that under (ection 97 of #A# 5o# 8791& the period
to e/ercise the ri%ht to redee. shall be until but not after the re%istration of the Certificate of Boreclosure (ale with
the e%ister of Deeds which is in no case shall be .ore than three )D, .onths after the foreclosure& whichever is
earlier#
:1
$he Certificate of Boreclosure (ale was re%istered on Gune 7& 2771 and since respondent 2ODC had
assi%ned6transferred the ri%ht to redee. the propert" to respondent A-uino onl" on !a" 11& 2772& the rede.ption
period had alread" lapsed#
On Dece.ber 18& 277D& the CA rendered Hud%.ent in CA8?## (2 5o# 7:787 %rantin% the petition of respondents
and settin% aside the assailed orders of the trial court# $he fallo of the decision readsE
CA==BO=& the petition is ?A5$=D and the orders dated Dece.ber 27& 277[2] and Bebruar" 18& 277D of
respondent Hud%e are >ACA$=D and (=$ A(;D=#
(O OD==D#
:2
$he appellate court ruled that the Dece.ber 27& 2772 Order of the $C %rantin% the petition for a writ of possession
was interlocutor" and not finalF hence& it .a" be -uestioned onl" via petition for certiorari under ule 4: of the ules
of Court& not b" appeal# $he CA cited the rulin% of this Court in Cit" of !anila v# (errano#
:D
$he CA further held that the $C co..itted %rave abuse of discretion a.ountin% to e/cess or lac' of Hurisdiction
when it %ranted the application of petitioner for a writ of possession# espondent A-uino& as successor8in8interest of
respondent 2ODC& had redee.ed the propert" on Gune 7& 2772 in accordance with (ection 4 of Act 5o# D1D:& as
a.ended& and in relation to (ection 27)a,& ule D9 of the ules of Court# $hus& althou%h the Certificate of
ede.ption was not re%istered before the e%ister of Deeds& he was entitled to the possession thereofF the
re%istration of the Certificate of ede.ption in the Office of the e%ister of Deeds is .erel" re-uired to bind third
persons# Accordin% to the CA& petitioner .a" not refuse the rede.ption b" respondent A-uino because the ri%ht of
petitioner over the propert" was .erel" inchoate until after the rede.ption period had lapsed without the ri%ht bein%
e/ercised b" those allowed b" law#
2etitioner .oved for the reconsideration of its decision on the %round that& under (ection 97 of #A# 5o# 8791&
respondent 2ODC had onl" up to the re%istration of the Certificate of Boreclosure (ale )Gune 7& 2771, but not .ore
than three )D, .onths fro. the public auction& whichever is earlier& within which to redee. the propert"F respondent
2ODC& on the other hand& assi%ned its ri%ht to redee. the propert" on !a" 11& 2772& lon% after the rede.ption
period had e/piredF hence& respondent 2ODC had no .ore ri%ht to assi%n it to respondent A-uino# Conse-uentl"&
the latter had no ri%ht to redee. the propert"& and the Certificate of ede.ption e/ecuted b" the =/8Officio (heriff
was null and void# !oreover& respondent A-uino failed to pa" the correct a.ount of the rede.ption price# 2etitioner
clai.ed that it acted in %ood faith when it had its Affidavit of Consolidation re%istered in the e%ister of Deeds# ;n
su.& petitioner ascribes error on the part of the CA in nullif"in% the order of the $C#
Aowever& the CA denied the .otion of petitioner on the %round that b" invo'in% (ection 97 of #A# 5o# 8791& it
thereb" chan%ed its theor" on appeal which& as held b" this Court in Dalu.pines v# Court of Appeals&
:9
is
prohibited#
::
2etitioner (BB; then filed a petition for review on certiorari with this Court for the reversal of the Decision and
esolution of the CA& and raised the followin% issuesE
;
Chether or not the Court of Appeals seriousl" erred when it sanctioned the espondents0 resort to Certiorari under
ule 4: of the evised ules of Court& -uestionin% a final order and not an interlocutor" order of the $C#
;;
Chether or not the respondents are %uilt" of foru. shoppin% b" ta'in% both the re.ed" of appeal and certiorari on
the sa.e issues and substantiall" the sa.e set of facts#
;;;
Chether or not the Court of Appeals co..itted serious error when it ruled on a .atter that was not and could not
have been sub.itted for its adHudication#
;>
Chether or not the Aonorable Court is precluded fro. reviewin% the factual findin%s of the Court of Appeals#
>
Chether or not the petitioner (AB= Ban'& as well as the Aonorable Court& is precluded fro. appl"in% the
%overnin% law& under which the rede.ption period had clearl" e/pired#
:4
On the first issue& petitioner avers that the Dece.ber 27& 2772 Order of the $C %rantin% the writ of possession in
its favor was finalF hence& the re.ed" of respondents herein& as oppositors below& was to appeal to the CA and not
to file a special civil action for certiorari# ;n fact& petitioner asserts& the writ of possession issued b" the $C had
alread" been i.ple.ented when respondents filed their petition in the CA on Dece.ber 17& 277D#
2etitioner also clai.s that the assailed order of the $C was in accordance with the law and the ules of CourtF
even if it is .erel" an error of Hud%.ent and not a Hurisdictional error& resort to a petition for certiorari was
inappropriate# espondents were& thus& proscribed fro. filin% a petition for certiorari in the CA since the appeal was
an ade-uate and speed" re.ed" in the ordinar" course of law and& indeed& the" appealed the 5ove.ber 17& 277D
Order of the $C in 3C 5o# 897 to the CA in CA8?## C> 5o# 81477# ;t had also posted a bond in the $C to
answer for an" da.a%es# $he rulin% of this Court in Cit" of !anila v# (errano
:7
is& therefore& not applicable#
2etitioner further avers that the CA erred in appl"in% Act 5o# D1D:& as a.ended& instead of (ection 97 of #A# 5o#
8791& the ?eneral Ban'in% Act of 2777# espondent 2ODC had the ri%ht to redee. the propert" not later than Gune
7& 2771# <ndisputabl"& respondent 2ODC failed to redee. the propert" before the re%istration of the Certificate of
(aleF hence& when respondent 2ODC e/ecuted the deed of assi%n.ent on !a" 11& 2772 in favor of respondent
A-uino& it had no .ore ri%ht to redee. the propert"#1vvpi1.n!t
$hus& it could not have assi%ned the ri%ht to redee. the propert" to respondent A-uino# $he latter redee.ed the
propert" onl" on Gune 7& 2772& lon% after the Certificate of (ale was re%istered on Gune 7& 2771# (ince there was no
valid rede.ption of the propert" b" respondent A-uino& petitioner clai.ed that it was entitled to the writ of
possession of the propert"# ;t further insisted that the $C& actin% as a 3and e%istration Court& had li.ited
HurisdictionF it had no Hurisdiction to resolve the issues on the validit" of the deed of assi%n.ent and the le%alit" of
respondent A-uino0s rede.ption of the propert"& as well as its ownership# Onl" the $C in the e/ercise of its %eneral
Hurisdiction in Civil Case 5o# 1274: )where petitioner assailed the deed of assi%n.ent and the Certificate of
ede.ption e/ecuted b" the =/8Officio (heriff, was vested with Hurisdiction to resolve these issues# ;n resolvin%
these issues& the CA thereb" pree.pted the $C in Civil Case 5o# 1274: and deprived it of due process# ;n an"
event& accordin% to petitioner& the pronounce.ent of the CA on the validit" of the Deed of Assi%n.ent and
Certificate of ede.ption was .erel" an obiter dictu.#
2etitioner posits that the CA0s reliance on the rulin%s of this Court in ivero and Barican was erroneous because the
ri%ht of third parties holdin% the propert" adverse to respondent 2ODC was not involved# 5either was the pendenc"
of the consulta of the e%ister of Deeds in the 3A a bar to the issuance of a writ of possession in its favor b" the
$C actin% as a land re%istration court# ;t was the .inisterial dut" of the $C to issue a writ of possession over the
propert" to petitioner as purchaser at the foreclosure sale durin% and after the rede.ption period#
2etitioner further .aintains that respondents filed their petition for certiorari in the CA and delineated the issues to
be resolved# ;t did not chan%e its theor" in the CA when it filed its .otion for reconsideration of the CA decision#
Citin% the rulin% in ivera v# Court of Appeals&
:8
petitioner avers that a theor" of the case is that which refers to the
facts on which the cause of action is based# $he facts are those alle%ed in the co.plaint and satisfactoril" proven at
the trial# ;t insists that it did not chan%e the set of facts that it sub.itted and presented to the CA# ;t was not
estopped fro. citin% (ection 97 of #A# 5o# 8791# ;t had posited in the $C that respondents failed to redee. the
propert" before the e/piration of the rede.ption period# Besides& as held b" this Court in 3ian%a 3u.ber Co.pan"
v# 3ian%a $i.ber Co#& ;nc#&
:9
a part" .a" chan%e his theor" on appeal when the factual basis thereof would not
re-uire presentation of an" further evidence b" the adverse part" to enable it to properl" .eet the issue raised in the
new theor"# $he failure of a part" to invo'e an applicable law in a %iven case does not create a vested ri%ht& and an
erroneous interpretation does not %ive rise to estoppel# =ven if petitioner did not invo'e #A# 5o# 8791& it behooved
the CA to appl" the law before it& prescindin% fro. the theor" advocated b" the parties# 5either .a" respondents
invo'e estoppel# $he" were aware of the provisions of the law as well as the facts and circu.stances warrantin% the
application thereof#
2etitioner also i.putes foru. shoppin% to respondents because the latter raised the issue of possession in both CA8
?## (2 5o# 7:787 and CA8?## C> 5o# 81477# 2etitioner also accuses respondents of usin% the decision in CA8
?## (2 5o# 7:787 to support their contention in CA8?## C> 5o# 81477# ;t further contends that the writ of
possession issued b" the $C was void#
Bor their part& respondents aver that the $C co..itted %rave abuse of its discretion in issuin% the Dece.ber 27&
2772 and Bebruar" 18& 277D Orders# Aence& the decision of the CA was in accord with the law and the ules of
Court# $he" assert that %iven the circu.stances obtainin% in this case& their petition for certiorari was proper#
Althou%h the" had the ri%ht to appeal the orders of the $C& the sa.e was not a speed" and ade-uate re.ed"#
$he" insist that the" were not %uilt" of foru. shoppin% because the onl" issue in CA8?## C> 5o# 81477 was the
validit" of the Order of the $C dated 5ove.ber 17& 277D& which denied their .otion to -uash the writ of
possession# On the other hand& challen%ed in CA8?## (2 5o# 7:787 was the Order of the $C %rantin% the petition
for a writ of possession# (ince the =/8Officio (heriff declared in the Certificate of ede.ption that respondent
A-uino redee.ed the propert" within the one8"ear period& petitioner was estopped fro. rel"in% on (ection 97 of
#A# 5o# 8791# espondents point out that in the $C and the CA& petitioner had insisted that respondent A-uino
had one )1, "ear fro. Gune 7& 2771 within which to redee. the propert" as provided in Act 5o# D1D:& as a.endedF
thus& petitioner was proscribed fro. chan%in% the theor" it pursued in the $C and the CA# !oreover& under (ection
71 of #A# 5o# 8791& rede.ption b" entities of propert" .ort%a%ed is %overned b" #A# 5o# 7D:D& under which the
period of rede.ption is one "ear fro. the re%istration of the Certificate of (ale#
$he ulin% of the Court
$he petition is .eritorious#
$he CA erred in holdin% that the Order of the $C %rantin% the petition for a writ of possession was .erel"
interlocutor"# ;nterlocutor" orders are those that deter.ine incidental .atters and which do not touch on the .erits
of the case or put an end to the proceedin%s# A petition for certiorari under ule 4: of the ules of Court is the
proper re.ed" to -uestion an i.provident interlocutor" order#
47
On the other hand& a final order is one that disposes
of the whole .atter or ter.inates the particular proceedin%s or action leavin% nothin% to be done but to enforce b"
e/ecution what has been deter.ined# ;t is one that finall" disposes of the pendin% action so that nothin% .ore can
be done with it in the lower court#
41
$he re.ed" to -uestion a final order is appeal under ule 91 of the ules of
Court#
Ce a%ree with petitioner0s contention that the Dece.ber 27& 2772 Order of the $C %rantin% the petition for a writ of
possession is final# $he re.ed" of respondents was to appeal to the CA b" filin% their notice of appeal within the
period therefor#
42
;ndeed& when the $C denied on 5ove.ber 17& 277D the .otion of respondents to -uash the writ
the court had earlier issued& respondents appealed to the CA under ule 91 of the ules of Court# $he appeal was
doc'eted as CA8?## C> 5o# 81477# espondents did not file a supple.ental petition in CA8?## (2 5o# 7:787#
$he reliance of the CA in Cit" of !anila v# (errano
4D
is .isplaced# ;n that case& the trial court issued the writ of
possession in connection with a co.plaint for e/propriation under ule 47 of the ules of Court# (uch a writ is
interlocutor" in nature#
49
On the other hand& an order %rantin% a writ of possession under Act 5o# D1D:& as a.ended&
is of a different species# $he latter order is final& hence& appealable#
4:
=ven if the trial court erred in %rantin% a
petition for a writ of possession& such an error is .erel" an error of Hud%.ent correctible b" ordinar" appeal and not
b" a petition for a writ of certiorari#
44
(uch writ cannot be le%all" used for an" other purpose#
Certiorari is a re.ed" narrow in its scope and infle/ible in character#1a"#$pi 1.net ;t is not a %eneral utilit" tool in the le%al
wor'shop#
47
Certiorari will issue onl" to correct errors of Hurisdiction and not to correct errors of Hud%.ent# An error of
Hud%.ent is one which the court .a" co..it in the e/ercise of its Hurisdiction& and which error is reviewable onl" b"
an appeal# =rror of Hurisdiction is one where the act co.plained of was issued b" the court without or in e/cess of
Hurisdiction and which error is correctible onl" b" the e/traordinar" writ of certiorari# As lon% as the court acts within
its Hurisdiction& an" alle%ed errors co..itted in the e/ercise of its discretion will a.ount to nothin% .ore than .ere
errors of Hud%.ent& correctible b" an appeal if the a%%rieved part" raised factual and le%al issuesF or a petition for
review under ule 9: of the ules of Court if onl" -uestions of law are involved#
48
A cert writ .a" be issued if the court or -uasi8Hudicial bod" issues an order with %rave abuse of discretion a.ountin%
to e/cess or lac' of Hurisdiction# ?rave abuse of discretion i.plies such capricious and whi.sical e/ercise of
Hud%.ent as is e-uivalent to lac' of Hurisdiction or& in other words& where the power is e/ercised in an arbitrar"
.anner b" reason of passion& preHudice& or personal hostilit"& and it .ust be so patent or %ross as to a.ount to an
evasion of a positive dut" or to a virtual refusal to perfor. the dut" enHoined or to act at all in conte.plation of
law#
49
!ere abuse of discretion is not enou%h# !oreover& a part" is entitled to a writ of certiorari onl" if there is no
appeal nor an" plain& speed" or ade-uate relief in the ordinar" course of law#
$he raison d0etre for the rule is that when a court e/ercises its Hurisdiction& an error co..itted while so en%a%ed
does not deprive it of the Hurisdiction bein% e/ercised when the error was co..itted# ;f it did& ever" error co..itted
b" a court would deprive it of its Hurisdiction and ever" erroneous Hud%.ent would be a void Hud%.ent# ;n such a
situation& the ad.inistration of Hustice would not survive# Aence& where the issue or -uestion involved affects the
wisdo. or le%al soundness of the decision K not the Hurisdiction of the court to render said decision K the sa.e is
be"ond the province of a special civil action for certiorari#
<nder (ection 8& Act 5o# D1D:& as a.ended& the debtor8.ort%a%or .a" file a .otion to set aside a writ of e/ecutionE
(ection 8# (ettin% aside of sale and writ of possession# K $he debtor .a"& in the proceedin%s in which possession
was re-uested& but not later than thirt" da"s after the purchaser was %iven possession& petition that the sale be set
aside and the writ of possession cancelled& specif"in% the da.a%es suffered b" hi.& because the .ort%a%e was not
violated or the sale was not .ade in accordance with the provisions hereof& and the court shall ta'e co%ni1ance of
this petition in accordance with the su..ar" procedure provided for in section one hundred and twelve of Act
5u.bered Bour hundred and ninet"8si/F and if it finds the co.plaint of the debtor Hustified& it shall dispose in his
favor of all or part of the bond furnished b" the person who obtained possession# =ither of the parties .a" appeal
fro. the order of the Hud%e in accordance with section fourteen of Act 5u.bered Bour hundred and ninet"8si/F but
the order of possession shall continue in effect durin% the pendenc" of the appeal#
$he purchaser .a" appeal the order to the CA if his petition is denied b" the $C# Aowever& durin% the pendenc" of
the appeal& the purchaser .ust be placed in possession of the propert"& such possession bein% predicated on the
ri%ht of ownership#
77
$he threshold issue between petitioner and respondents in the $C was the correct a.ount of rede.ption .one"
under (ection 97 of #A# 5o# 8791# espondent A-uino had the ri%ht to file an action a%ainst petitioner in the $C in
the e/ercise of its %eneral Hurisdiction to enforce rede.ption within the rede.ption period to preserve its ri%ht to
redee. the foreclosed propert"#
71
;t bears stressin% that the controvers" between the parties relates to the precise
a.ount of rede.ptionE petitioner contended that& under the real estate .ort%a%e e/ecuted b" respondent 2ODC in
its favor& the loan account of the spouses ?arbes was secured b" the propert" covered b" said deedF on the other
hand& respondents averred that onl" the loan account of respondent 2ODC was secured b" the .ort%a%e of its
propert"# ;ndeed& the parties could have raised the issue of the rede.ption period under the second para%raph of
(ection 97 of #A# 5o# 8791# $he provision readsE
5otwithstandin% Act D1D:& Huridical persons whose propert" is bein% sold pursuant to an e/traHudicial foreclosure&
shall have the ri%ht to redee. the propert" in accordance with this provision until& but not after& the re%istration of the
certificate of foreclosure sale with the applicable e%ister of Deeds which in no case shall be .ore than three )D,
.onths after foreclosure& whichever is earlier# Owners of propert" that has been sold in a foreclosure sale prior to
the effectivit" of this Act shall retain their rede.ption ri%hts until their e/piration#
$he .inisterial dut" of the $C to issue a writ of possession does not beco.e discretionar" si.pl" because the
e%ister of Deeds had elevated in consulta to the 3A the -uestion of whether the $orrens title should be issued in
favor of petitioner whose Affidavit of Consolidation was re%istered in the Office of the e%ister of Deeds& or in favor
of respondent A-uino who clai.ed to have redee.ed the propert" on Gune 7& 2772 as %leaned fro. the Certificate
of ede.ption of the =/8Officio (heriff but re%istered onl" on Gune 17& 2772# espondent A-uino clai.ed to have
redee.ed the propert" with the correct rede.ption price and within the one "ear period of rede.ption# $he 3A
hi.self ad.itted that the issue of whether respondent A-uino had re.itted the correct rede.ption price is a .atter
that should be resolved b" the re%ular courts#
72
$he 3A was vested with Hurisdiction to resolve onl" the re%istrabilit"
of the Affidavit of Consolidation e/ecuted b" petitioner and the Certificate of ede.ption e/ecuted b" the =/8Officio
(heriff#
Ce need not rule on the issue of whether respondent A-uino had lawfull" redee.ed the propert" as provided in
(ection 97 of #A# 5o# 8791# $his issue shall be passed upon b" the $C in Civil Case 5o# 1278: after the parties
present their testi.onial and docu.entar" evidence#
;5 3;?A$ OB A33 $A= BO=?O;5?& the petition is ?A5$=D# $he Decision of the Court of Appeals is (=$ A(;D=
A5D =>=(=D#
(O OD==D#