Victor Yam vs. Court of Appeals and Manphil Investment Corporation, G.R. No.

104726,
February 11, 1999
Facts:
On May 10, 1979, private respondent loaned petitioners P500,000.00 under a Loan Agreement
with Assumption of Solidary Responsibility. The contract required 12% yearly interest, 2%
monthly penalty, 1 1/2% monthly service charge, and 10% attorney's costs.   The petitioners'
printing apparatus was mortgaged to fund the first Industrial Guarantee and Lending Fund
(IGLF) loan. 
Petitioners received a second P300,000.00 IGLF loan with two promissory notes dated July 3,
1981 and September 30, 1981. For this, the parties agreed into a new loan agreement  with the
same terms as the first, except that the yearly interest was raised to 14% and the service fee was
decreased to 1%. The chattel mortgage deed was updated. 
Petitioners paid their first P500,000 loan on April 2, 1985. The Central Bank put private
respondent into receivership on November 4, 1985, with Ricardo Lirio as receiver and Cristina
Destajo as in-house examiner.
Petitioners paid P50,000.00 on the second loan on May 17, 1986. They proposed settlement in a
June 18, 1986 letter to private respondent. Private respondent, via its counsel, countered on July
2, 1986, offering to decrease the penalty costs to P140,000.00 if petitioners paid their obligation
by July 30, 1986. 
On July 31, 1986, petitioners owed private respondent P727,001.35.
Petitioners then paid P410,854.47 via Pilipinas Bank check, which Destajo confirmed.  The
check voucher reads "full payment of IGLF LOAN." 
The principle (P295,469.47) and interest (P165,385.00) minus the half payment of P50,000.00
totaled P410,854.47. The private respondent demanded P266,146.88 from petitioners in two
September 4, 1986 and September 25, 1986 letters. Private respondent filed this lawsuit at the
Regional Trial Court of Metro Manila to collect P266,146.88 plus interests, penalties, and
service costs or foreclose the mortgaged machines because petitioners did not reply.
Petitioners said they had paid private responder in their Response. They claimed that petitioner
Victor Yam and his wife, Elena Yam, met with Carlos Sobrepeñas, respondent corporation's
president, who agreed to waive the penalties and service charges if petitioners paid the principal
and interest, computed as of July 31, 1986, less the earlier payment of P50,000.00. This is why
they only paid P410,854.47, they said. The voucher accompanying the Philippine Bank check
petitioners issued said "full payment of IGLF loan."

Issue:
Whether petitioners must pay P266,246.88 for loan penalties and service charges as of July 31,
1986.
Ruling:
Yes, Art. 1270, par. 2 of the Civil Code provides that express condonation must comply with the
forms of donation. 12 Art. 748, par. 3 provides that the donation and acceptance of a movable, the
value of which exceeds P5,000,00, must be made in writing, otherwise the same shall be void. In
this connection, under Art. 417, par. 1, obligations, actually referring to credits, l3 are considered
movable property. In the case at bar, it is undisputed that the alleged agreement to condone
P266,196.88 of the second IGLF loan was not reduced in writing.
And although, petitioners argue that the voucher accompanying the Pilipinas Bank check for
P410,854.47, which states "full payment of IGLF loan," is proof of the oral agreement. The
contention is without merit. Petitioners' desire to make "full payment of IGLF debt" does not
bind private respondent. If the note appeared in a receipt issued by respondent company via its
receiver, it would constitute an admission against interest. Since private respondent approved the
amount, petitioners should have requested a proof of complete payment from respondent
company, as they did for their first IGLF loan of P500,000.00.