REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs. JOSE V. BAGTAS, defendant, FELICIDAD M.

BAGTAS, Administratrix of the Intestate Estate left by the late Jose V. Bagtas, petitioner-appellant. D. T. Reyes, Liaison and Associates for petitioner-appellant. Office of the Solicitor General for plaintiff-appellee. PADILLA, J.: The Court of Appeals certified this case to this Court because only questions of law are raised. On 8 May 1948 Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of Animal Industry three bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a Sahiniwal, of P744.46, for a period of one year from 8 May 1948 to 7 May 1949 for breeding purposes subject to a government charge of breeding fee of 10% of the book value of the bulls. Upon the expiration on 7 May 1949 of the contract, the borrower asked for a renewal for another period of one year. However, the Secretary of Agriculture and Natural Resources approved a renewal thereof of only one bull for another year from 8 May 1949 to 7 May 1950 and requested the return of the other two. On 25 March 1950 Jose V. Bagtas wrote to the Director of Animal Industry that he would pay the value of the three bulls. On 17 October 1950 he reiterated his desire to buy them at a value with a deduction of yearly depreciation to be approved by the Auditor General. On 19 October 1950 the Director of Animal Industry advised him that the book value of the three bulls could not be reduced and that they either be returned or their book value paid not later than 31 October 1950. Jose V. Bagtas failed to pay the book value of the three bulls or to return them. So, on 20 December 1950 in the Court of First Instance of Manila the Republic of the Philippines commenced an action against him praying that he be ordered to return the three bulls loaned to him or to pay their book value in the total sum of P3,241.45 and the unpaid breeding fee in the sum of P199.62, both with interests, and costs; and that other just and equitable relief be granted in (civil No. 12818). On 5 July 1951 Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that because of the bad peace and order situation in Cagayan Valley, particularly in the barrio of Baggao, and of the pending appeal he had taken to the Secretary of Agriculture and Natural Resources and the President of the Philippines from the refusal by the Director of Animal Industry to deduct from the book value of the bulls corresponding yearly depreciation of 8% from the date of acquisition, to which depreciation the Auditor General did not object, he could not return the animals nor pay their value and prayed for the dismissal of the complaint. After hearing, on 30 July 1956 the trial court render judgment — . . . sentencing the latter (defendant) to pay the sum of P3,625.09 the total value of the three bulls plus the breeding fees in the amount of P626.17 with interest on both sums of (at) the legal rate from the filing of this complaint and costs. On 9 October 1958 the plaintiff moved ex parte for a writ of execution which the court granted on 18 October and issued on 11 November 1958. On 2 December 1958 granted an ex-parte motion filed by the plaintiff on November 1958 for the appointment of a special sheriff to serve the writ outside Manila. Of this order appointing a special sheriff, on 6 December 1958, Felicidad M. Bagtas, the surviving spouse of the defendant Jose Bagtas who died on 23 October 1951 and as administratrix of his estate, was notified. On 7 January 1959 she file a motion alleging that on 26 June 1952 the two bull Sindhi and Bhagnari were returned to the Bureau Animal of Industry and that sometime in November 1958 the third bull, the Sahiniwal, died from gunshot wound inflicted during a Huk raid on Hacienda Felicidad Intal, and praying that the writ of execution be quashed and that a writ of preliminary injunction be issued. On 31 January 1959 the plaintiff objected to her motion. On 6 February 1959 she filed a reply thereto. On the same day, 6 February, the Court denied her motion. Hence, this appeal certified by the Court of Appeals to this Court as stated at the beginning of this opinion. It is true that on 26 June 1952 Jose M. Bagtas, Jr., son of the appellant by the late defendant, returned the Sindhi and Bhagnari bulls to Roman Remorin, Superintendent of the NVB Station, Bureau of Animal Industry, Bayombong, Nueva Vizcaya, as evidenced by a memorandum receipt signed by the latter (Exhibit 2). That is why in its objection of 31 January 1959 to the appellant's motion to quash the writ of execution the appellee prays "that another writ of execution in the sum of P859.53 be issued against the estate of defendant deceased Jose V. Bagtas." She cannot be held liable for the two bulls which already had been returned to and received by the appellee. The appellant contends that the Sahiniwal bull was accidentally killed during a raid by the Huk in November 1953 upon the surrounding barrios of Hacienda Felicidad Intal, Baggao, Cagayan, where the animal was kept, and that as such death was due to force majeure she is relieved from the duty of returning the bull or paying its value to the appellee. The contention is without merit. The loan by the appellee to the late defendant Jose V. Bagtas of the three bulls for breeding purposes for a period of one year from 8 May 1948 to 7 May 1949, later on renewed for another year as regards one bull, was subject to the payment by the borrower of breeding fee of 10% of the book value of the bulls. The appellant contends that the contract was commodatum and that, for that reason, as the appellee retained ownership or title to the bull it should suffer its loss due to force majeure. A contract of commodatum is essentially gratuitous.1 If the breeding fee be considered a compensation, then the contract would be a lease of the bull. Under article 1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor in bad faith, because she had continued possession of the bull after the expiry of the contract. And even if the contract becommodatum, still the appellant is liable, because article 1942 of the Civil Code provides that a bailee in a contract of commodatum — . . . is liable for loss of the things, even if it should be through a fortuitous event: (2) If he keeps it longer than the period stipulated . . . (3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting the bailee from responsibility in case of a fortuitous event; The original period of the loan was from 8 May 1948 to 7 May 1949. The loan of one bull was renewed for another period of one year to end on 8 May 1950. But the appellant kept and used the bull until November 1953 when during a Huk raid it was killed by stray bullets. Furthermore, when lent and delivered to the deceased husband of the appellant the bulls had each an appraised book value, to with: the Sindhi, at P1,176.46, the Bhagnari at P1,320.56 and the Sahiniwal at P744.46. It was not stipulated that in case of loss of the bull due to fortuitous event the late husband of the appellant would be exempt from liability. The appellant's contention that the demand or prayer by the appellee for the return of the bull or the payment of its value being a money claim should be presented or filed in the intestate proceedings of the defendant who died on 23 October 1951, is not altogether without merit. However, the claim that his civil personality having ceased to exist the trial court lost jurisdiction over the case against him, is untenable, because section 17 of Rule 3 of the Rules of Court provides that — After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. . . . and after the defendant's death on 23 October 1951 his counsel failed to comply with section 16 of Rule 3 which provides that — Whenever a party to a pending case dies . . . it shall be the duty of his attorney to inform the court promptly of such death . . . and to give the name and residence of the executory administrator, guardian, or other legal representative of the deceased . . . . The notice by the probate court and its publication in the Voz de Manila that Felicidad M. Bagtas had been issue letters of administration of the estate of the late Jose Bagtas and that "all persons having claims for monopoly against the deceased Jose V. Bagtas, arising from contract express or implied, whether the same be due, not due, or contingent, for funeral expenses and expenses of the last sickness of the said decedent, and judgment for monopoly against him, to file said claims with the Clerk of this Court at the City Hall Bldg., Highway 54, Quezon City, within six (6) months from the date of the first publication of this order, serving a copy thereof upon the aforementioned Felicidad M. Bagtas, the appointed administratrix of the estate of the said deceased," is not a notice to the court and the appellee who were to be notified of the defendant's death in accordance with the above-quoted rule, and there was no reason for such failure to notify, because the attorney who appeared for the defendant was the same who represented the administratrix in the special proceedings instituted for the administration and settlement of his estate. The appellee or its attorney or representative could not be expected to know of the death of the defendant or of the administration proceedings of his estate instituted in another court that if the attorney for the deceased defendant did not notify the plaintiff or its attorney of such death as required by the rule.

to resell them to several st ores.” The antecedent facts are as follows: Petitioner Carmen Liwanag (Liwanag) and a certain Thelma Tabligan went to the house of complainant Isidora Rosales (Rosales) and asked her to join them in the business of buying and selling cigarettes. 1994. While factual findings of the Court of Appeals are conclusive on the parties and not reviewable by the Supreme Court. C. Philippines and within the jurisdiction of thi s Honorable Court.650. the writ of execution appealed from is set aside. far from complying her aforesaid obligation.J. Carmen Liwanag.[1] She also argues that the transaction can also be interpreted as a simple loan. In all other respects.As the appellant already had returned the two bulls to the appellee. and once in possession thereof. Bautista Angelo. an Indeterminate Penalty of SIX (6) YEARS.. wherein Rosales would contribute the funds while she would buy and sell the cigarettes. Consequently. This is the amount prayed for by the appellee in its objection on 31 January 1959 to the motion filed on 7 January 1959 by the appellant for the quashing of the writ of execution. Rosales readily agreed. Philippine Currency. that the prosecution has established the guilt of the accused. the decision is AFFIRMED. imposes upon the accused. the decretal portion of which reads: “WHEREFORE.” Said decision was affirmed with modification by the Court of Appeals in a decision dated November 29. Branch 93. concur. the money judgment rendered in favor of the appellee cannot be enforced by means of a writ of execution but must be presented to the probate court for payment by the appellant. During the first two months. The accused is likewise ordered to reimburse the private complainant the sum of P526. to wit: on the date and in the place aforementioned..” Liwanag advances the theory that the intention of the parties was to enter into a contract of partnership. and abuse of confidence. RESPONDENT APPELLATE COURT GRAVELY ERRED IN NOT ACQUITTING THE ACCUSED-PETITIONER ON GROUNDS OF REASONABLE DOUBT BY APPLYING THE „EQUIPOISE RULE‟. Liwanag filed the instant petition. EIGHT (8) MONTHS AND TWENTY ONE (21) DAYS OF PRISION CORRECCIONAL TO FOURTEEN (14) YEARS AND EIGHT (8) MONTHS OF PRISION MAYOR AS MAXIMUM. Estafa is a crime committed by a person who defrauds another causing him to suffer damages. in view of the foregoing. the value of the bull which has not been returned to the appellee. with Rosales lending to her the amount stated on an installment basis. J.00. with unfaithfulness.[3] we deem it more expedient to resolve the instant petition on its merits. misappropriated and converted the same to her personal use and benefit. Special proceedings for the administration and settlement of the estate of the deceased Jose V. and ther efore. Paredes. Bengzon. however. and carry more weight when these affirm the factual findings of the trial court.[6] The receipt signed by Liwanag states thus: “May 19. THE HON. concurs in the result. JJ.[2] The Court of Appeals correctly rejected these pretenses. the elements of estafa are present. SO ORDERED. with intent of gain. the Court holds. to FOURTEEN (14) YEARS and EIGHT (8) MONTHS of reclusion temporal. Barrera. the said accused. misapplied. The dispositive portion of the decision reads thus: “WHEREFORE. but said accused. the administratrix appointed by the court. J. despite repeated demands made upon her. SO ORDERED. Rosales would give the money needed to buy the cigarettes while Liwanag and Tabligan would act as her agents.. Quezon City. EIGHT (8) MONTHS and TWENTY ONE (21) DAYS of prision mayor. Under their agreement. by means of unfaithfulness or abuse of confidence. unlawfully and feloniously defraud one ISIDORA ROSALES. with a corresponding 40% commission to her if the goods are sold. beyond reasonable doubt. as minimum. [5] and it is essential that there be a fiduciary relation between them either in the form of a trust.00.B. J.650. petitioner. vs. 2. and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party or third party. 1991.. 1993. 1988 and August. WHEN CLEARLY THE CONTRACT THAT EXIST (sic) BETWEEN THE ACCUSED-PETITIONER AND COMPLAINANT IS EITHER THAT OF A SIMPLE LOAN OR THAT OF A PARTNERSHIP OR JOINT VENTURE HENCE THE NON RETURN OF THE MONEY OF THE COMPLAINANT IS PURELY CIVIL IN NATURE AND NOT CRIMINAL. CARMEN LIWANAG. Bagtas having been instituted in the Court of First Instance of Rizal (Q-200). did then and there. as maximum. After trial on the merits. in the following manner.L.[4] From the foregoing. with the express obligation involving the duty to act as complainant‟s agent in purchasing local cigarettes (Philip Morris and Marlboro cigarettes). and all efforts by Rosales to obtain information regarding their business proved futile. commission or administration. 1988 Quezon City . Reyes. Alarmed by this development and believing that the amounts she advanced were being misappropriated. and to return the aforesaid amount of offended party. in an information which reads as follows: “That on or between the month of May 19. RESPONDENT APPELLATE COURT GRAVELY ERRED IN AFFIRMING THE CONVICTION OF THE ACCUSED-PETITIONER FOR THE CRIME OF ESTAFA. said accusedreceived in trust from the offended party cash money amounting to P536. Labrador. 1988 in Quezon City.650. represented by the Solicitor General. without subsidiary imprisonment. as follows: (1) that the accused defrauded another by abuse of confidence or deceit. in the aforementioned amount and in such other amount as may be awarded under the provision of the Civil Code. submitting the following assignment of errors: “1. otherwise the money would be returned to Rosales. in case of insolvency. Rosales gave several cash advances to Liwanag and Tabligan amounting to P633. finding Liwanag guilty as charged. Concepcion. accused failed and refused and still fails and refuses to deliver and/or return the same to the damage and prejudice of the said ISIDORA ROSALES.” Her motion for reconsideration having been denied in the resolution of March 16.00. Rosales filed a case of estafa against Liwanag. DECISION ROMERO. or of false pretenses of fraudulent acts. respondents. COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES. Dizon. to give her commission corresponding to 40% of the profits. Liwanag and Tabligan made periodic visits to Rosales to report on the progress of the transactions. CONTRARY TO LAW. suddenly stopped. without pronouncement as to costs. The visits. willfully. Regala and Makalintal. AND TO PAY THE COSTS. the estate of the late defendant is only liable for the sum of P859. because it was killed while in the custody of the administratrix of his estate. and later divide the profits between them.: Petitioner was charged with the crime of estafa before the Regional Trial Court (RTC).63. the judgment appealed from is hereby affirmed with the correction of the nomenclature of the penalty which should be: SIX (6) YEARS. the trial court rendered a decision dated January 9. ACCORDINGLY. Convinced of the feasibility of the venture.

its documents. that is.27. required its creditors and all those who had any claim against it. The claim of Woo & Lo & Co.48 Surety deposit 460.000.00 III.M. Isidora P.54 7. (SGD & Thumbedmarked) (sic) CARMEN LIWANAG 26 H. Woo & Lo & Co. Rosales the sum of FIVE HUNDRED TWENTY SIX THOUSAND AND SIX HUNDRED FIFTY PESOS (P526. and he describes it in turn as follows: Balance due on open account subject to check L-759 Savings account No.932. Since in this case there was no transfer of ownership of the money delivered.83 V. Laurel. DIAZ.00) Philippine Currency.20 IV. 156 (foreign) with Mercantile Bank of China L1611 Amoy $15.624. In the event the said cigarrets (sic) are not sold.20. to present the same in writing before the commissioner within ninety days. and that with the requisite approval of the corresponding authorities. It described its claim as follows: Balance due on open account subject to check Interest on c/a P4.22 10. and within the period of ninety days. Tan Locko. presented their presented their claims: Tiong Chui Gion. Baligad” The language of the receipt could not be any clearer. [8] Being In the instant petition. 315. ET AL. he had taken charge of all the assets thereof. Alvendia for appellees Chinese Grocers Asso.00 Interest on said Savings Account No. the following creditors.95 4. such partner is guilty of estafa. claimants-appellants. to purchase cigarrets (sic) (Philip & Marlboro) to be sold to customers. Thus. bond.Received from Mrs.650. for the purchase of cigarettes.232. Ross. the appealed decision of the Court of Appeals dated November 29.224. WHEREFORE. the money must be returned to Rosales. however.48 plus P460. Marcelo Nubla for appellees Ang Cheng Lian et al. Liwanag is liable for conversion under Art. Isidora P. Sy Guan Huat and La Bella Tondeña. the borrower can dispose of it for whatever purpose he may deem proper.610. Del Rosario and Sabido for appellant Tiong-Chui Gion. Rosales the said amount of P526. for the purchase of cigarettes. 156 Interest on checking a/c P7. and ordered the publication. The claim of Sy Guan Huat is for the sum of P6. He alleged that he deposited said sum in the bank under liquidation on current account. et al.. approved all the acts theretofore executed by the commissioner.34 8. papers. G. books of account. 1938 In re Liquidation of the Mercantile Bank of China. the proceeds of the sale or the said products (shall) be returned to said Mrs. of the order containing all these provisions. Lawrence and Selph for appellees Pacific Coast Biscuit Co. I. notes. After these publications. SO ORDERED. Gopoco Grocery.: On petition of the Bank Commissioner who alleged to have found. is for the sum of P6. L-43697 and L-442200 March 31. memorandum.R. vs. Zarate for appellants Gopoco Grocery et al.44 8. par. Nos.54 . deed. Neither can the transaction be considered a loan. The claim of Tan Locko is for the sum of P7. A. is AFFIRMED.. J. among others. we have ruled that when money or property have been [7] received by a partner for a specific purpose (such as that obtaining in the instant case) and he later misappropriated it. at the expenses of the aforesaid bank.53 4. that the Mercantile Bank of China could not continue operating as such without running the risk of suffering losses and prejudice its depositors and customers. Kaliraya St.37 6. even assuming that a contract of partnership was indeed entered into by and between the parties.88 and the described it as follows: Balance due on open account subject to check L-718 Interest on checking a/c P6.972.285.. The claim of Tiong Chui Gion is for the sum of P10. GOPOCO GROCERY (GOPOCO). it is evident that Liwanag could not dispose of the money as she pleased because it was only delivered to her for a single purpose.932.01 11. ET AL. the Court of First Instance of Manila declared the said bank in liquidation.88 and is set out in its written claim appearing in the record on appeal as follows: Balance due on open subject to check L-845 Interest on checking a/c P6. since in a contract of loan once the money is received by the debtor. after an investigation. PACIFIC COAST BISCUIT CO. namely. 1988. 1993. oppositors-appellees.00 or the said items on or before August 30. the owner. in view of the foregoing.972. vouchers. Quezon City Signed in the presence of: (Sgd) Illegible (Sgd) Doming Z. prohibited the officers and agents of the bank from interfering with said commissioner in the possession of the assets thereof. It indicates that the money delivered to Liwanag was for a specific purpose. The claim of Gopoco Grocery (Gopoco) is for the sum of P4. bonds and accounts. Costs against petitioner. for the two consecutive weeks in two news-papers of general circulation in the City of Manila. et al.. as was in fact done. obligations or securities and its real and personal properties.961. and if this was not possible then to return the money to Rosales. ownership over the same is transferred. II.927. and in the event the cigarettes cannot be sold.624. 1(b) of the Revised Penal Code. Eusebio Orense and Carmelino G.650.

224.88.285. the amount also of certain drafts accepted by it.232. 319). then.34 according to the referee). minus the amount of the draft for P664. The questions raised by the appellant in case G. but he owed $1. a deposit of P1. in turn.80. Smith. while he was a creditor of the Mercantile Bank of China in the sum of P10.972. in the sum of $2. In not holding that their claims constitute a preferred credit. plus interest thereon and the protest fees paid therefor. On the other hand.392.95 according to the referee). instead of holding that. indebted in the sum of $565.669.107. In not first deducting from their respective deposits in the bank under liquidation. the lower court. In holding that his deposit of P10. the classification having resulted in six groups. it is convenient to note that the commissioner and referee.48.88 VI. R.929.912. we believe it practical and proper to resolve said questions jointly in one decision. but it is indebted to it. to approve the claim of Woo & Lo & Co.76 but also in the sum of P664.59 2. Civil Code.757. This fact undoubtedly destroys the character which they nullifies their contention that the same be considered as irregular deposits. (6) to approve the claim of la Bella Tondeña but also as an ordinary credit only (1. but it was indebted in the sum of $3.40 or P1. there be turned over to him the balance together with the dividends or shares then corresponding to him.961. In the third group he included the claims checks or drafts issued by the bank under liquidation in payment or reimbursement of the drafts or goods remitted to it for collection.27) but only as an ordinary credit. amounting to $3.917. I.464. however. and In the sixth group he included the other claims different in nature from the of the aforesaid five claims. that the lower court erred: 1.60. (e) the claimants Sy Guan Huat and Sy Kia had a deposit of P6. and. Now. also described as follows: Balance due on open account subject to check Interest on account P1910.912. In holding that the amount of P633.77) from his aforesaid deposit. Gopoco Grocery Tan Locko. Before proceeding. after deducting it obligation amounting to $565. but they owed the sum of $3. Sy Guan Huat and La Bella Tondeña. for two drafts accepted by them and already due.80.912.232.285. (b) the claimant Gopoco Grocery (Gopoco) had a current account in the bank in the sum of P5. In the fifth group he included the claims of certain depositors or creditors of the bank who were at the same time debtors thereof. (10 Phil. and in not holding that the deposits on current account in said bank should enjoy preference over said drafts and checks. upon the distribution of the assets of the bank among its various creditors. from which it is inferred that the so-called irregular deposits no longer exist.77. was also a debtor not only in the sum of P633. In holding as preferred credits the drafts and checks issued by the bank under liquidation in payment of the drafts remitted to it for collection from merchants residing in the country.285. but he expressly refused to authorize the payment of the interest by reason of impossibility upon the ground set out in the decision.27. by foreign entities or banks. (5) to approve the claim of Sy Guan Huat but only as an ordinary credit (P6. 43697 being identical in nature.R.20 1.68.44 according to the referee). and 4. in Turn. savings and fixed deposits.84 or P6. And they contend and argue that what they had in the bank should be considered as of this character. or should they be considered ordinary credits only? The appellants contend that they are preferred credits only? The appellants contend that they are preferred credits because they are deposits in contemplation of law. are preferred credits. No.40 including interest and other expenses. minus its obligation amounting to $2.76 (which should be understood as P664. In the first group he included all the claims for current account.90. Tiong Chui Gion argues in his brief filed in case in G. after deducting his obligation amounting to $3.37) or P6. the amount of a draft which he accepted. amounting to P10. 1932.6.77). Bell & Co. on the basis of said amount. after deducting its obligation to the bank. and (f) the claimant La Bella Tondeña had. and not otherwise.88.79 To better resolve not only these claims but also the many others which were presented against the bank.107. the amount of a draft which he also accepted. In support thereof they cite Manresa (11 Manresa..27 which he deposited on current account. 442200. had a deposit of P6. No. placed under one group those partaking of the same nature. and what has been insinuated in the case of Rogers vs. that the lower court erred: 1.80. In the fourth group he included the claims for drafts or securities to be collected from resident merchants and entities to be collected from resident merchants and entities which were pending collection on the date payments were suspended.50 according to the referee). but it was. notwithstanding the provisions of articles 1767 and 1768 and others of the aforesaid Code.378. and as such should be returned with the corresponding interest thereon. Not agreeable to the decision of the lower court. finally. But it happens that they themselves admit that the bank owes them interest which should have been paid to them before it was declared in a state of liquidation. on July 15. deducting therefrom his obligation amounting to $1. R.74. but only as an ordinary credit (P6. and he considered of this class the claims of the appellants in these two cases. after qualifying for the office and receiving the evidence presented to him.76 (should be P664. and the commissioner and referee thus named. In holding that the drafts and checks issued by the bank under liquidation in payment of the drafts remitted to it by foreign entitles and banks for collection from the certain merchant residing in the country. in turn argue in the brief they jointly filed in case G.214. classifying the various claims presented against the bank. No.334. and not as a preferred credit as the interested parties wanted. 2.20..387.77. The claim of La Bella Tondeña is for the sum of P1. constitutes an ordinary credit only and not a preferred credit. the amount of certain drafts which it had accepted. the amount of two drafts drawn upon and accepted by it.610. which the claimant owes to the bank under liquidation. The evidence adduced and the very admissions of the said interested parties in fact show that (a) the claimant Tiong Chui Gion. 3. 44200 and by appellants in case G.624.84. In denying their motion for a new trial base on the proposition that the appealed decision is not in accordance with law and is contrary to the evidence adduced at the trial. The lower court approved all the recommendations of The commissioner and referee as to claims of the six appellants as follows. from resident merchants and entitles. in turn. each of the interested parties appealed therefrom and thereafter filed their respective briefs. whose payment they claim. as we stated with respect to the . that is. because they were at the same time debtors of the bank. (d) the claimant Woo & Lo & Co.27 in the Mercantile Bank of China.334. (2) to approve the claim of Gopoco Grocery (Gopoco) but also as an ordinary credit only (P5. 2. resolved the aforesaid six claims by recommending that the same be considered as an ordinary credit only. (1) To approve the claim of Tiong Chui Gion (P10. the fact is that said deposits still exist. 43697.01 according to the referee). by foreign banks and entities. The other five claimants. citing the said commentator who maintains that.285. after deducting the aforesaid sum of P633. be deducted from his current account deposit therein.79.130.37. should the appellants' deposits on current account in the bank now under liquidation be considered preferred credits. appointed Fulgencio Borromeo as commissioner and referee to receive the evidence which the interested parties may desire to present. Woo & Lo & Co. (c) the claimant Tan Locko had a deposit of P7.378.90 or P2. page 663). and in not holding that the deposits made by each of them enjoy preference over said drafts and checks. because the payment of interest only takes place in the case of loans. In the second group he included the claims for checks or drafts sold by the bank under liquidation and not paid by the agents or banks in whose favor they had been issued.80 or P4.464. (3) to approve the claim of Tan Locko but as an ordinary credit only (P7. and 3.79. R. their respective obligation thereto.

44200. respondents. when and until what time should they be paid the same? The question of whether they are entitled to interest should be resolved in the same way that we resolved the case of the claimant Tan Tiong Tick in the said case. entitled " In re Liquidation of Mercantile Bank of China. that their obligations to the bank under liquidation which should be set off against said deposits. the cardholder agrees to immediately report its loss or theft in writing to BECC . and declared by the lower court to be ordinary credits are for the following amounts: P10. That no set-off on counterclaim shall be allowed in favor of any debtor to the insolvent of a claim purchased by or transferred to such debtor within thirty days immediately preceding the filing. The circumstances in these two cases are certainly the same as those in the said case with reference to the said question.197. BECC. purchases made/incurred arising from the use of the lost/stolen card shall be for the exclusive account of the cardholder and the cardholder continues to be liable for the purchases made through the use of the lost/stolen BPI Express Card until after such notice has been given to BECC and the latter has communicated such loss/theft to its m ember establishments. without considering of course the provisions of article 1768 of the Civil Code. P607. R. THE COURT OF APPEALS AND BPI EXPRESS CARD CORP. the customer may avail himself in set-off against his indebtedness to the bank of any indebtedness of the bank to himself. for then there was already a reciprocal concurrence of debts. And with respect to the question of set-off. Manuelita. BECC held Luis liable for the amount of P3.70 incurred through the use of his wife’s lost card. as. 1990. In all other respects. CV No. by telephone. which were made after she had served BECC with notice of the loss of her card.929.) III. in a letter dated July 13. of course.. that is. (BECC) on October 8.[4] . G. Luis stressed that the contract BECC was referring to was a contract of adhesion and warned that if BECC insisted on charging him and his wife for the unauthorized purchases. G. for example. considering that the appellants ask for the payment of interest? Are they by any chance entitled to interest? If they are.285. we modify the appealed judgments by holding that the deposits claimed by the appellants. 43682). 361.) We there said. have not created and could not create a juridical relation between them except that of creditors and debtor. P6961. one amounting to P2. the balance due him on his deposit account. are not disputed. in view of the considerations set out in resolving the other assignments of errors. in his work on Bank and Banking (6th ed. the provisions of the Code of Commerce. the bank has made use thereof in the ordinary course of its transactions as an institution engaged in the banking business. Despite the spouses’ refusal to pay and the fact that they repeatedly exceeded their monthly credit limit. that the so-called current account and savings deposits have lost their character of deposits. 1956). and P1. Manuelita again wrote BECC disclaiming responsibility for those charges. On August 29." It is proper that set-offs be made. Tan Tiong Tick.A. P6. pointed out to Luis the following stipulation in their contract: ―In the event the card is lost or stolen.claim of Tan Tiong Tick (In re Liquidation of Mercantile Bank of China.80 of La Bella Todeña. 1989 through Manuelita’s lost card. and the appellants' second and third assigned errors in case G. . we hold.50 of La Bella Tondeña. BECC continued to include in the spouses’ billing statements those purchases made through Manuelita’s lost card.. In dispute is the validity of the stipulation embodied in the standard application form for credit cards furnished by private respondent. on December 4. It has been said with much basis by Morse.74 of Sy Huat. BECC of the loss. but not which the appellants claim should be earned by their deposits after said date and until the full amounts thereof are paid to them. 58. that the lower court properly denied the motion for new trial of said appellants.34 of Sy Guan Huat. P2. Petitioner Luis Ermitaño applied for a credit card from private respondent BPI Express Card Corp. Code of Commerce. 1990. Civil Code). exclusive of interest and penalty charges. SPOUSES LUIS M. p.77 of Tiong Chui Gion.214.757. BECC continued to bill the spouses for said purchases. 1989. With respect to the fourth assigned error of the appellants in case G. 1931. (Page 776. and we order that the set-offs in question be made in the manner stated in this decision. Notwithstanding this. this should be deemed made. it should be stated that the question of set-off raised by them cannot be resolved a like question in the said case. not because it so wishes. without special pronouncement as to costs.669. the date it was declared in a state of liquidation.68 of Woo & Lo & Co. G. 4th ed. reading: SEC. The spouses were given credit cards with a credit limit of P10. The call was received by BECC offices through a certain Gina Banzon. 1.610. Luis protested this billing in his letter dated June 20. As to the third and first errors attributed to lower court by Tiong Chui Gion in his case. J. or after the filing of the petition by or against the insolvent. they being the creditors and the bank the debtor. when Luis received his monthly billing statement from BECC dated September 20. and not those of the Civil Code. seeks to set aside the decision of the Court of Appeals in C.197. No. So ordered. as well as the resolution of the Court of Appeals denying petitioners’ motion for reconside ration. 1931. 1989 which required her to immediately pay the total amount of P3. with the right on their right on their part to collect interest. R. Among the items inside the bag was her BECC credit card. the charges included amounts for purchases made on August 30. P5. (Page 784. No.60 of Gopoco Grocery (Gopoco).95 of Gopoco Grocery (Gopoco).350. and P1. ERMITAÑO and MANUELITA C. She also surrendered Luis’ credit card and requested for replacement cards. of the Rules of Court. and it is not amiss to repeat now. 43682. 3154). 1195 and 1196 of the Civil Code. 1989. the same is only just and according to law (art. are respectively for the following amounts: P664. petitioners. 47888 reversing the trial court’s[1]judgment in Civil Case No. No. 61357. P4. 1989 stating that their cards had been renewed until March 1991. 43682. but precisely because of the authority deemed to have been granted to it by the appellants to enable them to collect the interest which they had been and they are now collecting.R. 43697. plus their corresponding interest up to December 4. and one debt set off against the other.917. and by the other appellants in theirs.70 covering the same (unauthorized) purchases. properly so-called and are convertible into simple commercial loans because.. This warning notwithstanding. No. What has so far been said resolves adversely the contention of the appellants. (Articles 303 and 309.: This petition for review under Rule 45. The facts. 1931. in cases of such deposits. December 4.27 of Tiong Chui Gion. 1195. that is. 2003 and 3610 and section 9 of the Banking Law (Act No. 43697. ERMITAÑO. 1931. corresponding to the year ending December 4. it is held that the deposits on current account of the appellants in the bank under liquidation.‖[3] Pursuant to this stipulation. That same night she informed. The stipulation makes the cardholder liable for purchases made through his lost or stolen credit card until (a) notice of such loss or theft has been given to private respondent and (b) the latter has communicated such loss or theft to its member-establishments. In her letter. In all cases of mutual debts and mutual credits between the parties. claimant.05 and the other. particularly as none of the appellants falls within the exceptions mentioned in section 58 of the Insolvency Law (Act No. respectively.44 of Tan Locko. the question raised in the first and second assigned errors Tiong Chui Gion in case G. Manuelita’s bag was snatched from her as she was shopping at the Greenbelt Mall in Makati. Wherefore. (Arts. They often exceeded this credit limit without protest from BECC.. which have to do with parties who are both merchants. ho wever. as of the date when the Mercantile Bank of China was declared in a state of liquidation. inasmuch as the appellants and the bank being reciprocally debtors and creditors. 1459). as amended by Acts Nos. 8 Manresa. BECC sent them a n otice dated December 29. vol.387.000.50.80 of Tan Locko. P6. and the balance only shall be allowed and paid. The Mercantile Bank of China owes to each of the appellants the interest claimed by them. DECISION QUISUMBING. as extension cardholder. In view of the foregoing. 1990.) But if set-offs are proper in these cases. R. Metro Manila. P7. are applicable to cases of the nature of those at bar.-G. 1989.130. the account between them shall be stated. R. we affirm the aforesaid judgments. when and how should they be made. as of the date already indicated. In his reply dated July 18.‖[2] However. No. No. as found by the trial court. they will sue BECC for damages.R. Manuelita stated that she ―shall not be responsible for any and all charges incurred [through the use of the lost card] after August 29. II..00. Two purchases were made. Manuelita received a billing statement dated October 20.01 of Woo & Lo & Co. This was followed by a letter dated August 30. vs..224. However. R. with respect to said bank and the appellants.) Where the bank itself stops payment and becomes insolvent. P6. 1989. and by virtue further of the authority granted to it by section 125 of the Corporation Law (Act No. 1986 with his wife. But no set-off or counterclaim shall be allowed of a claim in its nature not provable against the estate: Provided. pages 776 and 784) that: The rules of law as to the right of set-off between the bank and its depositors are not different from those applicable to other parties.

. The trial court further noted that the suspension of the spouses’ credit cards was based upon the ―lame excuse‖ that the cred it limit had been exceeded. Without cost. will not hesitate to rule out blind adherence to such contracts if they prove to be too one-sided under the attendant facts and circumstances. it may only do upon receipt of a notice from the cardholder. The trial court opined that the only purpose for the suspension of the spouses’ credit privileges was to compel them to pay f or the unauthorized purchases. petitioners have no chance at all to contest the stipulations appearing in the credit card application that was drafted entirely by private respondent. The Court of Appeals stated that the spouses should be bound by the contract.[15] Having thus performed her part of the notification procedure.. hinges on the validity and fairness of the stipulation on notice required by private respondent in case of loss or theft of a BECC-issued credit card. The dispositive portion of the trial court’s decision reads: ―WHEREFORE. Ermitaño. 229 SCRA 60. and IN VIEW OF THE ALL THE FOREGOING CONSIDERATIONS. in order to free the cardholder from any liability arising from the use of a lost or stolen card.and Luis.. purchases made/incurred arising from the use of the lost/stolen card shall be for the exclusive account of the cardholder and the cardholder continues to be liable for the purchases made through the use of the lost/stolen BPI Express Card until after such notice has been given to BECC and the latter has communicated such loss/theft to its member establishments. being a lawyer.00 as exemplary damages. it was reasonable for Manuelita -. Both the cardholder and BECC. despite the fact that BECC allowed the spouses previously to exceed their credit limit. in which they claim that the Court of Appeals gravely erred in: (i) Ruling that petitioners should be bound by the stipulations contained in the credit card application -.On April 10. This Court. He was informed that his credit card had not been cancelled but. which is to forthwith notify its member-establishments. however.taking into consideration the professional credentials of petitioner Luis M. his outstanding balance exceeded his credit limit ofP10. however. for that matter -. as indicated by the following circumstances: (1) Its failure to inform the spouses that the unauthorized charges on the lost card would be carried over to their replacement cards. precisely to avoid any unauthorized charges. That she gave such notices to BECC is admitted by BECC in the letter sent to Luis by Roberto L. SO ORDERED. who should have been more cautious in (his) transactions. Parties who enter into such contracts are free to reject the stipulations entirely. The trial court ruled that the latter portion of the condition in the parties’ contract. She immediately notified BECC of the loss of her card on the same day it was lost and. a clear contract of adhesion. he could not avail of his credit privileges. in our view.[13] The resolution of this petition. The petitioner in Serra was a CPA-lawyer. It is not unreasonable to assume that BECC would do this immediately.70 with 3% interest per month and an additional 3% penalty equivalent to the amount due every month until full payment. with interest and penalty charges. judgment is hereby rendered in favor of the plaintiffs.‖ For the cardholder to be absolved from liability for unauthorized purchases made through his lost or stolen card. The latter. In reply to Luis’ demand for an explanation. (ii) Relying on the case of Serra v.‖ But. Consequently. Maniquiz. two steps must be followed: (1) the cardholder must give written notice to BECC. In this case. Once more. Ermitaño and against defendant BPI Express Card Corporation: 1.00. which states that liability for purchases made after a card is lost or sto len shall be for the account of the cardholder until after notice of the loss or theft has been given to BECC and after the latter has informed its member establishments. ―a highly educated man . 3. Manuelita.‖[8] The Court of Appeals therefore disposed of the appeal as follows: ―THE FOREGOING CONSIDERED. she sent a written notice of the loss to BECC. and 4.000. . BECC wrote that it transferred the balance of his old credit card to his new one. and (iv) Holding that the onerous and unconscionable condition in the credit card application that the cardholder continues to be liable for purchases made on lost or stolen credit cards not only after such notice has been given to appellant but also after the latter has communicated such loss/ theft to its member establishments without any specific time or period -. even for almost two years after the loss of Manuelita’s card. since he exceeded his credit limit. has complied with what was required of her under the contract with BECC. petitioners sued BECC for damages. Subsequently. BECC continued to send the spouses separate billing statements that included the unauthorized purchases. (iii) Ruling that private respondent is not estopped by its subsequent acts after having been notified of the loss/theft of the credit card issued to petitioners.a document wholly prepared by private respondent itself -. The trial court ruled in their favor. because unlike that case. stating that there was a waiver on the part of BECC in enforcing the spouses’ liability. and (2) BECC must notify its member establishments of such loss or theft. we note that the contract between the parties in this case is indeed a contract of adhesion. 2. head of BECC’s Collection Department. Moreover.is valid.‖[9] Hence.. Constrained. 1991.to expect that BECC would perform its part of the procedure. the party that prepared it. thus. is void for being contrary to public [5] policy and for being dependent upon the sole will of the debtor. Luis used his credit card to purchase gasoline at a Caltex station. Luis pointed out that notice of the lost card was given to BECC before the purchases were made. have a responsibility to perform.‖[6] It cited the case of Serra v. whose terms must be construed strictly against BECC.00 as moral damages. including the unauthorized charges. Ordering said defendant to pay the plaintiffs the sum of P50. Moreover.000. Ermitaño and Manuelita C.[14] The stipulation in question reads: ―In the event the card is lost or stolen. then. the trial court observed that the contract between BECC and the Ermitaños was a contract of adhesion.197. SO ORDERED. Ordering said defendant to pay the plaintiffs the sum equivalent to twenty per cent (20%) of the amounts abovementioned as and for attorney’s fees and expenses of litigation. the cardholder.[10] At the outset. which. Spouses Luis M. and (2) Its act of unqualifiedly replacing the lost card and Luis’ card which were both surrendered by the spouses. on appeal this decision was reversed. It also said that Luis. Court of Appeals.[12] They are as binding as ordinary contracts. [11] Such contracts are not void in themselves. dishonored his card. BECC cancelled the spouses’ credit cards and advised them to settle the account immediately or risk being sued for collection of said account. naturally. this recourse by petitioners. had ―all the tools to drive a hard bargain had he wanted to. Court of Appeals[7] wherein this Court ruled that contracts of adhesion are as binding as ordinary contracts. Because of the peculiar nature of contracts of adhesion. Plaintiffs/appellees are hereby directed to pay the defendant/appellant the amount of P3. the cardholder agrees to immediately report its loss or theft in writing to BECC . Ordering the said defendant to pay the costs of suit.. the following day. . the contested decision is REVERSED. so-called because its terms are prepared by only one party while the other party merely affixes his signature signifying his adhesion thereto. the validity thereof must be determined in light of the circumstances under which the stipulation is intended to apply. even though it was one of adhesion. even after th e spouses unequivocally denied liability for the unauthorized purchases. the credit limit was exceeded only after BECC added the unauthorized purchases to the liability of the spouses. Ordering the said defendant to pay the plaintiffs the sum of P100.000.

JEPTI SOLAS). in our opinion controlled by the express stipulation of the parties. JJ. and the member-establishments or the petitioners could be negligent. 1934.. until full payment. Prompt notice by the cardholder to the credit card company of the loss or theft of his card should be enough to relieve the former of any liability occasioned by the unauthorized use of his lost or stolen card. Thus modified judgment is affirmed. Or. In effect. puts the cardholder at the mercy of the credit card company which may delay indefinitely the notification of its members to minimize if not to eliminate the possibility of incurring any loss from unauthorized purchases. therefore. (Article 1281. and only when the wording of the written instrument appears to be contrary to the evident intention of the parties that such intention must prevail. Hepti Solas se compromete a pagar al Sr. the deed of mortgage fails to express their agreement. as required by Article 2232 of the Civil Code. prevents said member-establishments from observing verification procedures including ascertaining the genuine signature and proper identification of the purported purchaser using the credit card. 400 from November 8. Thus. which still requires the cardholder to wait until the credit card company has notified all its member-establishments. moneda filipina. he cannot be allowed to lay any claim more than what its clear stipulations accord. For how else could an unauthorized person succeed to use Manuelita’s lost card? The cardholder was no longer in control of the procedure after it has notified BECC of the card’s loss or theft. WHEREFORE. we must delete the award of exemplary damages. We note that BECC is not a neophyte financial institution. but private respondent is further ordered to pay P25. for if such mistake existed. entitled only to the stipulated interest of 12 per cent on the loan of P2. Branch 157.R. otherwise. the debtor would continue to pay interest. petitioner. No. Plaintiff is. oppressive. When a party sues on a written contract and no attempt is made to show any vice therein. BECC is saying that the company. or up to the date payment is effected? This question is. L-47878 July 24. vs. The Court cannot give its assent to such a stipulation which could clearly run against public policy.4000. Act No. BECC asserts that the period that elapsed from the time of the loss of the card to the time of its unauthorized use was too short such tha t ―it would be next to [16] impossible for respondent to notify all its member-establishments regarding the fact of the loss. without making any mention of any interest which the mortgagor should pay during the additional period (see Exhibit B attached to the complaint). Hepti Solas cede y traspasa. 1935. Article 1755 of the Civil Code provides that "interest shall be due only when it has been expressly stipulated. now section 58. We hold therefore. 1942 GIL JARDENIL. defendant-appellee. la parcela de terreno descrita en el parrafo primero (1. respondents.00. to which the law attaches a definite warning as an in the instant case. IBARROLA. con los intereses de dicha suma al tipo de doce por ciento (12%) anual a partir desde fecha hasta el dia de su vencimiento o sea treintaiuno (31) de marzo de mil novecientos treintaicuatro (1934). HEFTI SOLAS (alias HEPTI SOLAS.‖ We take this to be an admission that negligence had occurred. The only question raised in this appeal is: Is defendant-appellee bound to pay the stipulated interest only up to the date of maturity as fixed in the promissory note. by mutual mistake. C.000. el Sr. sus herederos y causahabientes.[17] On the matter of the damages petitioners are seeking. Manuelita was being liable for those purchases. with the MODIFICATION that the award of exemplary damages in the amount of P50. that as the contract is clear and unmistakable and the terms employed therein have not been shown to belie or otherwise fail to express the true intention of the parties and that the deed has not been assailed on the ground of mutual mistake which would require its reformation." (Emphasis supplied. Neither has either of the parties shown that. Paragraph 4 of the mortgage deed recites: Que en consideracion a dicha suma aun por pagar de DOS MIL CUATROCIENTOS PESOS (P2. what happened in this case was that BECC failed to notify promptly the establishment in which the unauthorized purchases were made with the use of Manuelita’s lost card. And it being a fact that extra judicial demands have been made which we may assume to have been so made on the expiration of the year of grace. Eleuterio J. J. To require the cardholder to still pay for unauthorized purchases after he has given prompt notice of the loss or theft of his card to the credit card company would simply be unfair and unjust.: This is an action for foreclosure of mortgage. is self-serving and obviously untenable. PHILIPPINE NATIONAL BANK. same should be given its full force and effect. or otherwise insure itself against such risk. 47888 is hereby REVERSED and the decision of the Regional Trial Court. 190.º) de esta escritura.J. CV No. que el Sr. he shall be entitled to legal interest upon the principal and the accrued interest from April 1. COURT OF APPEALS and DR. reckless. Costs against private respondents. por via de primera hipoteca. even if there is no showing that Manuelita herself had signed for said purchases.000. Defendant-appellee has. indulge in any presumption as to such interest. the credit card company may for some reason fail to promptly notify its members through absolutely no fault of the cardholder. however.00 is hereby deleted. or malevolent manner. or until March 31. por la presente. with costs against appellant. clearly agreed to pay interest only up to the date of maturity. Jardenil. regarding signatures and the identification of card users at the point of actual purchase of goods or services.000.‖ Nothing. .R.00). in the event of non-payment. G. vs. It should have anticipated an occurrence such as the one in this case and devised effective ways and means to prevent it. and the amount of moral damages is reduced to P50. plaintiff would have undoubtedly adduced evidence to establish it and asked that the deed be reformed accordingly. unaware of the intricacies and risks of providing credit privileges to a large number of people. as in this case. and after notice by her concerning her card’s loss was already given to BECC. plaintiff-appellant. Gustilo for appellant. petitioners should be the ones to bear the loss since it was they who made possible the commission of a wrong. The questioned stipulation in this case.000 as attorney’s fees and litigation expenses. according to BECC. 1934. cannot by the courts be arbitrarily supplied by what their own notions of justice or equity may dictate.Clearly. a favor del Sr. considering the circumstances of the parties to the case.. Civil Code. Yulo. under the parcel-evidence rule. MORAN. His omission. It could be BECC for its failure to immediately notify its memberestablishments. Robles for appellee. This conclusion. however. Pasig City in Civil Case No. who appear lacking in care or instruction by BECC in proper procedures. BECC states that. absent any clear showing that BECC acted in a wanton. 1932 to March 31. indicates that the true intention of the parties was that no interest should be paid during the period of grace. Jose C. it was not petitioners who made possible the commission of the wrong. the decision of the Court of Appeals in CA-G. We likewise reduce the amount of moral damages to P50.) There is nothing in the mortgage deed to show that the terms employed by the parties thereto are at war with their evident intent. ERLINDA G. SO ORDERED. Ozaeta and Bocobo. Rule 123). On the contrary the act of the mortgage of granting to the mortgagor on the same date of execution of the deed of mortgage. the one who made the wrong possible should bear the loss.) A writing must be interpreted according to the legal meaning of its language (section 286. From one perspective.00. we need not here seek to explore. 61375 is REINSTATED. concur. we cannot in law. Jardenil en o antes del dia treintaiuno (31) de marzo de mil novecientos treintaicuarto (1934). However. As the contract is silent as to whether after that date. therefore. we would be imposing upon the debtor an obligation that the parties have not chosen to agree upon. What reason the parties may have therefor. ―between two persons who are negligent. an extension of one year from the date of maturity within which to make payment. fraudulent. It was already BECC’s responsibility to inform its member-establishments of the loss or theft of the card at the soonest possible time.

petitioner appealed to the Court of Appeals. in any case. Petitioner. 1994 said court issued an order clarifying that the rate is 12%. should be imposed. reiterating the same defenses raised in its answer.J. Hence. L-33582 March 30. satisfaction thereof would not be possible in view of the restriction imposed by the Monetary Board.. 1993. where the demand is established with reasonable certainty. Jr. which the agents appropriated after negotiating them with PNB. 1968.. Forbearance of money or judgment involving a loan or forbearance of money as it arose from a contract of sale whereby Ibarrola did not receive full payment for her merchandise. the proper rate of interest referred to in the judgment under execution is only 6%. However. 416.” [13] (Italics ours. In its decision dated September 29. the sheriff computed the interest mentioned in the judgment at the rate of 12% which PNB opposed insisting that the rate should only be 6%. hence the proper imposable rate of interest is six (6%) per cent.90 with interest thereon at the legal rate from the date of the filing of the complaint until the entire amount is fully paid. However. Act 337.‖ [11] Indeed.‖ docketed as Civil Case 4226 [2] P. ESCOLIN.691. G. Said amount being merely the uncollected balance of the purchase price covered by the 23 checks encashed and appropriated by Ibarrola’s agents. The rate of interest shall be 6% p.[12] The rate of 12% interest referred to in Cir.a.90. computed from the time of the filing of the complaint until its full payment before finality of judgment. The actual base for the computation of this 12% interest after the judgment in this damage suit became final shall be the amount adjudged (P98. No. In the case of Eastern Shipping Lines. raised as special defense the finding by the Monetary Board of its state of insolvency. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. It was further claimed that a judgment in favor of respondent would create a preference in favor of a particular creditor to the prejudice of other creditors and/or depositors of petitioner bank. otherwise known as the General Banking Act. It cited the Resolution of August 1. is deemed to be equivalent to a forbearance of credit. and (2) whether such rate shall be computed from the filing of the complaint until fully paid? The issues are not new. ACCORDINGLY. 1 it effectively barred or abated the action of respondent for even if judgment be ultimately rendered in favor of Cordero. 2209 of the Civil Code. The judgment in Civil Case 4226-P became final and executory on November 26. Cordero instituted an action in the Court of First Instance of Manila." [9] to wit: “When an obligation. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. Melo.” [4] [5] [3] (Italics supplied. This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed the judgment of the Court of First Instance of Manila. 1968 of the same Board. forbidding its directors and officers from making any payment out of its funds after the bank had become insolvent. v. holding petitioner bank liable to respondent Vicente Cordero in the amount of P80. private respondent opened a one-year time deposit with petitioner bank in the amount of P80. respectively.: Again.000. Davide.a.691. J. When an obligation not constituting a loan or forbearance of money is breached then an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum in accordance with Art. petitioner filed on November 29. the trial court ordered all the defendants in said civil case. this petition for review under Rule 45 where two legal issues are raised: (1) whether in an [6] [7] action for damages. ordering the Superintendent of Banks to take over the assets of petitioner for purposes of liquidation.‖[14] Thus. SO ORDERED.) PNB’s appeal to the Court of Appeals (CA) and later to the Supreme Court were denied and dismissed. concur. 1974 before the Regional Trial Court (RTC) an ―action for a sum of money and damages. against the Province ofIsabela. the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained).a. J. The actual base for the computation of legal interest shall. the lower court denied the motion and proceeded with the trial on the merits.. Lyndon Pharmaceuticals Laboratories. Accordingly. On August 4. Ibarrola sought clarification from the same RTC which promulgated the decision. is breached. 1993 until fully satisfied. a business operated by private respondent Ibarrola.: As payments for the purchase of medicines. the "interim period from the finality of judgment awarding a monetary claim and until payment thereof. respondents. 1982 THE OVERSEAS BANK OF MANILA. No. therefore . or to cases where money is transferred from one person to another and the obligation to return the same or a portion thereof is adjudged. in accordance with the pronouncement in Eastern Shipping the rate of 12% p. filed by one of its depositors. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. and to be computed from the time the judgment became final and executory until fully satisfied. computed from the time the judgment became final and executory onNovember 26.) Applying the aforequoted rule. prohibiting petitioner from issuing manager's and cashier's checks and the provisions of Section 85 of Rep. the monetary judgment in favor of private respondent does not involve a loan or forbearance of money. except 23 checks amounting to P98. 1967. 1987.RESOLUTION FRANCISCO.691. Dissatisfied. This interest according to Eastern Shipping shall be computed from the time of the filing of the complaint considering that the amount adjudged (P98. The checks were delivered to the seller’s agents who turned them over to Ibarrola. On July 20. which affirmed the decision of the lower court. When an obligation arises ―from a contract of purchase and sale and not from a contract of loan or mutuum. petitioner was unable to pay Cordero his said time deposit together with the interest. and Panganiban. the appealed decision is REVERSED.‖ the applicable rate is ―6% per annum as provided in Article 2209 of the NCC and not the rate of 12% per annum as provided in (CB) Cir. once the judgment becomes final and executory. its Treasurer. (Chairman). 1968 of the Monetary Board which authorized petitioner's board of directors to suspend all its operations. Thereafter. 1968 was then pending review before the Supreme Court. Indeed. In due time. however. Petitioner contended that although the Resolution of August 13. the Province of Isabela issued several checks drawn against its accounts with petitioner Philippine National Bank (PNB) in [1] favor of the seller. Narvasa. Inc. Any other monetary judgment which does not involve or which has nothing to do with loans or forbearance of any money.90). 1169. At the execution stage.90) can be established with reasonable certainty. C. if the amount adjudged remains unpaid.) The case at bench does not involve a loan. PNB’s liability is based only on the RTC’s judgment where it was held solidarily liable with the other defendants due to its negligence when it ―failed to assure itself‖ if the Provincial Treasurer was ―properly authorized‖ by Ibarrola to ―make endorsements‖ of said checks. vs.000. PNB’s direct appeal to this court from that order was referred to the CA which affirmed the RTC order. All the three courts. be on the amount finally adjudged. did not specify whether the legal rate of interest referred to in the judgment is 6% or 12%. and costs. 416 applies only to: “[L]oan or forbearance of money. among which is: “(1) P98. We are confronted with another case involving the Overseas Bank of Manila. the interest rate shall be 12% p. petitioner. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. due to its distressed financial condition. a motion to dismiss. After pre-trial. [8] this Court had provided a rule ―of thumb for future guidance. Finding the same unmeritorious. VICENTE CORDERO and COURT OF APPEALS. the legal rate of interest is 6% as provided by Article 2209 of the New Civil Code or 12% as provided by CB Circular 416 series of 1974.00 representing the latter's time deposit with petitioner. and the Resolution of August 13. goods or credit does not fall within its coverage for such imposition is not within the ambit of the authority granted to the Central Bank.691. to ―jointly and solidarily‖ pay Ibarrola several amounts. CA. . Ibarrola filed on November 6.”[10] (Italics ours. not constituting a loan or forbearance of money.R.00 to mature on July 20. plus interest thereon at 6% per annum until fully paid. in its answer. JJ. For her failure to receive the full payment for the medicines. the two agents and PNB. No interest. except the treasurer who died in the meantime. the lower court rendered the aforesaid decision. however. To enforce payment. 1968 with interest at the rate of 6% per annum.

Canada. DIAZ and COMPANY..00.840.840. our Consul General in Vancouver. The issues raised in this petition are quite novel.C. modified in effect by the decision as well as the approval of a formula of rehabilitation by this Court. this case is hereby dismissed. engage in international transactions. successor of petitioner Overseas Bank of Manila. Court of Appeals 2 is explicit and categorical. It is very clear.. acknowledging receipt of the sum of P73. When directed to produce the same. and We also confirm receipt of Seventy Three Thousand Eight Hundred Forty Pesos (P73. The first of these supervening events is the letter of Julian Cordero. 1981 a Comment confirming and ratifying the same. We hold it is a matter of simple equity that it be treated as such. is on leave.. When asked to comment on this Manifestation. addressed to the Commercial Bank of Manila (Combank).000.: The Case . pertinent portions of which We quote: I. Said Manifestation is in the nature of a quitclaim. However. from which it can derive income. Julian Cordero submitted the following explanatory Comment. Aquino. . the undersigned acting for and in behalf of my brother Vicente R.Hence. And concluding. in the recent case of Overseas Bank of Manila vs. It does not mean waiving the interest it should earn while the bank is closed and also the attorney's fees as decided by the lower court. the bank had no alternative under the law than to obey the orders of the Central Bank. that what enables a bank to pay stipulated interest on money deposited with it is that thru the other aspects of its operation. In this letter dated February 13. The second is a Manifestation by the same Julian Cordero dated July 3. acquire foreclosed mortgaged properties or their proceeds and generally engage in other banking and financing activities. Barredo (Chairman). concur.840. I did not waive the attorney's fees because it belongs to our attorney and interest because it belongs to us and we are entitled to it. and that the judgment rendered in favor of respondent would in effect create a preference in his favor to the prejudice of other creditors of the bank. particularly the portions which state: We also agree to hold free and harmless the Commercial Bank any third party or any suit that may arise against this agreement of payment.00) representing the principal and interest as computed by the Commercial Bank of Manila. This manifestation (referring to the Manifestation of July 3. this Court noted the absence of the alleged special power of attorney executed by private respondent in favor of Julian Cordero. applicable or followed in respect to all other obligations of petitioner which could not be paid during the period of its actual complete closure. We also confirm receipt of Seventy Three Thousand Eight Hundred Forty Pesos (P73. 1981. it should be deemed read into every contract of deposit with a bank that the obligation to pay interest on the deposit ceases the moment the operation of the bank is completely suspended by the duly constituted authority... it is inconceivable how it can carry on as a depository obligated to pay stipulated interest.. Whatever be the juridical significance of the subsequent action of the Supreme Court. strictly speaking be legally denominated as "force majeure" as maintained by private respondent. J. it is able to generate funds to cover the payment of such interest.00) with our full satisfaction.. upon further examination. however. that portion of the lower court's decision ordering petitioner to pay interest on Cordero's time deposit is set aside. per Justice Barredo. have rendered these issues moot and academic. 1981) applies only to third party claims. 3 Since respondent did not appeal from this decision. the only remaining issue to be determined is whether respondent is entitled to (1) interest on his time deposit during the period that petitioner was closed and (2) to attorney's fees. Jr. We consider it of trivial consequence that the stoppage of the bank's operations by the Central Bank has been subsequently declared illegal by the Supreme Court. WHEREFORE. to which was attached the special power of attorney executed by respondent Vicente Cordero: 3. If such a situation cannot. it appears that respondent Cordero had received from the Philippine Deposit Insurance Company the amount of P10. the stubborn fact remained that the petitioner was totally crippled from then on from earning the income needed to meet its obligations to its depositors. Cordero who resides in Canada and by virtue of a Special Power of Attorney issued by Vicente Romero.00.respondents. suit and other damages. Petitioner stands firm on its contentions that the suit filed by respondent Cordero for recovery of his time deposit is barred or abated by the state of insolvency of petitioner as found by the Monetary Board of the Central Bank of the Philippines.. No costs. for before the Court's order. Consequently. The trial court found that herein petitioner's refusal to pay was not due to a wilful and dishonest refusal to comply with its obligation but to restrictions imposed by the Central Bank. copy of which was furnished this Court. do hereby manifest to this honorable court that we have decided to waive all and any damages that may be awarded to the above-mentioned case and we hereby also agree to accept the amount of Seventy Three Thousand Eight Hundred Forty Pesos (P73. THE CONSOLIDATED BANK and TRUST CORPORATION. this Court stated: Parenthetically. CPA’s. De Castro and Ericta. We find the answer to be in the negative. with the principal claim of respondent having been satisfied.840..00) with our full satisfaction. Certain supervening events. Unless a bank can lend money. as a matter of consistency. 1981. Neither can respondent Cordero recover attorney's fees. brother and attorney-in-fact of respondent Vicente Cordero. Concepcion. COURT OF APPEALS and L. the same formula that exempts petitioner from the payment of interest to its depositors during the whole period of factual stoppage of its operations by orders of the Central Bank. We also agree to hold free and harmless the Commercial Bank of Manila against any claim by any third party or any suit that may arise against this agreement of payment. We quote: It is a matter of common knowledge which we take judicial notice of. this petition for review on certiorari. xerox copy attached. JJ. It appearing that the amount of the latter's time deposit had been fully paid. petitioner. We may add for the guidance of those who might be concerned and so that unnecessary litigations may be avoided from further clogging the dockets of the courts that in the light of the consideration expounded in the above opinion. DECISION CARPIO. vs. Abad Santos. . J. he is now barred from contesting the same. the Central Bank. Thus. SO ORDERED. should be. . The pronouncement made by this Court. counsel for Combank filed on August 12.

judgment is hereby rendered DISMISSING the complaint. Diaz to prove that the signatures on the withdrawal slip were forged. he left the passbook with Solidbank. 6 stamped the deposit slips with the words ―DUPLICATE‖ and ―SAVING TELLER 6 SOLIDBANK HEAD OFFICE.[12] . Diaz to recover P300. Diaz charged its messenger. SO ORDERED.C. Diaz did not offer this evidence because it is derogatory to its action.‖[9] At the time of the withdrawal. The trial court pointed out that L. of P300.000. On 14 August 1991. Calapre was then standing beside Macaraya.000 bore the signatures of the authorized signatories of L. The withdrawal slip for the P300. Emmanuel Alvarez. The trial court pointed out that the burden of proof now shifted to L.‖ Since the transaction took time and Calapre had to make another deposit for L. Diaz’s negligence ca used the unauthorized withdrawal.C. Teller No. (2) the presentation of a signed withdrawal receipt by an unauthorized person. The trial court ruled that the passbook presented during the questioned transaction was ―now out of the lock and key and presumptively ready for a business transaction.C.000 from the savings account of L. Sometime in March 1976.000. Diaz withdrew P82.000 was not the direct and proximate cause of the loss. Diaz filed a Complaint[7] for Recovery of a Sum of Money against Solidbank with the Regional Trial Court of Manila.C. Diaz was a check that it had ―long closed. The trial court further justified the dismissal of the complaint by holding that the case was a last ditch effort of L. The teller stamped the withdrawal slip with the words ―Saving Teller No. [1] The Facts Solidbank is a domestic banking corporation organized and existing under Philippine laws. the trial court rendered on 28 December 1994 a decision absolving Solidbank and dismissing the complaint. is a professional partnership engaged in the practice of accounting. however. a certain Noel Tamayo was not only in possession of the passbook. The teller stamped the words ―DUPLICATE‖ and ―SAVING TELLER 6 SOLIDBANK HEAD OFFICE‖ on the dup licate copy of the deposit slip. The letter must request Solidbank to allow the withdrawal and convert the amount to a manager’s check. Another person driving a car must accompany the bearer so that he would not walk from Solidbank to the office in making the withdrawal. The assailed decision reversed the Decision[2] of the Regional Trial Court of Manila. to deposit the money with Solidbank. Emerano Ilagan (―Ilagan‖) and one Roscon Verdazola with Estafa throu gh Falsification of Commercial Document. Manuel verified the signatures on the withdrawal slip. The appellate court. and (3) the possession by an unauthorized person of a PBC check ―long closed‖ by L. It was also on the same day that L. Diaz disregarded these precautions in its past withdrawal. Diaz opened a savings account with Solidbank. Diaz then appealed[8] to the Court of Appeals. CPA’s (―L. Another provision of the rules on savings account states that the depositor must keep the passbook ―under lock and key. Diaz through its cashier. Diaz.C.C.C. When Macaraya asked for the passbook. Diaz through its Chief Executive Officer.C. Branch 8. expenses of litigation and cost of suit. Teller No. On 27 October 1998. Teller No.C. Diaz learned of the unauthorized withdrawal the day before. L.000.C.C. A certain Noel Tamayo received the P300. With costs against plaintiff. On 11 May 1999.C. The signatories.‖ The teller then passed on the withdrawal slip to Genere Manuel (―Manuel‖) for aut hentication. L. Diaz’s contention that Solidbank did not follow the precautionary procedures obs erved by the two parties whenever L. Macaraya went back to her office and reported the matter to the Personnel Manager of L.C.‖[11] Solidbank did not have any participation in the custody and care of the passbook. The teller acknowledged receipt of the deposit by returning to Calapre the duplicate copies of the two deposit slips. Diaz claimed that a letter must accompany withdrawals of more than P20. This PBC check of L.C.C. L. L. Calapre went to Solidbank and presented to Teller No. Macaraya immediately prepared a deposit slip in duplicate copies with a check of P200. The trial court admonished L. The trial court believed that Solidbank’s act of allowing the withdrawal of P300. Teller No. 6 if Calapre got the passbook. The trial court concluded that Solidbank acted with care and observed the rules on savings account when it allowed the withdrawal of P300.C. Diaz (―Diaz‖). Private respondent L. The Court further renders judgment in favor of defendant bank pursuant to its counterclaim the amount of Thirty Thousand Pesos (P30.C. the Court of Appeals issued its Decision reversing the decision of the trial court. Mercedes Macaraya (―Macaraya‖). modified its decision by deleting the award of exemplary damages and attorney’s fees. Diaz’s negligence: (1) the possession of the passbook by a person other than the depositor L. The dispositive portion of the decision of the trial court reads: IN VIEW OF THE FOREGOING. that person is considered as the owner of the passbook.C. Ismael Calapre (―Calapre‖). The withdrawal slip was then given to another officer who compared the signatures on the withdrawal slip with the specimen on the signature cards.C. Branch 8. Macaraya. L. The questioned resolution of the appellate court denied the motion for reconsideration of Solidbank but modified the decision by deleting the award of exemplary damages.C.000. In an Information[6] dated 5 September 1991. After trial.C.C. Diaz. attorney’s fees. he also presented a withdrawal slip with the signatures of the authorized signatories of L. went to Solidbank and presented to Teller No.C. Failing to get back the passbook.Before us is a petition for review of the Decision of the Court of Appeals dated 27 October 1998 and its Resolution dated 11 May 1999. 5.C. called up Solidbank to stop any transaction using the same passbook until L. designated as Savings Account No.[5] On the same day.554 without any separate letter of authorization or any communication with Solidbank that the money be converted into a manager’s check. Three facts establish L.C. The bearer must also have a letter authorizing him to withdraw the same amount.C. 14 August 1991.000 from its savings account.‖[4] PBC subsequently dishonored the check because of insufficient funds and because the signature in the check differed from PBC’s specimen signature. L. The trial court believed that L. now known as Solidbank Corporation (―Solidbank‖).C. denied signing the withdrawal slip. Diaz through its counsel demanded from Solidbank the return of its money. together with Calapre. The rules state that ―p ossession of this book shall raise the presumption of ownership and any payment or payments made by the bank upon the production of the said book and entry therein of the withdrawal shall have the same effect as if made to the depositor personally. Diaz withdrew significant amounts from its account. which check was deposited on the day of the fr audulent withdrawal. Diaz for not offering in evidence the National Bureau of Investigation (―NBI‖) report on the authenticity of the signatu res on the withdrawal slip for P300.000 drawn on Philippine Banking Corporation (―PBC‖). Macaraya als o gave Calapre the Solidbank passbook. Diaz with Allied Bank. L. The Ruling of the Trial Court In absolving Solidbank. 6 inf ormed him that ―somebody got the passbook. of any liability. On 25 August 1992. 15 August 1991.C.C.C. the trial court applied the rules on savings account written on the passbook. The trial court debunked L. On 16 July 1991.000. Luis C. the Court of Appeals issued its Resolution denying the motion for reconsideration of Solidbank. 6 told Macaraya that someone got the passbook but she could not remember to whom she gave the passbook. When Macaraya asked Teller No. Teller No. L. Diaz‖). S/A 200-16872-6. Murillo. When Calapre returned to Solidbank to retrieve the passbook. absolving petitioner Consolidated Bank and Trust Corporation. Diaz formally wrote Solidbank to make the same request. namely Diaz and Rustico L. The trial court held that L. 6 answered that someone shorter than Calapre got the passbook. 6 handed to Macaraya a deposit slip dated 14 August 1991 for the deposit of a check for P90. L.‖ [10] When another person presents the passbook for withdrawal prior to Solidbank’s receipt of the notice of loss of the passbook.C. Diaz. Diaz. Diaz. 6 the two deposit slips and the passbook. On 24 August 1992.C. Solidbank refused. The specimen signatures of these persons were in the signature cards. however. The following day. Diaz. Diaz and reported the incident to Macaraya.000 after the dismissal of the criminal case against Ilagan. Macaraya instructed the messenger of L.‖ Calapre went back to L. Diaz. The Regional Trial Court of Manila dismissed the criminal case after the City Prosecutor filed a Motion to Dismiss on 4 August 1992.00) as attorney‟s fees. Diaz could open a new account. filled up a savings (cash) deposit slip for P990 and a savings (checks) deposit slip for P50. Diaz and Company. 6 the deposit slip and check. Calapre then went to [3] Allied Bank.

and Ordering the dismissal of defendant-appellee‟s counterclaim in the amount of P30. the award of attorney’s fees was also disallowed pursuant to Article 2208 of the Civil Code. Thus. SO ORDERED. is obliged to pay for the damage done. Solidbank could not escape liability because of the doctrine of ―last clear chance. The teller did not even verify the identity of the impostor who made the withdrawal. our decision dated October 27.The Ruling of the Court of Appeals The Court of Appeals ruled that Solidbank’s negligence was the proximate cause of the unauthorized withdrawal of P300. namely: (a) damages suffered by the plaintiff.000. The Ruling of the Court The petition is partly meritorious. who was not presented by Solidbank during trial. if there is no pre-existing contractual relation between the parties. Diaz was also negligent in entrusting its deposits to its messenger and its messenger in leaving the passbook with the teller. Ordering defendant-appellee Consolidated Bank and Trust Corporation to pay plaintiff-appellant the sum of Three Hundred Thousand Pesos (P300.000. to wit: Article 2176.C. The Court of Appeals pointed out that the teller of Solidbank who received the withdrawal slip for P300. 2. the latter being a depositor of the former. premises considered. and (c) the connection of cause and effect between the fault or negligence of the defendant and the damage incurred by the plaintiff. Banks are obligated to treat the accounts of their depositors with meticulous care. there being fault or negligence. AND IN THE SAFEKEEPING OF ITS CHECKS AND OTHER FINANCIAL DOCUMENTS. The business and functions of banks are affected with public interest. THE COURT OF APPEALS ERRED IN NOT MITIGATING THE DAMAGES AWARDED AGAINST PETITIONER UNDER ARTICLE 2197 OF THE CIVIL CODE.C. expenses of litigation and cost of suit.C. NOR IS THERE ANY BANKING LAW. Solidbank would have known that the withdrawal was unauthorized. Diaz.00).000.00 as attorney‟s fees. Diaz. Diaz to verify the withdrawal. Consequently. foregoing considered.000. The appellate court ruled that the degree of diligence required from Solidbank is more than that of a good father of a family. The Issues Solidbank seeks the review of the decision and resolution of the Court of Appeals on these grounds: I.000 from the savings account of L.000. Diaz. and P20. The dispositive portion of the decision of the Court of Appeals reads: WHEREFORE. NOTWITHSTANDING ITS FINDING THAT PETITIONER BANK‟S NEGLIGENCE WAS ONLY CONTRIBUTORY. the appellate court ruled that exemplary damages could be granted if the defendant acted with gross negligence. Diaz based on the provisions of the rules on savings account. The Court of Appeals found Solidbank remiss in its duty. or some other person for whose acts he must respond. Whoever by act or omission causes damage to another. On the other hand. III. Such fault or negligence.C.C. (b) fault or negligence of the defendant.00 as exemplary damages. The appellate court reached this conclusion after applying the provision of the Civil Code on quasi-delict.000. violating its fiduciary relationship with L. the Court of Appeals applied the law on quasi-delict to determine who between the two parties was ultimately negligent.C. The appellate court deleted the award of exemplary damages and attorney’s fees. Invoking Article 2231[14] of the Civil Code. 1. The dispositive portion of the Resolution reads as follows: WHEREFORE.C. Since Solidbank was guilty of simple negligence only. The appellate court stated that the teller.‖ Solidbank could have averted the injury suffered by L.00 as attorney‟s fees and expenses of litigation as well as the cost of suit. The appellate court held that the three elements of a quasi-delict are present in this case. with interest thereon at the rate of 12% per annum from the date of filing of the complaint until paid.00 TO RESPONDENT‟S MESSENGER EMERANO ILAGAN. THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE OF LAST CLEAR CHANCE AND IN HOLDING THAT PETITIONER BANK‟S T ELLER HAD THE LAST OPPORTUNITY TO WITHHOLD THE WITHDRAWAL WHEN IT IS UNDISPUTED THAT THE TWO SIGNATURES OF RESPONDENT ON THE WITHDRAWAL SLIP ARE GENUINE AND PRIVATE RESPONDENT‟S PASSBOOK WAS DULY PRESENTED. . The law on quasi-delict or culpa aquiliana is generally applicable when there is no pre-existing contractual relationship between the parties. the sum of P20. is called a quasi-delict and is governed by the provisions of this chapter. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER BANK SHOULD SUFFER THE LOSS BECAUSE ITS TELLER SHOULD HAVE FIRST CALLED PRIVATE RESPONDENT BY TELEPHONE BEFORE IT ALLOWED THE WITHDRAWAL OF P300. the appellate court affirmed its decision but modified the award of damages. a recognition of the contractual relationship between Solidbank and L. the award of exemplary damages was not justified . The trial court pinned the liability on L. IV. the appellate court found Solidbank liable for its negligence in the selection and supervision of its employees. Diaz.[15] Hence. Had the teller called up L. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE INSTANT CASE IS A LAST DITCH EFFORT OF PRIVATE RESPONDENT TO RECOVER ITSP300.000 allowed the withdrawal without making the necessary inquiry. always having in mind the fiduciary nature of their relationship with their clients. WHICH MANDATES THAT A BANK TELLER SHOULD FIRST CALL UP THE DEPOSITOR BEFORE ALLOWING A WITHDRAWAL OF A BIG AMOUNT IN A SAVINGS ACCOUNT. 199 8 is affirmed with modification by deleting the award of exemplary damages and attorney‟s fees. Diaz had it called up L. this petition.[13] Acting on the motion for reconsideration of Solidbank. the decision appealed from is hereby REVERSED and a new one entered.00 AFTER FAILING IN ITS EFFORTS TO RECOVER THE SAME FROM ITS EMPLOYEE EMERANO ILAGAN. SINCE THERE IS NO AGREEMENT BETWEEN THE PARTIES IN THE OPERATION OF THE SAVINGS ACCOUNT. The expenses of litigation and cost of suit were also not imposed on Solidbank.C. [16] II. should have called up the depositor because the money to be withdrawn was a significant amount. SO ORDERED. AND CONTRARIWISE RESPONDENT WAS NEGLIGENT IN THE SELECTION AND SUPERVISION OF ITS MESSENGER EMERANO ILAGAN. The appellate court ruled that while L. Solidbank’s Fiduciary Duty under the Law The rulings of the trial court and the Court of Appeals conflict on the application of the law.

Solidbank failed to fulfill its contractual obligation because it gave the passbook to another person. a situation that Congress certainly did not intend in enacting Section 2 of RA 8791. holding [21] that ―the bank is under obligation to treat the accounts of its depositors with meticulous care. 8791 (―RA 8791‖). which took effect on 13 June [19] 2000. The record does not indicate that Teller No. Under Solidbank’s rules on savings account. Diaz to confirm the withdrawal. Proximate Cause of the Unauthorized Withdrawal Another point of disagreement between the trial and appellate courts is the proximate cause of the unauthorized withdrawal. always having in mind the fiduciary nature of their relationship. introduced in 2000. [18] Solidbank’s Breach of its Contractual Obligation Article 1172 of the Civil Code provides that ―responsibility arising from negligence in the performance of every kind of obligation is demandable.000.C. It was the negligent act of Solidbank’s Teller No.C. Solidbank’s failure to return the passbook to Calapre made possible the withdrawal of the P300. there is a presumption that the defendant was at fault or negligent. Diaz was not at fault that the passbook landed in the hands of the impostor. The tellers know. and that Teller No. The impostor apparently deposited a large amount of money to deflect suspicion from the withdrawal of a much bigger amount of money. if there is such a procedure.C. which later bounced.C. In contrast. Proximate cause is that cause which.000 from L. Diaz has established that Solidbank breached its contractual obligation to return the passbook only to the authorized representative of L. Solidbank relies on the following statements in the Booking and Information Sheet of Emerano Ilagan: . After completion of the transaction. 6 the P90.C. 6 verified the identity of the person who retrieved the passbook. The fiduciary nature of banking does not convert a simple loan into a trust agreement because banks do not accept deposits to enrich depositors but to earn money for themselves. once the plaintiff proves a breach of contract. Solidbank also failed to adduce in evidence its standard procedure in verifying the identity of the person retrieving the passbook. Diaz failed to do so. Diaz. Solidbank’s tellers must exercise a high degree of diligence in insuring that they return the passbook only to the depositor or his authorized representative. and in insuring its return to the party authorized to receive the same. Solidbank did not present to the trial court Teller No. We do not subscribe to the appellate court’s theory that the proximate cause of the unauthorized withdrawal was the teller’s failure to call up L. Diaz to v erify the withdrawal. The law allows banks to offer the lowest possible interest rate to depositors while charging the highest possible interest rate on their own borrowers. The burden is on the defendant to prove that he was not at fault or negligent. In culpa contractual.‖ This new provision in the general [20] banking law. produces the injury and without which the result would not have occurred. 6 presumptively failed to observe such high degree of diligence in safeguarding the passbook. L. Calapre left the passbook with Solidbank because the ―transaction took time‖ and he had to go to Allied Bank for another transaction. Diaz pertaining to measures that the parties must observe whenever withdrawals of large amounts are made does not direct Solidbank to call up L. is a statutory affirmation of Supreme Court decisions. Failure by the bank to pay the depositor is failure to pay a simple loan. policy and precedent. the teller with whom Calapre left the passbook and who was supposed to return the passbook to him. whether express or implied. mere possession of the passbook raises the presumption of ownership. and not a breach of trust. the law imposes on Solidbank and its tellers an even higher degree of diligence in safeguarding the passbook. or culpa contractual. Article 1172 of the Civil Code states that the degree of diligence required of an obligor is that prescribed by law or contract. The law imposes on banks high standards in view of the fiduciary nature of banking. The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan. There is no arrangement between Solidbank and L. L. Solidbank’s rules on savings account require that the ―deposit book should be carefully guarded by the depositor and kept under lock and key.000.C. For failing to return the passbook to Calapre. in natural and continuous sequence. jurisprudence at the time of the withdrawal already imposed on banks the same high standard of diligence required under RA No. The defense of exercising the required diligence in the selection and supervision of employees is not a complete defense in culpa contractual. However. Diaz therefore had the burden to prove that it is the usual practice of Solidbank to call up its clients to verify a withdrawal of a large amount of money. the fiduciary nature of a bank-depositor relationship does not convert the contract between the bank and its depositors from a simple loan to a trust [24] agreement. Solidbank and Teller No.[17] Article 1980 of the Civil Code expressly provides that ―x x x savings x x x deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. 6 that gave the impostor presumptive ownership of the passbook. 6 implemented this procedure in the present case. The law simply imposes on the bank a higher standard of integrity and performance in complying with its obligations under the contract of simple loan. and thus failed to prove that this teller exercised the ―high standards of integrity and performance‖ required of Solidbank’s employees. the authorized representative of L. beyond those required of non-bank debtors under a similar contract of simple loan. Section 2 of RA 8791 prescribes the statutory diligence required from banks – that banks must observe ―high standards of integrity and performance‖ in servicing [23] their depositors. the proximate cause of the unauthorized withdrawal was Solidbank’s negligence in not returning the passbook to Calapre.C. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family. Solidbank continues to foist the defense that Ilagan made the withdrawal. In the present case. Teller No. Solidbank had the contractual obligation to return the passbook only to Calapre. Diaz. There is thus a presumption that Solidbank was at fault and its teller was negligent in not returning the passbook to Calapre. Court of Appeals. they would be clothing that person presumptive ownership of the passbook. The interest spread or differential belongs to the bank and not to the depositors who are not cestui que trust of banks.000 PBC check.000 would not have happened. 5 who processed the withdrawal could not have been put on guard to verify the withdrawal.C. Solidbank did not have the duty to call up L. Likewise. Diaz. declares that the State recognizes the ―fiduciary nature of banking that requires high standards of integrity and performance.‖ When the passbook is in the possession of Solidbank’s tellers during withdrawals. If the tellers give the passbook to the wrong person. and absent such stipulation then the diligence of a good father of [22] a family. 8791.[26] Proximate cause is determined by the facts of each case upon mixed considerations of logic.C. The appellate court thus erred when it imposed on Solidbank the duty to call up L. the impostor deposited with Teller No.We hold that Solidbank is liable for breach of contract due to negligence. Solidbank was in possession of the passbook while it was processing the deposit. The trial court believed that L. L. Although RA 8791 took effect almost nine years after the unauthorized withdrawal of the P300. that the rules on savings account provide that any person in possession of the passbook is presumptively its owner. the loss of P300. There is no law mandating banks to call up their clients whenever their representatives withdraw significant amounts from their accounts. the authorized representative of L. Solidbank failed to discharge its burden.[25] The bank must not only exercise ―high standards of integrity and performance. unbroken by any efficient intervening cause. Diaz to confirm the withdrawal when no law requires this from banks and when the teller had no reason to be suspicious of the transaction. The depositor lends the bank money and the bank agrees to pay the depositor on demand. if possible. Even the agreement between Solidbank and L. the bank is liable to its depositor. The passbook was still in the hands of the employees of Solidbank for the processing of the deposit when Calapre left Solidbank. For the appellate court. the proximate cause was the teller’s negligence in processing the withdrawal without first verifying with L. Solidbank failed to present the teller who had the duty to return to Calapre the passbook.‖ it must also insure that its employees do likewise because this is th e only way to insure that the bank will comply with its fiduciary duty. Thus. The savings deposit agreement between the bank and the depositor is the contract that determines the rights and obligations of the parties. Diaz. facilitating unauthorized withdrawals by that person.000 by the impostor who took possession of the passbook. Diaz. The burden was on Solidbank to prove that there was no negligence on its part or its employees.‖ This fiduciary relationship means that the bank’s obligation to observe ―high standards of integrity and performance‖ is deem ed written into every deposit agreement between a bank and its depositor. 6.‖ For brea ch of the savings deposit agreement due to negligence. The bank is the debtor and the depositor is the creditor.‖ There is a debtor-creditor relationship between the bank and its depositor.C. Solidbank is bound by the negligence of its employees under the principle of respondeat superior or command responsibility. unlike in culpa aquiliana. Diaz’s savings account. Section 2 of Republic Act No.C. then the interest spread or income belongs to the depositors. common sense. Diaz.C.C. Solidbank claims that since Ilagan was also a messenger of L.[27] L. Prior to the withdrawal of P300.C. in culpa aquiliana the plaintiff has the burden of proving that the defendant was negligent. We do not agree with either court. or should know.C. Diaz to this effect. he was familiar with its teller so that there was no more need for the teller to verify the withdrawal.C. Diaz’s negligence in not securing its passbook under lock and key was the proximate cause that allowed the impostor to withdraw the P300. or culpa contractual. Had the passbook not fallen into the hands of the impostor. If depositors are cestui que trust of banks.C. starting with the 1990 case of Simex International v.

Such contributory negligence or last clear chance by the plaintiff merely serves to reduce the recovery of damages by the plaintiff but does not exculpate the defendant from his breach of contract. judgment is hereby rendered in favor of the plaintiffs and third party defendants and against the defendants and third party plaintiffs as follows: Ordering defendants and third party plaintiffs Shell and Michael.000 were not presented during trial to substantiate Solidbank’s claim that Ilagan deposited the check and made the questioned withdrawal. Doctrine of Last Clear Chance The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the other.‖ This means that if the defendant exercised the proper diligence in the selection and supervision of its employee. Batangas. Solidbank is liable for breach of contract due to negligence in the performance of its contractual obligation to L. Moreover. Reyes.C. Branch XI. 1974.000 was a certain Noel Tamayo.is the issue raised by the REFORMINAS (herein petitioners) in this Petition for Review on certiorari of the Resolution of the Hon.). In Philippine Bank of Commerce v. Ilagan then hired a taxicab in the amount of P1. Pineda. Marcelo Fernan & Associates for respondent Michael. L-59096 October 11. Azcuna. 1 Petitioners' motion for the reconsideration of the questioned Resolution having been denied. Incorporated to pay jointly and severally the following persons: . We find no justifiable reason to reverse the factual finding of the trial court and the Court of Appeals. INCORPORATED. issued in Civil Case No. an action for Recovery of Damages for injury to Person and Loss of Property. would exonerate [31] the defendant from liability.R. Ilagan extravagantly and lavishly spent his money but a big part of his loot was wasted in cockfight and horse racing. CUEVAS. who had the last fair chance to prevent the impending harm by the exercise of due diligence. vs.[32] Mitigated Damages Under Article 1172.C. CEBU CITY... Applying the same ruling to this case. After successfully withdrawing this large sum of money. CPA’s. Let a writ of execution be issued. they now come before Us through the instant petition praying for the setting aside of the said Resolution and for a declaration that the judgment in their favor should bear legal interest at the rate of twelve (12%) percent per annum pursuant to Central Bank Circular No. Vitug. TOMOL. The tellers who processed the deposit of the P90.000 to transport him (Ilagan) to his home province at Bauan. of the then Court of First Instance of Cebu-Branch XI.[33] where the Court held the depositor guilty of contributory negligence. C. Hereunder are the pertinent antecedents: On June 7. ―liability (for culpa contractual) may be regulated by the courts. petitioners. or if the plaintiff was guilty of contributory negligence. SHELL REFINING COMPANY (PHILS. respondents. L. SO ORDERED. judgment was rendered by the Court of First instance of Cebu in Civil Case No. JR. 2 the dispositive portion of which reads— WHEREFORE. The remaining 40% of the actual damages shall be borne by private respondent L. This is a case of culpa contractual. Diaz and Company. CPA’s only 60% of the actual damages awarded by the Court of Appeals. we allocated the damages between the depositor and the bank on a 40-60 ratio. (Chairman). Solidbank must pay the other 60% of the actual damages. No. WHEREFORE.[28] (Emphasis supplied. or where it is impossible to determine whose fault or negligence caused the loss. Stated differently. We uphold the finding of the trial and appellate courts that a certain Noel Tamayo withdrew the P300.) L. R-11279. the antecedent negligence of the plaintiff does not preclude him from recovering damages caused by the supervening negligence of the defendant.000.C. Court of Appeals . Diaz and Company. the one who had the last clear opportunity to avoid the loss but failed to do so. by way of legal interest. R-11279. the decision of the Court of Appeals is AFFIRMED with MODIFICATION.C. Tomol.xxx Ilagan also had with him (before the withdrawal) a forged check of PBC and indicated the amount of P90. then the courts may reduce the award of damages. as Judge of the Court of First Instance.C. on official leave. The dispositive portion of the assailed Resolution reads as follows— In light (sic) of the foregoing. JJ. 1985 PACITA F.C. should a judgment debtor pay the judgment creditor. and Ynares-Santiago. Diaz and Company. REFORMINA and HEIRS OF FRANCISCO REFORMINA.. the liability of Solidbank should be reduced. Thus. and MICHAEL. SO ORDERED. Reynaldo A. Jr. 1972. THE HONORABLE VALERIANO P. where neither the contributory negligence of the plaintiff nor his last clear chance to avoid the loss. Tayao and Picaso Law Office for respondent Shell..C. G. respondent Judge Valeriano P.000 which he deposited in favor of L. Diaz. the considered view here that by legal interest is meant six (6%) percent as provided for by Article 2209 of the Civil Code.: How much. J.[30] We do not apply the doctrine of last clear chance to the present case. Petitioner Solidbank Corporation shall pay private respondent L. the entry quoted by Solidbank does not categorically state that Ilagan presented the withdrawal slip and the passbook. Santayana. Jr. we hold that L. is chargeable with the [29] loss. Diaz must shoulder 40% of the actual damages awarded by the appellate court. 416 dated July 29. In this case. concur. Ilagan was apprehended and meekly admitted his guilt. Davide. INC.J.. Diaz was guilty of contributory negligence in allowing a withdrawal slip signed by its authorized signatories to fall into the hands of an impostor. Both the trial and appellate courts stated that this Noel Tamayo presented the passbook with the withdrawal slip. The Court is not a trier of facts. accused Ilagan gave alias Rey (Noel Tamayo) his share of the loot. Mateo Canonoy for petitioners. Proportionate costs. Inc.. according to the circumstances. J.000 check and the withdrawal of the P300. Diaz refutes Solidbank’s contention by pointing out that the person who withdrew the P300.

The petition is devoid of merit.000. as amended. its dismissal is in order. the availability of adequate capital resources is. in the absence of express contract as to such rate of interest. or credits and the rate allowed in judgments. private respondents insist that said legal interest should be at the rate of six (6%) percent per annum only. words and phrases in statutes should not be interpreted in isolation from one another. Incorporated are hereby ordered to pay . 2655 deals with interest on (1) loans. Central Bank Circular No.appellants are also directed to pay P100. No. Reformina and Francisco Reformina the sum of P131. That such changes shall not be made oftener than once every twelve months. 116 which brought about the grant of authority to the Central Bank and which reads thus— WHEREAS. 2209. 1980. . pursuant to and by authority of Article 2209 of the New Civil Code in relation to Articles 2210 and 2211 thereof. Coming to the case at bar. or credits. nor involving loans or forbearance of any money. the Monetary Board increased the rate of legal interest from that of six (6%) percent per annum originally allowed under Section I of Act No.00 with costs against defendants and third party plaintiffs. 116. xxx xxx xxx (g) Plaintiffs Pacita F. The Monetary Board is hereby authorized to prescribe the maximum rate or rates of interest for the loan or renewal thereof or the forbearance of any money. a decisive element in the achievement of the declared objective of accelerating the growth of the national economy. shall be the payment of interest agreed upon. and to change such rate or rates whenever warranted by prevailing economic and social conditions: Provided. 2655. the rest of the judgment appealed from is affirmed. 1972 with legal interest from the filing of the complaint until paid and to pay attorney's fees of P5. Consequently. 5 Another formidable argument against the tenability of petitioners' stand are the whereases of PD No. and in the absence of stipulation. The liability of the two defendants for an the awards is solidary. there being no stipulation to the contrary. Upon the other hand.00 which is the value of the insurance recovered and the amount of P10. That function is vested solely with the legislative authority. petitioners contend that Central Bank Circular No. the decision herein sought to be executed is one rendered in an Action for Damages for injury to persons and loss of property and does not involve any loan. invoking in support of their aforesaid submission. Central Bank of the Philippines Circular No.000. which amended Act No. (Phils. 4 A word or phrase in a statute is always used in association with other words or phrases and its meaning may thus be modified or restricted by the latter. fishing gear and equipment minus P80. The amendment from which said authority emanated reads as follows— Section 1-a. shall be twelve (12%) per cent per annum. Inc. (Italics supplied) includes the judgment sought to be executed in this case. WHEREAS. Reformina and the heirs of Francisco Reformina. goods. much less forbearances of any money. the indemnity for damages. As correctly argued by the private respondents. goods or credits. 416. because it is covered by the phrase 2nd the rate allowed in judgments in the absence of express contract as to such rate of interest . and Michael. It is axiomatic in legal hermeneutics that statutes should be construed as a whole and not as a series of disconnected articles and phrases. 1969 up to the time they are actually paid or already the total sum of P370. " in the aforequoted circular. The two (2) defendants. performs a vital role in mobilizing domestic savings and attracting capital resources into preferred areas of investments.000. otherwise known as the Usury Law.. 416 which took effect on July 29. the legal interest which is six percent per annum. 1974. finance companies and other similar credit institutions although the rates prescribed for these institutions need not necessarily be uniform. the trial court's judgment was modified to reads as follows— WHEREFORE. petitioners claim that the "legal interest" should be at the rate of twelve (12%) percent per annum. and the debtor incurs in delay. the monetary authorities have recognized the need to amend the present Usury.. 1622 dated July 29.000. 2655 to twelve (12%) percent per annum. On appeal to the then Court of Appeals.00 compensation for the value of the lost boat with legal interest from the filing of the complaint until fully paid to Pacita F. (Italics supplied) Acting pursuant to this grant of authority.. SO ORDERED. In the exercise of the authority herein granted. In the computation of the "legal interest" decreed in the judgment sought to be executed. goods or credits. goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. the case was remanded to the lower court for execution and this is where the controversy started. It will be noted that Act No. In the absence of a clear contrary intention. The Monetary Board may not tread on forbidden grounds. It cannot rewrite other laws. otherwise known as the "Usury Law" the Monetary Board in its Resolution No. This Circular shall take effect immediately.).D. WHEREAS. If the obligation consists in the payment of a sum of money.00 with legal interests from the filing of the complaint until paid as compensatory and moral damages and P41. the judgment appealed from is modified such that defendants-appellants Shell Refining Co. (2) forbearances of any money. among other factors.00 as of June 4. xxx xxx xxx Except as modified above. 416 which provides — By virtue of the authority granted to it under Section 1 of Act 2655.084.00 a month as the estimated monthly loss suffered by them as a result of the fire of May 6. 3 The said decision having become final on October 24. the interest rate.(a) . goods. The judgments spoken of and referred to are Judgments in litigations involving loans or forbearance of any 'money. Any other kind of monetary judgment which has nothing to do with. together with other monetary and credit policy instruments. Law to allow for more flexible interest rate ceilings that would be more responsive to the requirements of changing economic conditions.000. In support of their stand. Appellants Shell and Michael and third party defendant Anita L. goods or credits. 1974 was issued and promulgated by the Monetary Board pursuant to the authority granted to the Central Bank by P.000. Abellanosa shall shoulder their respective costs. the law applicable to the said case is Article 2209 of the New Civil Code which reads— Art. has prescribed that the rate of interest for the loan or forbearance of any money. Petitioners maintain that it covers all kinds of monetary judgment. The issue now is—what kind of judgment is referred to under the said law..00 which is the value of the boat F B Pacita Ill together with its accessories. the Monetary Board may prescribe higher maximum rates for consumer loans or renewals thereof as well as such loans made by pawnshops. The contention is devoid of merit.. and (3) rate allowed in judgments. The defendants-appellants shall pay costs in favor of the plaintiffs..

When an obligation. a loan or forbearance of money.00. When an obligation. (Chairman). (5) when the findings are conflicting.00 issued by petitioner in favor of private respondent. concu . as well as the accrual thereof.‖[3] Apparently aggrieved. Gutierrez. FELIX VILLANUEVA. the same should earn legal interest at the rate of 12% per annum computed from the time the complaint was filed until the finality of this decision. if the total obligation is not satisfied it shall further earn legal interest at the rate of 12% per annum computed from the finality of the decision until payment thereof. (7) when the findings of the Court of Appeals are contrary to those of the trial court. J. Makasiar. the rate of interest.. in making its findings. and the entire obligation to earn interest at six (6%) percent per annum from the filing of the complaint. J. CV 39731 entitled ―Almario Go Manuel v. A demand was made upon petitioner to make good the check but he failed to do so. as well as moral and exemplary damages. the interest due is that which may have been stipulated in writing.‖ Applying the foregoing rules. As such. is breached. IN VIEW OF THE FOREGOING CONSIDERATIONS. In the absence of stipulation. Kapunan. i. On July 27.. this Court is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below. (6) when the Court of Appeals. this interim period being deemed to be by then an equivalent to a forbearance of credit. if properly considered. respondents. i. since the principal obligation in the amount of P167. as follows: 1. Narvasa C.. petitioner. regardless of its source. Furthermore. Concepcion. the rate of legal interest. 3.00. the interest due shall itself earn legal interest from the time it is judicially demanded. With regard particularly to an award of interest in the concept of actual and compensatory damages. Jr. the same is hereby DISMISSED with costs against petitioners. Judgment is hereby rendered in favor of the plaintiff and against co-defendant Felix Villanueva. both parties appealed the decision to the Court of Appeals. SO ORDERED.00. involving an action for sum of money. the rate of interest shall be 12% per annum to be computed from default. JJ. WHEREFORE. (2) when there is a grave abuse of discretion. J. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. CJ. Felix Villanueva‖ January 30. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record. would justify a different conclusion.. and (c) the Court of Appeals erred in not declaring that the Central Bank and Monetary Board has no power or authority to repeal the usury law. When the judgment of the court awarding a sum of money becomes final and executory. concur. Time and again it has been ruled that the jurisdiction of this Court in cases brought to it from the Court of Appeals is limited to the review and revision of errors of law allegedly committed by the appellate court. however. 1992. not constituting a loan or forbearance of money. and finally with costs against the husband.. No costs. Court of Appeals[8] laid down the following guidelines: ―I.[4] Petitioner now comes before this Court basically alleging the same issues raised before the Court of Appeals as follows: (a) the Court of Appeals erred in not ruling that the five (5%) and ten (10%) percent interest imposed is not enforceable due to absence of such stipulation in writing. on the other hand.D. Abad Santos. Branch 8 against petitioner. above. JJ. surmises or conjectures. this Court. the trial court rendered a decision in favor of private respondent.The above provision remains untouched despite the grant of authority to the Central Bank by Act No. and it consists in the payment of a sum of money. Petitioner prayed for the reversal of the trial court’s decision and contended that his principal obligation is only P23. CV 39731 dated January 30. Inc. and finding the instant petition to be without merit. the rate of TWELVE PERCENT (12%) per annum shall be additionally imposed on the total obligation until payment thereof is satisfied. the decision of the Court of Appeals in CA-G. Aquino. [1] dated In 1991. quasi-contracts. (9) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which. and Purisima. (3) when the finding is grounded entirely on speculations. (8) when the findings of fact are conclusions without citation of specific evidence on which they are based.00 is a loan.[7] After a review of the case at bar. with separate opinion of Justice Plana. concurs in the result. 416 applicable to any case other than those specifically provided for by the Usury Law will make the same of doubtful constitutionality since the Monetary Board will be exercising legislative functions which was beyond the intendment of P. Alampay and Patajo. i. 2. Almario Go Manuel filed a civil action for sum of money with damages before the Regional Trial Court of Cebu City. The subject matter of the action involved a check dated June 30.[5] The petition should be denied. As regards the matter of legal interest.420. twenty-five percent (25%) as attorney’s fees. Escolin. (b) the Court of Appeals erred in not finding that petitioner is only liable for the amount P23. No. law. is imposed. directing the latter to pay the former P167. II. the interim period being deemed to be a forbearance of credit.[6] The rule. The Court of Appeals dismissed the petition and affirmed the decision of the trial court subject to the modification that petitioner was directed to additionally pay private respondent attorney’s fees and litigation expenses in the amount of ten (10%) percent of P167. shall be 12% per annum from such finality until its satisfaction. premises considered. avers that his principal obligation only amounts to P23. SO ORDERED.e. 1991 in the amount of P167.420. admits of the following exceptions: (1) when the inference made is manifestly mistaken.R. as its findings of fact are deemed conclusive.R. Private respondent then filed a criminal complaint for violation of Batas Pambansa Bilang 22 [2] before the Cebu City Prosecutor’s Office and the subject civil complaint for sum of money. (4) when the judgment of the Court of Appeals is based on misapprehension of facts. Relova. The provisions under Title XVII on ―Damages‖ of the Civil Code govern in determining the measure of recoverable damages.600.e. contracts. Melencio-Herrera. The check when duly represented for payment was dishonored due to insufficiency of funds.. When the obligation is breached. absurd or impossible. Felix Villanueva and his wife Melchora. DECISION ROMERO.420. 2655.: For the Court’s resolution is the petition for review of the decision of the Court of Appeals in CA -G. SO ORDERED. 1996 is hereby AFFIRMED with the MODIFICATION that the rate of legal interest to be paid is TWELVE PERCENT (12%) per annum of the amount due computed from the time the complaint was filed until the finality of this decision. delicts or quasi-delicts is breached. After this decision becomes final and executory. COURT OF APPEALS and ALMARIO GO MANUEL. On the other hand. in the case of Eastern Shipping Lines. Jr.e. the dismissal of this case with respect to co-defendant Melchora Villanueva. x x x. To make Central Bank Circular No.. the dispositive portion of which reads: ―THE FOREGOING CONSIDERED. The check supposedly represented payment of loans previously obtained by petitioner from private respondent as capi tal for the former’s mining and fertilizer business. v. went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee.600. as amended.600. De la Fuente. private respondent. 1996. whether the case falls under paragraph 1 or paragraph 2.. 116.600. the contravenor can be held liable for damages. vs. while private respondent sought interest of ten percent (10%) of the principal obligation.00. we consider petitioner to have failed to raise issues which would constitute sufficient ground to warrant the reversal of the findings of the trial and appellate courts. Petitioner.00.

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