FIRST DIVISION
BANCO FILIPINO SAVINGS G.R. No. 153134
AND MORTGAGE BANK,
Petitioner,
Present:
PANGANIBAN, C.J., Chairperson,
YNARES-SANTIAGO,*
- versus- AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
ANTONIO
G. DIAZ and Promulgated:
ELSIE
B. DIAZ,
Respondents. June
27, 2006
x-----------------------------------------------------------------------------------------x
CALLEJO, SR., J.:
Before the Court is
the Petition for Review on Certiorari
filed by Banco Filipino Savings and Mortgage Bank of the Decision[1]
dated November 12, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64475
allowing respondents spouses Antonio and Elsie Diaz to withdraw their deposit
on consignation in the amount of P1,034,600.00[2]
held by the Regional Trial Court (RTC) of Makati City, Branch 61. The assailed decision reversed and set aside
the orders of the said lower court which had denied the respondents’ motion to
withdraw deposit. Likewise assailed is
the Resolution of
The
present case is an offshoot of the CA Decision[3]
of
On
P400,000.00
bearing an interest rate of 16% per annum.
In November 1982, the said loan was restructured or consolidated in the
increased amount of P3,163,000.00
payable within a period of 20 years at an interest rate of 21% per
annum. The obligation was to be paid in
equal monthly amortization of P56,227.00, and secured by a real estate
mortgage over two commercial lots situated at
Despite
repeated demands made on them, the respondents defaulted in the payment of
their obligation beginning October 1986.
Before petitioner bank could institute the proceedings to foreclose on
the mortgaged properties, the respondents filed with the RTC of Davao City a
complaint for “Declaration of Interest Rates and Penalty Charges as
Unconscionable and Its Reduction, Reformation of Contract, Annulment of
Assignment of Rentals, Damages and Attorney’s Fees with Injunction,” docketed
as Civil Case No. 17840. The RTC of Davao City (Branch 12) denied the
application for the issuance of a writ of preliminary injunction. It held that, by respondent Antonio Diaz’ own
admission, the respondents had been remiss in paying the amortization as agreed
upon in the contract; hence, the conditions in the real estate mortgage
contract had been violated. As such,
petitioner bank could rightfully foreclose the mortgaged properties. On appeal by the respondent spouses, the CA,
in its Decision of
Thereafter,
the respondents filed another complaint with the RTC of Makati City for
“Consignation and Declaration of Cancellation of Obligation, with Prayer for
Issuance of a Preliminary Injunction and Temporary Restraining Order.” The case was docketed as Civil Case No.
91-3090, and raffled to Branch 61 of the said RTC. For failure to file its answer, petitioner
bank was declared in default. In
addition to the facts established in the previous case, the RTC of Makati City,
based on the ex parte evidence of the
respondents, made the finding that during the period of P1,311,308.48. Further, as of P3,391,501.99. The
respondents made additional payments from P2,356,910.00. If these additional payments were to be
applied to the principal, the remaining balance would only be P1,034,600.00
as of P1,034,600.00 as full payment of their loan
obligation. However, petitioner bank,
through its then Liquidator Ricardo P. Lirio, refused to accept the said
amount. According to petitioner bank,
the respondents’ obligation at that time amounted to P10,160,649.13.
The respondents
then deposited by way of consignation with the RTC of Makati City, a manager’s
check dated P1,034,600.00 as full payment of their loan
obligation. Petitioner bank was duly
informed of such consignation.
In its Decision
dated March 6, 1992, the RTC of Makati City ruled that the respondents’ total
obligation to petitioner bank amounted only to P1,034,600.00 exclusive
of interests, and the latter could not charge and/or collect any interest
during the time that it was closed by the Central Bank as, in fact, banks that
were ordered closed by the Central Bank ceased to be liable for the payment of
interests on deposits. It also
considered the deposited check as consignation of the respondents’ entire debt
and that there was a valid consignation.
Accordingly, the respondents’ obligation to petitioner bank was declared
as fully paid and/or cancelled.
On appeal by
petitioner bank, the CA, in its Decision dated
The CA declared
that the deposited amount of P1,034,600.00 failed to effect a valid
consignation in law because it did not include all interests due. It ratiocinated that for a valid consignation
to exist, the tender of the principal must be accompanied with the tender of
interests which had accrued; otherwise, the said tender would not be
effective. The CA then reversed and set
aside the decision of the RTC of Makati City and entered a new one dismissing
Civil Case No. 91-3090.
The subsequent facts pertain to the case now before the Court:
Upon finality of
the decision of the CA in CA-G.R. CV No. 42899, declaring that there was no
valid consignation and dismissing Civil Case No. 91-3090, the respondents filed
with the RTC of Makati City a motion to withdraw deposit. They averred therein that with the finality
of the CA decision dismissing their complaint, they are now withdrawing the
amount of P1,034,600.00 which they had deposited by way of consignation
with the said lower court. In addition,
they alleged that their loan obligation was eventually settled with the payment
of the amount of P25,000,000.00 through negotiations made with
petitioner bank by the brothers James and Francisco Gaisano as
attorneys-in-fact of the respondents.
Upon such payment, Corazon L. Costan, petitioner bank’s 2nd
Assistant Vice-President and Davao Main Branch Manager, issued on
Petitioner bank
opposed the respondents’ motion. It
alleged that as of P28,810,330.51. Petitioner bank asserted that the deposit in
question should be released to it as part of the full payment of the
respondents’ obligation. It maintained
that it accepted the said consignation; hence, the respondents could no longer
withdraw the said amount.
Petitioner bank
refuted the respondents’ claim that there was already full payment of their
obligation with the payment by the Gaisanos of P25,000,000.00. Petitioner bank stated that it negotiated
with the Gaisanos on P28,810,330.51.
Petitioner bank added that during this negotiation, it took into account
and deducted from the said total obligation the amounts of P1,462,901.00,
representing the payments made by the respondents in 1990 and 1991, and P1,034,600.00,
representing the deposit made by the respondents with the RTC of Makati
City. The net obligation of the
respondents after deducting these amounts stood at P26,312,828.52 and it
was this amount that petitioner bank agreed to be settled with the payment by
the Gaisanos of P25,100,000.00, not P25,000,000.00 as alleged by
the respondents.
Petitioner bank
accused the respondents of being in bad faith in that while its negotiation
with the Gaisanos had not yet been finalized, the respondents sought to
withdraw the deposit in question – which was part of the consideration that
induced petitioner bank to agree to settle the respondents’ obligation with the
payment by the Gaisanos of P25,100,000.00 Petitioner bank prayed that the deposit in
question be released to it in order that it could be applied to the respondents’
total loan obligation.
After
consideration of the parties’ respective arguments, the RTC of Makati City
issued the Order dated
Acting on the Motion to Withdraw Deposit
mailed by plaintiff[s], [the respondents herein] on
It appears on record that the Complaint
for Consignation filed by the plaintiff[s] before this Court, dated 13 December
1991 and was dismissed by the Court of Appeals on 14 November 1997 which found
that the deposited amount of P1,034,600.00 did not include the interest
due and was not in full satisfaction of the defendant’s claim and there was no
valid tender of payment and consignation.
The dismissal of the complaint for
Consignation by the Appellate Court did not absolve the obligation of plaintiff
to apply the consignation to the outstanding obligation to the defendant and
thus, the deposited amount may still be applied for payment of the obligation
after due hearing on the deficiency claim of the defendant against the
plaintiff.
WHEREFORE, in view of the foregoing, the
MOTION TO WITHDRAW DEPOSIT is hereby DENIED for lack of merit.
SO ORDERED.[5]
The
respondents sought the reconsideration thereof but the RTC of Makati City
denied their motion in its Order dated
Acting
on the said petition, the CA rendered the Decision dated
The CA stressed that petitioner bank had not “performed any prior unmistakable and deliberate act denominating a preemptive acceptance of the deposit in partial settlement of the loan obligation.”[7] The claim of “acceptance” was found to be an afterthought on the part of petitioner bank and proffered for the sole purpose of opposing the respondents’ motion to withdraw deposit.
Even
assuming that there was acceptance by petitioner bank, the CA opined that such
acceptance must retroact to
The
CA strongly condemned the fact that the respondents’ original loan of P400,000.00
in 1972 ballooned to P28,810,330.51
as of
The
CA found as credible the respondents’ claim that, on their behalf, the Gaisanos
had secured a compromise agreement with petitioner bank with the payment of P25,100,000.00
and, consequently, the mortgage over the respondents’ commercial lots was
cancelled. Further, the auction sale of
these properties which was scheduled on
The dispositive portion of the assailed decision of the CA reads:
WHEREFORE, the foregoing premises
considered, the petitioners’ [the respondents herein] petition for certiorari
is GRANTED. The Orders dated P1,034,600.00
held in custodia legis with said
court. No costs.
SO ORDERED.[9]
Petitioner
bank sought the reconsideration of the said decision but the CA, in its
Resolution dated
The basic
contention of petitioner bank is that the CA erred in reversing the Orders
dated
of Makati City which had denied the respondents’ motion to withdraw
deposit. Petitioner bank posits that the
said lower court did not commit grave abuse of discretion in issuing the said
orders because, as stated in the CA Decision of November 14, 1997 in CA-G.R. CV
No. 42899, there was no valid consignation since the amount tendered (P1,034,600.00)
by the respondents did not include the interests that accrued on the principal
and, therefore, was not in full settlement of their outstanding
obligation. Petitioner bank maintains
that the dismissal of the respondents’ complaint for consignation in Civil Case
No. 91-3090 did not discharge their obligation to petitioner bank. Hence, the deposited amount may still be applied
to the payment of such obligation.
Petitioner
bank claims that it accepted the respondents’ deposit on consignation as
partial payment of their obligation after the CA had declared the same to have
been improperly made and ineffective to discharge the respondents of their
obligation to petitioner bank. The RTC
of Makati City thus did not allegedly commit grave abuse of discretion in
holding that the deposited amount of P1,034,600.00 may still be applied
to the payment of their outstanding obligation of P28,810,330.51 as of
It is likewise petitioner bank’s view that respondents erroneously resorted to the remedy of certiorari in assailing the orders of the RTC of Makati City. By filing their motion to withdraw deposit with the said lower court, the respondents allegedly recognized its jurisdiction and assuming arguendo that it committed an error in the exercise thereof, the appropriate remedy to correct the same was by ordinary appeal, not certiorari.
Petitioner
bank emphasizes that it already accepted the deposit of P1,034,600.00
such that it could no longer be withdrawn by the respondents. It reiterated that as of December 31, 1998,
the respondents’ total obligation was P28,810,330.51 and when it
negotiated with the Gaisanos in January 1999, it deducted therefrom the sums of
P1,462,901.00, representing previous payments of the respondents, and P1,034,600.00,
representing the deposit in question.
After these deductions, the respondents’ net obligation stood at P26,312,828.52,
and it was this amount that petitioner bank agreed to be settled with the
payment of P25,100,000.00 by the Gaisanos. This allegedly showed its acceptance of the
deposit in question as it was part of the consideration for the settlement of
the respondents’ obligation of P28,810,330.51.
Petitioner
bank strongly takes exception to the portion of the assailed CA decision
comparing it to Shylock and characterizing the surcharges and interests as
“excessive, iniquitous, unconscionable and exorbitant.” It faults the respondents for being remiss in
paying their amortization. Had they been
religious in paying the same, then their obligation would not have reached the
amount of over P28,000,000.00.
Petitioner bank denies that it delayed the foreclosure of the
respondents’ mortgaged properties in order to allow the loan arrearages to
accumulate. Rather, the delay was
allegedly the respondents’ doing as they filed with the RTC of Davao City a
complaint to enjoin the said foreclosure.
Moreover, petitioner bank points out that in several cases,[10]
the Court recognized that interests and surcharges are two entirely different
things that may be simultaneously collected in connection with loan
agreements.
Petitioner
bank, thus, prays for the reversal of the Decision dated P1,034,600.00
held by the RTC of Makati City.
The petition is denied.
The Court shall first address the procedural issue on the propriety of respondents’ filing with the CA of a petition for certiorari in assailing the Orders of the RTC of Makati City denying their motion to withdraw deposit. Petitioner bank submits that such tack was erroneous, as they should have filed an appeal. Petitioner bank’s submission is not correct.
A special civil
action for certiorari may be
instituted when any tribunal, board or officer, exercising judicial or
quasi-judicial functions, has acted without or in excess of jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal, nor any plain, speedy and adequate remedy in the ordinary
course of law.[11] To recall, in the present case, the RTC of
Makati City had already rendered its original judgment in Civil Case No 91-3090
and the same was appealed to the CA.
Acting on the appeal, the CA reversed the judgment of the RTC of Makati
City and dismissed the respondents’ complaint for consignation. The CA decision became final and
executory. Subsequently, the respondents
filed the motion to withdraw deposit with the RTC of Makati City and which the
latter denied in the Orders of
On the other
hand, the only substantive issue for the Court’s resolution is whether the
appellate court erred in reversing the Orders dated July 31, 2000 and December
14, 2000 of the RTC of Makati City which denied the respondents’ motion to
withdraw deposit and, consequently, allowing them to withdraw their deposit of P1,034,600.00
held on consignation by the said lower court.
Consignation is
the act of depositing the thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses to accept payment and it
generally requires a prior tender of payment.[12]
In order that consignation may be effective, the debtor must show that: (1)
there was a debt due; (2) the consignation of the obligation had been made
because the creditor to whom tender of payment was made refused to accept it,
or because he was absent or incapacitated, or because several persons claimed
to be entitled to receive the amount due or because the title to the obligation
has been lost; (3) previous notice of the consignation had been given to the
person interested in the performance of the obligation; (4) the amount due was
placed at the disposal of the court; and (5) after the consignation had been
made, the person interested was notified thereof.[13] As earlier mentioned, the CA, in its Decision
of
The issue that
now confronts the Court relates to the right of the respondents to withdraw the
amount deposited with the RTC of Makati City. Article 1260 of the Civil Code of
the
Art. 1260. Once the consignation has been duly made, the
debtor may ask the judge to order the cancellation of the obligation.
Before the creditor has accepted the consignation, or before a judicial confirmation that the consignation has been properly made, the debtor may withdraw the thing or the sum deposited, allowing the obligation to remain in force.
This provision has been explained in this wise:
x x x The right of the debtor to
withdraw the thing or amount deposited in court, depends upon whether or not the
consignation has already been accepted or judicially declared proper. Before that time, the debtor is still the
owner, and he may withdraw it; in this case, the obligation will remain in full
force as before the deposit. But once
the consignation has been accepted by the creditor or judicially declared as
properly made, the debtor loses his right over the thing or amount deposited,
and he cannot withdraw the same without the consent of the creditor; if the
creditor consents to the withdrawal in such case, the obligation is revived as
against the debtor personally, but all rights of preference of the creditor
over the thing and all his actions against co-debtors, guarantors and sureties
are extinguished.
x x x x
x x x
We believe, however, that the contrary view is more acceptable. Before the consignation has been accepted by
the creditor or judicially declared as properly made, the debtor is still the
owner of the thing or amount deposited, and, therefore, the other parties
liable for the obligation have no right to oppose his withdrawal of such thing
or amount. The debtor merely uses his
right, and unless the law expressly limits that use of his right, it cannot be
prevented by the objections of anyone. Our
law grants to the debtor the right to withdraw, without any limitation, and we
should not read a non-existing limitation into the law. Although the other
parties liable for the obligation would have been benefited if the consignation
had been allowed to become effective, before that moment they have not acquired
such an interest as would give them a right to oppose the exercise of the right
of the debtor to withdraw the consignation.
Before the consignation has been
judicially declared proper, the creditor may prevent the withdrawal by the
debtor, by accepting the consignation, even with reservations. Thus, when the amount consigned does not
cover the entire obligation, the creditor may accept it, reserving his right to
the balance. x x x[14]
Thus, under Article 1260 of the Civil Code, the debtor may withdraw, as a matter of right, the thing or amount deposited on consignation in the following instances:
(1) Before the creditor has
accepted the consignation; or
(2) Before a judicial
declaration that the consignation has been properly made.
Obviously, in this case, there was no judicial declaration that the consignation had been properly made. On the contrary, the CA declared that there was no valid consignation. What remains to be determined then is whether petitioner bank had already accepted the deposit in question so as to prevent the respondents from exercising their right to withdraw the same.
Petitioner bank
insists that it had already done so. In
fact, petitioner bank avers, it took into account and deducted the deposit in
question from the respondents’ outstanding obligation of P28,810,330.51
as of P26,312,828.52. It was this
amount that petitioner bank allegedly agreed to be settled with the payment of P25,100,000.00
by the Gaisanos on behalf of the respondents.
To prove this
claim, petitioner bank relies on the statement of account[15]
prepared by its employees purportedly showing that the deposit in question was
deducted from the respondents’ outstanding obligation as of P1,034,600.00 held
by the RTC of Makati City.
On the other hand, in the assailed decision, the CA categorically made the finding that petitioner bank made no acceptance of the deposit in question, even if only as partial payment of the respondents’ outstanding obligation:
Nor could it be successfully argued with
any modicum of persuasion, x x x, that the bank had performed any prior
unmistakable and deliberate act denominating a preemptive acceptance of the
deposit in partial settlement of the loan obligation. Otherwise, it would not have waited until the
petitioners [the respondents herein] filed their motion to withdraw more than a
year after this Court’s aforecited decision.
The claimed “acceptance” was obviously an afterthought, and proffered
for the sole purpose of opposing the deposit withdrawal.[16]
This finding of fact of the CA that petitioner bank had not accepted the deposit in question, even with reservation, is accorded respect by this Court following the salutary rule that findings of facts of the appellate court are generally conclusive on the Supreme Court.[17] It is significant to note that the RTC of Makati City never made any factual finding on whether or not there had been acceptance of the deposit in question by petitioner bank.[18] The said lower court did not even apply Article 1260 of the Civil Code when it denied the respondents’ motion to withdraw deposit.
With the finding
that petitioner bank had not made any prior acceptance of the deposit in
question, the CA accordingly did not commit reversible error in setting aside
the Orders of the RTC of Makati City which had denied the respondents’ motion
to withdraw deposit. Indeed, absent this
prior acceptance by petitioner bank or a judicial declaration that the
consignation had been properly made, the respondents remain the owners of the
sum of P1,034,600.00 deposited with the RTC of Makati City. When they filed their motion to withdraw the
deposit, they did so in the exercise of their right.
At
this point, it bears mentioning that it is not disputed that the Gaisano
brothers, as attorneys-in-fact of the respondents, eventually paid to
petitioner bank some time in January 1999 the sum of P25,100,000.00 as
settlement of the respondents’ obligation.
To the Court’s mind, the payment of the said sum already constituted
substantial compliance by the respondents of their obligation considering that
their loan, as restructured or consolidated in November 1982, amounted to only P3,163,000.00.
As noted by the
CA, the surcharges imposed by petitioner bank on the respondents as of P16,569,534.62.[19] Article 1229[20]
of the Civil Code specifically empowers the judge to reduce the civil penalty
equitably, when the principal obligation has been partly or irregularly
complied with. Upon this premise, the
Court holds that the said surcharges should be equitably reduced such that the
payment of P25,100,000.00 constituted substantial compliance by the
respondents of their obligation to petitioner bank.
The Court need not delve on the other issues raised, particularly relating to the interests imposed by petitioner bank in connection with the respondents’ loan, as these were already passed upon in the other cases (CA-G.R. SP No. 21089 and CA-G.R. CV No. 42899) involving the same parties.
WHEREFORE, premises considered, the
petition is DENIED. The Decision dated
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE CONCUR:
Chief Justice
Chairperson
CONSUELO YNARES-
Associate Justice
Associate Justice
Associate Justice
Pursuant to Section 13,
Article VIII of the Constitution, it is hereby certified that the conclusions
in the above decision were reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.
ARTEMIO V. PANGANIBAN
Chief Justice
* No part.
[1] Penned by Associate Justice Eliezer R. De Los Santos, with Associate Justices Eubulo G. Verzola (deceased) and Rodrigo V. Cosico, concurring; rollo, pp. 37-48.
[2] P1,034,600.99 in some pleadings.
[3] Penned by Associate Justice Manuel C. Herrera, with Associate Justices Alfredo L. Benipayo and Fortunato A. Vailoces, concurring; rollo, pp. 118-123.
[4] Penned by Associate Justice Conrado M. Vasquez, Jr., with Associate Justices Consuelo Ynares-Santiago (now Associate Justice of the Supreme Court) and Roberto A. Barrios, concurring; id. at 151-165.
[5] Rollo, p. 7.
[6]
Judge Fernando V. Gorospe, Jr.
[7] Rollo, p. 43.
[8] 359 Phil. 820 (1998).
[9] Rollo, pp. 47-48.
[10] Citing, among others, Tan v. Court of Appeals, 419 Phil. 857 (2001).
[11]
Argana v.
Republic, G.R. No. 147227,
[12] Pabugais v. Sahijwani, G.R. No. 156846,
[13]
[14] TOLENTINO, IV CIVIL CODE OF THE
[15] Rollo, p. 180.
[16]
[17] Sps. Hanopol v. Shoemart Incorporated., 439 Phil. 266, 277 (2002).
[18] Supra note 3.
[19] Rollo, p. 45.
[20] The provision reads:
Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance the penalty may also be reduced by the courts if it is iniquitous or unconscionable.