Republic of
the
Supreme Court
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SPOUSES |
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G.R. No. 164510 |
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RUFINA TANCHAN, |
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Petitioners, |
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Present: |
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YNARES-SANTIAGO, J., |
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Chairperson, |
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- versus - |
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AUSTRIA-MARTINEZ, |
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CHICO-NAZARIO, |
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NACHURA, and |
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REYES, JJ. |
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ALLIED BANKING |
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CORPORATION, |
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Promulgated: |
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Respondent. |
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November 25, 2005 |
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D E C I S I O N
AUSTRIA-MARTINEZ, J.:
By way
of Petition for Review under Rule 45 of the Rules of
Court, spouses Santiago and Rufina
Tanchan (petitioners) seek the modification of the
June 15, 2004 Decision[1] of the Court of Appeals
(CA) which
affirmed the August 3, 2001 Decision[2] and
August 8, 2002 Order[3] of
Branch 137, Regional Trial Court
(RTC), Makati in Civil Case No. 98-2468.[4]
The relevant facts are of record.
For
value received, Cebu Foremost Construction, Inc.
(Foremost), through its Chairman and President Henry Tanchan
(Henry) and his spouse, Vice-President and Treasurer
Ma. Julie Ann Tanchan (Ma. Julie Ann) executed and
delivered to Allied Banking Corporation (respondent) seven US$ promissory notes,[5] including Promissory Note No. 0051-97-03696[6] (Exhibit G) for US$379,000.00, at 9.50% interest rate per annum, due
on February 9, 1998.
Foremost
also issued to respondent several Philippine peso promissory notes[7] covering various loans in the aggregate amount of
Php28,900,000.00, including Promissory Note No. 0051-97-03688 (Exhibit H) for PhpP16,500,000.00, at an interest rate of 14.5% per
annum, due on February 9, 1998.[8]
All the
foregoing promissory notes are secured by two Continuing Guaranty/ Comprehensive Surety
Agreements (CG/CSA) executed in the personal capacities of spouses Henry and Ma. Julie
Ann (Spouses Tanchan) and Henrys brother, herein
petitioner Santiago Tanchan (Santiago),[9] for himself and as
attorney-in-fact of his wife and co-petitioner Rufina
Tanchan (Rufina) under a
Special Power of Attorney, dated April 30, 1993, which grants Santiago
authority to:
x x x borrow and/or contract
debts and obligations involving, affecting or creating a charge or liability
on, or which may involve, affect or create a liability on the Property and/or
my interest therein, whether or not such debt/s or obligation/s contracted or
to be contracted will benefit me or the family, and to sign, execute and
deliver in my name to or in favor of any party, under such terms and conditions
as my attorney-in-fact may deem necessary, appropriate or convenient, any and
all documents instruments or contract/s (including without limitations,
promissory notes, loan agreements, assignments, surety or guaranty
undertakings, security agreements) involving, affecting or creating a charge or
liability on the Property.[10]
The
liability of the sureties under both CG/CSAs is
limited to Php150,000,000.00.[11]
Exhibit G and all the
Philippine peso promissory notes, including Exhibit H, are secured not only by the two CG/CSAs
but also by a Real Estate Mortgage executed on February 14, 1997 by Henry, for
himself and as the legal guardian of the minors Henry Paul L. Tanchan and Don Henry L. Tanchan;
his wife Ma. Julie Ann; and Spouses Pablo and Milagros Lim, over real
properties registered in their names under Transfer Certificates of Title No.
115804, No. 111149, No. 110672 and No. 3815, all located in
In
separate final demand letters, both dated May 14, 1998, respondent sought from
Foremost payment of US$1,054,000.00, as the outstanding principal balance,
exclusive of interest and charges, of its obligations under the seven US$ promissory notes, and PhP28,900,000.00
under its Philippine peso promissory notes.[13] Separate
demands for payment were also made upon Spouses Tanchan[14] and the petitioners[15] as sureties.
In a
letter dated
On
On
October 13, 1998, respondent filed with the RTC a Complaint for Collection of
Sum of Money with Petition for Issuance of Writ of Preliminary Injunction
against Foremost, Spouses Tanchan and herein
petitioners (collectively referred to as Foremost, et al.), praying that they
be ordered to pay, jointly and severally, the following amounts:[19]
|
Promissory Note |
Amount |
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0051-96-09495 |
US$ 80,000.00 plus interest at the rate
of 11.4% per annum from |
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0051-96-17617 |
US$110,000.00 plus interest at the rate of 11.4%
per annum and a penalty charge at the rate of 1% per month, all reckoned from
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0051-96-19008 |
US$250,000.00 plus interest at the rate of 11.4%
per annum and a penalty charge at the rate of 1% per month all reckoned from |
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0051-96-24801 |
US$115,000.00 plus interest at the rate of 11.4%
per annum and a penalty charge at the rate of 1% per month all reckoned from |
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0051-96-00603 |
US$75,000.00 plus interest at the rate of 11.4%
per annum and a penalty charge at the rate of 1% per month all reckoned from |
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0051-97-02444 |
US$45,000.00 plus interest at the rate of 11.4%
per annum and a penalty charge at the rate of 1% per month all reckoned from |
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0051-97-03696 (Exhibit
G) |
US$379,000.00 plus interest at
the rate of 11.4% per annum reckoned from |
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0051-97-03688 (Exhibit
H) |
PhpP7,466,795.67 plus interest at the rate of 20% per annum and
a penalty charge at the rate of 3% per month from |
Respondent also prayed for payment of attorney's fees
equivalent to 25% of the total amount due, expenses and costs of suit,
In
support of its application for issuance of a writ of preliminary attachment,
respondent submitted an Affidavit executed by Elmer Elumbaring
(Elumbaring), Branch Cashier/Loans Supervisor,
4. Defendants [Foremost, et al.] committed
fraud in contracting the obligations upon which the action is brought in that:
a) to induce plaintiff [respondent] to grant the credit accommodation they
represented to the plaintiff [respondent] that they were in a financial position to pay their
obligations on maturity date in consideration of which plaintiff [respondent] granted the credit accommodations.
It turned out, however, that they were not in such financial position when they
failed to pay their obligations on maturity date; b) they falsely represented
that the proceeds of the Loan would be used as additional working capital in
consideration of which, plaintiff [respondent] granted the loans but when defendants [Foremost, et al.] received the said
proceeds, they diverted the same to a purpose other than that for which they
were intended as shown by the fact that defendants [Foremost, et al.] were not
able to fully pay the obligations at its maturity date;
5. There is no security whatsoever for the
claim plaintiff [respondent] seeks to enforce by this action, and only by the
issuance of a writ of preliminary attachment can its interest be protected.[20]
The
application for writ of preliminary attachment was granted by the RTC in an
Order dated
WHEREFORE, finding plaintiff's
[respondent's] application for the issuance of a writ of preliminary attachment
sufficient in form and substance, and the ground set forth therein being among
those allowed by the Rules (Rule 57, Sec. 1 [e]), let a Writ of Preliminary
Attachment issue against the properties of defendants Cebu
Foremost Construction, Incorporated, Santiago Tanchan,
Jr., Rufina C. Tanchan,
Henry Tanchan and Ma. Julie Ann T. Tanchan, upon plaintiff's [respondent's] filing of a bond
in the amount of FIFTY-FOUR MILLION (P54,000,000.00) PESOS, conditioned to
answer for whatever damage that the said defendants [Foremost, et al.] may
suffer by reason of the issuance of said writ should the Court finally adjudge
that plaintiff [respondent] was not entitled thereto.
SO ORDERED.[21]
Thus, armed with a writ of attachment,[22] the sheriff levied several parcels of land registered in
the name of Foremost, et al.[23]
In their
Amended Answer with Counterclaim,[24] Foremost, et al. acknowledged
the authenticity and due execution of the promissory notes but denied liability
for the amounts alleged in the Complaint, the computation of which they dispute
due to the arbitrariness of the imposition of new interest rates. They
impugned the cause of action of respondent to collect the amount due
under Exhibit G and Exhibit H in view of the bank's prior
extra-judicial foreclosure of the securities thereon, which recourse bars
collection of the amounts due on the same promissory notes.[25]
Foremost, et al. questioned the inclusion of Rufina as a party-defendant even
when she was not bound by the CG/CSAs
which her husband Santiago signed in excess of his authority under the special
power of attorney to contract loans for the family but not to guarantee loans obtained by third
persons.[26]
The
issuance of the writ of preliminary attachment was likewise objected to by
Foremost on the ground that it contracted the loans in
good faith but was prevented from paying the same only because of the economic
crisis that beset the country. On the part
of Spouses Tanchan and herein petitioners, they claim
that they had no personal participation or influence in the loan transactions
except to ensure its payment; hence, they could not have practiced fraud upon
respondent because they did not personally contract the loans with it.[27] Thus,
each sought payment of Php100,000,000.00
as moral damages for the emotional and mental vexation visited upon them by respondent in
causing the unwarranted preliminary attachment of their properties.[28]
At the
pre-trial, respondent submitted an Amended Pre-trial Brief where it admitted
that Foremost's Exhibit G
and Exhibit H were among those secured by the real estate mortgage[29] that it earlier foreclosed, but the
proceeds of the foreclosure sale satisfied only part of the amounts due on said
promissory notes and left a deficiency which is now the subject of their complaint.[30]
The RTC
issued a Pre-trial Order which limited
the issues to be resolved to the following:
1. Does the [respondent] have a cause
of action with respect to the promissory notes marked as [Exhibits] G[31] and H[32]?
2. Is [petitioner] Rufina
C. Tanchan liable on the basis of the Continuing
Guaranty/Comprehensive Surety Agreements because of her authority from [sic] Santiago Tanchan, Jr. was limited to borrow money only for the
benefit of the family?
3. Is the unilateral increase of the
interest rate of [respondent] valid?
4. What is the amount and nature of the
damages that should be adjudged against the losing party in favor of the
prevailing party?[33]
As directed by the RTC in its Pre-trial Order, both
parties presented affidavits in lieu of direct examination of their
witnesses.
For
respondent, Fresnido Bandilla
(Bandilla), Manager, Legal Department, testified that
the obligations of Foremost which were secured by the real estate mortgage had
amounted to Php61,155,339.36 as of the date of the foreclosure sale, and that
with respondent's bid of
only Php37,745,283.67 being adjudged the lone and highest bid, there remained
an unpaid balance of Php23,415,115.69.[34] Elumbaring corroborated
Bandilla's testimony.[35]
On the
other hand, Henry averred that even in the wake of the Asian financial crisis, Foremost struggled to meet
interest payments on its loan obligations with respondent, but the point came
when there were no more construction jobs to be had, and Foremost was constrained to default on its
obligations.[36]
After
the parties submitted their respective memoranda,[38] the
WHEREFORE, judgment is hereby
rendered ordering defendants Cebu Foremost
Construction, Inc., Santiago Tanchan, Jr., Rufina C. Tanchan, Henry Tanchan and Ma. Julie Ann Tanchan,
solidarily, [to] pay plaintiff Allied Banking Corporation the
following amounts: (1) US $80,000.00, plus 8.75 % interest per annum from 7
June 1996 to 6 May 1997, 9.5% interest per annum from 7 May 1997 until fully
paid, and 1% penalty per month on the amount due from maturity date and until
fully paid; (2) US $110,00.00, plus 8.75% interest per annum from 24 September
to 29 May 1997, 9.5% interest per annum from 30 May 1997 until fully paid, and
1% penalty per month on the amount due from maturity date until fully paid; (3)
US $570,000.00, plus 8.75% interest per annum from 8 October 1996 to 29 May
1997, 9.5% interest per annum from 30 May 1997 until fully paid, and 1% penalty
per month on the amount due from maturity date until fully paid; (4) US
$115,000.00 plus 9.5% interest per month from 12 December 1996 until fully
paid, and 1% penalty per month on the amount due from maturity date until fully
paid; (5) US $75,000.00, plus 9.5% interest per annum from 7 January 1997 until
fully paid, and 1% penalty per month on the amount due from maturity date until
fully paid; (7) US $379,000.00, plus 9.5% interest per annum from 12 February
1997 to 8 December 1997, 11.4% interest per annum from 9 December 1997 until
fully paid, and 1% penalty per month on the amount due from maturity date until
fully paid; (8) P7,582,945.85, plus 28.5% interest per annum, and 3% penalty per month,
from the foreclosure sale on 10 August 1998 until fully paid; (9) attorney's
fees equivalent to 10% of the amount due plaintiff. However,
the liability of defendants' Santiago Tanchan, Jr., Rufina C. Tanchan, Henry Tanchan and Ma. Julie Ann T. Tanchan
is limited to P150,00,000.00 only.
Defendants' counterclaims are
dismissed for lack of sufficient merit.
SO ORDERED.[39]
Foremost,
et al. filed a Motion for
Partial Reconsideration of Decision on the ground that respondent failed to
state a cause of action for the payment of any deficiency account under Exhibit G and Exhibit H. Its Complaint does not contain any allegation
regarding a deficiency account; nor even an allusion to the foreclosure sale
conducted in partial satisfaction of said promissory notes. Although in its Amended Pre-trial Brief, respondent
mentioned that a deficiency account remained after the foreclosure of the real
estate mortgage, such statement did not have the effect of amending the
Complaint itself. Neither did the
testimonies of Bandilla and Elumbaring
about a deficiency account take the place of a specific allegation of such
cause of action in the Complaint. Thus, in the absence of an allegation
in the Complaint of a cause of action for the payment of a deficiency account, the RTC had no factual
or legal basis to grant such claim.[40]
Spouses Tanchan and herein petitioners also filed a Motion to Lift
the Writ of Preliminary Attachment.[41]
The RTC
denied the Motion to Lift the Writ of Attachment in an Order[42]
dated
Foremost, et al. appealed to the CA under the
following assignment of errors:
1. The lower court erred in not holding
that having opted to extra-judicially foreclose the real estate mortgage which
was executed to secure the promissory notes marked as Exhibits G and H, the
[respondent] is barred from filing an action for collection of the same;
2. The lower court erred in not holding
that Rufina Tanchan did not
authorize her husband, Santiago J. Tanchan, Jr. to
sign the Continuing Guaranty/ Comprehensive Surety Agreement marked as Exhibit I; and
3. The lower court erred in not lifting
the writ of preliminary attachment and granting the claim for damages of the
individual defendants by virtue of the wrongful issuance of the writ of
preliminary attachment.[44]
The CA dismissed the appeal in the
Only petitioners took the present
recourse to raise the following issues:
I. Whether or not the petitioners as
mere sureties of the loans obtained by Cebu Foremost
Construction, Inc.
were guilty of fraud in incurring the obligations so that a writ of preliminary
attachment may be issued against them?
II. Whether or not the respondent may
claim for deficiency judgment on its seventh and eight causes of action, not
having alleged in its complaint that said loans were secured by a real estate
mortgage and after the foreclosure there was a deficiency as in fact in its complaint,
the respondent sought full recovery of the promissory notes subject of its
seventh and eighth cause of action?
III. Whether or not the lower court and the
Court of Appeals erred in not awarding petitioners damages for the wrongful
issuance of a writ of preliminary attachment against them?[45]
Being interrelated, the first and
third issues will be resolved jointly.
The issues involve the validity of
the writ of preliminary attachment as against the properties of petitioners
only, but not as against the properties
of Foremost and Spouses Tanchan, neither of whom
appealed before the Court. The discussion that follows,
therefore, shall pertain only to the
effect of the writ on petitioners.
One of the grounds cited by
the CA in refusing to discharge the writ of attachment is that it is now too
late for [petitioners] to question the validity of the writ because they
waited three long years to have it lifted or discharged.[46]
Under Section 13, Rule 57 of
the Rules of Court, a party whose property has been ordered attached may file a
motion with the court in which the action is pending for the discharge of the
attachment on the ground that it has been improperly issued or enforced. In addition, said party may file, under
Section 20, Rule 57, a claim for damages on account of
improper attachment within the following periods:
Sec. 20. Claim for damages on
account of improper, irregular or excessive attachment. - An application for damages on account of improper, irregular or
excessive attachment must be filed before the
trial or before appeal is perfected or before the judgment becomes executory, with due notice to the attaching obligee
or his surety or sureties, setting forth the facts showing his right to damages
and the amount thereof. Such damages may be awarded only after proper hearing
and shall be included in the judgment on the main case.
If the judgment of the appellate court be
favorable to the party against whom the attachment was issued, he must claim
damages sustained during the pendency of the appeal
by filing an application in the appellate court with notice to the party in
whose favor the attachment was issued or his surety or sureties, before the
judgment of the appellate court becomes executory.
The appellate court may allow the application to be heard and decided by the
trial court.[47] (Emphasis
supplied)
Records reveal that the RTC issued
the writ of preliminary attachment on
Clearly,
petitioners' opposition to the writ was timely.
The question now is whether
petitioner has a valid reason to have the writ discharged and to claim damages.
It should be
borne in mind that the questioned writ of preliminary attachment was issued by
the RTC under Section 1(d), Rule 57 of the Rules of Court, to wit -
Sec. 1. Grounds
upon which attachment may issue. - A plaintiff or any proper party may, at the
commencement of the action or at any time thereafter, have the property of the
adverse party attached as security for the satisfaction of any judgment that
may be recovered in the following cases:
x x x x
(d) In an action
against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in concealing or
disposing of the property for the taking, detention or conversion of which the
action is brought;
x x x x.
and on the basis solely of respondent's allegations in
its Complaint that defendants [Foremost, et al.] failed to pay their
obligations on maturity dates, with the amount of US$1,054,000.00 and Php7,466795.69
remaining unpaid; that defendants are disposing/concealing their properties
with intent to defraud the plaintiff and/or are guilty of fraud in the
performance of their obligations; and that there is no security whatsoever for
the claim sought to be enforced.[51]
Petitioners argue that the foregoing allegations are not
sufficient to justify issuance of the writ, especially in the absence of
findings that they, as sureties, participated in specific fraudulent acts in the
execution and performance of the loan agreements with respondent. [52]
In refusing to lift the writ, the RTC held that the lack
of a specific factual finding of fraud in its decision is not among the grounds
provided under Sections 12 and 13, Rule 57 of the Rules of Court for the
discharge of the writ.[53] The
CA agreed for the reason that the RTC's affirmative
action on the complaint filed by respondent signifies its agreement with the
allegations found therein that Foremost, et al., including herein petitioners,
committed fraudulent acts in procuring
loans from respondent.[54]
Both courts are in error.
The
present case fits perfectly into the mold of Allied
Banking Corporation v. South Pacific Sugar Corporation,[55] where a writ of
preliminary attachment issued in favor of Allied Banking Corporation was
discharged by the lower courts for lack of evidence of fraud. In sustaining the discharge of the writ, the Court held:
Moreover,
even a cursory examination of the banks complaint will reveal that it cited no factual circumstance to show fraud on the part of
respondents. The complaint only had a general statement in the Prayer for the
Issuance of a Writ of Preliminary Attachment, reproduced in the attached
affidavit of petitioners witness Go who stated as
follows:
x x x x
4. Defendants committed fraud in
contracting the obligations upon which the present action is based and in the
performance thereof. Among others, defendants induced plaintiff to grant
the subject loans to defendant corporation by willfully and deliberately
misrepresenting that, one, the proceeds of the loans would be used as additional
working capital and, two, they would be in a financial position to pay, and
would most certainly pay, the loan obligations on their maturity dates. In
truth, defendants had no intention of honoring their
commitments as shown by the fact that upon their receipt of the proceeds of the
loans, they diverted the same to illegitimate purposes and then brazenly
ignored and resisted plaintiffs lawful demands for them to settle their past
due loan obligations
x x x x
Such general averment
will not suffice to support the issuance of the writ of preliminary attachment.
It is necessary to recite in what particular manner an applicant for the writ
of attachment was defrauded x x x.
Likewise, written contracts are
presumed to have been entered into voluntarily and for a sufficient
consideration. Section 1, Rule 131 of the Rules of Court instructs that each
party must prove his own affirmative allegations. To repeat, in this
jurisdiction, fraud is never presumed. Moreover, written contracts such
as the documents executed by the parties in the present case,
are presumed to have been entered into for a sufficient consideration. (Citations omitted)
In the aforecited case -- as in the present case -- the bank presented the
testimony of its account officer who processed the loan application, but the Court
discarded her testimony for it did
not detail how the corporation induced or deceived the bank into granting the
loans.[56]
Also apropos is Ng Wee v. Tankiansee[57] where the appellate court was questioned for discharging
a writ of preliminary attachment to the extent that it affected the properties
of respondent Tankiansee, a corporate officer of Wincorp, both defendants in the
complaint for damages which petitioner Ng Wee had filed with the trial court. In holding that the appellate court correctly
spared respondent Tankiansee from the writ of
preliminary attachment, the Court cited the following basis:
In the instant case, petitioners
October 12, 2000 Affidavit is bereft of any factual statement that respondent
committed a fraud. The affidavit narrated only the alleged fraudulent
transaction between Wincorp and Virata
and/or Power Merge, which, by the way, explains why this Court, in G.R. No. 162928, affirmed
the writ of attachment issued against the latter. As to the
participation of respondent in the said transaction, the affidavit merely
states that respondent, an officer and director of Wincorp,
connived with the other defendants in the civil case to defraud petitioner of
his money placements. No other factual averment or
circumstance details how respondent committed a fraud or how he connived with
the other defendants to commit a fraud in the transaction sued upon. In other
words, petitioner has not shown any specific act or deed to support the allegation
that respondent is guilty of fraud.
The affidavit, being
the foundation of the writ, must contain such particulars as to how the fraud
imputed to respondent was committed for the court to decide whether or not to
issue the writ. Absent any statement of other factual circumstances to show
that respondent, at the time of contracting the obligation, had a preconceived
plan or intention not to pay, or without any showing of how respondent
committed the alleged fraud, the general averment in the affidavit that
respondent is an officer and director of Wincorp who
allegedly connived with the other defendants to commit a fraud, is insufficient
to support the issuance of a writ of preliminary attachment x x x. Verily, the mere fact
that respondent is an officer and director of the company does not necessarily
give rise to the inference that he committed a fraud or that he connived with
the other defendants to commit a fraud. While under certain circumstances,
courts may treat a corporation as a mere aggroupment of
persons, to whom liability will directly attach, this is only done when the
wrongdoing has been clearly and convincingly established. (Emphasis supplied)
Indeed, a writ of preliminary attachment is too
harsh a provisional remedy to
be issued based on mere abstractions of fraud.[58] Rather, the rules require that for the writ to issue, there must be a recitation of clear and
concrete factual circumstances manifesting that the debtor practiced fraud upon
the creditor at the time of the execution of their agreement in that said
debtor had a pre-conceived plan or intention not to pay the creditor.[59] Being a state of
mind, fraud cannot be merely inferred from a bare allegation of non-payment of
debt or non-performance of obligation.[60]
As shown in Ng Wee, the
requirement becomes all the more stringent when the application for preliminary
attachment is directed against a defendant officer of a defendant corporation,
for it will not be inferred from the affiliation of one to the other that the
officer participated in or facilitated in any fraudulent practice attributed to
the corporation. There must be
evidence clear and convincing that the officer committed a fraud or connived
with the corporation to commit a fraud; only then may the properties of said
officer, along with those of the corporation, be held under a writ of preliminary
attachment.
There is
every reason to extend the foregoing rule, by analogy, to a mere surety of the
defendant. A surety's involvement is
marginal to the principal agreement between the defendant and the plaintiff;
hence, in order for the surety to be subject to a proceeding for issuance of a
writ of preliminary attachment, it must be shown that said surety participated
in or facilitated the fraudulent practice of the defendant, such as by offering
a security solely to induce the plaintiff to enter into the agreement with the
defendant.
There is neither allegation nor innuendo in the Complaint
of respondent or the Affidavit of Elumbaring that
petitioners as sureties or officers of Foremost participated in or facilitated
the commission of fraud by Foremost, et al. against respondent. In fact, there is no mention of petitioners, much
less a recital of their role or influence in the execution of the loan
agreements. The RTC cited an allegation
that petitioners are disposing/concealing
their properties with intent to defraud respondent, but there is no hint of such scheme in the
five paragraphs of the Complaint[61] or in the four corners of the Affidavit of Elumbaring.[62] All that is alleged is that Foremost obtained loans from
respondent but failed to pay the same, but as the Court has repeatedly held, no
fraud can be inferred from a mere failure to pay a loan.[63]
In fine,
there was no factual basis for the issuance of a writ of preliminary attachment
against the properties of petitioners. The immediate
dissolution of the writ is called for.
In so
ruling, however, the Court does not go so far as to grant petitioners' claim
for moral damages. A wrongful attachment
may give rise to liability for moral damages but evidence must be adduced not
only of the torment and humiliation brought upon the defendant by the attaching
party but also of the latter's bad faith or malice in causing the wrongful
attachment,[64] such as evidence that the latter deliberately made false
statements in its application for attachment.[65] Absent such evidence of malice, the attaching party
cannot be held liable for moral damages.[66]
In the
present case, petitioners cite the allegations made by respondent in its application
for attachment as evidence of bad faith. However, the
allegations in question contain nothing but the stark truth that Foremost obtained loans and that it failed to pay. The Court fails to see any malice in such bare
allegations as would make respondent liable to petitioners for moral damages.
To
recapitulate, the Court partly dissolves the writ of preliminary attachment for
having wrongfully issued against the properties of petitioners who were not
shown to have committed fraud in the execution of the loan agreements between
Foremost and respondent, but declines to award moral damages to petitioners in
the absence of evidence that respondent acted with malice in causing the
wrongful issuance of the writ.
The second issue involves that portion of the August 3,
2001 RTC Decision awarding respondent (7) US $379,000.00, plus 9.5% interest
per annum from 12 February 1997 to 8 December 1997, 11.4% interest per annum
from 9 December 1997 until fully paid, and 1% penalty per month on the amount
due from maturity date until fully paid under Promissory Note No.
0051-97-03696, and (8) P7,582,945.85, plus 28.5% interest per annum, and 3%
penalty per month, from the foreclosure sale on 10 August 1998 until fully
paid under Promissory Note No. 0051-97-03688.
Petitioners argue that respondent is barred from claiming
any amount under the Promissory Notes, Exhibits G and H, because it had already elected to foreclose on the
mortgage security, and it failed to allege in its pleadings that a deficiency
remained after the public auction sale of the securities and that what it is
seeking is the payment of such deficiency.[67]
There is no question that a mortgage creditor has a
single cause of action against a mortgagor debtor, which is to recover the
debt; but it has the option of either filing a personal action for collection
of sum of money or instituting a real action to foreclose on the mortgage
security.[68] An election of the first bars recourse to the second; otherwise, there would be multiplicity of suits in which the debtor
would be tossed from one venue to another, depending on the location of the
mortgaged properties and the residence of the parties.[69] On the other hand, a creditor who elects to
foreclose on the mortgage may yet file an independent civil action for recovery
of whatever deficiency may remain in the outstanding obligation of the debtor,
after deducting the price obtained in the sale of the mortgaged properties at
public auction.[70] The complaint, though, must specifically allege that what is being sought is
the recovery of the deficiency,[71] or that in the pre-trial, such claim be raised as an
issue.[72]
Contrary to petitioners' argument, it is clear from the
allegations in the Complaint that what respondent
sought was the payment of the deficiency amount under the
subject promissory notes. In particular,
while the Promissory
Note, Exhibit H, is for the amount of Php16,500,000.00, what respondent
sought to recover was only Php7,582,945.85, consistent with
the fact that part of said promissory note has been satisfied from the proceeds
of the extra-judicial foreclosure. While the exact
phrase deficiency account is not employed in the
Complaint, the intention of respondent to recover the same is borne out by its
allegations.
More importantly, in the Pre-trial Order issued by the
RTC, the right of respondent to recover the deficiency account under the
subject promissory notes was raised as a specific issue.
WHEREFORE, the petition is PARTLY GRANTED. The June 15, 2004
Decision of the Court
of Appeals is MODIFIED to the effect that the November 3, 1998 Writ of
Preliminary Attachment is LIFTED and DISSOLVED insofar as it affects the properties of petitioners Spouses
Santiago and Rufina Tanchan.
No costs.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
WE
CONCUR:
CONSUELO YNARES-SANTIAGO
Associate
Justice
Chairperson
|
MINITA V. CHICO-NAZARIO Associate Justice |
ANTONIO EDUARDO B. NACHURA Associate Justice |
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article
VIII of the Constitution, and the Division Chairpersons Attestation, it is
hereby certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.
REYNATO S. PUNO
Chief Justice
[1] Penned
by Associate Justice Mariano C. del Castillo, and concurred in by Associate Justices
Roberto A. Barrios and Magdangal M. de Leon,
rollo, p. 41.
[2] Records, p.
347.
[3]
[4] Entitled, Allied Banking Corporation, Plaintiff-Appellee versus
[5] Promissory Notes No. 0051-96-09495, No. 0051-96-17617, 0051-96-19008,
0051-96-24801, 0051-96-00603, 0051-97-02444, records, pp. 15-26.
[6] Exhibit G, id. at 27-28.
[7] Promissory
Notes No. 0051-97-03335, No. 0051-97-05478, No. 0051-97-05680, No.
0051-97-09783, No. 0051-97-13871, id. at 184-190.
[8] Exhibit H, id. at 29-30.
[9] See dorsal portions of Exhibit J and Exhibit I, id. at 31-32.
[10] Exhibit N, id. at 141.
[11] Exhibits I and J, records, pp. 31-32.
[12] Exhibit
5, id. at 145-146.
[13] Exhibit
K, id. at 139.
[14]
[15] Exhibit
K, id. at 139.
[16] Exhibit 3, id. at 143.
[17] Exhibit W, id. at 179.
[18] Exhibit O, records, p. 134.
[19] Complaint, id. at 8-10.
[20] Records,
p. 13.
[21] Id at 34.
[22]
[23]
[24] Records,
p. 93.
[25]
[26]
[27]
[28]
[29] Records,
p. 105.
[30]
[31] Promissory Note No. 0051-97-03696, id. at 191.
[32] Promissory Note No. 0051-97-03688, id. at
183.
[33]
[34] Affidavit, id. at 156-157.
[35] Exhibits P thru T, id. at 171-175.
[36] Affidavit, records, p. 256. See also TSN,
[37] Affidavit, id. at 262. See also TSN,
[38]
[39]
[40] Records,
pp. 364-365.
[41]
[42]
[43]
[44] Brief
for Defendants-Appellants, CA rollo,
pp. 23-24.
[45] Memorandum
for Petitioner, rollo,
p. 125.
[46] CA
Decision, CA rollo,
p. 94.
[47] See
Carlos v.
Sandoval, G.R.
No. 135830,
[48] Records,
p. 34.
[49]
[50]
[51] Complaint, records, pp. 8-10.
[52] Memorandum,
rollo, pp. 126-127.
[53] RTC
Decision, records, p. 407.
[54] CA
Decision, rollo, pp.
54-55.
[55] G.R.
No. 163692,
[56] Allied Banking
Corporation v. South Pacific Sugar Corporation, supra note 55.
[57] G.R.
No. 171124,
[58] PCL Industries Manufacturing
Corporation v. Court of Appeals, G.R. No. 147970,
[59] FCY Construction Group, Inc. v.
Court of Appeals, G.R. No. 123358, February 1, 2000, 324 SCRA 270, citing Liberty Insurance
Corporation v. Court of Appeals, G.R.
No. 104405, May 13, 1993, 222 SCRA
37.
[60] Philippine
Bank of Communications v. Court of Appeals, G.R. No. 115678, February 23,
2001, 352 SCRA 616.
[61] Complaint, records, pp. 7-8.
[62]
[63] Philippine
National Construction Corporation v. Hon. Dy,
G.R. No. 156887, October 3, 2005, 472 SCRA 1.
[64] Yu v. Ngo Yet Te, G.R. No. 155868, February 6, 2007, 514 SCRA 423; D.M. Wenceslao
and Associates, Inc. v. Readycon, G.R. No. 154106, June 29, 2004, 433 SCRA 251.
[65] Philippine
Commercial Industrial Bank v. Alejandro, G.R. No. 175587,
[66] California
Bus Lines, Inc. v. State Investment House, Inc., G.R. No. 147950,
[67] Memorandum
for Petitioner, rollo,
p. 125.
[68] Bank
of
[69] Suico Rattan & Buri
Interiors, Inc. v. Court of Appeals, G.R. No. 138145, June 15, 2006, 490
SCRA 560.
[70] Quirino
Gonzales Logging Concessionaire v. Court of Appeals, G.R. No. 126568,
[71] Suico Rattan & Buri
Interiors, Inc. v. Court
of Appeals, supra note 69.
[72] PCI Leasing & Finance, Inc. v. Dai, G.R. No. 148980,