Republic of the
Supreme Court
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METROPOLITAN BANK AND TRUST COMPANY,
Petitioner, -
versus - RURAL BANK OF GERONA, INC., Respondent. |
G.R. No. 159097 Present: CARPIO mORALES, J., Chairperson, BRION, BERSAMIN, *ABAD, and VILLARAMA, JR., JJ. Promulgated: July 5, 2010 |
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D E C I S I O N
BRION, J.:
Petitioner Metropolitan Bank and Trust
Company (Metrobank) filed this
Petition for Review on Certiorari[1]
under Rule 45 of the Rules of Court to challenge the Court of Appeals (CA) decision dated December 17, 2002[2]
and the resolution dated July 14, 2003[3] in CA-G.R. CV No.
46777. The CA decision set aside the
July 7, 1994 decision[4] of the Regional
Trial Court (RTC) of Tarlac, Branch
65, in Civil Case No. 6028 (a collection case filed by Metrobank against
respondent Rural Bank of Gerona, Inc. [RBG]),
and ordered the remand of the case to include the Central Bank of the
Philippines[5]
(Central Bank) as a necessary
party.
THE FACTUAL ANTECEDENTS
RBG is a rural banking corporation organized under
Philippine laws and located in
On
September 27, 1978, the Central Bank released a credit advice in Metrobank’s
favor and accordingly credited Metrobank’s demand deposit account in the amount
of P178,652.00, for the
account of RBG. The amount, which was credited
to RBG’s special savings account represented the approved loan application of farmer-borrower
Dominador de Jesus. RBG withdrew the P178,652.00 from its
account.
On
the same date, the Central Bank approved the loan application of another
farmer-borrower, Basilio Panopio,
for P189,052.00, and credited
the amount to Metrobank’s demand deposit account. Metrobank, in turn, credited RBG’s special
savings account. Metrobank claims that
the RBG also withdrew the entire credited amount from its account.
On
October 3, 1978, the Central Bank approved Ponciano
Lagman’s loan application for P220,000.00. As with the two other IBRD loans, the amount
was credited to Metrobank’s demand deposit account, which amount Metrobank
later credited in favor of RBG’s special savings account. Of the P220,000.00, RBG only withdrew P75,375.00.
On
November 3, 1978, more than a month after RBG had made the above withdrawals
from its account with Metrobank, the Central
Bank issued debit advices, reversing
all the approved IBRD loans.[6] The Central Bank implemented the reversal by
debiting from Metrobank’s demand deposit account the amount corresponding to all
three IBRD loans.
Upon
receipt of the November 3, 1978 debit advices, Metrobank, in turn, debited the
following amounts from RBG’s special savings account: P189,052.00, P115,000.00,
and P8,000.41. Metrobank,
however, claimed that these amounts were insufficient to cover all the credit
advices that were reversed by the Central Bank.
It demanded payment from RBG which could make partial payments. As of October 17, 1979, Metrobank claimed that
RBG had an outstanding balance of P334,220.00. To collect this amount, it filed a complaint for collection of sum of money against
RBG before the RTC, docketed as
Civil Case No. 6028.[7]
In
its July 7, 1994 decision,[8] the RTC ruled for Metrobank, finding that legal subrogation had
ensued:
[Metrobank] had allowed releases of the
amounts in the credit advices it credited in favor of [RBG’s special savings
account] which credit advices and deposits were under its supervision. Being faulted in these acts or omissions, the
Central Bank [sic] debited these
amounts against [Metrobank’s] demand [deposit] reserve; thus[, Metrobank’s]
demand deposit reserves diminished correspondingly, [Metrobank as of this time,]
suffers prejudice in which case legal subrogation has ensued.[9]
It thus
ordered RBG to pay Metrobank the sum of P334,200.00, plus interest at 14% per
annum until the amount is fully paid.
On appeal, the CA noted that this was not a case of legal subrogation
under Article 1302 of the Civil Code. Nevertheless,
the CA recognized that Metrobank had a right to be reimbursed of the amount it
had paid and failed to recover, as it suffered loss in an agreement that
involved only the Central Bank and the RBG.
It clarified, however, that a determination still had to be made on who should
reimburse Metrobank. Noting that no evidence
exists why the Central Bank reversed the credit advices it had previously
confirmed, the CA declared that the
Central Bank should be impleaded as a necessary party so it could shed
light on the IBRD loan reversals. Thus,
the CA set aside the RTC decision, and remanded the case to the trial court for
further proceedings after the Central Bank is impleaded as a necessary party.[10] After the CA denied its motion for
reconsideration, Metrobank filed the present petition for review on certiorari.
THE PETITION FOR REVIEW ON CERTIORARI
Metrobank disagrees with the CA’s ruling to implead the Central Bank as
a necessary party and to remand the case to the RTC for further proceedings. It argues that the inclusion of the Central
Bank as party to the case is unnecessary since RBG has already admitted its
liability for the amount Metrobank failed to recover. In two letters,[11]
RBG’s President/Manager made proposals to Metrobank for the repayment of the
amounts involved. Even assuming that no
legal subrogation took place, Metrobank claims that RBG’s letters more than
sufficiently proved its liability.
Metrobank additionally contends that a remand of the case would unduly
delay the proceedings. The transactions involved
in this case took place in 1978, and the case was commenced before the RTC more
than 20 years ago. The RTC resolved the
complaint for collection in 1994, while the CA decided the appeal in 2002. To implead Central Bank, as a necessary party
in the case, means a return to square one and the restart of the entire
proceedings.
THE COURT’S RULING
The
petition is impressed with merit.
A basic first step in resolving this
case is to determine who the liable parties are on the IBRD loans that the
Central Bank extended. The Terms and
Conditions of the IBRD 4th Rural Credit Project[12]
(Project Terms and Conditions) executed
by the Central Bank and the RBG shows that the farmers-borrowers to whom
credits have been extended, are primarily liable for the payment of the
borrowed amounts. The loans were
extended through the RBG which also took care of the collection and of the remittance
of the collection to the Central Bank. RBG, however, was not a mere conduit and
collector. While the farmers-borrowers
were the principal debtors, RBG assumed liability under the Project Terms and
Conditions by solidarily binding itself with the principal debtors to fulfill
the obligation.
How RBG profited from the transaction is not clear from the records and
is not part of the issues before us, but if it delays in remitting the amounts
due, the Central Bank imposed a 14% per annum penalty rate on RBG until the
amount is actually remitted. The Central
Bank was further authorized to deduct the amount due from RBG’s demand deposit
reserve should the latter become delinquent in payment. On these points, paragraphs 5 and 6 of the Project
Terms and Conditions read:
5. Collection received representing repayments of
borrowers shall be immediately remitted to the Central Bank, otherwise[,] the
Rural Bank/
6. In case the
rural bank becomes delinquent in the payment of amortizations due[,] the
Central Bank is authorized to deduct the corresponding amount from the rural
bank’s demand deposit reserve[13] at any time to cover any delinquency. [Emphasis supplied.]
Based on these arrangements, the Central Bank’s immediate recourse,
therefore should have been against the farmers-borrowers and the RBG; thus, it
erred when it deducted the amounts covered by the debit advices from Metrobank’s
demand deposit account. Under the
Project Terms and Conditions, Metrobank had no responsibility over the proceeds
of the IBRD loans other than serving as a conduit for their transfer from the Central
Bank to the RBG once credit advice has been issued. Thus,
we agree with the CA’s conclusion that the agreement governed only the parties
involved – the Central Bank and the RBG. Metrobank was simply an outsider to the
agreement. Our disagreement with the appellate
court is in its conclusion that no legal subrogation took place; the present case,
in fact, exemplifies the circumstance contemplated under paragraph 2, of
Article 1302 of the Civil Code which provides:
Art. 1302. It is presumed that
there is legal subrogation:
(1)
When a creditor pays another
creditor who is preferred, even without the debtor’s knowledge;
(2) When a third person, not interested
in the obligation, pays with the express or tacit approval of the debtor;
(3)
When, even without the knowledge of
the debtor, a person interested in the fulfillment of the obligation pays,
without prejudice to the effects of confusion as to the latter’s share. [Emphasis supplied.]
As discussed, Metrobank was a third party to the Central Bank-RBG agreement,
had no interest except as a conduit, and was not legally answerable for the
IBRD loans. Despite this, it was Metrobank’s
demand deposit account, instead of RBG’s, which the Central Bank proceeded
against, on the assumption perhaps that this was the most convenient means of
recovering the cancelled loans. That
Metrobank’s payment was involuntarily made does not change the reality that it
was Metrobank which effectively answered for RBG’s obligations.
Was there express or tacit approval by RBG of the payment enforced
against Metrobank? After Metrobank received
the Central Bank’s debit advices in November 1978, it (Metrobank) accordingly debited
the amounts it could from RBG’s special savings account without any objection
from RBG.[14]
RBG’s President and Manager, Dr. Aquiles
Abellar, even wrote Metrobank, on August 14, 1979, with proposals regarding possible
means of settling the amounts debited by Central Bank from Metrobank’s demand
deposit account.[15] These instances are all indicative of RBG’s
approval of Metrobank’s payment of the IBRD loans. That RBG’s tacit approval came after payment
had been made does not completely negate the legal subrogation that had taken
place.
Article 1303 of the Civil Code states
that subrogation transfers to the person subrogated the credit with all the
rights thereto appertaining, either against the debtor or against third
persons. As the entity against which the
collection was enforced, Metrobank was subrogated to the rights of Central Bank
and has a cause of action to recover from RBG the amounts it paid to the
Central Bank, plus 14% per annum interest.
Under this situation, impleading the Central Bank as a party is completely
unnecessary. We note that the CA erroneously
believed that the Central Bank’s presence is necessary “in order x x x to shed
light on the matter of reversals made by it concerning the loan applications of
the end users and to have a complete determination or settlement of the claim.”[16] In so far as Metrobank is concerned, however,
the Central Bank’s presence and the reasons for its reversals of the IBRD loans
are immaterial after subrogation has taken place; Metrobank’s interest is
simply to collect the amounts it paid the Central Bank. Whatever cause of action RBG may have against
the Central Bank for the unexplained reversals and any undue deductions is for
RBG to ventilate as a third-party claim; if it has not done so at this point,
then the matter should be dealt with in a separate case that should not in any
way further delay the disposition of the present case that had been pending
before the courts since 1980.
While we would like to fully and
finally resolve this case, certain factual matters prevent us from doing
so. Metrobank contends in its petition
that it credited RBG’s special savings account with three amounts corresponding
to the three credit advices issued by the Central Bank: the P178,652.00 for Dominador de Jesus; the P189,052.00 for Basilio Panopio; and the P220,000.00 for Ponciano Lagman. Metrobank
claims that all of the three credit advices were subsequently reversed by the Central
Bank, evidenced by three debit advices.
The records, however, contained only the credit and debit advices for
the amounts set aside for de Jesus and Lagman;[17]
nothing in the findings of fact by the RTC and the CA referred to the amount
set aside for Panopio.
Thus, what were sufficiently proven as credited and later on debited from
Metrobank’s demand deposit account were only the amounts of P178,652.00 and P189,052.00. With these amounts
combined, RBG’s liability would amount to P398,652.00 – the same amount RBG acknowledged as due to Metrobank in its
August 14, 1979 letter.[18] Significantly,
Metrobank likewise quoted this amount in its July 11, 1979[19]
and July 26, 1979[20]
demand letters to RBG and its Statement of Account dated December 23, 1982.[21]
RBG asserts that it made partial
payments amounting to P145,197.40,[22]
but neither the RTC nor the CA made a conclusive finding as to the accuracy of
this claim. Although Metrobank admitted
that RBG indeed made partial payments, it never mentioned the actual amount
paid; neither did it state that the P145,197.40 was part of the P312,052.41
that, it admitted, it debited from RBG’s special savings account.
Deducting P312,052.41 (representing the amounts
debited from RBG’s special savings account, as admitted by Metrobank) from P398,652.00 amount due to Metrobank from RBG, the
difference would only be P86,599.59. We are, therefore, at a loss on how Metrobank
computed the amount of P334,220.00
it claims as the balance of RBG’s loan. As this Court is not a trier of facts, we deem
it proper to remand this factual issue to the RTC for determination and computation
of the actual amount RBG owes to Metrobank, plus the corresponding interest and
penalties.
WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the decision and the resolution of the Court of Appeals, in
CA-G.R. CV No. 46777, promulgated on December 17, 2002 and July 14, 2003,
respectively. We AFFIRM the decision of the Regional Trial Court, Branch 65, Tarlac,
promulgated on July 7, 1994, insofar as it found respondent liable to the petitioner
Metropolitan Bank and Trust Company, but order the REMAND of the case to the trial court to determine the actual
amounts due to the petitioner. Costs
against respondent Rural Bank of Gerona, Inc.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
CONCHITA
CARPIO MORALES
Associate
Justice Chairperson |
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|
LUCAS P. BERSAMIN Associate Justice |
ROBERTO A. ABAD Associate Justice |
MARTIN S. VILLARAMA, JR.
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 Court’s Division.
CONCHITA
CARPIO MORALES
Associate Justice
Chairperson
CERTIFICATION
RENATO
C. CORONA
Chief
Justice
* Designated additional Member
of the Third Division, in view of the retirement of former Chief Justice
Reynato S. Puno, per Special Order No. 843 dated May 17, 2010.
[1] Rollo, pp. 3-32.
[2]
[3]
[4]
[5] Now the Bangko
Sentral ng Pilipinas.
[6] Rollo, pp. 61.
[7]
[8] Supra note 4.
[9]
[10]
[11]
This
is in connection with the P398,652.00 which was debited by the Central
Bank of the
We
would like to make the following proposals as agreed upon during our conference
with Central Bank and [Metrobank] Officials:
1.
Pending
the re-consideration of the Central bank regarding the loan of Dominador de
Jesus in the amount of P178,652.00, we would like to ask for a Plan of
Payment for a period of six (6) months starting August, 1979;
2.
With [regard
to] the P220,000.00 balance plus interest, we would like to reiterate
our request for a personal loan from your bank, the proceeds of which will be
used to pay our capital build-up, to enable the bank to settle the said amount.
Considering that you have been our depository
bank for a long time, we hope you will not fail us on our proposals especially
now that we are badly in need of your help.
Thanking you in advance.
The August 27, 1979 letter read:
This
will acknowledge receipt of your letter on August 26, 1979, informing me about
the decision of Metrobank’s management rejecting my proposals on August 14,
1979.
Please
be informed that I am going to
I
will also try to get an appointment with your Executive Vice-President and if
necessary, I will refer the matter to our legal counsel, the [Siguion]-Reyna
Law Office,
I
have great hopes that this problem will be settled within five (5) days.
[12]
[13] Section 94 of the New
Central Bank Act (Republic Act No. 7653) states:
In order to control the volume of money created
by the credit operations of the banking system, all banks operating in the
Philippines shall be required to maintain reserves against their deposit
liabilities: Provided, That the
Monetary Board may, at its discretion, also require all banks and/or
quasi-banks to maintain reserves against funds held in trust and liabilities
for deposit substitutes as defined in this Act.
The required reserves of each bank shall be proportional to the volume
of its deposit liabilities and shall ordinarily take the form of a deposit in
the Bangko Sentral. Reserve requirements
shall be applied to all banks of the same category uniformly and without
discrimination.
[14] Rollo, p. 15.
[15]
[16]
[17]
[18] Supra note 15.
[19] Exhibits for the
Plaintiff, p. 8.
[20]
[21]
[22] Rollo, pp. 67-68.