Republic
of the
SUPREME
COURT
FIRST DIVISION
|
SAMUEL U. LEE and PAULINE
LEE and ASIATRUST DEVELOPMENT BANK, INC., Petitioners, - versus - BANGKOK
BANK PUBLIC COMPANY, LIMITED, Respondent. |
|
G.R. No. 173349 Present: VELASCO,
JR., LEONARDO-DE
CASTRO, PEREZ,
JJ. Promulgated: February
9, 2011 |
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D E C I S I
O N
VELASCO, JR., J.:
The Case
In
this Petition for Review on Certiorari under Rule 45, petitioners assail the
March 15, 2006 Decision[1]
of the Court of Appeals (CA) in CA-G.R. CV No. 79362, which reversed and set
aside the April 21, 2003 Decision[2]
of the Regional Trial Court (RTC), Branch 73 in Antipolo City, in Civil Case
No. 99-5388, entitled Bangkok Bank Public
Company Limited v. Spouses Samuel U. Lee and Pauline Lee and Asiatrust
Development Bank for the Rescission of Real Estate Mortgage (REM),
Annulment of Foreclosure Sale, Cancellation of Titles and Damages. They assail also the June 29, 2006 CA
Resolution denying their motion for reconsideration.
The Facts
Midas
Diversified Export Corporation (MDEC) and Manila Home Textile, Inc. (MHI) entered
into two separate Credit Line Agreements (CLAs) with Respondent Bangkok Bank
Public Company, Limited (Bangkok Bank) on November 29, 1995 and April 17, 1996,
respectively.[3] MDEC and MHI are owned and controlled by the
Lee family: Thelma U. Lee, Maybelle L. Lim, Daniel U. Lee and Samuel U. Lee
(Samuel).[4] Both corporations have interlocking directors
and management led by the Lee family; and engaged in the manufacturing and
export of garments, ladies’ bags and apparel.
Bangkok
Bank required guarantees from the Lee family for the two CLAs. Consequently, the Lee family executed
guarantees in favor of Bangkok Bank on December 1, 1995 for the CLA for MDEC
and on April 17, 1996 for the CLA of MHI.
Under the guarantees, the Lee family irrevocably and unconditionally
guaranteed, as principal debtors, the payment of any and all indebtedness of
MDEC and MHI with Bangkok Bank.[5] Prior to the granting of the CLAs, Bangkok
Bank conducted a property check on the Lee family and required Samuel to submit
a list of his properties. Bangkok Bank,
however, did not require the setting aside, as collateral, of any particular
property to answer for any future unpaid obligation.[6] Subsequently, MDEC and MHI made several
availments from the CLAs. In time, the
advances, which MDEC and MHI had taken out from the CLAs, amounted to three
million dollars (USD 3,000,000).[7]
On
July 25, 1996, MDEC was likewise granted a loan facility by Asiatrust Development
Bank, Inc. (Asiatrust).[8] This facility had an available credit line of
forty million pesos (PhP 40,000,000) for letters of credit, advances on bills
and export packing; and a separate credit line of two million dollars (USD
2,000,000) for bills purchase.[9]
In
the meantime, in May 1997, Samuel bought several parcels of land in Cupang,
Antipolo, and later entered into a joint venture with Louisville Realty and
Development Corporation to develop the properties into a residential
subdivision, called Louisville Subdivision.[10] These properties in Cupang, Antipolo are the
subject properties in the instant case (Antipolo properties) and are covered by
Transfer Certificate of Title (TCT) Nos. 329663 to 329511 of the Registry of Deeds
of Rizal in Marikina City (RD).[11]
Throughout
1997, MDEC availed itself of the omnibus credit line granted by Asiatrust on
three occasions: ten million pesos (PhP 10,000,000) to mature on July 15, 1997;
eleven million pesos (PhP 11,000,000) to mature on February 6, 1998; and
another ten million pesos (PhP 10,000,000) to mature on February 20, 1998. In the same year, particularly in August
1997, when MDEC had defaulted in the payment of its loan that matured on July
15, 1997, Asiatrust initiated negotiations with MDEC and required the Lee
family to provide additional collateral that would secure the loan. In December 1997, the negotiation was
concluded when Asiatrust had agreed to Samuel’s proposition that he would
mortgage the subject Antipolo properties to secure the loan, and therefore
execute a REM over the properties.[12] While the titles of the Antipolo properties had
been delivered by Samuel to Asiatrust and the REM had been executed in January
1998, spouses Samuel and Pauline Lee (spouses Lee) were requested to sign a new
deed of mortgage on February 23, 1998, and, thus, it was only on that date that
the said mortgage was actually notarized, registered, and annotated at the back
of the titles.[13]
Similarly,
MDEC and MHI initially had made payments with their CLAs until they defaulted
and incurred aggregate obligations to Bangkok Bank in the amount of USD 1,998,554.60
for MDEC and USD 800,000 for MHI.[14] Similarly, the Lee corporations defaulted in
their obligations with other creditors.
For example, Security Bank Corporation (SBC) filed a case against the
Lee family for a sum of money resulting from the nonpayment of obligations
before the RTC, Branch 132 in
On
February 16, 1998, MDEC, MHI, and three other corporations owned by the Lee
family filed before the Securities and Exchange Commission (SEC) a Consolidated
Petition for the Declaration of a State of
On
February 20, 1998, the SEC issued a Suspension Order enjoining the Lee
corporations from disposing of their property in any manner except in the ordinary
course of business, and from making any payments outside the legitimate
expenses of their business during the pendency of the petition.[19]
On
March 12, 1998, Bangkok Bank instituted an action before the RTC, Branch 141 in
While
enforcing the writs of preliminary attachment, Bangkok Bank discovered that the
spouses Lee had executed a REM over the subject Antipolo properties in favor of
Asiatrust; and that the REM had previously been annotated on the titles.[22] Thus, the writs of preliminary attachment
were also inscribed at the back of the TCTs covering the subject Antipolo
properties, next to the annotation of the REM.
With
MDEC still unable to make payments on its defaulting loans with Asiatrust, the
latter foreclosed the subject mortgaged Antipolo properties. On April 15, 1998, Asiatrust won as the
highest bidder at the auction sale, purchasing the said properties for PhP
20,864,735.[23] Thereafter, Asiatrust still filed an action
against MDEC and the spouses Lee to collect the deficiency amounting to at
least PhP 14,800,000. Up until the
filing of the memoranda by the parties before this Court, the said action
remained pending before the CA.[24]
Subsequently,
the sale was registered on April 21, 1998.[25] Believing the REM and the foreclosure sale to
be fraudulent, Bangkok Bank did not redeem the subject properties. As there had been no effort to redeem the
properties, consequently, the TCTs covering the subject properties were
consolidated in the name of Asiatrust on April 30, 1999, and 120 new titles were
issued in the name of Asiatrust without the annotation of the writs of
preliminary attachment, which were deemed canceled.[26]
Among
the 120 titles foreclosed by Asiatrust in Louisville Subdivision in Antipolo,
only 12 properties were sold for a maximum price of PhP 250,000 for a house and
lot, and 108 titles remained. Asiatrust was
still unable to sell them and convert them into cash. From then on, Asiatrust maintained security
services and paid the real estate taxes of the subject Antipolo properties,
among others.
On
July 20, 1999, Bangkok Bank filed the instant case before the RTC, Branch 73 in
Meanwhile,
on March 23, 2000, the RTC, Branch 141 in Makati City in Civil Case No. 98-628
rendered a Partial Decision in favor of Bangkok Bank, ordering the Lee family,
pursuant to the guarantees, to pay USD 1,998,554.60 for the CLA of MDEC
and USD 800,000 for the CLA of MHI, with the corresponding 12% interest per
annum from the date of the filing of the complaint, i.e., on March 12, 1998,
until fully paid.
But
Bangkok Bank had only levied on the execution of the partial decision, some old
equipment, office fixtures and furniture, garments, textiles, and other small
production equipment with an approximate aggregate value of PhP 600,000.[27] Considering the total liabilities of the Lee
family to Bangkok Bank, the levied properties were insufficient to satisfy the
partial judgment in Civil Case No. 98-628.
The Ruling of the RTC
After due hearing with the parties
presenting their evidence, on April 21, 2003, the RTC rendered a Decision
dismissing the case, the fallo reading:
WHEREFORE, premises
considered, the instant case is hereby dismissed
for lack of merit.
No findings as to the
counterclaim of the defendants for insufficiency of evidence to support the
claim.
SO ORDERED.[28]
In dismissing the instant case, the
trial court found no concrete proof of the alleged fraud committed by the Lee
family and Asiatrust, more so, that of a collusion or conspiracy between
them. Consequently, it ruled that Art.
1381(3) of the Civil Code does not apply.
Moreover, it noted that Bangkok Bank has not proved that it cannot in
any manner collect its claims from the Lee family. For one, it held that Bangkok Bank chose not
to exercise its right of redemption over the subject properties; for another,
the subject properties were not the only properties of the Lee family as
admitted by Bangkok Bank’s sole witness, Susan Capalaran.
The RTC explained that a mortgage
contract is an onerous undertaking to secure payment of an obligation and
cannot be considered as a gratuitous alienation; thus, Art. 1387 of the Civil
Code does not apply.[29] Finally, it held that neither fraud nor a
violation of the SEC suspension order can result from the execution of the REM
and the foreclosure of the subject properties, because according to the
testimony of Bangkok Bank’s sole witness, the subject properties are not
covered by the SEC Suspension Order for which reason Bangkok Bank filed an
action to attach them. As the subject
properties are not covered by the SEC Suspension Order, the RTC held that there
is nothing that precludes the spouses Lee from mortgaging them to Asiatrust.[30]
The Ruling of the CA
Aggrieved, Bangkok Bank appealed the
trial court’s decision before the CA; and on March 15, 2006, the appellate
court rendered the assailed decision, which granted the appeal, and reversed
and set aside the RTC decision. The
decretal portion reads:
WHEREFORE, premises
considered, the instant appeal is hereby GRANTED. The assailed Decision dated April 21, 2003 of
the trial court is REVERSED and SET ASIDE.
A new judgment is rendered ordering the:
1. Rescission of the Real
Estate Mortgage over Appellees-spouses Lee’s Antipolo properties in favor of
appellee Asiatrust;
2. Annulment of the Foreclosure
Sale conducted on April 15, 1998;
3. Cancellation of the Transfer
Certificate of Titles in the name of Asiatrust; and
4. Reversion of the titles in
favor of appellees-spouses Lee.
No costs.
SO ORDERED.[31]
In reversing and setting aside the
RTC decision, the CA held as crucial the Letter dated April 4, 1998 sent by the
counsel of the Midas Group of Companies to the Office of the Clerk of Court and
Ex-Officio Sheriff of the trial court
relative to the extra-judicial foreclosure of the REM scheduled on April 15,
1998. The letter assailed said proceeding as bereft of legal and factual bases
in the light of the February 20, 1998 Suspension Order of the SEC.[32] It held that the present counsel of
petitioner-spouses Lee cannot take a 360-degree turn as regards their
predecessor’s position, for Bangkok Bank merely adopted petitioners’ earlier
stance. Thus, the CA ruled that
petitioner-spouses Lee are in estoppel in
pais, under Art. 1431 of the Civil Code and Section 2(a) of Rule 131 of the
Revised Rules on Evidence.
The CA found that the subject Antipolo
properties, though personal assets of the spouses Lee, are covered by the
February 20, 1998 Suspension Order of the SEC, since they are included in the
list submitted to SEC by the Lee family; and that Samuel is a guarantor of the
loans incurred by MDEC and MHI from Bangkok Bank. It ruled that Samuel, being a guarantor, is
jointly and severally liable to Bangkok Bank for the corporate debts of MDEC
and MHI, as he divested himself from the protection of the limited liability doctrine,
which, the CA held, was shown (1) through the inclusion of the said subject
Antipolo properties in the list submitted to the SEC; and (2) by Samuel, through
the guarantees that he executed, thus voluntarily binding himself to the
payment of the loans incurred from Bangkok Bank.
The CA also rejected petitioners’
claim that the subject properties were allotted to Asiatrust. It reasoned that if the subject properties
were indeed allotted to Asiatrust, then these would not have been included in
the list of properties submitted to the SEC.
It added that the absence of any encumbrance annotated on the TCTs or
any document appurtenant to it prior to the January 30, 1998 writ of
preliminary attachment issued in Civil Case No. 98-196 and the February 20,
1998 Suspension Order further belies petitioners’ claim. The CA held that fraud was perpetrated
through the REM executed and registered on February 23, 1998 pursuant to the presumption
in the second paragraph of Art. 1387 of the Civil Code, which provides that “alienations
by onerous title are also presumed fraudulent when made by persons against whom
x x x some writ of attachment has been issued.”
Consequently, the spouses Lee filed the instant petition.
The Issues
I.
Whether or not Bangkok Bank can maintain an action
to rescind the REM on the subject Antipolo properties despite its failure to
exhaust all legal remedies to satisfy its claim.
II.
Whether or not properties owned by private
individuals should be covered by a suspension order issued by the SEC in an
action for suspension of payments.
III.
Whether or not a surety or guarantor is guilty of
defrauding creditors for executing a REM in favor of one creditor prior to the
filing of a Petition for Suspension of Payments.[33]
The Court’s Ruling
The core issue is whether the
February 23, 1998 REM executed over the subject Antipolo properties and the
April 15, 1998 foreclosure sale were committed in fraud of petitioners’ other
creditors, and, as a consequence of such fraud, the questioned mortgage could,
therefore, be rescinded. Petitioners
allege that no fraud exists.
The petition is meritorious.
Prevailing and applicable
SEC laws
At
the outset, it must be noted that at the time the Consolidated Petition for the
Declaration of a State of Suspension of Payments and for Appointment of a
Management Committee/Rehabilitation Receiver was filed before the SEC on
February 16, 1998 by MDEC, MHI,
and three other corporations owned by the Lee family, Batas Pambansa Blg. (BP) 178 or the then Revised Securities Act was
the primary governing law along
with Presidential
Decree No. (PD) 902-A, as amended, and the Corporation Code of the Philippines. Pertinently, among others, the SEC was also
covered by the Investment House Law (PD 129), the Financing Company Act under
Republic Act. No. (RA) 2626, the
Foreign Investments Act (RA 7042),
and the Liberalized Foreign Investments Act (RA 8179). And subsequent to the filing of the instant
case, the Securitization Act of 2004 (RA 9267) and the Lending Company Regularization
Act of 2007 (RA 9474) were also enacted.
PD
902-A,[34]
however, was further amended by RA 8799 or the Securities Regulation Code,
approved on July 19, 2000 by President Joseph Estrada.[35] Under Sec.
5.2 of RA 8799,[36]
the SEC’s original and exclusive jurisdiction over all cases enumerated under
Sec. 5 of PD 902-A[37]
was transferred to the appropriate RTC. RA 8799, Sec. 5.2,
however, expressly stated as an exception, that the “[t]he Commission shall retain jurisdiction over pending suspension of
payment/rehabilitation cases filed as of 30 June 2000
until finally disposed.” Accordingly,
the Consolidated Petition for the Declaration of a State of Suspension of
Payments and for Appointment of a Management Committee/Rehabilitation Receiver
filed on February 16, 1998 by MDEC, MHI and three other corporations owned by
the Lee family, remained under the jurisdiction of the SEC until finally
disposed of pursuant to the last sentence of Sec. 5.2 of RA 8799.
The subject properties are not under the
purview of the SEC Suspension Order
Pivotal
to the resolution of the instant case is whether the subject properties owned
by the spouses Lee were subject
to the February 20, 1998 SEC Suspension Order.
On the one
hand, the CA held and found these
to be subject to the Suspension Order.
The RTC, on the other hand, found contrariwise in that the assailed REM
and foreclosure sale did not violate the SEC Suspension Order.
A
review of the applicable laws and existing jurisprudence would show that the
subject properties owned by the spouses
Lee were not subject to the February 20, 1998 SEC Suspension Order.
PD 902-A vested the SEC with jurisdiction
on petitions for suspension of payments only on corporations, partnerships and
associations; not on individual persons
The SEC’s jurisdiction
is evident from the statutorily vested power of jurisdiction, supervision and
control by the SEC over all corporations, partnerships or associations, which
are grantees of primary franchise, license or permit issued by the government
to operate in the Philippines, and its then original and exclusive jurisdiction
over petitions for suspension of payments of said entities. Secs.
3 and 5 of PD 902-A pertinently provides, thus:
Sec.
3. The Commission shall have absolute
jurisdiction, supervision and control over all corporations, partnerships or associations, who are the grantees of
primary franchise and/or a license or permit issued by the government to
operate in the Philippines; and in the exercise of its authority, it shall have
the power to enlist the aid and support of any and all enforcement agencies of
the government, civil or military.
Sec. 5.
In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of
associations registered with it as expressly granted under existing laws and
decrees, it shall have original and
exclusive jurisdiction to hear and decide cases involving:
x x x x
(d) Petitions
of corporations, partnerships or associations to be declared in the state of
suspension of payments in cases where the corporation, partnership or
association possesses sufficient property to cover all its debts but foresees
the impossibility of meeting them when they respectively fall due or in
cases where the corporation, partnership or association has no sufficient
assets to cover its liabilities, but is under the management of a
Rehabilitation Receiver or Management Committee created pursuant to this
Decree. (Emphasis Ours.)
It can be clearly gleaned from the above provisions that in cases of
petitions for the suspension of payments, the SEC has jurisdiction over
corporations, partnerships and associations, which are grantees of primary
franchise or license or permit issued by the government to operate in the
Private individuals and their privately
owned properties cannot be placed under the jurisdiction of the SEC in a
petition for suspension of payments
In
Chung Ka Bio v. Intermediate Appellate
Court,[39]
this Court resolved in the negative the
issue of whether private individuals can file with the SEC petitions for declaration
in a state of suspension of payments.
We held that Sec.
5(d) of PD 902-A clearly does not allow a mere individual to file the petition,
which is limited to “corporations, partnerships or associations.” Besides, We pointed out that the SEC, being a
mere administrative agency, is a tribunal of limited jurisdiction and, as such,
can only exercise those powers, which are specifically granted to them by their
enabling statutes. We, thus, concluded
that where no authority is granted to hear petitions of individuals for
suspension of payments, such petitions are beyond the competence of the
SEC. In short, the SEC has no
jurisdiction over private individuals relative to any petition for suspension
of payments, whether the private individual is a petitioner or a
co-petitioner. We have said time and
again that the SEC’s “jurisdiction is limited only to corporations and
corporate assets;” it has no jurisdiction over the properties of private
individuals or natural persons, even if they are the corporation’s officers or
sureties.[40] We have,
thus,
consistently applied this ruling to the subsequent Ong
v. Philippine Commercial International Bank,[41]
Modern Paper Products, Inc. v. Court of
Appeals,[42] and
Union Bank of the Philippines v. Court of
Appeals.[43]
Here, it is undisputed that
the petition for suspension of payments was collectively filed by the five
corporations owned by the Lee family. It
is likewise undisputed that together with the consolidated petition is a list
of properties, which included the subject Antipolo properties owned by Samuel
and Pauline Lee. The fact, however, that
the subject properties were included in the list submitted to the SEC does not
confer jurisdiction on the SEC over such properties. It is apparent that even if the members of
the Lee family are joined as co-petitioners with the five corporations, still, this could not confer jurisdiction on the SEC
over the Lee family members—as private
individuals—nor could this affect
their privately owned properties.
Further,
the fact that the debts of MDEC and MHI to Bangkok Bank are secured by the Lee
family through the guarantees will not likewise put the Lee family and their
privately owned properties under the jurisdiction of the SEC through the
consolidated petition for suspension of payments.
Therefore,
the February 20, 1998 Suspension Order issued by the SEC did not and could not
have included the subject properties.
The RTC correctly grasped this point that the disposition of the subject
properties did not violate the suspension order.
Bangkok
Bank cannot take both opposing stances
Certainly,
Bangkok Bank cannot take opposite positions at the same time. On the
one hand, it instituted Civil Case No. 98-628 before
the RTC, Branch 141 in Makati City on March 12, 1998—almost a month after the
filing of the consolidated petition before the SEC and the issuance of the
February 20, 1998 Suspension Order in order to recover the loans extended to
MDEC and MHI under the guarantees. In it, Bangkok Bank contended that the subject lots
were not part of the properties under the jurisdiction of the SEC in the case
for suspension of payments. But, on the
other hand, Bangkok Bank claims that
the Antipolo properties are subject to the February 20, 1998 SEC Suspension
Order, and, therefore, cannot be mortgaged by the spouses Lee to Asiatrust. By saying that the subject Antipolo properties
are not under the jurisdiction of the SEC that is hearing the consolidated
petition for suspension of payments, it necessarily follows that the same
properties could not be subject to the SEC Suspension Order. This admission is also very clear in the
statement made by Bangkok Bank’s sole witness, Susan Capalaran:[44]
Q: In other words, by your filing of an
action in Makati on March 12, 1998, you are in effect saying that the
properties owned by the individual stockholders are not covered by the
Suspension Order of the Securities and Exchange Commission?
Susan Capalaran: Yes.
The
allegations of fraud in the instant petition
At the heart of the present
controversy is the allegation of fraud by Bangkok Bank against the spouses Lee and
Asiatrust. It is in this regard that the
issue of fraud shall be examined here in detail. Preliminary matters, such as the applicable
laws and their
interpretation, shall first be explained.
And subsequently, in order to fully appreciate the allegations of fraud
by Bangkok Bank, they shall
be discussed in three parts: (1) the existence of fraud on the part of the spouses Lee; (2) the
existence of fraud on the part of Asiatrust; and separately, (3) the existence
of collusion on the part of the spouses
Lee and Asiatrust. It is imperative to
expound on these points separately in order to illustrate that the mere
existence of fraud on the part of one party, i.e., the spouses Lee (against whom some
judgment or some writ of attachment has been issued),[45]
does not necessarily result in the rescission of a supposed alienation, if
there is any.
The presumption of fraud under Art. 1387 of the Civil
Code does not apply in the present case
Under Art. 1381(3) of the Civil
Code, contracts, which were “undertaken in fraud of creditors when the latter
cannot in any other manner collect the claims due them,” are rescissible. Art.
1387 of the Code states when an act is presumed to be fraudulent, thus:
Art.
1387. All contracts by virtue of which
the debtor alienates property by gratuitous title are presumed to have been
entered in fraud of creditors, when the donor did not reserve sufficient
property to pay all debts contracted before the donation.
Alienations
by onerous title are also presumed fraudulent when made by persons against whom
some judgment has been rendered in any instance or some writ of attachment has
been issued. The decision or attachment
need not refer to the property alienated, and need not have been obtained by
the party seeking the rescission.
In
addition to these presumptions, the design to defraud creditors may be proved
in any other manner recognized by the law of evidence.
It is with regard to
the foregoing provisions that the CA anchored its ruling of the existence of a
presumption of fraud in the instant case.
This presumption,
however, finds no application to
this case.
The
presumption of fraud established under Art.
1387 does not apply to registered lands IF “the
judgment or attachment made is not also registered.”[46] In Abaya
v. Enriquez,[47]
Abaya was able to obtain a judgment against Enriquez for a sum of money, and
the judgment was partially unsatisfied after Enriquez made a partial
payment. The judgment and the writ of
execution,
however, was never annotated on the titles of the registered lands owned by
Enriquez.[48] Subsequently, Enriquez sold the said
lands. In an action for rescission
instituted by Abaya, the Court ruled that the presumption of fraud does not
apply as the judgment and the attachment have not been registered and annotated
on the title.[49] The
Court held:
Where
the judgment rendered against the defendant x x x has not
been entered in the records of the register of deeds, relative to an immovable
belonging to the judgment debtor, the subsequent sale of said property by the
latter, shall not be rescinded upon the ground of fraud, unless the complicity
of the buyer in the fraud imputed to said vendor is established by other means
than the presumption of fraud x x x.[50]
In
this case, prior to the annotation of the REM on February 23, 1998, SBC was
able to successfully acquire a writ of preliminary attachment in its favor
against the spouses Lee on January
30, 1998 in a case for a sum of money for nonpayment of its obligation. Bangkok Bank alleges that because of this,
the presumption of fraud under Art.
1387 of the Civil Code applies. But
while a judgment was made against the
spouses Lee in favor of SBC on January 30, 1998, this, however, was not annotated on
the titles of the subject properties. In
fact, there is no showing that the judgment
has ever been annotated on the titles of the subject properties. As established in the facts, there were only
two annotations at the back of the titles of the Antipolo properties: first, the REM executed in favor of
Asiatrust on February 23, 1998; and second,
the writ of preliminary attachment in favor of Bangkok Bank on March 18,
1998. Considering that the earlier SBC
judgment or attachment was not, and in fact never was, annotated on the titles
of the subject Antipolo properties, prior to the execution of the REM, the
presumption of fraud under Art.
1387 of the Code clearly cannot apply.
Even assuming that Art. 1387 of the Code applies, the execution of a mortgage is not
contemplated within the meaning of alienation by onerous title under the said
provision
Under
Art. 1387 of the Code, fraud is presumed
only in alienations by onerous title of a person against
whom a judgment or attachment has been issued.
The term, alienation, connotes the “transfer of the property and
possession of lands, tenements, or other things, from one person to another.”[51] This term is “particularly applied to absolute conveyances of real property” and must involve a
“complete transfer from one person to another.”[52] A mortgage does not contemplate a transfer or
an absolute conveyance of a real property.[53] It is “an interest in land created by a
written instrument providing security for the performance of a duty or the
payment of a debt.”[54]
When a debtor mortgages his property, he “merely subjects it to a lien but ownership thereof is not parted with.”[55] It is merely a lien that neither creates a
title nor an estate.[56] It is,
therefore, certainly not the alienation by onerous title that is contemplated in
Art. 1387 where fraud is to be
presumed.
In
this very action, Bangkok Bank claims that when the spouses Lee executed the REM in favor of
Asiatrust, the presumption of fraud under Art. 1387 became applicable. We hold in the negative. As We have plainly discussed, a mortgage is
not that which is contemplated in the term “alienation” that would make the presumption of fraud under Art. 1387 apply. It requires a full and absolute conveyance or
transfer of property from one person to another, such as that in the form of a
sale. As elucidated earlier, a mortgage
merely creates a lien on the property that would afford the mortgagee/creditor
greater security in the obligation of the mortgagor/debtor. This being so, as the REM is not the alienation
contemplated in Art.
1387 of the Code,
the presumption of fraud
cannot apply.
In any case, the application of the presumption
of fraud under Art. 1387, if
applicable, could only be made to apply to the spouses
Lee as the person against whom a judgment or writ of attachment has been issued;
not to Asiatrust
A careful reading of Art. 1387 of the
Code vis-ŕ-vis its Art. 1385 would plainly show that the presumption of fraud
in case of alienations by onerous title only applies to the person who made
such alienation, and against whom some judgment has been rendered in any
instance or some writ of attachment has been issued. A third person is not and should not be
automatically presumed to be in fraud or in collusion with the judgment
debtor. In allowing rescission in
case of an alienation by onerous title, the third person who received the
property conveyed should likewise be a party to the fraud.[57] As clarified by Art. 1385(2) of the Code, so long as the
person who is in legal possession of the property did not act in bad faith,
rescission cannot take place. Thus, in
all instances, as to the third person in legal possession of the questioned
property, good faith is presumed.
Accordingly, it is upon the person who alleges bad faith or fraud that
rests the burden of proof.[58]
Asiatrust, being a third person in good faith,
should not be automatically presumed to have acted fraudulently by the mere
execution of the REM over the subject Antipolo properties, there being no
evidence of fraud or bad faith. Regrettably,
in ratiocinating that fraud was committed by both the spouses Lee and
Asiatrust, the CA merely anchored its holding on the presumption espoused under
Art. 1387 of the Code,[59] nothing more.
The alleged fraud on the part of the spouses Lee was not proved and substantiated
It appears that the argument of
Bangkok Bank on the existence of fraud on the part of the spouses Lee[60]
revolves around the application of the presumption of fraud under Art. 1387 of
the Code.[61] Bangkok Bank failed to substantiate its
allegations by presenting clear and convincing proof that the spouses Lee
indeed committed fraud in mortgaging the subject properties to Asiatrust, and
instead anchored its existence of the presumption under Art. 1387. This cannot stand before this Court.
On the contrary, the spouses Lee proved
the absence of fraud on their part.
During trial, the spouses Lee and Asiatrust were able to substantially
establish that, indeed, a loan agreement has been existing between them since
1996 and that MDEC made use of it on several occasions in 1997. It has likewise been established that, as MDEC
defaulted in its payment of the loan that matured in 1997, the parties began
negotiations as to how MDEC could secure the loans. It was concluded in December 1997 upon
Samuel’s proposal that his Antipolo properties be used to secure MDEC’s loans
by means of a mortgage. This settlement
has been agreed upon even before any action was filed against the Lee
corporations in 1998. These facts have
been established during trial without any controversy.
No deception could have been used by the
spouses Lee in including in the list of properties, which they submitted to the
SEC, the subject Antipolo properties. First, it is undisputed that the list of
properties submitted by the Lee corporations to the SEC clearly indicated that
the subject Antipolo properties have already been earmarked, or have already
been serving as security, for its loan obligations with Asiatrust. Second,
MDEC, through its counsel, truly believed in good faith that the inclusion of the
spouses Lee’s private properties in the list submitted to the SEC is valid and
regular. As can be seen in the letter
sent by the counsel of the Midas Group of Companies to the Office of the Clerk
of Court and Ex-Officio Sheriff of
the Antipolo RTC on April 4, 1998, at the time when the subject Antipolo
properties were being foreclosed by Asiatrust, its counsel vigorously countered
the actions of Asiatrust and stated that the subject Antipolo properties cannot
be foreclosed pursuant to the SEC Suspension Order.[62] And as discussed infra, the alleged collusion between the spouses Lee and Asiatrust
appears to be a mere figment of imagination.
In any case, the facts show no presence
of fraud on the part of Asiatrust; therefore, the REM was not a sham
Even pushing further to say that the
REM was executed by the spouses Lee to defraud creditors, the REM cannot be
rescinded and shall, therefore, stand, as Asiatrust—the third party, in favor
of which the REM was executed, and which subsequently foreclosed the subject
properties—acted in good faith and without any badge of fraud. As a general rule, whether the person,
against whom a judgment was made or some writ of attachment was issued, acted with or without fraud, so long as the
third person who is in legal possession of the property in question did not act
with fraud and in bad faith, an action for rescission cannot prosper. Art. 1385 of the Civil Code explicitly states
this, thus:
Art. 1385. Rescission creates the obligation to return
the things which were the object of the contract, together with their fruits,
and the price with its interest; consequently, it can be carried out only when he who demands rescission can return
whatever he may be obliged to restore.
Neither shall rescission take place when the things
which are the object of the contract are legally in the possession of third
persons who did not act in bad faith. (Emphasis
Ours.)
As to who or which entity is in legal
possession of a property, the registration in the Registry of Deeds of the
subject property under the name of a third person indicates the legal
possession of that person.[63] In this case, Asiatrust is in the legal
possession of the subject Antipolo properties after the titles under the name
of Spouses Lee have been canceled, and new TCTs have been issued on April 20,
1999, under the name of Asiatrust. What
is more, 12 title out of the 120 titles in the Antipolo properties in question
have already been sold to different persons, which make them in legal
possession of the properties. It is, thus,
established that Asiatrust and the 12 other unnamed persons are in legal
possession of the subject Antipolo properties; and it is imperative to prove
that they legally took possession of them in good faith and without any badge
of fraud.
Now, as to whether Asiatrust acted
with fraud or bad faith, Bangkok Bank failed to present any clear and
convincing evidence that would ascertain its existence.
Contracts in fraud of creditors are
those executed with the intention to prejudice the rights of creditors. They should not be confused with those
entered into without such mal-intent, even if, as a direct consequence, a
creditor may suffer some damage. More so
it is, when the allegation involves not only fraud on the part of the debtor,
but also that of another creditor. In
determining whether or not a certain conveying contract is fraudulent, what
comes to mind first is the question of whether the conveyance was a bona fide transaction or a trick and
contrivance to defeat creditors.[64] Haste alone in the foreclosure of the mortgage
does not constitute the existence of fraud.
Considering that the totality of circumstances clearly manifests the
want of fraud and bad faith on the part of the parties to the REM in question,
consequently, the REM cannot be rescinded.
In this case, it is clearly
established that there was a bona fide transaction
between the spouses Lee and Asiatrust that necessitated the negotiations
resulting from the former’s default in the payment of its obligations; and
which brought about the execution of the REM to secure their pre-existing
obligations. Particularly on the part of
Asiatrust, the testimonies of Shirley Benedicto, its Vice-President, who was
part of the bank’s account management group tasked to ensure the proper
management of loans from its inception up to its collection, and of Atty.
Neriza San Juan, the bank’s former Vice-President, and Head of its Credit
Support Services and Legal Services Groups, amply proved the existence of good
faith and dismissed the allegation of fraud.
Asiatrust was able to establish (1) the existence of a loan agreement
through a loan facility/credit line between Asiatrust and MDEC since July 25,
1996, which was guaranteed by the Lee family, including Samuel; (2) the
advances made by MDEC throughout 1997, which amounted to an aggregate sum of
PhP 31,000,000; (3) the default in payment of MDEC on its maturing loans; and (4)
the negotiations, which took place between Asiatrust and Samuel on behalf of
MDEC that led, in December 1997, to the agreement for Samuel to mortgage the
subject Antipolo properties to secure the defaulting loan and the loans, which
were yet to mature.[65] And as the last advances made by MDEC matured
on February 20, 1998, it was just timely and appropriate for Asiatrust to
foreclose the subject properties on April 15, 1998 in order to ensure that it
is paid of the obligations, which MDEC owed to it. In this
case, Asiatrust was left with only one clear and practicable means by which it
could be paid of MDEC’s obligations, i.e.,
by foreclosing the mortgaged properties.
After all, “[t]he only right of a mortgagee in case of non-payment of a
debt secured by mortgage would be to foreclose the mortgage and have the
encumbered property sold to satisfy the outstanding indebtedness.”[66]
Conversely, Asiatrust did not sleep
on its rights as a mortgage creditor of MDEC by foreclosing the mortgage on the
spouses Lee’s Antipolo properties. On
the contrary, it is odd but worth noting that Bangkok Bank never acted on its
rights as creditor at the soonest possible time. It could have asserted it rights as creditor
at the time when the Lee family’s corporations started to default in their
payments of the loans as early as October 1997.[67] When Bangkok Bank finally instituted an
action against the Lee family on March 12, 1998 to collect the outstanding
obligations of MDEC and MHI, a writ of preliminary attachment was issued by the
Makati RTC in the same month covering the properties of the Lee family,
including the subject Antipolo properties.
And while enforcing the said writ, Bangkok Bank discovered the existing
REM that had already been annotated on the titles of the subject Antipolo
properties. But Bangkok Bank did nothing upon its knowledge and discovery. Worse, even at the time of the foreclosure
and the redemption period, or until April 30, 1999, Bangkok Bank likewise did
not act on the alleged fraudulent execution of the REM; nor did it redeem the
subject properties. Rather, it was only
on July 20, 1999 that Bangkok Bank seems to have belatedly realized that the
subject Antipolo properties could properly be another means by which it could
be paid of the defaulting obligations of MDEC and MHI. Interestingly, even on the elevation of this
case to Us, Bangkok Bank’s counsel had to move for four extensions, totaling to
52 days within which to file a comment on the instant petition, and has been
warned for it.[68] Asiatrust cannot be faulted for acting with
prudence, in good faith, and without any badge of fraud in the creation of the
REM and in the foreclosure of the mortgage to ensure the satisfaction of the
debts owed to it by MDEC. Bangkok Bank
should have likewise done so at the earliest possible opportunity.
Furthermore, Asiatrust, in good
faith, conducted the necessary diligence and meticulousness expected of it.
During cross-examination, Atty. San Juan established that when the spouses Lee
offered the subject Antipolo properties as collateral, Asiatrust had them appraised
and required the spouses Lee to submit a photocopy of the titles, location map,
and the relevant tax declarations, which was forwarded to its Appraisal Team.
She further explained that credit investigation is a continuing annual process
since the bank considers the market information in connection with the account
of the borrower.[69] Indeed:
The mortgagee
has a right to rely in good faith on what appears on the certificate of title
of the mortgagor to the property given as security and in the absence of
anything to excite suspicion, he is under no obligation to look beyond the
certificate and investigate the title of the mortgagor appearing on the fact of
the certificate. Accordingly, the right
or lien of an innocent mortgagee for value upon the mortgaged property must be
respected and protected, even if the mortgagor obtained his title through
fraud. The remedy of the persons
prejudiced is to bring an action for damages against the person who caused the
fraud x x x.[70]
There was no
collusion between the spouses Lee and Asiatrust
Besides
the fact that individually, fraud was not sufficiently and convincingly
established on the part of the spouses Lee and Asiatrust, Bangkok Bank’s
allegation of collusion between them was likewise unsubstantiated and therefore
untenable.
First, even after the subject Antipolo
properties were foreclosed by Asiatrust, Asiatrust sought the
recovery of the deficiency amounting to at least PhP 14,800,000. And until the filing of the memoranda by the
parties before this Court, the said action remains pending before the CA.[71]
Second, Asiatrust filed a criminal case
against Samuel for violation of BP 22.[72] At the time of the filing of the petition for
review, the case was still pending before the Metropolitan Trial Court of
Quezon City.[73] Later, at the time of the filing of the spouses
Lee’s Memorandum, it was indicated that it has already been dismissed.
Third, contrary to the CA’s appreciation
of the facts,[74] the
letter sent by Atty. Macam, counsel of the Midas Group of Companies, actually
strengthens the proof that no collusion existed between the parties. Acting on the interest of MDEC, Atty. Macam
sent a letter to the Clerk of Court and the Ex-Officio
Sheriff of the Antipolo RTC, arguing that the subject Antipolo properties
cannot be foreclosed as they are the subject of an existing SEC Suspension Order.[75] In fact, counsel for MDEC alleged that the
foreclosure sale was illegal.[76] On the other hand, when the Ex-Officio Sheriff presented a copy of
the letter to Asiatrust and asked the latter to comment, Asiatrust
categorically stated that the subject properties could not be made a subject of
the SEC Suspension Order, they being properties of the spouses Lee, natural
persons outside the jurisdiction of the SEC.[77] In fact, it was Bangkok Bank’s sole witness, Capalaran,
who firmly agreed that, indeed, the subject properties are not covered by the
Suspension Order that is why Bangkok Bank, too, filed an action against the spouses
Lee on March 12, 1998 and sought the attachment of the said properties.[78]
With all
the foregoing facts strongly established, We confirm the absence of fraud, bad
faith, and collusion between the spouses Lee and Asiatrust.
The requisite (1) good faith on the part
of the third person and (2) fraud, necessary for an action to rescind under Art.
1381 of the Civil Code, were not complied with
In Siguan v. Lim,[79]
this Court held that in an action to rescind under Art. 1381, the following
requisites must exist:
The action to rescind contracts in fraud of creditors
is known as accion pauliana. For this action to prosper, the following
requisites must be present: (1) the
plaintiff asking for rescission has a credit prior to the alienation, although
demandable later; (2) the debtor has made a subsequent contract conveying a
patrimonial benefit to a third person; (3) the creditor has no other legal
remedy to satisfy his claim; (4) the act
being impugned is fraudulent; (5) the third person who received the property
conveyed, if it is by onerous title, has been an accomplice in the fraud.
(Emphasis Ours; citations omitted.)
Considering the discussions
previously expounded, the extant records show that the fourth and fifth
requisites enumerated above are absent.
As between
Asiatrust and Bangkok Bank, the former has a better right over the subject
Antipolo properties, it being the first to annotate its lien on the titles of
the properties
It is
evidently a well-settled and elementary principle that the rights of the first
mortgage creditor or mortgagee over the mortgaged properties are superior to
those of a subsequent attaching creditor and other junior mortgagees.[80]
In this
case, it is a fact that the REM was annotated on the titles of the subject
Antipolo properties ahead of the writs of preliminary attachment issued in
favor of Bangkok Bank. In fact, it was
admitted by Bangkok Bank that it only knew of the existing mortgage that has
already been annotated at the back of the subject titles when it sought the
annotation of the writs of preliminary attachment.[81] Therefore, as between Asiatrust as mortgage
creditor and Bangkok Bank as attaching creditor, it is apparent that the former
has a superior right over the latter.
Besides, “as
between two persons who both stand to suffer loss, the possessor of the
property should be preferred in that possession, the ownership having been
transferred by delivery.”[82] In this case, Asiatrust, being the entity
with legal possession of the subject Antipolo properties, should be preferred
in that possession. In addition, 12 of
the titles in question have already been sold to 12 different persons, whose
identities have not been introduced in the instant case and who have not been
impleaded as parties. As these persons
have been in legal possession of the said properties and are in good faith,
their ownership and possession, should not be disturbed.
The redemption period has already lapsed
Sec. 27,
Rule 39 of the Rules of Court states the persons who may redeem a real property
sold, thus:
Sec. 27. Who may redeem real property so sold.
Real property sold as provided in the last preceding
section, or any part thereof sold separately, may be redeemed in the manner
hereinafter provided, by the following persons:
(a) The judgment obligor, or his successor in
interest in the whole or any part of the property;
(b) A creditor having a lien by virtue of an
attachment, judgment or mortgage on the property sold, or
on some part thereof, subsequent to the lien under which the property was sold.
Such redeeming creditor is termed a redemptioner. (Emphasis
Ours.)
From the
foregoing rule, it is clear that Bangkok Bank, as an attaching creditor, has
the right to redeem the subject Antipolo properties that were foreclosed by
Asiatrust.[83]
In
determining the period within which to redeem the foreclosed Antipolo
properties in the present case, RA 337 or the General Banking Act[84] finds application. Pertinently, its Sec. 78 states:
Sec. 78. x x x In the event of
foreclosure, whether judicially or extrajudicially, of any mortgage on real
estate which is security for any loan granted before the passage of this Act or
under the provisions of this Act, the mortgagor or debtor whose real property
has been sold at public auction, judicially or extrajudicially, for the full or
partial payment of an obligation to any bank, banking, or credit institution,
within the purview of this Act, shall have the right, within one year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to
redeem the property by paying the amount fixed by the court in the order of
execution, with interest thereon at the rate specified in the mortgage, and all
the costs and other judicial expenses incurred by the bank or institution
concerned by reason of the execution and sale and as a result of the custody of
said property less the income received from the property. However, the
purchaser at the auction sale concerned shall have the right to enter upon and
take possession of such property immediately after the date of the confirmation
of the auction sale and administer the same in accordance with law. (Emphasis Ours.)
In this case,
the auction sale took place on April 15, 1998 and was registered with the RD on
April 21, 1998. Subsequently, on April
30, 1999, a date already and certainly beyond the one-year redemption period
provided by law, new titles were issued in favor of Asiatrust.[85] Apparently, Bangkok Bank chose not to
exercise its right of redemption over the subject Antipolo properties.
Even as a
general rule, “[t]he period of redemption is not tolled by the filing of a
complaint or petition for annulment of the mortgage and the foreclosure sale
conducted pursuant to the said mortgage,”[86]
Bangkok Bank, however, filed its action for rescission way beyond the
expiration of the said redemption period on July 20, 1999. After the expiration of the redemption period,
Asiatrust as purchaser, therefore, became the absolute owner of the subject
properties, and whose rights necessarily include the right to be in the legal possession
of the properties.[87]
As a final note, in ruling for
Bangkok Bank, the CA strangely did not even delve upon any fact that could have
ascertained the allegation of fraud from which Bangkok Bank based its
arguments. Quite the opposite, the RTC
discussed in detail the facts and testimonies presented by the parties, upon
which its finding of the absence of fraud was based. Indeed, factual findings by the trial court
are afforded great weight by this Court especially when supported by
substantial evidence on record.[88]
While prejudice to Bangkok Bank
ultimately resulted in the series of inopportune events that led to the present
case, it cannot be denied that no clear, satisfactory and convincing evidence
was presented to show fraud on the part of both the spouses Lee and
Asiatrust. Nor was bad faith on the part
of Asiatrust and the 12 other subsequent purchasers established. Accordingly, the REM annotated on the titles
of the subject Antipolo properties and the subsequent foreclosure of the same
properties cannot and should not be rescinded.
Wherefore, premises considered, the petition is
hereby GRANTED. Accordingly, the CA’s
March 15, 2006 Decision and June 29, 2006 Resolution in CA-G.R. CV No. 79362
are REVERSED and SET ASIDE.
The RTC’s April 21, 2003 Decision in
Civil Case No. 99-5388 is hereby REINSTATED.
No pronouncement as to costs.
SO
ORDERED.
PRESBITERO J. VELASCO, JR.
Associate
Justice
WE CONCUR:
RENATO C. CORONA
Chief
Justice
Chairperson
TERESITA J. LEONARDO-DE CASTRO MARIANO C.
Associate Justice Associate Justice
JOSE
Associate Justice
C E R T I F I C A T I O N
Pursuant
to Section 13, Article VIII of the Constitution, I certify 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.
RENATO C. CORONA
Chief Justice
[1] Rollo, pp. 79-90. Penned by Associate Justice Eliezer R. De Los Santos and concurred in by Associate Justices Jose C. Reyes, Jr. and Arturo G. Tayag.
[24] In Asiatrust Bank v. Midas Diversified Export
Corporation, Samuel U. Lee, et al., CA-G.R. CV No. 80862, Memorandum for
Spouses Lee, p. 11.
[34] Reorganization of the Securities and Exchange Commission with Additional Power and Placing the Said Agency under the Administrative Supervision of the Office of the President (March 11, 1976).
[35] It became effective on August 8, 2000, 15 days after its publication on July 24, 2000 in a newspaper of general circulation.
[36] Sec. 5.2. The Commission’s jurisdiction over all
cases enumerated under section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the
appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the
Regional Trial Court branches that shall exercise jurisdiction over
the cases. The Commission shall retain jurisdiction over pending cases
involving intra-corporate disputes submitted for final resolution
which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension
of payment/rehabilitation cases filed as of 30 June 2000 until
finally disposed.
[37] Section 5. In addition to the regulatory and
adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and
decrees, it shall have original and exclusive jurisdiction to hear and decide
cases involving:
a) Devices or schemes
employed by or any acts, of the board of directors, business associates, its
officers or partnership, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or
organizations registered with the
Commission.
b) Controversies
arising out of intra-corporate or partnership relations, between and among
stockholders, members, or associates; between any or all
of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between
such corporation, partnership or
association and the state
insofar as it concerns their individual franchise or right to exist as such
entity;
c) Controversies in the
election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.
[38] Cayabyab v. De Aquino, G.R. No. 159974, September 5, 2007, 532 SCRA 353; Heirs of Florencio Adolfo v. Cabral, G.R. No. 164934, August 14, 2007, 530 SCRA 111.
[40] Ong v. Philippine Commercial International Bank, G.R. No. 160466, January 17, 2005, 448 SCRA 705, 710.
[57] 4 A.M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the
[58] Balbuena v. Sabay, G.R. No. 154720, September 4, 2009, 598 SCRA 215, 227; Coastal Pacific Trading, Inc. v. Southern Rolling Mills, Co., Inc., G.R. No. 118692, July 28, 2006, 497 SCRA 11, 39.
[60] As persons against whom some judgment has been rendered in any instance or some writ of attachment has been issued under Art. 1387, paragraph 2 of the Civil Code.
[66] H.S. De
[70] H.S. De Leon, supra note 53, at 411-412; citing Cebu International Finance Corporation v. Court of Appeals, G.R. No. 107554, February 13, 1997, 268 SCRA 178; and Philippine National Bank v. Court of Appeals, G.R. No. 43972, July 24, 1990, 187 SCRA 735.
[71] Rollo, p. 17; in Asiatrust Bank v. Midas Diversified Export Corporation, Samuel U. Lee, et al., CA-G.R. CV No. 80862, Memorandum for Spouses Lee, p. 11.
[72] People of the
[80] “G” Holdings, Inc. v. National Mines and
Allied Workers Union Local 103, G.R. No. 160236, October 16, 2009, 604
SCRA, 73, 104; Cabral v. Evangelista,
139 Phil. 300, 306-307 (1969); H.S. De
Leon, supra note 53, at 414; citing Rizal Commercial Banking Corporation v. Court of Appeals, G.R. Nos. 128833-34, April 20, 1998, 289
SCRA 292; Marcaida v. Pigtain, 101
Phil. 1110, 1115-1116 (1957); Benedicto
v. F.M. Yap Tico & Co., 46 Phil. 753, 757 (1923).
[84] An Act Regulating Banks and Banking Institutions and for Other Purposes (1948); cited in Spouses Benedict and Maricel Dy Tecklo v. Rural Bank of Pamplona, Inc., G.R. No. 171201, June 18, 2010.
[86] Heirs of Estelita Burgos-Lipat v. Heirs of
Eugenio D. Trinidad, G.R. No. 185644, March 2, 2010, 614 SCRA 94, 97-99; citing Landrito, Jr. v. Court of Appeals, G.R. No. 133079,
August 9, 2005, 466 SCRA 107, 118.