Republic
of the
SUPREME
COURT
FIRST DIVISION
|
EUSEBIO
GONZALES, Petitioner, -
versus - PHILIPPINE
COMMERCIAL AND INTERNATIONAL BANK, EDNA OCAMPO, and ROBERTO NOCEDA, Respondents. |
|
G.R. No. 180257 Present: VELASCO,
JR., NACHURA,* PEREZ,
JJ. Promulgated: February
23, 2011 |
x-----------------------------------------------------------------------------------------x
D E C I S I O N
VELASCO, JR., J.:
The Case
This
is an appeal via a Petition for Review on Certiorari under Rule 45 from the Decision[1]
dated October 22, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 74466,
which denied petitioner’s appeal from the December 10, 2001 Decision[2] in
Civil Case No. 99-1324 of the Regional Trial Court (RTC), Branch 138 in Makati
City. The RTC found justification for
respondents’ dishonor of petitioner’s check and found petitioner solidarily liable
with the spouses Jose and
Jocelyn Panlilio (spouses Panlilio) for the three promissory notes they
executed in favor of respondent Philippine Commercial and International Bank
(PCIB).
The Facts
Petitioner
Eusebio Gonzales (Gonzales) was a client of PCIB for a good 15 years before he
filed the instant case. His account with
PCIB was handled by respondent Edna Ocampo (Ocampo) until she was replaced by
respondent Roberto Noceda (Noceda).
In
October 1992, PCIB granted a credit line to Gonzales through the execution of a
Credit-On-Hand Loan Agreement[3]
(COHLA), in which the aggregate amount of the accounts of Gonzales with PCIB
served as collateral for and his availment limit under the credit line. Gonzales drew from said credit line through
the issuance of check. At the
institution of the instant case, Gonzales had a Foreign Currency Deposit (FCD)
of USD 8,715.72 with PCIB.
On
The
monthly interest dues of the loans were paid by the spouses Panlilio through the
automatic debiting of their account with PCIB.
But the spouses Panlilio, from the month of July 1998, defaulted in the
payment of the periodic interest dues from their PCIB account which apparently
was not maintained with enough deposits.
PCIB allegedly called the attention of Gonzales regarding the July 1998
defaults and the subsequent accumulating periodic interest dues which were left
still left unpaid.
In
the meantime, Gonzales issued a check dated September 30, 1998 in favor of Rene
Unson (Unson) for PhP 250,000 drawn against the credit line (COHLA). However, on
Consequently,
Gonzales had a falling out with Unson due to the dishonor of the check. They had a heated argument in the premises of
the Philippine Columbian Association (PCA) where they are both members, which
caused great embarrassment and humiliation to Gonzales. Thereafter, on
On
January 28, 1999, Gonzales, through counsel, wrote PCIB insisting that the
check he issued had been fully funded, and demanded the return of the proceeds
of his FCD as well as damages for the unjust dishonor of the check.[7] PCIB replied on
PCIB’s
refusal to heed his demands compelled Gonzales to file the instant case for
damages with the RTC, on account of the alleged unjust dishonor of the check
issued in favor of Unson.
The
Ruling of the RTC
After
due trial, on December 10, 2001, the RTC rendered a Decision in favor of PCIB. The
decretal portion reads:
WHEREFORE,
judgment is rendered as follows –
(a) on the first issue, plaintiff is liable to
pay defendant Bank as principal under the promissory notes, Exhibits A, B and
C;
(b) on the second issue, the Court finds that
there is justification on part of the defendant Bank to dishonor the check,
Exhibit H;
(c) on the third issue, plaintiff and defendants
are not entitled to damages from each other.
No
pronouncement as to costs.
SO ORDERED.[10]
The
RTC found Gonzales solidarily liable with the spouses Panlilio on the three promissory
notes relative to the outstanding REM loan.
The trial court found no fault in the termination by PCIB of the COHLA
with Gonzales and in freezing the latter’s accounts to answer for the past due PhP
1,800,000 loan. The trial court ruled
that the dishonor of the check issued by Gonzales in favor of Unson was proper
considering that the credit line under the COHLA had already been terminated or
revoked before the presentment of the check.
Aggrieved,
Gonzales appealed the RTC Decision before the CA.
The Ruling
of the CA
On
September 26, 2007, the appellate court rendered its Decision dismissing Gonzales’
appeal and affirming in toto the RTC Decision. The fallo reads:
WHEREFORE,
in view of the foregoing, the decision, dated December 10, 2001, in Civil Case
No. 99-1324 is hereby AFFIRMED in toto.
SO
ORDERED.[11]
In
dismissing Gonzales’ appeal, the CA, first, confirmed the RTC’s findings
that Gonzales was indeed solidarily liable with the spouses Panlilio for the
three promissory notes executed for the REM loan; second, it likewise found
neither fault nor negligence on the part of PCIB in dishonoring the check
issued by Gonzales in favor of Unson, ratiocinating that PCIB was merely
exercising its rights under the contractual stipulations in the COHLA brought
about by the outstanding past dues of the REM loan and interests for which
Gonzales was solidarily liable with the spouses Panlilio to pay under the
promissory notes.
Thus,
we have this petition.
The Issues
Gonzales,
as before the CA, raises again the following assignment of errors:
I - IN NOT CONSIDERING THAT THE LIABILITY ARISING
FROM PROMISSORY NOTES (EXHIBITS “A”, “B” AND “C”, PETITIONER; EXHIBITS “1”, “2”
AND “3”, RESPONDENT) PERTAINED TO BORROWER JOSE MA. PANLILIO AND NOT TO
APPELLANT AS RECOGNIZED AND ACKNOWLEDGE[D] BY RESPONDENT PHILIPPINE COMMERCIAL
& INDUSTRIAL BANK (RESPONDENT BANK).
II - IN FINDING THAT THE RESPONDENTS WERE NOT AT
FAULT NOR GUILTY OF GROSS NEGLIGENCE IN DISHONORING PETITIONER’S CHECK DATED 30
SEPTEMBER 1998 IN THE AMOUNT OF P250,000.00 FOR THE REASON “ACCOUNT CLOSED”,
INSTEAD OF MERELY “REFER TO DRAWER” GIVEN THE FACT THAT EVEN AFTER DISHONOR,
RESPONDENT SIGNED A CERTIFICATION DATED 7 DECEMBER 1998 THAT CREDIT ON HAND
(COH) LOAN AGREEMENT WAS STILL VALID WITH A COLLATERAL OF FOREIGN CURRENCY
DEPOSIT (FCD) OF [USD] 48,715.72.
III - IN NOT AWARDING DAMAGES AGAINST RESPONDENTS
DESPITE PRESENTATION OF CLEAR PROOF TO SUPPORT ACTION FOR DAMAGES.[12]
The
Court’s Ruling
The
core issues can be summarized, as follows: first, whether Gonzales is
liable for the three promissory notes covering the PhP 1,800,000 loan he made
with the spouses Panlilio where a REM over a parcel of land covered by TCT No.
38012 was constituted as security; and second, whether PCIB properly
dishonored the check of Gonzales drawn against the COHLA he had with the bank.
The petition is partly meritorious.
First Issue: Solidarily Liability on Promissory
Notes
A close perusal of the records shows
that the courts a quo correctly found Gonzales solidarily liable with
the spouses Panlilio for the three promissory notes.
The promissory notes covering the PhP
1,800,000 loan show the following:
(1) Promissory
Note BD-090-1766-95,[13]
dated October 30, 1995, for PhP 500,000 was signed by Gonzales and his wife, Jessica Gonzales;
(2) Promissory
Note BD-090-2122-95,[14]
dated December 26, 1995, for PhP 1,000,000 was signed by Gonzales and the spouses Panlilio; and
(3) Promissory
Note BD-090-011-96,[15]
dated January 3, 1996, for PhP 300,000 was signed
by Gonzales and the spouses Panlilio.
Clearly, Gonzales is liable for the
loans covered by the above promissory notes.
First, Gonzales admitted that he is an accommodation party which PCIB
did not dispute. In his testimony,
Gonzales admitted that he merely accommodated the spouses Panlilio at the
suggestion of Ocampo, who was then handling his accounts, in order to
facilitate the fast release of the loan.
Gonzales testified:
ATTY. DE JESUS:
Now in this case you filed against the bank you
mentioned there was a loan also applied for by the Panlilio’s in the sum of
P1.8 Million Pesos. Will you please tell
this Court how this came about?
GONZALES:
Mr. Panlilio requested his account officer . . . . at
that time it is a P42.0 Million loan and if he secures another P1.8 Million
loan the release will be longer because it has to pass to XO.
Q: After
that what happened?
A: So as
per suggestion since Mr. Panlilio is a good friend of mine and we co-owned the
property I agreed initially to use my name so that the loan can be utilized
immediately by Mr. Panlilio.
Q: Who is
actually the borrower of this P1.8 Million Pesos?
A: Well,
in paper me and Mr. Panlilio.
Q: Who
received the proceeds of said loan?
A: Mr.
Panlilio.
Q: Do you
have any proof that it was Mr. Panlilio who actually received the proceeds of
this P1.8 Million Pesos loan?
A: A check
was deposited in the account of Mr. Panlilio.[16]
x x x x
Q: By the
way upon whose suggestion was the loan of Mr. Panlilio also placed under your
name initially?
A: Well it
was actually suggested by the account officer at that time Edna Ocampo.
Q: How
about this Mr. Rodolfo Noceda?
A: As you
look at the authorization aspect of the loan Mr. Noceda is the boss of Edna so
he has been familiar with my account ever since its inception.
Q: So
these two officers Ocampo and Noceda knew that this was actually the account of
Mr. Panlilio and not your account?
A: Yes,
sir. In fact even if there is a change of
account officer they are always informing me that the account will be debited
to Mr. Panlilio’s account.[17]
Moreover, the first note for PhP
500,000 was signed by Gonzales and his wife as borrowers, while the two subsequent
notes showed the spouses Panlilio sign as borrowers with Gonzales. It is, thus, evident that Gonzales signed, as
borrower, the promissory notes covering the PhP 1,800,000 loan despite not
receiving any of the proceeds.
Second, the records of PCIB indeed bear out,
and was admitted by Noceda, that the PhP 1,800,000 loan proceeds went to the
spouses Panlilio, thus:
ATTY. DE JESUS: [on Cross-Examination]
Is it not a fact that as far as the records of the
bank [are] concerned the proceeds of the 1.8 million loan was received by Mr.
Panlilio?
NOCEDA:
Yes sir.[18]
The fact that the loans were
undertaken by Gonzales when he signed as borrower or co-borrower for the benefit of the spouses Panlilio—as shown
by the fact that the proceeds went to the spouses Panlilio who were servicing
or paying the monthly dues—is beside the point.
For signing as borrower and co-borrower on the promissory notes with the
proceeds of the loans going to the spouses Panlilio, Gonzales has extended an accommodation
to said spouses.
Third, as an accommodation party, Gonzales
is solidarily liable with the spouses Panlilio for the loans. In Ang v. Associated Bank,[19] quoting
the definition of an accommodation party under Section 29 of the Negotiable
Instruments Law, the Court cited that an accommodation party is a person “who
has signed the instrument as maker, drawer, acceptor, or indorser, without
receiving value therefor, and for the purpose of lending his name to some other
person.”[20] The Court further explained:
[A]n accommodation party is one who meets all the
three requisites, viz: (1) he must be
a party to the instrument, signing as maker, drawer, acceptor, or indorser; (2)
he must not receive value therefor; and (3) he must sign for the purpose of
lending his name or credit to some other person. An accommodation party lends his name to
enable the accommodated party to obtain credit or to raise money; he receives
no part of the consideration for the instrument but assumes liability to the
other party/ies thereto. The
accommodation party is liable on the instrument to a holder for value even
though the holder, at the time of taking the instrument, knew him or her to be
merely an accommodation party, as if the contract was not for accommodation.
As petitioner acknowledged
it to be, the relation between an accommodation party and the accommodated
party is one of principal and surety—the accommodation party being the surety. As such, he is deemed an original promisor and
debtor from the beginning; he is considered in law as the same party as the
debtor in relation to whatever is adjudged touching the obligation of the
latter since their liabilities are interwoven as to be inseparable. Although a
contract of suretyship is in essence accessory or collateral to a valid principal
obligation, the surety’s liability to the creditor is immediate,
primary and absolute; he is directly and equally bound
with the principal. As an equivalent of
a regular party to the undertaking, a surety becomes liable to the debt and
duty of the principal obligor even without possessing a direct or personal
interest in the obligations nor does he receive any benefit therefrom.[21]
Thus, the knowledge, acquiescence, or
even demand by Ocampo for an accommodation by Gonzales in order to extend the
credit or loan of PhP 1,800,000 to the spouses Panlilio does not exonerate Gonzales
from liability on the three promissory notes.
Fourth, the solidary liability of Gonzales is
clearly stipulated in the promissory notes which uniformly begin, “For value
received, the undersigned (the “BORROWER”) jointly and severally promise
to pay x x x.” Solidary liability cannot
be presumed but must be established by law or contract.[22] Article 1207 of the Civil Code pertinently states
that “there is solidary liability only when the obligation expressly so states,
or when the obligation requires solidarity.” This is true in the instant case where Gonzales,
as accommodation party, is immediately, equally, and absolutely bound with the
spouses Panlilio on the promissory notes which indubitably stipulated solidary
liability for all the borrowers. Moreover,
the three promissory notes serve as the contract between the parties. Contracts have the force of law between the
parties and must be complied with in good faith.[23]
Second Issue: Improper Dishonor of Check
Having ruled that Gonzales is
solidarily liable for the three promissory notes, We shall now touch upon the question
of whether it was proper for PCIB to dishonor the check issued by Gonzales
against the credit line under the COHLA.
We answer in the negative.
As a rule, an appeal by certiorari
under Rule 45 of the Rules of Court is limited to review of errors of law.[24] The factual findings of the trial court, especially
when affirmed by the appellate court, are generally binding on us unless there
was a misapprehension of facts or when the inference drawn from the facts was
manifestly mistaken.[25] The instant case falls within the exception.
The courts a quo found and
held that there was a proper dishonor of the PhP 250,000 check issued by
Gonzales against the credit line, because the credit line was already closed
prior to the presentment of the check by Unson; and the closing of the credit
line was likewise proper pursuant to the stipulations in the promissory notes on
the bank’s right to set off or apply all moneys of the debtor in PCIB’s hand and
the stipulations in the COHLA on the PCIB’s right to terminate the credit line
on grounds of default by Gonzales.
Gonzales argues otherwise, pointing
out that he was not informed about the default of the spouses Panlilio and that
the September 21, 1998 account statement of the credit line shows a balance of
PhP 270,000 which was likewise borne out by the December 7, 1998 PCIB’s
certification that he has USD 8,715.72 in his FCD account which is more than
sufficient collateral to guarantee the PhP 250,000 check, dated September 30,
1998, he issued against the credit line.
A careful scrutiny of the records
shows that the courts a quo committed reversible error in not finding
negligence by PCIB in the dishonor of the PhP 250,000 check.
First.
There was no proper notice to Gonzales of the default and delinquency of
the PhP 1,800,000 loan. It must be borne
in mind that while solidarily liable with the spouses Panlilio on the PhP
1,800,000 loan covered by the three promissory notes, Gonzales is only an
accommodation party and as such only lent his name and credit to the spouses
Panlilio. While not exonerating his
solidary liability, Gonzales has a right to be properly apprised of the default
or delinquency of the loan precisely because he is a co-signatory of the
promissory notes and of his solidary liability.
We note that it is indeed
understandable for Gonzales to push the spouses Panlilio to pay the outstanding
dues of the PhP 1,800,000 loan, since he was only an accommodation party and
was not personally interested in the loan.
Thus, a meeting was set by Gonzales with the spouses Panlilio and the PCIB
officers, Noceda and Ocampo, in the spouses Panlilio’s jewelry shop in SM
Megamall on October 5, 1998. Unfortunately, the meeting did not push through
due to the heavy traffic Noceda and Ocampo encountered.
Such knowledge of the default by
Gonzales was, however, not enough to properly apprise Gonzales about the
default and the outstanding dues.
Verily, it is not enough to be merely informed to pay over a hundred
thousand without being formally apprised of the exact aggregate amount and the
corresponding dues pertaining to specific loans and the dates they became due.
Gonzales testified that he was not
duly notified about the outstanding interest dues of the loan:
ATTY. DE JESUS:
Now when Mr. Panlilio’s was encountering problems with
the bank did the defendant bank [advise] you of any problem with the same
account?
GONZALES:
They never [advised] me in writing.
Q: How did
you come to know that there was a problem?
A: When my
check bounced sir.[26]
On the other hand, the PCIB contends
otherwise, as Corazon Nepomuceno testified:
ATTY. PADILLA:
Can you tell this Honorable Court what is it that you
told Mr. Gonzales when you spoke to him at the celphone?
NEPOMUCENO:
I just told him to update the interest so that we
would not have to cancel the COH Line and he could withdraw the money that was
in the deposit because technically, if an account is past due we are not allowed
to let the client withdraw funds because they are allowed to offset funds so,
just to help him get his money, just to update the interest so that we could
allow him to withdraw.
Q: Withdraw
what?
A: His
money on the COH, whatever deposit he has with us.
Q: Did you
inform him that if he did not update the interest he would not be able to
withdraw his money?
A: Yes
sir, we will be forced to hold on to any assets that he has with us so that’s
why we suggested just to update the interest because at the end of everything,
he would be able to withdraw more funds than the interest that the money he
would be needed to update the interest.[27]
From the foregoing testimonies,
between the denial of Gonzales and the assertion by PCIB that Gonzales was
properly apprised, we find for Gonzales.
We find the testimonies of the former PCIB employees to be self-serving
and tenuous at best, for there was no proper written notice given by the
bank. The record is bereft of any
document showing that, indeed, Gonzales was formally informed by PCIB about the
past due periodic interests.
PCIB is well aware and did not
dispute the fact that Gonzales is an accommodation party. It also acted in accordance with such fact by
releasing the proceeds of the loan to the spouses Panlilio and likewise only
informed the spouses Panlilio of the interest dues. The spouses Panlilio, through their account[28]
with PCIB, were paying the periodic interest dues and were the ones
periodically informed by the bank of the debiting of the amounts for the periodic
interest payments. Gonzales never paid
any of the periodic interest dues.
PCIB’s Noceda admitted as much in his cross-examination:
ATTY. DE JESUS: [on Cross-Examination]
And there was no instance that Mr. Gonzales ever made
even interest for this loan, is it not, it’s always Mr. Panlilio who was paying
the interest for this loan?
NOCEDA:
Yes sir.[29]
Indeed, no evidence was presented tending
to show that Gonzales was periodically sent notices or notified of the various
periodic interest dues covering the three promissory notes. Neither do the records show that Gonzales was
aware of amounts for the periodic interests and the payment for them. Such were serviced by the spouses Panlilio.
Thus, PCIB ought to have notified
Gonzales about the status of the default or delinquency of the interest dues
that were not paid starting July 1998.
And such notification must be formal or in written form considering that
the outstanding periodic interests became due at various dates, i.e., on July 8, 17, and 28, 1998,
and the various amounts have to be certain so that Gonzales is not only
properly apprised but is given the opportunity to pay them being solidarily
liable for the loans covered by the promissory notes.
It is the bank which computes these
periodic interests and such dues must be put into writing and formally served
to Gonzales if he were asked to pay them, more so when the payments by the
spouses Panlilio were charged through the account of the spouses Panlilio where
the interest dues were simply debited.
Such arrangement did not cover Gonzales’ bank account with PCIB, since
he is only an accommodation party who has no personal interest in the PhP
1,800,000 loan. Without a clear and
determinate demand through a formal written notice for the exact periodic
interest dues for the loans, Gonzales cannot be expected to pay for them.
In business, more so for banks, the
amounts demanded from the debtor or borrower have to be definite, clear, and
without ambiguity. It is not sufficient
simply to be informed that one must pay over a hundred thousand aggregate
outstanding interest dues without clear and certain figures. Thus, We find PCIB negligent in not properly
informing Gonzales, who is an accommodation party, about the default and the
exact outstanding periodic interest dues.
Without being properly apprised, Gonzales was not given the opportunity
to properly act on them.
It was only through a letter[30]
sent by PCIB dated October 2, 1998 but incongruously showing the delinquencies
of the PhP 1,800,000 loan at a much later date, i.e., as of October 31, 1998, when Gonzales was formally
apprised by PCIB. In it, the interest
due was PhP 106,1616.71 and penalties for the unpaid interest due of PhP
64,766.66, or a total aggregate due of PhP 171,383.37. But it is not certain and the records do not
show when the letter was sent and when Gonzales received it. What is clear is that such letter was
belatedly sent by PCIB and received by Gonzales after the fact that the
latter’s FCD was already frozen, his credit line under the COHLA was terminated
or suspended, and his PhP 250,000 check in favor of Unson was dishonored.
And way much later, or on
To reiterate, a written notice on the
default and deficiency of the PhP 1,800,000 loan covered by the three
promissory notes was required to apprise Gonzales, an accommodation party. PCIB is obliged to formally inform and
apprise Gonzales of the defaults and the outstanding obligations, more so when
PCIB was invoking the solidary liability of Gonzales. This PCIB failed to do.
Second.
PCIB was grossly negligent in not giving prior notice to Gonzales about
its course of action to suspend, terminate, or revoke the credit line, thereby violating
the clear stipulation in the COHLA.
The COHLA, in its effectivity clause,
clearly provides:
4. EFFECTIVITY
— The COH shall be effective for a period of one (1) year commencing from the
receipt by the CLIENT of the COH checkbook issued by the BANK, subject to
automatic renewals for same periods unless terminated by the BANK upon prior
notice served on CLIENT.[31] (Emphasis ours.)
It is undisputed that the bank
unilaterally revoked, suspended, and terminated the COHLA without giving
Gonzales prior notice as required by the above stipulation in the COHLA. Noceda testified on cross-examination on the
Offering Ticket[32]
recommending the termination of the credit line, thus:
ATTY. DE JESUS: [on Cross-Examination]
This Exhibit 8, you have not furnished at anytime a
copy to the plaintiff Mr. Gonzales is it not?
NOCEDA:
No sir but verbally it was relayed to him.
Q: But you
have no proof that Mr. Gonzales came to know about this Exhibit 8?
A: It was
relayed to him verbally.
Q: But
there is no written proof?
A: No sir.
Q: And it
is only now that you claim that it was verbally relayed to him, it’s only now
when you testified in Court?
A: Before
. . .
Q: To whom
did you relay this information?
A: It was
during the time that we were going to Megamall, it was relayed by Liza that he
has to pay his obligations or else it will adversely affect the status of the
account.[33]
On the other hand, the testimony of
Corazon Nepomuceno shows:
ATTY. DE JESUS: [on Cross-Examination]
Now we go to the other credit facility which is the
credit on hand extended solely of course to Mr. Eusebio Gonzales who is the
plaintiff here, Mr. Panlilio is not included in this credit on hand
facility. Did I gather from you as per
your Exhibit 7 as of
NEPOMUCENO:
It was recommended by the account officer and I
supported it.
Q: And you
approved it?
A: Yes
sir.
Q: Did
you inform Mr. Gonzales that you have already cancelled his credit on hand
facility?
A: As far
as I know, it is the account officer who will inform him.
Q: But you
have no record that he was informed?
A: I don’t
recall and we have to look at the folder to determine if they were informed.
Q: If you
will notice, this letter . . . what do you call this letter of yours?
A: That is
our letter advising them or reminding them of their unpaid interest and that if
he is able to update his interest he can extend the promissory note or
restructure the outstanding.
Q: Now, I
call your attention madam witness, there is nothing in this letter to the
clients advising them or Mr. Gonzales that his credit on hand facility was
already cancelled?
A: I don’t
know if there are other letters aside from this.
Q: So in
this letter there is nothing to inform or to make Mr. Eusebio aware that his
credit on hand facility was already cancelled?
A: No
actually he can understand it from the last sentence. “If you will be able to update your
outstanding interest, we can apply the extention of your promissory note” so in
other words we are saying that if you don’t, you cannot extend the promissory
note.
Q: You
will notice that the subject matter of this October 2, 1998 letter is only the
loan of 1.8 million is it not, as you can see from the letter? Okay?
A: Ah . .
.
Q: Okay. There is nothing there that will show that
that also refers to the credit on hand facility which was being utilized by Mr.
Gonzales is it not?
A: But I
don’t know if there are other letters that are not presented to me now.[34]
The foregoing testimonies of PCIB
officers clearly show that not only did PCIB fail to give prior notice to Gonzales
about the Offering Ticket for the process of termination, suspension, or
revocation of the credit line under the COHLA, but PCIB likewise failed to
inform Gonzales of the fact that his credit line has been terminated. Thus, we find PCIB grossly negligent in the
termination, revocation, or suspension of the credit line under the COHLA. While PCIB invokes its right on the so-called
“cross default provisions,” it may not with impunity ignore the rights of
Gonzales under the COHLA.
Indeed, the business of banking is
impressed with public interest and great reliance is made on the bank’s sworn
profession of diligence and meticulousness in giving irreproachable service.
Like a common carrier whose business is imbued with public interest, a bank
should exercise extraordinary diligence to negate its liability to the
depositors.[35] In this instance, PCIB is sorely remiss in
the diligence required in treating with its client, Gonzales. It may not wantonly exercise its rights
without respecting and honoring the rights of its clients.
Art. 19 of
the New Civil Code clearly provides that “[e]very person must, in the exercise
of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.” This is the basis of the
principle of abuse of right which, in turn, is based upon the maxim suum jus summa injuria (the abuse of
right is the greatest possible wrong).[36]
In order
for Art. 19 to be actionable, the following elements must be present: “(1) the
existence of a legal right or duty, (2) which is exercised in bad faith, and
(3) for the sole intent of prejudicing or injuring another.”[37]
We find that such elements are present in the instant case. The effectivity
clause of the COHLA is crystal clear that termination of the COH should be done
only upon prior notice served on the CLIENT. This is the legal duty of
PCIB––to inform Gonzales of the termination. However, as shown by the above testimonies,
PCIB failed to give prior notice to Gonzales.
Malice or
bad faith is at the core of Art. 19. Malice or bad faith “implies a conscious
and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity.”[38]
In the instant case, PCIB was able to send a letter advising Gonzales of the
unpaid interest on the loans[39]
but failed to mention anything about the termination of the COHLA. More
significantly, no letter was ever sent to him about the termination of the
COHLA. The failure to give prior notice on the part of PCIB is already prima
facie evidence of bad faith.[40]
Therefore, it is abundantly clear that this case falls squarely within the
purview of the principle of abuse of rights as embodied in Art. 19.
Third.
There is no dispute on the right of PCIB to suspend, terminate, or
revoke the COHLA under the “cross default provisions” of both the promissory
notes and the COHLA. However, these cross
default provisions do not confer absolute unilateral right to PCIB, as they are
qualified by the other stipulations in the contracts or specific circumstances,
like in the instant case of an accommodation party.
The promissory notes uniformly
provide:
The lender is hereby authorized, at its option and
without notice, to set off or apply to the payment of this Note any and all
moneys which may be in its hands on deposit or otherwise belonging to the
Borrower. The Borrower irrevocably appoint/s the Lender, effective upon the
nonpayment of this Note on demand/at maturity or upon the happening of any of
the events of default, but without any obligation on the Lender’s part should
it choose not to perform this mandate, as the attorney-in-fact of the Borrower,
to sell and dispose of any property of the Borrower, which may be in the
Lender’s possession by public or private sale, and to apply the proceeds
thereof to the payment of this Note; the Borrower, however, shall remain liable
for any deficiency.[41] (Emphasis ours.)
The above provisos are indeed
qualified with the specific circumstance of an accommodation party who, as
such, has not been servicing the payment of the dues of the loans, and must
first be properly apprised in writing of the outstanding dues in order to
answer for his solidary obligation.
The same is true for the COHLA, which
in its default clause provides:
16. DEFAULT
— The CLIENT shall be considered in default under the COH if any of the
following events shall occur:
1. x x x
2. Violation
of the terms and conditions of this Agreement or any contract of the CLIENT
with the BANK or any bank, persons, corporations or entities for the payment of
borrowed money, or any other event of default in such contracts.[42]
The above pertinent default clause
must be read in conjunction with the effectivity clause (No. 4 of the COHLA,
quoted above), which expressly provides for the right of client to prior
notice. The rationale is simple: in cases where the bank has the right to
terminate, revoke, or suspend the credit line, the client must be notified of
such intent in order for the latter to act accordingly—whether to correct any
ground giving rise to the right of the bank to terminate the credit line and to
dishonor any check issued or to act in accord with such termination, i.e., not to issue any check drawn
from the credit line or to replace any checks that had been issued. This, the bank—with gross negligence—failed
to accord Gonzales, a valued client for more than 15 years.
Fourth.
We find the testimony[43]
of Ocampo incredible on the point that the principal borrower of the PhP
1,800,000 loan covered by the three promissory notes is Gonzales for which the
bank officers had special instructions to grant and that it was through the
instructions of Gonzales that the payment of the periodic interest dues were
debited from the account of the spouses Panlilio.
For one, while the first promissory
note dated October 30, 1995 indeed shows Gonzales as the principal borrower,
the other promissory notes dated December 26, 1995 and January 3, 1996
evidently show that it was Jose Panlilio who was the principal borrower with
Gonzales as co-borrower. For another,
Ocampo cannot feign ignorance on the arrangement of the payments by the spouses
Panlilio through the debiting of their bank account. It is incredulous that the payment
arrangement is merely at the behest of Gonzales and at a mere verbal directive
to do so. The fact that the spouses
Panlilio not only received the proceeds of the loan but were servicing the
periodic interest dues reinforces the fact that Gonzales was only an
accommodation party.
Thus, due to PCIB’s negligence in not
giving Gonzales—an accommodation party—proper notice relative to the
delinquencies in the PhP 1,800,000 loan covered by the three promissory notes,
the unjust termination, revocation, or suspension of the credit line under the
COHLA from PCIB’s gross negligence in not honoring its obligation to give prior
notice to Gonzales about such termination and in not informing Gonzales of the
fact of such termination, treating Gonzales’ account as closed and dishonoring
his PhP 250,000 check, was certainly a reckless act by PCIB. This resulted in the actual injury of PhP
250,000 to Gonzales whose FCD account was frozen and had to look elsewhere for
money to pay Unson.
With banks, the degree of diligence
required is more than that of a good father of the family considering that the
business of banking is imbued with public interest due to the nature of their
function. The law imposes on banks a high degree of obligation to treat the
accounts of its depositors with meticulous care, always having in mind the
fiduciary nature of banking.[44] Had Gonzales been properly notified of the
delinquencies of the PhP 1,800,000 loan and the process of terminating his
credit line under the COHLA, he could have acted accordingly and the dishonor
of the check would have been avoided.
Third Issue: Award of Damages
The banking system has become an
indispensable institution in the modern world and plays a vital role in the
economic life of every civilized society—banks have attained a ubiquitous
presence among the people, who have come to regard them with respect and even
gratitude and most of all, confidence, and it is for this reason, banks should
guard against injury attributable to negligence or bad faith on its part.[45]
In the instant case, Gonzales
suffered from the negligence and bad faith of PCIB. From the testimonies of Gonzales’ witnesses,
particularly those of Dominador Santos[46]
and Freddy Gomez,[47] the embarrassment and humiliation Gonzales has
to endure not only before his former close friend Unson but more from the
members and families of his friends and associates in the PCA, which he
continues to experience considering the confrontation he had with Unson and the
consequent loss of standing and credibility among them from the fact of the
apparent bouncing check he issued.
Credit is very important to businessmen and its loss or impairment needs
to be recognized and compensated.[48]
The termination of the COHLA by PCIB
without prior notice and the subsequent dishonor of the check issued by
Gonzales constitute acts of contra bonus
mores. Art. 21 of the Civil Code refers to such acts when it says, “Any
person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter
for damage.”
Accordingly, this Court finds that
such acts warrant the payment of indemnity in the form of nominal damages. Nominal
damages “are recoverable where a legal right is technically violated and must
be vindicated against an invasion that has produced no actual present loss of
any kind x x x.”[49] We
further explained the nature of nominal damages in Almeda v. Carińo:
x x x Its award is thus not
for the purpose of indemnification for a loss but for the recognition and
vindication of a right. Indeed, nominal damages are damages in name only and
not in fact. When granted by the courts, they are not treated as an equivalent
of a wrong inflicted but simply a recognition of the existence of a technical
injury. A violation of the plaintiff’s right, even if only technical, is
sufficient to support an award of nominal damages. Conversely, so long as there is a showing of a violation of the right
of the plaintiff, an award of nominal damages is proper.[50] (Emphasis Ours.)
In the present case, Gonzales had the
right to be informed of the accrued interest and most especially, for the
suspension of his COHLA. For failure to do so, the bank is liable to pay
nominal damages. The amount of such damages is addressed to the sound
discretion of the court, taking into account the relevant circumstances.[51]
In this case, the Court finds that the grant of PhP 50,000 as nominal damages
is proper.
Moreover, as We held in MERALCO v. CA,[52]
failure to give prior notice when required, such as in the instant case,
constitutes a breach of contract and is a clear violation of Art. 21 of the
Code. In cases such as this, Art. 2219 of the Code provides that moral damages
may be recovered in acts referred to in its Art. 21. Further, Art. 2220 of the
Code provides that “[w]illful injury to property may be a legal ground for
awarding moral damages if the court should find that, under the circumstances,
such damages are justly due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith.” Similarly, “every
person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the same.”[53] Evidently,
Gonzales is entitled to recover moral damages.
Even in the absence of malice or bad
faith, a depositor still has the right to recover reasonable moral damages, if
the depositor suffered mental anguish, serious anxiety, embarrassment, and
humiliation.[54] Although incapable of pecuniary estimation,
moral damages are certainly recoverable if they are the proximate result of the
defendant’s wrongful act or omission. The
factual antecedents bolstered by undisputed testimonies likewise show the
mental anguish and anxiety Gonzales had to endure with the threat of Unson to
file a suit. Gonzales had to pay Unson PhP
250,000, while his FCD account in PCIB was frozen, prompting Gonzales to demand
from PCIB and to file the instant suit.
The award of moral damages is aimed
at a restoration within the limits of the possible, of the spiritual status
quo ante—it must always reasonably approximate the extent of injury and be
proportional to the wrong committed.[55] Thus, an award of PhP 50,000 is reasonable
moral damages for the unjust dishonor of the PhP 250,000 which was the
proximate cause of the consequent humiliation, embarrassment, anxiety, and
mental anguish suffered by Gonzales from his loss of credibility among his
friends, colleagues and peers.
Furthermore, the initial carelessness
of the bank’s omission in not properly informing Gonzales of the outstanding interest
dues––aggravated by its gross neglect in omitting to give prior notice as
stipulated under the COHLA and in not giving actual notice of the termination
of the credit line––justifies the grant of exemplary damages of PhP 10,000. Such an award is imposed by way of example or
correction for the public good.
Finally, an award for attorney’s fees
is likewise called for from PCIB’s negligence which compelled Gonzales to
litigate to protect his interest. In
accordance with Art. 2208(1) of the Code, attorney’s fees may be recovered when
exemplary damages are awarded. We find that the amount of PhP 50,000 as attorney’s
fees is reasonable.
WHEREFORE, this
petition is PARTLY GRANTED. Accordingly, the CA Decision dated October
22, 2007 in CA-G.R. CV No. 74466 is hereby REVERSED and SET ASIDE. The Philippine Commercial and International
Bank (now Banco De Oro) is ORDERED to
pay Eusebio Gonzales PhP 50,000 as nominal damages, PhP 50,000 as moral damages,
PhP 10,000 as exemplary damages, and PhP 50,000 as attorney’s fees.
No pronouncement as to costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief
Justice
Chairperson
ANTONIO EDUARDO B. NACHURA 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
* Additional member per Special Order No. 947 dated February 11, 2011.
[1] Rollo, pp. 28-44. Penned by Associate Justice Arturo G. Tayag and concurred in by Associate Justices Rodrigo V. Cosico and Hakim S. Abdulwahid.
[2] Records, pp. 751-764. Penned by Judge Sixto Marella, Jr.
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11] Rollo, p. 43.
[12]
[13] Records, pp. 10-11.
[14]
[15]
[16]
[17]
[18]
[19] G.R. No. 146511, September 5, 2007, 532 SCRA 244.
[20]
[21]
[22] Hi-Cement Corporation v. Insular Bank of Asia and America, G.R. No. 132403, September 28, 2007, 534 SCRA 269, 283.
[23] Panlilio v. Citibank, N.A., G.R. No. 156335, November 28, 2007, 539 SCRA 69, 82-83; citing Civil Code, Art. 1159.
[24] Usero v. Court of Appeals, G.R. No. 152115, January 26, 2005, 449 SCRA 352, 358.
[25] Casol v. Purefoods Corporation, G.R. No. 166550, September 22, 2005, 470 SCRA 585, 589.
[26] Records, pp. 384-A-386, TSN, January 13, 2000, pp. 35-36.
[27]
[28]
[29]
[30]
[31]
[32]
[33]
[34]
[35] Solidbank Corporation/Metropolitan Bank and Trust Company v. Tan, G.R. No. 167346, April 2, 2007, 520 SCRA 123, 129-130; citations omitted.
[36] Arlegui v. CA, G.R. No. 126437, March 6, 2002,
378 SCRA 322, 337.
[37] ABS-CBN Broadcasting Corporation v. CA, G.R. No. 128690, January 21, 1999, 301 SCRA
572, 603.
[38]
[39] Records, p. 160.
[40] Manila Electric Company v. Hon.
Navarro-Domingo, G.R. No. 161893, June 27, 2006, 493 SCRA 363, 371.
[41] Records, p. 10.
[42]
[43]
[44] Philippine National Bank v. Pike, G.R. No. 157845, September 20, 2005, 470 SCRA 328, 347.
[45] Sandejas v. Ignacio, Jr., G.R. No. 155033, December 19, 2007, 541 SCRA 61, 82.
[46] Records, pp. 274-286, TSN, March 9, 2000, pp. 2-13.
[47]
[48] Prudential Bank v. Lim, G.R. No. 136371, November 11, 2005, 474 SCRA 485, 497; citing Samson v. Bank of the Philippine Islands, G.R. No. 154087, July 10, 2003, 405 SCRA 607.
[49] Francisco v. Ferrer, Jr., G.R. No. 142029, February 28, 2001, 353 SCRA 261, 267.
[50]
G.R. No. 152143, January 13, 2003, 395 SCRA 144, 150.
[51] Ancheta v. Destiny Financial Plans, Inc.,
G.R. No. 179702, February 16, 2010, 612 SCRA 648, 664; citing Agabon v. NLRC, G.R. No. 158693, November
17, 2004, 442 SCRA 616.
[52] No. L-39019, January 22, 1988, 157
SCRA 243, 248.
[53] Civil Code, Art. 20.
[54] Bank of Philippine Islands v. Court of Appeals, G.R. No. 136202, January 25, 2007, 512 SCRA 620, 641.
[55] Solidbank Corporation v. Arrieta, G.R. No. 152727, February 17, 2005, 451 SCRA 711, 721-722; citations omitted.