12.) ANICETO G. SALUDO, JR. vs. SECURITY BANK
There is no
CORPORATION G.R. No. 184041 October 13,
2010
FACTS:
On 30 October 1997, SBC approved the renewal of
credit facility of Booklight in the amount of
₱10,000,000.00 under the prevailing security lending
rate. For failure to settle the loans upon maturity,
demands were made on Booklight and petitioner for
the payment of the obligation but the duo failed to pay.
As of 15 May 2000, the obligation of Booklight stood at
₱10,487,875.41, inclusive of interest past due and
penalty.
On 16 June 2000, SBC filed against Booklight and herein
petitioner an action for collection of sum of money
with the RTC. Booklight initially filed a motion to
dismiss, which was later on denied for lack of merit. In
his Answer, Booklight asserted that the amount
demanded by SBC was not based on the omnibus
credit line facility of 30 May 1996, but rather on the
amendment of the credit facilities on 15 October 1996
increasing the loan line from ₱8,000,000.00 to
₱10,000,000.00. Booklight denied executing the
promissory notes. It also claimed that it was not in
default as in fact, it paid the sum of ₱1,599,126.11 on
30 September 1999 as a prelude to restructuring its
loan for which it earnestly negotiated for a mutually
acceptable agreement until 5 July 2000, without
knowing that SBC had already filed the collection case.
In his Answer to the complaint, herein petitioner
alleged that under the Continuing Suretyship, it was
the parties’ understanding that his undertaking and
liability was merely as an accommodation guarantor of
Booklight. He countered that he came to know that
Booklight offered to pay SBC the partial payment of the
loan and proposed the restructuring of the obligation.
Petitioner argued that said offer to pay constitutes a
valid tender of payment which discharged Booklight’s
obligation to the extent of the offer. The Court of
Appeals affirmed in toto the ruling of the RTC.
Petitioner filed a motion for reconsideration but it was
denied by the Court of Appeals.
ISSUE:
Whether or not petitioner should be held solidarily
liable for the second credit facility extended to
Booklight.
HELD:
The Supreme Court ruled in the affirmative.
doubt that Booklight was extended two (2) credit
facilities, each with a one-year term, by SBC. Booklight
availed of these two (2) credit lines. While Booklight
was able to comply with its obligation under the first
credit line, it defaulted in the payment of the loan
obligation amounting to ₱9,652,725.00 under the
second credit line. There is likewise no dispute that the
first credit line facility, with a term from 30 June 1996
to 30 June 1997, was covered by a Continuing
Suretyship with petitioner acting as the surety. The
dispute is on the coverage by the Continuing Suretyship
of the loan contracted under the second credit facility.
The two loan facilities availed by Booklight under the
credit agreement are the Omnibus Line amounting to
₱10,000,000.00 granted to Booklight in 1996 and the
other one is the Loan Line of the same amount in 1997.
Petitioner however seeks to muddle the issue by
insisting that these two availments were two separate
principal contracts, conveniently ignoring the fact that
it is the credit agreement which constitutes the
principal contract signed by Booklight in order to avail
of SBC’s credit facilities. The two credit facilities are but
loans made available to Booklight pursuant to the
credit agreement.
The lameness of petitioner’s stand is pointed up by his
attempt to escape from liability by labelling the
Continuing Suretyship as a contract of adhesion. A
contract of adhesion is defined as one in which one of
the parties imposes a ready-made form of contract,
which the other party may accept or reject, but which
the latter cannot modify. One party prepares the
stipulation in the contract, while the other party merely
affixes his signature or his ‘adhesion’ thereto, giving no
room for negotiation and depriving the latter of the
opportunity to bargain on equal footing.
13.) METROBANK vs. ROGELIO REYNADO and JOSE
C. ADRANDEA
G.R. No. 164538 August 9, 2010
FACTS:
On January 31, 1997, petitioner Metropolitan Bank and
Trust Company charged respondents before the Office
of the City Prosecutor of Manila with the crime of
estafa under Article 315, paragraph 1(b) of the Revised
Penal Code. In the affidavit of petitioner’s audit officer,
Antonio Ivan S. Aguirre, it was alleged that the special
audit conducted on the cash and lending operations of
its Port Area branch uncovered anomalous/fraudulent
transactions perpetrated by respondents in connivance
with client Universal Converter Philippines, Inc.
1
(Universal); that respondents were the only voting of these transactions which they approved. Further, no
members of the branch’s credit committee authorized damage was caused to your client as it agreed [to] the
to extend credit accommodation to clients up to settlement [with] Universal. A Motion for
₱200,000.00; that through the so-called Bills Purchase Reconsideration was filed by petitioner, but the same
Transaction, Universal, which has a paid-up capital of was denied.
only ₱125,000.00 and actual maintaining balance of
₱5,000.00, was able to make withdrawals totaling ISSUE:
₱81,652,000.00 against uncleared regional checks
deposited in its account at petitioner’s Port Area Whether or not the execution of the Debt Settlement
branch; that, consequently, Universal was able to utilize Agreement precluded petitioner from holding
petitioner’s funds even before the seven-day clearing respondents liable to stand trial for estafa under Art.
period for regional checks expired; that Universal’s 315 (1)(b) of the Revised Penal Code.
withdrawals against uncleared regional check deposits
were without prior approval of petitioner’s head office;
HELD:
that the uncleared checks were later dishonored by the
drawee bank for the reason "Account Closed"; and,
The Supreme Court found the petition to be highly
that respondents acted with fraud, deceit, and abuse of
meritorious. Petitioner persistently insists that the
confidence.
execution of the Debt Settlement Agreement with
Universal did not absolve private respondents from
In their defense, respondents denied responsibility in
criminal liability for estafa. Petitioner submits that the
the anomalous transactions with Universal and claimed
settlement affects only the civil obligation of Universal
that they only intended to help the Port Area branch
but did not extinguish the criminal liability of the
solicit and increase its deposit accounts and daily
respondents. Petitioner thus faults the CA in sustaining
transactions. Meanwhile, on February 26, 1997,
the DOJ which in turn affirmed the finding of
petitioner and Universal entered into a Debt
Prosecutor Edad for committing apparent error in the
Settlement Agreement whereby the latter
appreciation and the application of the law on
acknowledged its indebtedness to the former in the
novation. Novation not a mode of extinguishing
total amount of ₱50,990,976.27 as of February 4, 1997
criminal liability for estafa; Criminal liability for estafa is
and undertook to pay the same in bi-monthly
not affected by compromise or novation of contract. It
amortizations in the sum of ₱300,000.00 starting
is not one of the grounds prescribed by the Revised
January 15, 1997, covered by postdated checks, "plus
Penal Code for the extinguishment of criminal liability."
balloon payment of the remaining principal balance
and interest and other charges, if any, on December 31,
In a catena of cases, it was ruled that criminal liability
2001."
for estafa is not affected by a compromise or novation
of contract. Thus, the doctrine that evolved from the
The execution of the Debt Settlement Agreement puts
aforecited cases is that a compromise or settlement
complainant bank in estoppel to argue that the liability
entered into after the commission of the crime does
is criminal. Since the agreement was made even before
not extinguish accused’s liability for estafa. Neither will
the filing of this case, the relations between the parties
the same bar the prosecution of said crime.
[have] change[d], novation has set in and prevented
Accordingly, in such a situation, as in this case, the
the incipience of any criminal liability on the part of
complaint for estafa against respondents should not be
respondents. Thus, Prosecutor Edad recommended the
dismissed just because petitioner entered into a Debt
dismissal of the case. WHEREFORE, for insufficiency of
Settlement Agreement with Universal.
evidence, it is respectfully recommended that the case
be dismissed.12
Even if the instant case is viewed from the standpoint
of the law on contracts, the disposition absolving the
On December 9, 1997, petitioner appealed the
respondents from criminal liability because of novation
Resolution of Prosecutor Edad to the Department of
is still erroneous.
Justice (DOJ) by means of a Petition for Review.
Equivocally, there is no estafa in the instant case as it
In the case at bar, it is beyond cavil that respondents
was not clearly shown how respondents
are not parties to the agreement. The intention of the
misappropriated the ₱53,873,500.00 which Universal
parties thereto not to include them is evident either in
owed your client after its checks deposited with
the onerous or in the beneficent provisions of said
Metrobank were dishonored. Moreover, fraud is not
agreement. They are not assigns or heirs of either of
present considering that the Executive Committee and
the parties. Not being parties to the agreement,
the Credit Committee of Metrobank were duly notified
respondents cannot take refuge therefrom to bar their

2
anticipated trial for the crime they committed. It may
do well for respondents to remember that the criminal
action commenced by petitioner had its genesis from
the alleged fraud, unfaithfulness, and abuse of
confidence perpetrated by them in relation to their
positions as responsible bank officers. It did not arise
from a contractual dispute or matters strictly between
petitioner and Universal. This being so, respondents
cannot rely on subject settlement agreement to
preclude prosecution of the offense already committed
to the end of extinguishing their criminal liability or
prevent the incipience of any liability that may arise
from the criminal offense. This only demonstrates that
the execution of the agreement between petitioner
and Universal has no bearing on the innocence or guilt
of the respondents. WHEREFORE, the petition is
GRANTED. The assailed Decision of the Court of
Appeals denying reconsideration thereon are hereby
REVERSED and SET ASIDE. The public prosecutor is
ordered to file the necessary information for estafa
against the respondents.
14.) PRUDENTIAL BANK AND TRUST COMPANY (now
BPI) vs. LIWAYWAY ABASOLO G.R. No. 186738
September 27, 2010
FACTS:
Leonor Valenzuela-Rosales inherited two parcels of
land situated in Palanan, Sta. Cruz, Laguna , registered
as Original Certificates of Title Nos. RO-527 and RO-
528. After she passed away, her heirs executed on June
14, 1993 a Special Power of Attorney (SPA) in favor of
Liwayway Abasolo (respondent) empowering her to
sell the properties. Sometime in 1995, Corazon
Marasigan (Corazon) wanted to buy the properties
which were being sold for ₱2,448,960, but as she had
no available cash, she broached the idea of first
mortgaging the properties to petitioner Prudential
Bank and Trust Company (PBTC), the proceeds of which
would be paid directly to respondent. Respondent
agreed to the proposal.
On Corazon and respondent’s consultation with PBTC’s
Head Office, its employee, Norberto Mendiola
(Mendiola), allegedly advised respondent to issue an
authorization for Corazon to mortgage the properties,
and for her (respondent) to act as one of the co-makers
so that the proceeds could be released to both of
them. To guarantee the payment of the property,
Corazon executed on August 25, 1995 a Promissory
Note for ₱2,448,960 in favor of respondent.
By respondent’s claim, in October 1995, Mendiola
advised her to transfer the properties first to Corazon
for the immediate processing of Corazon’s loan
application with assurance that the proceeds thereof
would be paid directly to her (respondent), and the
obligation would be reflected in a bank guarantee.
Heeding Mendiola’s advice, respondent executed a
Deed of Absolute Sale over the properties in favor of
Corazon following which or on December 4, 1995,
Transfer Certificates of Title Nos. 164159 and 164160
were issued in the name of Corazon.
Corazon’s application for a loan with PBTC’s Tondo
Branch was approved on December 1995. She
thereupon executed a real estate mortgage covering
the properties to secure the payment of the loan. In
the absence of a written request for a bank guarantee,
the PBTC released the proceeds of the loan to Corazon.
Respondent later got wind of the approval of Corazon’s
loan application and the release of its proceeds to
Corazon who, despite repeated demands, failed to pay
the purchase price of the properties. Respondent
eventually accepted from Corazon partial payment in
kind consisting of one owner type jeepney and four
passenger jeepneys,3 plus installment payments, which,
by the trial court’s computation, totaled ₱665,000. In
view of Corazon’s failure to fully pay the purchase price,
respondent filed a complaint for collection of sum of
money and annulment of sale and mortgage with
damages, against Corazon and PBTC (hereafter
petitioner), before the Regional Trial Court (RTC) of Sta.
Cruz, Laguna.
RTC rendered judgment in favor of respondent and
against Corazon who was made directly liable to
respondent, and against petitioner who was made
subsidiarily liable in the event that Corazon fails to pay.
Defendant Corazon Marasigan to pay the plaintiff the
amount of P1,783,960.00 plus three percent (3%)
monthly interest per month from August 25, 1995 until
fully paid. Further, to pay the plaintiff the sum
equivalent to twenty percent five [sic] (25%) of
P1,783,960.00 as attorney’s fees. Defendant Prudential
Bank and Trust Company to pay the plaintiff the
amount of P1,783,960.00 or a portion thereof plus the
legal rate of interest per annum until fully paid in the
event that Defendant Corazon Marasigan fails to pay
the said amount or a portion thereof.
Liwayway would not have executed the deed of sale in
favor of Corazon had Norberto Mendiola did not
promise and guarantee that the proceeds of the loan
would be directly paid to her. Based on ordinary human
experience, she would not have readily transferred the
title over the subject lots had there been no strong and
reliable guarantee. In this case, what caused her to
transfer title is the promise and guarantee made by
Norberto Mendiola that the proceeds of the loan
3
would be directly paid to her. On appeal, the Court of
Appeals affirmed the trial court’s decision with
modification on the amount of the balance of the
purchase price which was reduced from ₱1,783,960 to
₱1,753,960.
ISSUE:
Whteher or not the Petitioner is subsidiarily liable.
HELD:
The petition is meritorious.In the absence of a lender-
borrower relationship between petitioner and
Liwayway, there is no inherent obligation of petitioner
to release the proceeds of the loan to her.To a banking
institution, well-defined lending policies and sound
lending practices are essential to perform its lending
function effectively and minimize the risk inherent in
any extension of credit.
For Liwayway to prove her claim against petitioner, a
clear and deliberate act of conferring a favor upon her
must be present. A written request would have sufficed
to prove this, given the nature of a banking business,
not to mention the amount involved. Since it has not
been established that petitioner had an obligation to
Liwayway, there is no breach to speak of. Liwayway’s
claim should only be directed against Corazon.
Petitioner cannot thus be held subisidiarily liable. To
the Court, Liwayway did not rely on Mendiola’s
representations, even if he indeed made them. The
contract for Liwayway to sell to Corazon was perfected
from the moment there was a meeting of minds upon
the properties-object of the contract and upon the
price. Only the source of the funds to pay the purchase
price was yet to be resolved at the time the two
inquired from Mendiola.
That it was on Corazon’s execution of a promissory
note that prompted Liwayway to finally execute the
Deed of Sale is thus clear. The trial Court’s reliance on
the doctrine of apparent authority – that the principal,
in this case petitioner, is liable for the obligations
contracted by its agent, in this case Mendiola, – does
not lie.
A banking corporation is liable to innocent third
persons where the representation is made in the
course of its business by an agent acting within the
general scope of his authority even though, in the
particular case, the agent is secretly abusing his
authority and attempting to perpetuate fraud upon his
principal or some person, for his own ultimate benefit.
The onus probandi that attempt to commit fraud
attended petitioner’s employee Mendiola’s acts and
that he abused his authority lies on Liwayway. She,
however, failed to discharge the onus. It bears noting
that Mendiola was not privy to the approval or
disallowance of Corazon’s application for a loan nor
that he would benefit by the approval thereof. Aside
from Liwayway’s bare allegations, evidence is wanting
to show that there was collusion between Corazon and
Mendiola to defraud her. Even in Liwayway’s
Complaint, the allegation of fraud is specifically
directed against Corazon. IN FINE, Liwayway’s cause of
action lies against only Corazon.
Estate of KH Hemady vs Luzon Surety, Inc.
Facts:
Luzon Surety filed a claim against the Estate based on
20 different indemnity agreements, or counter bonds,
each subscribed by a distinct principal and by the
deceased KH Hemady, a surety solidary guarantor. The
administratrix contended that whatever losses may
occur after Hemady's death are not chargeable to his
estate because upon his death, he ceased to be
guarantor. The RTC dismissed the claim of Luzon Surety.
Issue: WON the solidary guarantor's liability is
extinguished by his death
Ruling:
No. Under the law, the general rule is that a party's
contractual rights and obligations are transmissible to
the successors. Under Article 1311, a person who
enters into a contract is deemed to have contracted for
himself and his heirs and assigns, and it is unnecessary
for hims to expressly stipulate to that effect. His failure
to do so is no sign that he intened his bargain to
terminate upon his death.
The lower court sought to infer a limitation from Art.
2056, to the effect that “one who is obliged to furnish a
guarantor must present a person who possesses
integrity, capacity to bind himself, and sufficient
property to answer for the obligation which he
guarantees”. It will be noted, however, that the law
requires these qualities to be present only at the time
of the perfection of the contract of guaranty. It is self-
evident that once the contract has become perfected
and binding, the supervening incapacity of the
guarantor would not operate to exonerate him of the
eventual liability he has contracted; and if that be true
of his capacity to bind himself, it should also be true of
his integrity, which is a quality mentioned in the article
alongside the capacity.
The supervening disappearance of guarantor's integrity
after he has become bound does not terminate the
contract but merely entitles the creditor to demand a
replacement of the guarantor. But the step remains
4
optional in the creditor: it is his right, not his duty; he
may waive it if he chooses, and hold the guarantor to
his bargain.
The contract of surety does not fall under the
exceptions to such general rule which are: (1)
Intransmissiblity by stipulation; (2) nature of the
obligation; and (3) not transmissible by operation of
law.
Kauffman vs. PNB
42 Phil 182
September 29, 1921
Facts:
George A. Kauffman, was the president of a domestic
corporation engaged chiefly in the exportation of hemp
from the Philippine Islands and known as the Philippine
Fiber and Produce Company, of which company the
plaintiff apparently held in his own right nearly the
entire issue of capital stock. He was based in New York
City and as the president of the said company, he was
entitled to receive a dividend; as per instruction, Wicks
who worked as the treasurer of the company, went to
the exchange department of PNB and requested a
telegraphic transfer of the money to Kauffman.
The PNB agreed with additional charges for the
transaction. The treasurer issued a check to PNB and it
was accepted. The PNB’s representative in New York
sent a message suggesting the advisability of
withholding this money from Kauffman, in view of his
reluctance to accept certain bills of the company. PNB
acquiesced in this and dispatched to its NY agency a
message to withhold the Kauffman payment as
suggested. Meanwhile, Wicks then informed Kauffman
that his dividends had been wired to his credit in the
NY agency of PNB. So Kauffman went to PNB office in
NYC and demanded the money, however, he was
refused payment. So he filed this complaint.
the bank's promise to cause a definite sum of money to
be paid to the plaintiff in NYC is a stipulation in his favor
within the meaning of the paragraph above quoted;
and the circumstances under which that promise was
given disclose an evident intention on the part of the
contracting parties that the plaintiff should have the
money upon demand in NYC. The recognition of this
unqualified right in the plaintiff to receive the money
implies in our opinion the right in him to maintain an
action to recover it.
It will be noted that under the paragraph cited a third
person seeking to enforce compliance with a
stipulation in his favor must signify his acceptance
before it has been revoked. In this case the plaintiff
clearly signified his acceptance to the bank by
demanding payment; and although PNB had already
directed its NY agency to withhold payment when this
demand was made, the rights of the plaintiff cannot be
considered to as there used, must be understood to
imply revocation by the mutual consent of the
contracting parties, or at least by direction of the party
purchasing he exchange. Thus, it was said, "Cable
transfers, therefore, mean a method of transmitting
money by cable wherein the seller engages that he has
the balance at the point on which the payment is
ordered and that on receipt of the cable directing the
transfer his correspondent at such point will make
payment to the beneficiary described in the cable. All
these transaction are matters of purchase and sale
create no trust relationship."

Issue:

Whether or not Kauffman has a right of action against

PNB?

Held:

Yes. It is a stipulation pour autrui.

Should the contract contain any stipulation in favor of a

third person, he may demand its fulfillment, provided
he has given notice of his acceptance to the person
bound before the stipulation has been revoked. (Art.
1257, par. 2, Civ. Code.) In the light of the conclusion
thus stated, the right of the plaintiff to maintain the
present action is clear enough; for it is undeniable that