1. EULALIO M. RUIZ and ILUMINADA RUIZ, petitioners,vs. HON. DOROTEO N. CANEBA, THE CITY SHERIFF OF MANILA AND/OR HIS DEPUTIES, ZENAIDA SANGALANG and ADOLFO CRUZ, respondents.

G.R. No. 84884. December 3, 1990 Judgments; Interest; Where the court judgment which did not

provide for interest is already final, there is no reason to add interest in the judgment.Anent the Ruizes claim of interest as aforementioned, it has been held in the case of Santulan v. Fule, 133 SCRA 762 (1984) that where the court judgment which did not provide for interest is already final, there is no reason to add interest in the judgment. Interest was not demanded by the Ruizes when the case was pending before the lower court, hence, there is no reason for this Court to grant such claim. As ruled by this Court, such claim is groundless since the decision and orders sought to be enforced do not direct the payment of interest and have long become final (Canonizado v. Ordoez-Benitez, 149 SCRA 555 [1987]).

Appeals; An issue which was not raised in the lower court cannot

be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due process.Finally, as to Sangalangs claim for P1,500.00 as monthly rental for Door No. 2, the records show that such claim was never raised in the trial court. The issue of additional rentals was brought up by Sangalang only when the motion for execution of par. 3 of the dispositive portion of the decision was filed by the Ruiz spouses (Rollo, p. 189). It is a basic rule that an issue which was not raised in the court below cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due process (Matienzo v. Servidad, 107 SCRA 276 [1981]; De la Santa v. CA, 140 SCRA 44, [1985]; Dihiansan v. CA, 157 SCRA 434 [1987]; Anchuelo v. CA, 147 SCRA 434 [1987]; Dulos Realty and Devt. Corp. v. CA, 157 SCRA 425 [1988]; Ramos v. IAC., G.R. No. 78282, July 5, 1989; Filipino Merchants vs. CA, GR No. 85141, Nov. 28, 1989). Consequently, Sangalangs claim cannot be granted.

Judgments; The respondent judge exceeded his authority when he

modified the terms of a final and executory judgment.Hence, since

the May 15, 1986 decision has long become final and executory and in fact has been partly executed, the respondent judge had lost its jurisdiction thereon (Marcopper Mining Corp. vs. Briones, G.R. 77210, Sept. 19, 1988; Baclayon et al. v. CA, G.R. No. 89132, Feb. 26, 1990). He has exceeded his authority, considering that the trial court has no authority to modify or vary the terms and conditions of a final and executory judgment (Vda. de Nabong v. Sadang, 167 SCRA 232 [1988]; Commercial Credit Corporation vs. CA, 169 SCRA 1 [1989]; Christian Literature Crusade v. NLRC, 171 SCRA 712 [1989]). What remains in his authority in relation thereto is purely the ministerial enforcement or execution of the judgment. (Christian Lit. Crusade, supra: Baclayan vs. CA, supra.) Therefore, for having substantially affected the final and executory judgment such Order of the respondent judge dated July 27, 1988 is null and void for lack of jurisdiction, including the entire proceedings held for the purpose (Marcopper Mining vs. Briones, supra).

2. EASTERN SHIPPING LINES, INC., petitioner, vs. HON. COURT OF

APPEALS AND MERCANTILE INSURANCE COMPANY, INC.

G.R. No. 97412. July 12, 1994.

Common Carriers; Obligations; Presumption of Fault; When the

goods shipped either are lost or arrive in damaged condition, a

presumption arises against the carrier of its failure to observe that

requisite diligence, and there need not be an express finding of

negligence to hold it liable.The common carriers duty to observe the

requisite diligence in the shipment of goods lasts from the time the

articles are surrendered to or unconditionally placed in the possession

of, and received by, the carrier for transportation until delivered to, or

until the lapse of a reasonable time for their acceptance by, the person

entitled to receive them (Arts. 1736-1738, Civil Code; Ganzon vs. Court

of Appeals, 161 SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52 Phil.

863). When the goods shipped either are lost or arrive in damaged

condition, a presumption arises against the carrier of its failure to

observe that diligence, and there need not be an express finding of

negligence to hold it liable (Art. 1735, Civil Code; Philippine National

Railways vs. Court of Appeals, 139 SCRA 87; Metro Port Service vs.

Court of Appeals, 131 SCRA 365). There are, of course, exceptional

cases when such presumption of fault is not observed but these cases,

enumerated in Article 1734 of the Civil Code, are exclusive, not one of

which can be applied to this case.

Same; Same; Arrastre Operator; Carrier and arrastre operator

liable in solidum for the proper delivery of the goods to the consignee.

The question of charging both the carrier and the arrastre operator

with the obligation of properly delivering the goods to the consignee

has, too, been passed upon by the Court. In Firemans Fund Insurance

Co. vs. Metro Port Service, Inc. (182 SCRA 455), we have explained, in

holding the carrier and the arrastre operator liable in solidum, thus:

The legal relationship between the consignee and the arrastre

operator is akin to that of a depositor and warehouseman (Lua Kian v.

Manila Railroad Co., et al., 19 SCRA 5 [1967]. The relationship between

the consignee and the common carrier is similar to that of the

consignee and the arrastre operator (Northern Motors, Inc. v. Prince

Line, et al., 107 Phil. 253 [1960]). Since it is the duty of the ARRASTRE to

take good care of the goods that are in its custody and to deliver them

in good condition to the consignee, such responsibility also devolves

upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore

charged with the obligation to deliver the goods in good condition to

the consignee.

Same; Same; Same; The Supreme Court is not implying, however,

that the arrastre operator and the customs broker are themselves

always and necessarily liable solidarily with the carrier, or vice-versa,

nor that attendant facts in a given case may not vary the rule.We do

not, of course, imply by the above pronouncement that the arrastre

operator and the customs broker are themselves always and

necessarily liable solidarily with the carrier, or vice-versa, nor that

attendant facts in a given case may not vary the rule. The instant

petition has been brought solely by Eastern Shipping Lines which, being

the carrier and not having been able to rebut the presumption of fault,

is, in any event, to be held liable in this particular case. A factual finding

of both the court a quo and the appellate court, we take note, is that

there is sufficient evidence that the shipment sustained damage while

in the successive possession of appellants (the herein petitioner

among them). Accordingly, the liability imposed on Eastern Shipping

Lines, Inc., the sole petitioner in this case, is inevitable regardless of

whether there are others solidarily liable with it.

Damages; Interest Rates; Rules of thumb for future guidance in the

award of damages and interest rates.The ostensible discord is not

difficult to explain. The factual circumstances may have called for

different applications, guided by the rule that the courts are vested

with discretion, depending on the equities of each case, on the award

of interest. Nonetheless, it may not be unwise, by way of clarification

and reconciliation, to suggest the following rules of thumb for future

guidance.

Same; Same; Same; When an obligation is breached, the

contravenor can be held liable for damages.When an obligation,

regardless of its source, i.e., law, contracts, quasi-contracts, delicts or

quasi-delicts is breached, the contravenor can be held liable for

damages. The provisions under Title XVIII on Damages of the Civil

Code govern in determining the measure of recoverable damages.

Same; Same; Same; Interests in the Concept of Actual and

Compensatory Damages; In a loan or forbearance of money, the

interest due should be that stipulated in writing, and in the absence

thereof, the rate shall be 12% per annum.With regard particularly to

an award of interest in the concept of actual and compensatory

damages, the rate of interest, as well as the accrual thereof, is imposed,

as follows: 1. When the obligation is breached, and it consists in the

payment of a sum of money, i.e., a loan or forbearance of money, the

interest due should be that which may have been stipulated in writing.

Furthermore, the interest due shall itself earn legal interest from the

time it is judicially demanded. In the absence of stipulation, the rate of

interest shall be 12% per annum to be computed from default, i.e.,

from judicial or extrajudicial demand under and subject to the

provisions of Article 1169 of the Civil Code.

Same; Same; Same; Same; In case of other obligations, the interest

on the amount of damages may be imposed at the discretion of the

court at the rate of 6% per annum.When an obligation, not

constituting a loan or forbearance of money, is breached, an interest on

the amount of damages awarded may be imposed at thediscretion of

the court at the rate of 6% per annum. No interest, however, shall be

adjudged on unliquidated claims or damages except when or until the

demand can be established with reasonable certainty. Accordingly,

where the demand is established with reasonable certainty, the

interest shall begin to run from the time the claim is made judicially or

extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be

so reasonably established at the time the demand is made, the interest

shall begin to run only from the date the judgment of the court is made

(at which time the quantification of damages may be deemed to have

been reasonably ascertained). The actual base for the computation of

legal interest shall, in any case, be on the amount finally adjudged.

Same; Same; Same; Same; When the judgment of the court

awarding a sum of money becomes final and executory, the rate of

legal interest shall be 12% per annum from such finality until its

satisfaction, this interim period being deemed to be by then an

equivalent to a forbearance of credit.When the judgment of the court

awarding a sum of money becomes final and executory, the rate of

legal interest, whether the case falls under paragraph 1 or paragraph 2,

above, shall be 12% per annum from such finality until its satisfaction,

this interim period being deemed to be by then an equivalent to a

forbearance of credit.

3. CENTRAL BANK OF THE PHILIPPINES as Liquidator of the FIDELITY

SAVINGS BANK, petitioner, vs.HONORABLE JUDGE JESUS P. MORFE, as

Presiding Judge of Bran ch XIII, Court of First Instance of Manila,

Spouses AUGUSTO and ADELAIDA PADILLA and Spouses MARCELA

and JOB ELIZES, respondents.

G.R. No. L-38427. March 12, 1975.*

Mercantile law; Banks; Deposits; Loans; Bank deposits are simple

loans.It should be noted that fixed, savings, and current deposits of

money in banks and similar institutions are not true deposits. They are

considered simple loans and, as such, are not preferred credits.

Same; Same; Same; Central Bank Act; Insolvency laws;Preference

of credits; Where a suit for recovery of a bank deposit was filed after

the bank has been declared insolvent by the Central Bank, a judgment in

favor of the depositor cannot be considered a preferred credit under

Article 22H(H)(b ) of the Civil Code.The Board in its Resolution No. 350

dated February 18, 1969 banned the Fidelity Savings Bank from doing

business. It took charge of the banks assets. Evidently , one purpose in

prohibiting the insolvent bank from doing business is to prevent some

depositors from having an undue or fraudulent preference over other

creditors and depositors. That purpose would be nullified if, as in this

case, after the bank is declared insolvent, suits by some depositors

could be maintained and judgments would be rendered for the

payment of their deposits and then such judgments would be

considered preferred credits under article 2244(14)(b) of the Civil Code.

Same; Same; Same; Same; Same; A non-preferred credit cannot be

raised to that category simply because a depositor, taking advantage of

long interval of time between declaration of insolvency and filing of

judicial assistance, was able to secure a judgment for payment of his

deposit.Considering that the deposits in question, in their inception,

were not preferred credits, it does not seem logical and just that they

should be raised to the category of preferred credits simply because

the depositors, taking advantage of the long interval between the

declaration of insolvency and the filing of the petition for judicial

assistance and supervision, were able to secure judgments for the pay

ment of their time deposits.

4. ANTONIO R. BANZON and ROSA BALMACEDA,

petitioners, vs. COURT OF APPEALS, MAXIMO R. STA. MARIA and

VALERIANA R. STA. MARIA, respondents.

G.R. No. 47258. July 13, 1989.*

Civil Law; Guaranty; Law and Equity; General Rule that a

guarantor must first pay the outstanding amounts before it can exact

payment from the principal debtor; Since Associated had not paid nor

compelled private respondent to pay the bank, it had no right in law or

equity to execute judgment against the indemnitor; Case at Bar.What

appears to us as error is the trial courts conclusion that private

respondents are responsible for the prejudice caused petitioners. This

conclusion is in opposition to our clear and unequivocal

pronouncement in said Banzon vs. Cruz case that the wrongful taking of

petitioners two lots was the direct result of three premature acts, to

wit: 1) the action of Associated Insurance and Surety, Inc. against

petitioner Banzon; 2) the execution of the 1957 judgment in Civil Case

No. 31237; 3) the act of the Sheriff of Caloocan City in demolishing the

improvements on one of the lots. These acts do not fall under any of

the situations provided for in Article 2071 of the Civil Code wherein the

guarantor even before paying may proceed against the principal

debtors. Otherwise stated, as a general rule, the guarantor must first

pay the outstanding amounts due before it can exact payment from the

principal debtor. Hence, since Associated had not paid nor compelled

private respondent to pay the bank, it had no right in law or equity to

so execute the judgment against Banzon as indemnitor. Coming back to

the issue, the appellate court exhibited a higher degree of perception

when it held: In the first place, it was well established that it was not

the defendants who started the series of litigations but the Associated.

Instead of fulfilling its obligations to discharge, as a surety, the Sta.

Marias indebtedness, Associated instituted the premature court action

against its indemnitors, including Sta. Maria. This premature action of

the Associated consequently resulted in the levy and sale of the two

lots thereby depriving plaintiffs of their property.

Same; Same; Damages; Principle that moral damages may be

recovered if they are the proximate result of the defendants wrongful

acts or omission; Case at bar.While ideally this debacle could have

been avoided by private respondents payment of their obligations to

PNB, such fact of non-payment alone, without Associateds premature

action and subsequent fraudulent acts, could not possibly have resulted

in the prejudice and damage complained of. Thus, while private

respondents non-payment was admittedly the remote cause or the

factor which set in motion the ensuing events, Associateds premature

action and execution were the immediate and direct causes of the

damage and prejudice suffered by petitioners. In other words, active

supervening events, consisting of said premature and fraudulent acts of

the Associated Insurance and Surety, Inc. had broken the causal

connection between the fact of non-payment and the damage suffered

by petitioners, so that their claim should be directed not against private

respondents but against Associated. Parenthetically, this right of action

against Associated had been reserved in petitioners favor in

the Banzon vs. Cruz case.

Same; Same; Same; Bad faith; The failure of private respondents

to pay their obligation with the PNB was not attended by bad faith to

cause injury to petitioners; Reasons.We are convinced that the failure

of private respondents to pay their obligations with the PNB was not

attended by bad faith or wilfull intent to cause injury to petitioners. For

as found in Banzon vs. Cruz, supra: x x x It should be noted therefore,

that the debtor Sta. Maria had been making payments all along to the

bank on account of his crop loans so much so that by 1963, the total

principal due and amount outstanding thereon amounted only to

P15,446.44. This amounts to practically one-half of the advance

judgment for the total amount of P30,257.86, excluding interests,

obtained by Associated six (6) years earlier in 1957 against Banzon for

the benefit of the Philippine National Bank allegedly as the amount due

from Sta. Maria and which Associated as surety would have to pay the

bank, and which as it turns out, Associated never paid to the bank.

Consequently, Associated, in not discharging its liability

notwithstanding that it had already executed its 1957 judgment against

Banzon as indemnitor and taken in execution Banzons two properties

committed rank fraud.

Same; Same; Same; Rule that damages for which a defendant may

be held liable are those which are the natural and probable

consequence of the act or omission complained of; Case at bar.

Moreover, under the Civil Code, the damages for which a defendant

may be held liable are those which are the natural and probable

consequences of the act or omission complained of. As above

explained, the prejudice caused petitioners cannot be said to be the

natural and probable consequence of private respondents mere failure

to pay their crop loans as such prejudice arose due to active

supervening forces or events.

5. ATOK FINANCE CORPORATION, petitioner, vs. COURT OF APPEALS,

SANYU CHEMICAL CORPORATION, DANILO E. ARRIETA, NENITA B.

ARRIETA, PABLITO BERMUNDO and LEOPOLDO HALILI, respondents.

G.R. No. 80078. May 18, 1993.*

Contracts; Suretyship; Guaranty; Obligations; While a contract of

suretyship or guarantee is an accessory contract, it may be readily

entered into to warranty debts to be incurred or created in the future

yet.We consider that the Court of Appeals here was in serious error.

It is true that a guaranty or a suretyship agreement is an accessory

contract in the sense that it is entered into for the purpose of securing

the performance of another obligation which is denominated as the

principal obligation. It is also true that Article 2052 of the Civil Code

states that a guarantee cannot exist without a valid obligation. This

legal proposition is not, however, like most legal principles, to be read

in an absolute and literal manner and carried to the limit of its logic.

This is clear from Article 2052 of the Civil Code itself: Art. 2052. A

guaranty cannot exist without a valid obligation. Nevertheless, a

guaranty may be constituted to guarantee the performance of a

voidable or an unenforceable contract. It may also guarantee

a natural obligation. (Emphases supplied) Moreover, Article 2053 of the

Civil Code states: Art. 2053. A guaranty may also be given as security

for future debts, the amount of which is not yet known; there can be no

claim against the guarantor until the debt is liquidated. A conditional

obligation may also be secured.

Same; Same; Same; Same; Same.It is clear to us that theRizal

Commercial Banking Corporation and the NARIC cases rejected the

distinction which the Court of Appeals in the case at bar sought to

make with respect to Article 2053, that is, that the future debts

referred to in that Article relate to debts already existing at the time of

the constitution of the agreement but the amount [of which] is

unknown, and not to debts not yet incurred and existing at that time.

Of course, a surety is not bound under any particular principal

obligation until that principal obligation is born. But there is no

theoretical or doctrinal difficulty inherent in saying that the suretyship

agreement itself is valid and binding even before the principal

obligation intended to be secured thereby is born, any more than there

would be in saying that obligations which are subject to a condition

precedent are valid and binding before the occurrence of the condition

precedent.

Same; Same; Same; Same; Same.Comprehensive or continuing

surety agreements are in fact quite commonplace in present day

financial and commercial practice. A bank or a financing company

which anticipates entering into a series of credit transactions with a

particular company, commonly requires the projected principal debtor

to execute a continuing surety agreement along with its sureties. By

executing such an agreement, the principal places itself in a position to

enter into the projected series of transactions with its creditor; with

such suretyship agreement, there would be no need to execute a

separate surety contract or bond for each financing or credit

accommodation extended to the principal debtor. As we understand it,

this is precisely what happened in the case at bar.

Same; Same; Same; Same; Prescription; The period of limitations

in Art. 1629 of the New Civil Code does not apply where there is no

breach of warranty of solvency but the creation of solidary liability as

per agreement of the sureties with the creditor when principal

defaults.Article 1629 of the Civil Code invoked by private

respondents and accepted by the Court of Appeals is not, in the case at

bar, material. The liability of Sanyu Chemical to Atok Finance

rests not on the breach of the warranty of solvency; the liability of

Sanyu Chemical was not ex lege (ex Article 1629) but rather ex

contractu. Under the Deed of Assignment, the effect of non-payment by

the original trade debtors was a breach of warranty of solvency by

Sanyu Chemical, resulting in turn in the assumption of solidary liability

by the assignor under the receivables assigned.In other words, the

assignor Sanyu Chemical becomes a solidary debtor under the terms of

the receivables covered and transferred by virtue of the Deed of

Assignment. And because assignor Sanyu Chemical became, under the

terms of the Deed of Assignment, solidary obligor under each of the

assigned receivables, the other private respondents (the Arrieta

spouses, Pablito Bermundo and Leopoldo Halili), became solidarily

liable for that obligation of Sanyu Chemical, by virtue of the operation

of the Continuing Suretyship Agreement. Put a little differently, the

obligations of individual private respondent officers and stockholders of

Sanyu Chemical under the Continuing Suretyship Agreement, were

activated by the resulting obligations of Sanyu Chemical as solidary

obligor under each of the assigned receivables by virtue of the

operation of the Deed of Assignment. That solidary liability of Sanyu

Chemical is not subject to the limiting period set out in Article 1629 of

the Civil Code.

6. INTEGRATED REALTY CORPORATION and RAUL L. SANTOS, petitioners, vs. PHILIPPINE NATIONAL BANK, OVERSEAS BANK OF MANILA and THE HON. COURT OF APPEALS, respondents.

G.R. No. 60705. June 28, 1989.*

OVERSEAS BANK OF MANILA, petitioner, vs. COURT OF APPEALS, INTEGRATED REALTY CORPORATION, and RAUL L. SANTOS, respondents.

G.R. No. 60907. June 28, 1989.*

Civil Law; Credit Transactions; Pledge; Deed of Assignment; The

deed of assignment in the instant case is actually a pledge.For all

intents and purposes, the deed of assignment in this case is actually a

pledge. Adverting again to the Courts pronouncements in Lopez,

supra, we quote therefrom: The character of the transaction between

the parties is to be determined by their intention, regardless of what

language was used or what the form of the transfer was. If it was

intended to secure the payment of money, it must be construed as a

pledge; but if there was some other intention, it is not a pledge.

However, even though a transfer, if regarded by itself, appears to have

absolute, its object and character might still be qualified and explained

by contemporaneous writing declaring it to have been a deposit of the

property as collateral security. It has been said that a transfer of

property by the debtor to a creditor, even if sufficient on its face to

make an absolute conveyance, should be treated as a pledge if the debt

continues in existence and is not discharged by the transfer, and that

accordingly, the use of the terms ordinarily importing conveyance, of

absolute ownership will not be given that effect in such a transaction if

they are also commonly used in pledges and mortgages and therefore

do not unqualifiedly indicate a transfer of absolute ownership, in the

absence of clear and unambiguous language or other circumstances

excluding an intent to pledge.

Same; Same; Same; Requisites of a Contract of Pledge.The facts

and circumstances leading to the execution of the deed of assignment,

as found by the court a quo and the respondent court, yield said

conclusion that it is in fact a pledge. The deed of assignment has

satisfied the requirements of a contract of pledge (1) that it be

constituted to secure the fulfillment of a principal obligation; (2) that

the pledgor be the absolute owner of the thing pledged; (3) that the

persons constituting the pledge have the free disposal of their

property, and in the absence thereof, that they be legally authorized for

the purpose. The further requirement that the thing pledged be placed

in the possession of the creditor, or of a third person by common

agreement was complied with by the execution of the deed of

assignment in favor of PNB.

Same; Same; Loans; A contract of simple loan or mutuum is

created when Santos invested his money in time deposit with petitioner-

bank.Thus, when PNB demanded from OBM payment of the amounts

due on the two time deposits which matured on January 11, 1968 and

February 6, 1968, respectively, there was as yet no obstacle to the

faithful compliance by OBM of its liabilities thereunder. Consequently,

for having incurred in delay in the performance of its obligation, OBM

should be held liable for damages. When respondent Santos invested

his money in time deposits with OBM, they entered into a contract of

simple loan ormutuum, not a contract of deposit.

Same; Obligations and Contracts; Default; Damages; Legal interest

in the nature of damages for non-compliance with an obligation to pay

a sum of money is recoverable even if not expressly stipulated in

writing.While it is true that under Article 1956 of the Civil Code no

interest shall be due unless it has been expressly stipulated in writing,

this applies only to interest for the use of money. It does not

comprehend interest paid as damages. OBM contends that it had

agreed to pay interest only up to the dates of maturity of the

certificates of time deposit and that respondent Santos is not entitled

to interest after the maturity dates had expired, unless the contracts

are renewed. This is true with respect to the stipulated interest, but the

obligations consisting as they did in the payment of money, under

Article 1108 of the Civil Code he has the right to recover damages

resulting from the default of OBM, and the measure of such damages is

interest at the legal rate of six percent (6%) per annum on the amounts

due and unpaid at the expiration of the periods respectively provided in

the contracts. In fine, OBM is being required to pay such interest, not as

interest income stipulated in the certificates of time deposit, but as

damages for failure and delay in the payment of its obligations which

thereby compelled IRC and Santos to resort to the courts. The

applicable rule is that legal interest, in the nature of damages for non-

compliance with an obligation to pay a sum of money, is recoverable

from the date judicial or extrajudicial demand is made, which latter

mode of demand was made by PNB, after the maturity of the

certificates of time deposit, on March 1, 1968. The measure of such

damages, there being no stipulation to the contrary, shall be the

payment of the interest agreed upon in the certificates of deposit

which is six and one-half percent (6-1/2%). Such interest due or accrued

shall further earn legal interest from the time of judicial demand.

Banking; Interest on Deposits; The banks obligation to pay

interest on the deposit ceases the moment its operation is completely

suspended by the Central Bank.On the issue of whether OBM should

be held liable for interests on the time deposits of IRC and Santos from

the time it ceased operations until it resumed its business, the answer

is in the negative. We have held in The Overseas Bank of Manila vs.

Court of Appeals and Tony D. Tapia,that: It is a matter of common

knowledge which We take judicial notice of, that what enables a bank

to pay stipulated interest on money deposited with it is that thru the

other aspects of its operation it is able to generate funds to cover the

payment of such interest. Unless a bank can lend money, engage in

international transactions, acquire foreclosed mortgaged properties or

their proceeds and generally engage in other banking and financing

activities from which it can derive income, it is inconceivable how it can

carry on as a depository obligated to pay stipulated interest.

Conventional wisdom dictates this inexorable fair and just conclusion.

And it can be said that all who deposit money in banks are aware of

such a simple economic proposition. Consequently, it should be

deemed read into every contract of deposit with a bank that the

obligation to pay interest on the deposit ceases the moment the

operation of the bank is completely suspended by the duly constituted

authority, the Central Bank.

7. DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF

APPEALS, CELEBRADA MANGUBAT and ABNER MANGUBAT,

respondents.

G.R. No. 110053. October 16, 1995.*

Civil Law; Contracts; If both parties have no fault or are not guilty,

the restoration of what was given by each of them to the other is consequently in order.The Court of Appeals, after an extensive discus sion, found that there had been no bad faith on the part of either party, and this remains uncontroverted as a fact in the case at bar. Correspondingly, respondent court correctly applied the rule that if both parties have no fault or are not guilty, the restoration of what was given by each of them to the other is consequently in order. This is because the declaration of nullity of a contract which is voidab initio operates to restore things to the state and condition in which they were found before the execution thereof.

Same; Same; Purchaser is entitled to recover the money paid by

him where the contract is set aside by reason of the mutual material mistake of the parties as to the identity or quantity of the land sold.Therefore, the purchaser is entitled to recover the money paid by him where the contract is set aside by reason of the mutual material mistake of the parties as to the identity or quantity of the land sold. And where a purchaser recovers the purchase money from a vendor who fails or refuses to deliver the title, he is entitled as a general rule to interest on the money paid from the time of payment.

Same; Same; The contract of loan executed between the parties is

entirely different and discrete from the deed of sale they entered into.In its legal context, the contract of loan executed between the parties is entirely different and discrete from the deed of sale they entered into. The annulment of the sale will not have an effect on the existence and demandability of the loan. One who has received money as a loan is bound to pay to the creditor an equal amount of the same kind and quality.

Same; Same; Fact that the annulment of the sale will also result in the invalidity of the mortgage does not have an effect on the validity and efficacy of the principal obligation.The fact that the annulment of the sale will also result in the invalidity of the mortgage does not have an effect on the validity and efficacy of the principal obligation, for even an obligation that is unsupported by any security of the debtor may also be enforced by means of an ordinary action. Where a mortgage is not valid, as where it is executed by one who is not the owner of the property, or the consideration of the contract is simulated or false, the principal obligation which it guarantees is not thereby rendered null and void. That obligation matures and becomes demandable in accordance with the stipulations pertaining to it.

Same; Damages; Actual or compensatory damages cannot be

presumed but must be duly proved and so proved with a reasonable degree of certainty.In order that damages may be recovered, the best evidence obtainable by the injured party must be presented. Actual or compensatory damages cannot be presumed, but must be duly proved, and so proved with a reasonable degree of certainty. A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered and on evidence of the actual amount thereof. If the proof is flimsy and unsubstantial, no damages will be awarded.

8. LUCIO ROBLES, EMETERIA ROBLES, ALUDIA ROBLES and EMILIO

ROBLES, petitioners, vs. COURT OF APPEALS, Spouses VIRGILIO

SANTOS and BABY RUTH CRUZ, RURAL BANK OF CARDONA, Inc.,

HILARIO ROBLES, ALBERTO PALAD, JR. in his capacity as Director of

Lands, and JOSE MAULEON in his capacity as District Land Officer of

the Bureau of Lands, respondents.

G.R. No. 123509. March 14, 2000.*

Remedial Law; Quieting of Title; An action to quiet title is a

common-law remedy for the removal of any cloud or doubt or

uncertainty on the title to real property.Based on the above

definition, an action to quiet title is a common-law remedy for the

removal of any cloud or doubt or uncertainty on the title to real

property. It is essential for the plaintiff or complainant to have a legal

or an equitable title to or interest in the real property which is the

subject matter of the action. Also, the deed, claim, encumbrance or

proceeding that is being alleged as a cloud on plaintiffs title must be

shown to be in fact invalid or inoperative despite its prima facie

appearance of validity or legal efficacy.

Civil Law; Property; Co-ownership; It is a fundamental principle

that a co-owner cannot acquire by prescription the share of the other

co-owners, absent any clear repudiation of the co-ownership; Requisites

in order that the title may prescribe in favor of a coowner.Contrary to

the disquisition of the Court of Appeals, Hilario effected no clear and

evident repudiation of the co-ownership. It is a fundamental principle

that a co-owner cannot acquire by prescription the share of the other

co-owners, absent any clear repudiation of the co-ownership. In order

that the title may prescribe in favor of a co-owner, the following

requisites must concur: (1) the co-owner has performed unequivocal

acts of repudiation amounting to an ouster of the other co-owners; (2)

such positive acts of repudiation have been made known to the other

co-owners; and (3) the evidence thereof is clear and convincing.

Same; Same; Mortgages; In a real estate mortgage contract, it is

essential that the mortgagor be the absolute owner of the property to

be mortgaged; otherwise, the mortgage is void.In a real estate

mortgage contract, it is essential that the mortgagor be the absolute

owner of the property to be mortgaged; otherwise, the mortgage is

void. In the present case, it is apparent that Hilario Robles was not the

absolute owner of the entire subject property; and that the Rural Bank

of Cardona, Inc., in not fully ascertaining his title thereto, failed to

observe due diligence and, as such, was a mortgagee in bad faith.

Same; Same; Same; The rule that persons dealing with registered

lands can rely solely on the certificate of title does not apply to banks.

The bank should not have relied solely on the Deed of Sale purportedly

showing that the ownership of the disputed property had been

transferred from Exequiel Ballena to the Robles spouses, or that it had

subsequently been declared in the name of Hilario. Because it was

dealing with unregistered land, and the circumstances surrounding the

transaction between Hilario and his fatherin-law Exequiel were

suspicious, the bank should have exerted more effort to fully determine

the title of the Robleses. Rural Bank of Compostela v. Court of

Appeals invalidated a real estate mortgage after a finding that the bank

had not been in good faith. The Court explained: The rule that persons

dealing with registered lands can rely solely on the certificate of title

does not apply to banks.

Land Titles; Free Patents; Jurisprudence holds that a free patent

covering private land is null and void.In the light of their open,

continuous, exclusive and notorious possession and occupation of the

land, petitioners are deemed to have acquired, by operation of law, a

right to a grant, a government grant, without the necessity of a

certificate of title being issued. The land was segregated from the

public domain. Accordingly, the director of lands had no authority to

issue a free patent thereto in favor of another person. Verily,

jurisprudence holds that a free patent covering private land is null and

void.

9. BA FINANCE CORPORATION, petitioner, vs. HON. COURT OF APPEALS and ROBERTO M. REYES, respondents.

G.R. No. 102998. July 5, 1996.*

Actions; Replevin; Words and Phrases; Replevin, Explained; Replevin may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the

plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and hold it pendente lite.Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and hold it pendente lite. The action is primarily possessory in nature and generally determines nothing more than the right of possession.

Same; Same; Same; Same; Parties; As an action in rem, the gist

of the replevin action is the right of the plaintiff to obtain possession of

specific personal property by reason of his being the owner or of his

having a special interest therein and the person in possession of the

property sought to be replevied is ordinarily the proper and only

necessary party defendant and the plaintiff is not required to so join as

defendants other persons claiming a right on the property but not in

possession thereof.Replevin is so usually described as a mixed action,

being partly in rem and partly in personamin rem insofar as the

recovery of specific property is concerned, and in personam as regards

to damages involved. As an action in rem, the gist of the replevin

action is the right of the plaintiff to obtain possession of specific

personal property by reason of his being the owner or of his having a

special interest therein. Consequently, the person in possession of the

property sought to be replevied is ordinarily the proper and only

necessary party defendant, and the plaintiff is not required to so join as

defendants other persons claiming a right on the property but not in

possession thereof. Rule 60 of the Rules of Court allows an application

for the immediate possession of the property but the plaintiff must

show that he has a good legal basis, i.e., a clear title thereto, for

seeking such interim possession.

Same; Same; Same; Same; Same; Chattel Mortgage; Where the

right of the plaintiff to the possession of the specific property is so

conceded or evident, the action need only be maintained against him

who so possesses the property.Where the right of the plaintiff to the

possession of the specific property is so conceded or evident, the action

need only be maintained against him who so possesses the property. In

rem actio est per quam rem nostram quae ab alio possidetur petimus,

et semper adversus eum est qui rem possidet. InNorthern Motors, Inc.

vs. Herrera, the Court has said: There can be no question that persons

having a special right of property in the goods the recovery of which is

sought, such as a chattel mortgagee, may maintain an action for

replevin therefor. Where the mortgage authorizes the mortgagee to

take possession of the property on default, he may maintain an action

to recover possession of the mortgaged chattels from the mortgagor or

from any person in whose hands he may find them.

Same; Same; Same; Same; Same; Same; The mortgagee, upon the

mortgagors default, is constituted an attorney-in-fact of the mortgagor

enabling such mortgagee to act for and in behalf of the owner and the

fact that the defendant is not privy to the chattel mortgage is

inconsequential.In effect then, the mortgagee, upon the mortgagors

default, is constituted an attorney-in-fact of the mortgagor enabling

such mortgagee to act for and in behalf of the owner. Accordingly, that

the defendant is not privy to the chattel mortgage should be

inconsequential. By the fact that the object of replevin is traced to his

possession, one properly can be a defendant in an action for replevin. It

is here assumed that the plaintiffs right to possess the thing is not or

cannot be disputed.

Same; Same; Same; Same; Same; Same; In case the right of

possession on the part of the plaintiff, or his authority to claim such

possession or that of his principal, is put to great doubt, it could become

essential to have other persons involved and accordingly impleaded for

a complete determination and resolution of the controversy.In case

the right of possession on the part of the plaintiff, or his authority to

claim such possession or that of his principal, is put to great doubt (a

contending party might contest the legal bases for plaintiffs cause of

action or an adverse and independent claim of ownership or right of

possession is raised by that party), it could become essential to have

other persons involved and accordingly impleaded for a complete

determination and resolution of the controversy.

Same; Same; Same; Same; Same; Same; Where the mortgagees

right of possession is conditioned upon the actual fact of default which

itself may be controverted, the inclusion of other parties, like the debtor

or the mortgagor himself, may be required in order to allow a full and

conclusive determination of the casean adverse possessor, who is not

the mortgagor, cannot just be deprived of his possession, let alone be

bound by the terms of the chattel mortgage contract, simply because

the mortgagee brings up an action for replevin.A chattel mortgagee,

unlike a pledgee, need not be in, nor entitled to, the possession of the

property unless and until the mortgagor defaults and the mortgagee

thereupon seeks to foreclose thereon. Since the mortgagees right of

possession is conditioned upon the actual fact of default which itself

may be controverted, the inclusion of other parties, like the debtor or

the mortgagor himself, may be required in order to allow a full and

conclusive determination of the case. When the mortgagee seeks a

replevin in order to effect the eventual foreclosure of the mortgage, it

is not only the existence of, but also the mortgagors default on, the

chattel mortgage that, among other things, can properly uphold the

right to replevy the property. The burden to establish a valid

justification for that action lies with the plaintiff. An adverse possessor,

who is not the mortgagor, cannot just be deprived of his possession, let

alone be bound by the terms of the chattel mortgage contract, simply

because the mortgagee brings up an action for replevin.

10. DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE

NATIONAL LABOR RELATIONS COMMISSION, ONG PENG, ET AL.,

respondents.

G.R. Nos. 100264-81. January 29, 1993.*

Labor Laws; Separation Pay; Liability of foreclosing institution for

payment of workers' money claims; Due Process.DBP asserts that it

was deprived of due process since there was no formal order

impleading it in the complaints against RHI. Moreover, DBP points out,

the cases were never set for hearing thus depriving it of the

opportunity to peruse the documentary evidence of the complainants

and to confront the complainants' witnesses. Additionally, DBP was not

given an opportunity to present its own evidence. There is no merit to

this contention of DBP. Denial of due process means the total lack of

opportunity to be heard. There is no denial of due process where a

party is given an opportunity to be heard and to present his case. The

petitioner in this case filed an opposition to the motion to implead it as

a party defendant. It likewise filed a motion for reconsideration of the

labor arbiter's decision. Thereafter, DBP filed an appeal with the NLRC

and, later on, a motion for reconsideration of the NLRC decision. The

petitioner, thus, was given ample opportunity to present its case. It was

not denied due process.

Same; Same; Same.There is no merit to DBP's contention that

the workers are not entitled to separation pay. Despite the enormous

losses incurred by RHI due to the fire that gutted the sawmill in 1981

and despite the logging ban in 1983, the uncontroverted claims for

separation pay show that most of the private respondents still worked

up to the end of 1985 (See Rollo, p. 39). RHI would still have continued

its business had not the petitioner foreclosed all of its assets and

properties on September 24, 1985. Thus, the closure of RHI's business

was not primarily brought about by serious business losses. Such

closure was a consequence of DBP's foreclosure of RHI's assets. We

therefore apply Article 283 which provides: "x x x in cases of closures or

cessation of operations of establishment or undertaking not due to

serious business losses or financial reverses, the separation pay shall be

equivalent to one (1) month pay or at least one-half (1/2) month pay

for every year of service, whichever is higher. x x x"

Same;Worker preference in case of bankruptcy.We have

repeatedly stressed that before the workers' preference provided by

Article 110 may be invoked, there must first be a declaration of

bankruptcy or a judicial liquidation of the employer's business. xxx xxx

In DBP v. Santos, supra, the Court discussed the import of Article 110

and Section 10 of Rule VIII, Book III and stated: "It is quite clear from

the provisions that a declaration of bankruptcy or ajudicial

liquidation must be present before the worker's preference may be

enforced. Thus, Article 110 of the Labor Code and its implementing rule

cannot be invoked by the respondents in this case absent a formal

declaration of bankruptcy or a liquidation order.

Same; Same; Rule under amendment cannot be applied

retroactively.Article 110 of the Labor Code has been amended by R.A.

No. 6715 and now reads: "Article 110. Worker preference in case of

bankruptcy.In the event of bankruptcy or liquidation of an employer's

business, his workers shall enjoy first preference as regards their

unpaid wages and other monetary claims, any provision of law to the

contrary notwithstanding. Such unpaid wages, and monetary

claims shall be paid in full before the claims of the Government and

other creditors may be paid." (Italics ours.) We ruled in DBP v. NLRC,

supra, that the amendment "expands worker preference to cover not

only unpaid wages but also other monetary claims to which even claims

of the Government must be deemed subordinate." Hence, under the

new law, even mortgage credits are subordinate to workers' claims. In

this connection, respondent NLRC ruled: "Lastly, while we are cognizant

of the pronouncement of the Supreme Court with respect to Art. 110

and while we hold in respect said pronouncements, we are of the

earnest view that considering that Art. 110 has been amended by RA

6715, complainants' preference over government claims and other

creditors be adhered to." (Rollo, p. 65) R.A. No. 6715, however, took

effect only on March 21; 1989. The amendment cannot therefore be

retroactively applied to, nor can it affect, the mortgage credit which

was secured by the petitioner several years prior to its effectivity.

11. PHILIPPINE VETERANS BANK, petitioner, vs.BENJAMIN MONILLAS,

respondent.

G.R. No. 167098. March 28, 2008.*

Appeals; Questions of Law; Questions of Fact; Words and Phrases;

A party may directly appeal to the Supreme Court from a decision of the

trial court only on pure questions of law; A question of law lies, on one

hand, when the doubt or difference arises as to what the law is on a

certain set of facts; on the other hand, a question of fact exists when

the doubt or difference arises as to the truth or falsehood of the alleged

facts.On the procedural issue raised, we declare that the instant

petition, contrary to respondents contention, is the correct remedy to

question the challenged issuances. Under the Rules of Court, a party

may directly appeal to this Court from a decision of the trial court only

on pure questions of law. A question of law lies, on one hand, when the

doubt or difference arises as to what the law is on a certain set of facts;

on the other hand, a question of fact exists when the doubt or

difference arises as to the truth or falsehood of the alleged facts. Here,

the facts are not disputed; the controversy merely relates to the correct

application of the law or jurisprudence to the undisputed facts.

Land Titles; Real Estate Mortgages; Adverse Claims; Settled in this

jurisdiction is the doctrine that a prior registration of a lien creates a

preferencethe subsequent annotation of an adverse claim cannot

defeat the rights of the mortgagee, or the purchaser at the auction sale

whose rights were derived from a prior mortgage validly registered.

On the merits of the petition, the Court rules that the prior registered

mortgage of PVB and the foreclosure proceedings already conducted

prevail over respondents subsequent annotation of the notices of lis

pendens on the titles to the property. Settled in this jurisdiction is the

doctrine that a prior registration of a lien creates a preference; hence,

the subsequent annotation of an adverse claim cannot defeat the rights

of the mortgagee, or the purchaser at the auction sale whose rights

were derived from a prior mortgage validly registered. A contrary rule

will make a prior registration of a mortgage or any lien nugatory or

meaningless. It may not be amiss to point out, at this juncture, that the

doctrine applies with greater force in this case considering that the

annotation of the notice of lis pendens was made not only after the

registration of the mortgage, but also, and much later, after the

conclusion of the foreclosure sale. Furthermore, the mortgagee itself,

PVB, is the purchaser of the subject properties in the foreclosure sale.

Same; The public interest in upholding the indefeasibility of a

certificate of title, as evidence of the lawful ownership of the land or of

any encumbrance thereon, protects a buyer or mortgagee who, in good

faith, relied upon what appears on the face of the certificate of title.

The Court also notes that PVB is an innocent mortgagee for value.

When the lots were mortgaged to it by Ireneo, the titles thereto were

in the latters name, and they showed neither vice nor infirmity. In

accepting the mortgage, petitioner was not required to make any

further investigation of the titles to the properties being given as

security, and could rely entirely on what is stated in the aforesaid titles.

The public interest in upholding the indefeasibility of a certificate of

title, as evidence of the lawful ownership of the land or of any

encumbrance thereon, protects a buyer or mortgagee who, in good

faith, relied upon what appears on the face of the certificate of title.

Same; Laches; Foreclosure of Mortgage; Laches, being a doctrine

in equity, cannot be invoked to resist the enforcement of a legal right;

Since foreclosure sale retroacts to the date of the registration of the

mortgage, it no longer matters that the annotation of the sheriffs

certificate of sale and the affidavit of consolidation of ownership was

made subsequent to the annotation of the notice of lis pendens.PVB

cannot even be considered to have slept on its rights when it only

registered the Sheriffs certificate of sale after the lapse of almost 15

years, because, as already discussed, it registered its prior mortgage

and had already foreclosed on the same. Petitioner, therefore, had

every reason to expect that its rights were amply protected. And the

mortgagor was even benefited by this late registration of the Sheriffs

Sale, because then, he would still have a chance to redeem the

property. Laches, being a doctrine in equity, cannot be invoked to resist

the enforcement of a legal right. Furthermore, oft-repeated is the rule

that the foreclosure sale retroacts to the date of the registration of the

mortgage. Thus, it no longer matters that the annotation of the sheriffs

certificate of sale and the affidavit of consolidation of ownership was

made subsequent to the annotation of the notice oflis pendens.

12. LUISA GUANCO, assisted by her husband, LEONARDO GUANCO,

petitioner, vs. ISIDRO ANTOLO, respondent.

G.R. No. 150852. July 31, 2006.*

Remedial Law; Mortgages; Foreclosures; Posting of a notice of the

foreclosure of the real estate mortgage in at least three of the most

conspicuous public places not only in the municipality but also in the

barrio where the land mortgaged is situated during the 60-day period

immediately preceding the public land auction is mandatory.Under

Section 5 of Republic Act No. 720, as amended by Rep. Act No. 7939,

the provincial sheriff is mandated to post a notice of the foreclosure of

the real estate mortgage in at least three of the most conspicuous

public places not only in the municipality but also in the barrio where

the land mortgaged is situated during the 60-day period immediately

preceding the public auction: The foreclosure of mortgages covering

loans granted by rural banks shall be exempt from the publication in

newspapers now required by law where the total amount of the loan,

including interests due and unpaid, does not exceed three thousand

pesos. It shall be sufficient publication in such cases if the notices of

foreclosure are posted in at least three of the most conspicuous public

places in the municipality and barrio where the land mortgaged is

situated during the period of sixty days immediately preceding the

public auction. Proof of publication as required herein shall be

accomplished by affidavit of the sheriff or officer conducting the

foreclosure sale and shall be attached with the records of the

case:Provided, That when a homestead or free patent land is

foreclosed, the homesteader or free patent holder, as well as their

heirs shall have the right to redeem the same within two years from the

date of foreclosure in case of a land not covered by a Torrens title or

two years from the date of the registration of the foreclosure in the

case of a land covered by a Torrens title: Provided, finally, That in case

of borrowers who are mere tenants the produce corresponding to their

share may be accepted as security.

Foreclosures; Unless it was made to appear that a sale at public

auction was conducted and that the requisite redemption period had

lapsed, no Torrens title over the property can be issued by the Register

of Deeds.Petitioner Luisa Guanco and the deputy sheriff made it

appear that a public auction sale took place on August 19, 1977, that

she purchased the property for P775.00 on said date, that respondent

failed to redeem the property within the requisite period, and,

consequently, a final deed of sale was executed on August 28, 1977.

The only conclusion is that Deputy Sheriff Alvior made it appear in the

certificate of sale that a sale at public auction was conducted on August

19, 1977, and that respondent failed to redeem the property within

one year from registration of the sale. This was clearly done to enable

petitioner Luisa Guanco to secure a Torrens title over the property in

her name. Unless it was made to appear that a sale at public auction

was conducted and that the requisite redemption period had lapsed,

no Torrens title over the property can be issued by the Register of

Deeds to and under the name of petitioner.

13. LORENZO PASCUAL and LEONILA TORRES, plaintiffs-

appellees, vs. UNIVERSAL MOTORS CORPORATION, defendant-

appellant.

G.R. No. L-27862. November 20, 1974.*

Sales; Chattel mortgage; Foreclosure of chattel mortgage

precludes any further action against the debtor and his guarantor.The

next contention is that what article 1484 withholds from the vendor is

the right to recover any deficiency from the purchaser after the

foreclosure of the chattel mortgage and not a recourse to the

additional security put up by a third party to guarantee the purchasers

performance of his obligation. A similar argument has been answered

by this Court in this wise: (T)o sustain appellants argument is to

overlook the fact that if the guarantor should be compelled to pay the

balance of the purchase price, the guarantor will in turn be entitled to

recover what she has paid from the debtor vendee (Art. 2066, Civil

Code); so that ultimately, it will be the vendee who will be made to

bear the payment of the balance of the price, despite the earlier

foreclosure of the chattel mortgage given by him. Thus, the protection

given by Article 1484 would be indirectly subverted, and public policy

overturned. (Cruz vs. Filipinas Investment & Finance Corporation, L-

24772, May 27, 1968; 23 SCRA 791).

14. INTERNATIONAL HARVESTER MACLEOD, INC., petitioner,

vs. MARIANO MEDINA, JR. and HON. TOMAS P. MADDELA, JR., in his

capacity as Presiding Judge of Branch XXXIV of the Court of First

Instance of Manila, respondents.

G.R. No. 53623. March 22, 1990.*

Commercial Law; Credit Transaction; Financing transaction that is

regulated by RA 5980 involves the buying, discounting, or factoring of

promissory notes and sales on credit or installments.Evidently, the

financing transaction that is regulated by R.A. 5980 involves the buying,

discounting, or factoring of promissory notes and sales on credit or

installment. IHMI did not purchase from itself the Retail Notes Analysis

executed by Medina. IHMI only extended credit to Medina by allowing

him to pay for the 24 truck engines in installment. While the increased

price of the sale included a financing charge, that charge was simply

another name for the interest to be paid by the installment buyer

(Medina) on the deferred payment of the purchase price of the vehicles

sold and delivered to him by IHMI.

Same; Same; Same; Use of the words finance charge,

financing or finance operation in the documents prepared and

letters sent by IHMI to Medina was in compliance with RA 3765 (Truth

in Lending Act).The use of the words finance charge, financing or

finance operation in the documents prepared, and letters sent, by

IHMI to Medina, was in compliance with R.A. 3765 (Truth in Lending

Act) which requires a creditor (or seller) to fully disclose to the debtor

(or buyer) the true cost of credit with a view of preventing the

uninformed use of credit to the detriment of the national economy.

Same; Same; Same; Same; IHMI transaction with Medina differs

from a financing transaction under RA 5980.IHMI correctly pointed

out that its transaction with Medina differs from a financing transaction

under R.A. 5980, in that there were only two parties in its transaction

with Medina, namely: IHMI and Medina, while in a financing

transaction under R.A. 3765, there are three (3) parties involved,

namely: (1) the installment buyer, (2) the seller, and (3) the financing

company. The buyer executes a note or notes for the unpaid balance of

the price of the thing purchased by him on installment. The seller

assigns the notes or discounts them with a financing company which is

subrogated in the place of the seller, as creditor of the installment

buyer.

Same; Same; Same; Same; Same; Transaction between IHMI and

Medina did not involve any discounting, factoring or assignment of

IHMIs credit against Medina to a finance company.The transaction

between IHMI and Medina did not involve any discounting, factoring or

assignment of IHMIs credit against Medina to a finance company. The

transaction was bilateral, not trilateral. No financing company stepped

into the shoes of IHMI as assignee or purchaser of IHMIs credit against

Medina. Medina himself, not a financing company, paid IHMI for the

truck engines. Medina made his installment payments or amortizations

to IHMI, not to a financing company.

15. STATE INVESTMENT HOUSE, INC. and STATE FINANCING CENTER,

INC., petitioners, vs. CITIBANK, N.A., BANK OF AMERICA, NT & SA,

HONGKONG & SHANGHAI BANKING CORPORATION, and the COURT

OF APPEALS, respondents.

G.R. Nos. 79926-27. October 17, 1991.*

Corporation Law; Foreign Corporation; Attachment; A foreign

corporation licitly doing business in the Philippines, which is a defendant

in a civil suit, may not be considered a non-resident within the scope of

the legal corporation authorizing attachment against a defendant not

residing in the Philippine Islands.This Court itself has already had

occasion to hold that a foreign corporation licitly doing business in the

Philippines, which is a defendant in a civil suit, may not be considered

a non-residentwithin the scope of the legal provision authorizing

attachment against a defendant not residing in the Philippine

Islands; in other words, a preliminary attachment may not be applied

for and granted solely on the asserted fact that the defendant is a

foreign corporation authorized to do business in the Philippinesand is

consequently and necessarily, a party who resides out of the

Philippines. Parenthetically, if it may not be considered as a party not

residing in the Philippines, or as a party who resides out of the country,

then, logically, it must be considered a party who does reside in the

Philippines, who is a resident of the country. Be this as it may, this

Court pointed out that: x x Our laws and jurisprudence indicate a

purpose to assimilate foreign corporations, duly licensed to do business

here, to the status of domestic corporations. (Cf. Section 73, Act No.

1459, and Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76;

Yu; Cong Eng vs. Trinidad, 47 Phil. 385, 411) We think it would be

entirely out of line with this policy should we make a discrimination

against a foreign corporation, like the petitioner, and subject its

property to the harsh writ of seizure by attachment when it has

complied not only with every requirement of law made specially of

foreign corporations, but in addition with every requirement of law

made of domestic corporations. xx.

Same; Same; Insolvency Law; The law grants to a juridical person

as well as to natural persons the power to petition for the adjudication

of bankruptcy of any natural or judicial, provided it is a resident

corporation.Neither can the Court accept the theory that the

omission by the banks in their petition for involuntary insolvency of an

explicit and categorical statement that they are residents of the

Philippine Islands, is fatal to their cause. In truth, in light of the

concept of resident foreign corporations just expounded, when they

alleged in that petition that they are foreign banking corporations,

licensed to do business in the Philippines, and actually doing business in

this country through branch offices or agencies, they were in effect

stating that they are resident foreign corporations in the Philippines.

There is, of course, as petitioners argue, no substantive law explicitly

granting foreign banks the power to petition for the adjudication of a

Philippine corporation as a bankrupt. This is inconsequential, for

neither is there any legal provision expressly giving domestic banks the

same power, although their capacity to petition for insolvency can

scarcely be disputed and is not in truth disputed by petitioners. The law

plainly grants to a juridical person, whether it be a bank or not or it be a

foreign or domestic corporation, as to natural persons as well, such a

power to petition for the adjudication of bankruptcy of any person,

natural or juridical, provided that it is a resident corporation and joins

at least two other residents in presenting the petition to the

Bankruptcy Court.

1. EULALIO M. RUIZ and ILUMINADA RUIZ, petitioners,vs. HON. DOROTEO N. CANEBA, THE CITY SHERIFF OF MANILA AND/OR HIS DEPUTIES, ZENAIDA SANGALANG and ADOLFO CRUZ, respondents.2. EASTERN SHIPPING LINES, INC., petitioner, vs. HON. COURT OF APPEALS AND MERCANTILE INSURANCE COMPANY, INC.3. CENTRAL BANK OF THE PHILIPPINES as Liquidator of the FIDELITY SAVINGS BANK, petitioner, vs.HONORABLE JUDGE JESUS P. MORFE, as Presiding Judge of Bran ch XIII, Court of First Instance of Manila, Spouses AUGUSTO and ADELAIDA PADILLA and Spouses MARCE...4. ANTONIO R. BANZON and ROSA BALMACEDA, petitioners, vs. COURT OF APPEALS, MAXIMO R. STA. MARIA and VALERIANA R. STA. MARIA, respondents.5. ATOK FINANCE CORPORATION, petitioner, vs. COURT OF APPEALS, SANYU CHEMICAL CORPORATION, DANILO E. ARRIETA, NENITA B. ARRIETA, PABLITO BERMUNDO and LEOPOLDO HALILI, respondents.6. INTEGRATED REALTY CORPORATION and RAUL L. SANTOS, petitioners, vs. PHILIPPINE NATIONAL BANK, OVERSEAS BANK OF MANILA and THE HON. COURT OF APPEALS, respondents.OVERSEAS BANK OF MANILA, petitioner, vs. COURT OF APPEALS, INTEGRATED REALTY CORPORATION, and RAUL L. SANTOS, respondents.7. DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, CELEBRADA MANGUBAT and ABNER MANGUBAT, respondents.8. LUCIO ROBLES, EMETERIA ROBLES, ALUDIA ROBLES and EMILIO ROBLES, petitioners, vs. COURT OF APPEALS, Spouses VIRGILIO SANTOS and BABY RUTH CRUZ, RURAL BANK OF CARDONA, Inc., HILARIO ROBLES, ALBERTO PALAD, JR. in his capacity as Director of Lands, and...9. BA FINANCE CORPORATION, petitioner, vs. HON. COURT OF APPEALS and ROBERTO M. REYES, respondents.10. DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, ONG PENG, ET AL., respondents.11. PHILIPPINE VETERANS BANK, petitioner, vs.BENJAMIN MONILLAS, respondent.G.R. No. 167098.March 28, 2008.*12. LUISA GUANCO, assisted by her husband, LEONARDO GUANCO, petitioner, vs. ISIDRO ANTOLO, respondent.G.R. No. 150852.July 31, 2006.*13. LORENZO PASCUAL and LEONILA TORRES, plaintiffs-appellees, vs. UNIVERSAL MOTORS CORPORATION, defendant-appellant.14. INTERNATIONAL HARVESTER MACLEOD, INC., petitioner, vs. MARIANO MEDINA, JR. and HON. TOMAS P. MADDELA, JR., in his capacity as Presiding Judge of Branch XXXIV of the Court of First Instance of Manila, respondents.15. STATE INVESTMENT HOUSE, INC. and STATE FINANCING CENTER, INC., petitioners, vs. CITIBANK, N.A., BANK OF AMERICA, NT & SA, HONGKONG & SHANGHAI BANKING CORPORATION, and the COURT OF APPEALS, respondents.