reyes vs. ca to babst vs ca

7/24/2019 Reyes vs. CA to Babst vs CA

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SECOND DIVISION

[G.R. No. 120817. November 4, 1996]

ELSA B. REYES,petitioner, vs. COUR O! A""EALS, SECREARY O! #US$CE, A!"%&UUAL BENE!$ ASSOC$A$ON, $NC., '() GRAC$ELA

ELEA*AR, respondents.

+ E C $ S $ O N

ORRES, #R.,J.

Petitioner assails the respondent courts decision[1]dated May 12, 1! "hich sustained the

t"o resolutions o# the respondent Secretary o# $ustice, na%ely& 1' the (esolution dated $anuary

2), 12 a##ir%in* the resolution o# the Pro+incial Prosecutor o# (ial dis%issin* the co%plaintso# petitioner a*ainst pri+ate respondent Eleaar in I-S- Nos- 1.2/!), 1.0)2/ to 2, 1.0!/! to

1 and 1.0)/ to ) #or +iolations o# -P- l*- 22 and esta#a under 3rticle )1!, par- 0, no- 2 4d'

o# the (e+ised Penal Code, and 2' the (esolution dated $anuary 12, 1) a##ir%in* the resolution

o# the City Prosecutor o# 5ueon City #indin* aprima faciecase in I-S- No- 2.26 #or +iolation

o# -P- l*- 22 and esta#a #iled 7y respondent 38P.Mutual ene#it 3ssociation, Inc- 438P.

M3I, #or 7re+ity' a*ainst petitioner (eyes-

9he #acts as su%%aried 7y the respondent court are as #ollo"s&

Elsa (eyes is the president o# Eurotrust Capital Corporation 4E:(O9(:S9', a do%estic

corporation en*a*ed in credit #inancin*- ;raciela Eleaar, pri+ate respondent, is the president o#

-E- (it Mansion International Corporation 4E(MIC', a do%estic enterprise en*a*ed in real

estate de+elop%ent- 9he other respondent, 3r%ed 8orces o# the Philippines Mutual ene#it

3sso-, Inc- 438P.M3I', is a corporation duly or*anied pri%arily to per#or% "el#are ser+ices

#or the 3r%ed 8orces o# the Philippines-

3- (e& (esolution dated $anuary 2), 12

In her +arious a##ida+its.co%plaints "ith the O##ice o# the Pro+incial Prosecutor o# (ial, Elsa

(eyes alle*es that Eurotrust and er%ic entered into a loan a*ree%ent- Pursuant to the said

contract, Eurotrust e- 9he loan "as "ithout collateral 7ut "ith hi*her

interest rates than those allo"ed 7y the 7an>s- In turn, er%ic issued 21 postdated chec>s to

co+er pay%ents o# the loan pac>a*es- ?o"e+er, "hen those chec>s "ere presented #or pay%ent,

the sa%e "ere dishonored 7y the dra"ee 7an>, (ial Co%%ercial an>in* Corporation 4(CC',

due to stop pay%ent order %ade 7y ;raciela Eleaar- Despite Eurotrusts notices and repeated
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de%ands to pay, Eleaar #ailed to %a>e *ood the dishonored chec>s, pro%ptin* (eyes to #ile

a*ainst her se+eral cri%inal co%plaints #or +iolation o# -P- 22 and esta#a under 3rticle )1!, 0th

para*raph, No- 2 4d' o# the (e+ised Penal Code-

;raciela Eleaar, in her counter.a##ida+its, asserts that 7e*innin* Dece%7er 1/, Eurotrust

ea*es a%ountin* to P1=,))6,)//-/6- 8or its part, er%ic

issued se+eral postdated chec>s to co+er pay%ents o# the principal and interest o# e+ery loan

pac>a*es in+ol+ed-

Su7se@uently, Elsa (eyes "as in+esti*ated 7y the Senate lue (i77on Co%%ittee- She "as

in+ol+ed in a lar*e scale sca% a%ountin* to %illions o# pesos 7elon*in* to Instructional Material

Corporation 4IMC', an a*ency under the Depart%ent o# Education, Culture and Sports-

Mean"hile, respondent 38P.M3I "hich in+ested its #unds "ith Eurotrust, 7y 7uyin* #ro% it

*o+ern%ent securities, conducted its o"n in+esti*ation and #ound that a#ter Eurotrust deli+ered

to 38P.M3I the securities it purchased, the #or%er 7orro"ed the sa%e securities 7ut #ailed to

return the% to 38P.M3IA and that the a%ounts paid 7y 38P.M3I to Eurotrust #or those

securities "ere in turn lent 7y Elsa (eyes to er%ic and others-

Bhen Eleaar ca%e to >no" that the #unds ori*inally loaned 7y Eurotrust to er%ic 7elon*ed to

38P.M3I, she, as President o# er%ic, re@uested a %eetin* "ith Eurotrust representati+es-

9hus, on8e7ruary 1!,11, the representati+es o# Eurotrust and er%ic a*reed that er%ic

"ould directly settle its o7li*ations "ith the real o"ners o# the #und.38P.M3I and DECS.

IMC- 9his a*ree%ent "as #or%alied in t"o letters dated March 1, 11- Pursuant to this

understandin*, er%ic ne*otiated "ith 38P.M3I and DECS.IMC and %ade pay%ents to thelatter- In #act, er%ic paid 38P.M3IP)1,11-11 and a chec> o# P1.%illion-

?o"e+er, ;raciela Eleaar later learned that Elsa (eyes continued to collect on the postdated

chec>s issued 7y her 4Eleaar' contrary to their a*ree%ent- So, er%ic "rote to Eurotrust to hold

the a%ounts in constructi+e trust #or the real o"ners- ut (eyes continued to collect on the other

postdated chec>s dated 3pril 1 to $une 2/, 11- :pon her counsels ad+ise, Eleaar had the

pay%ent stopped- ?ence, her chec>s issued in #a+or o# Eurotrust "ere dishonored-

3#ter in+esti*ation, the O##ice o# the Pro+incial Prosecutor o# (ial issued a resolution

dis%issin* the co%plaints #iled 7y Elsa (eyes a*ainst ;raciela Eleaar on the *round that "henthe latter assu%ed the o7li*ation o# (eyes to 38P.M3I, it constituted no+ation, ee place-


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9he Secretary o# $ustice dis%issed the petition holdin* that the no+ation o# the loan a*ree%ent

pre+ents the rise o# any incipient cri%inal lia7ility since the no+ation had the e##ect o# cancelin*

the chec>s and renderin* "ithout e##ect the su7se@uent dishonor o# the already cancelled chec>s-

- (e& (esolution dated $anuary 12, 1)

3t the ti%e o# the pendency o# the cases #iled 7y Elsa (eyes a*ainst ;raciela Eleaar, 38P.

M3I lod*ed a separate co%plaint #or esta#a and a +iolation o# P 22 a*ainst Elsa (eyes "ith

the o##ice o# the city prosecutor o# 5ueon city doc>eted as I-S- 2.26- 9he a##ida+it o# ;udelia

Dinapo a %e%7er o# the in+esti*atin* co%%ittee #or%ed 7y 38P.M3I to in+esti*ate the

ano%alies co%%itted 7y Eurotrust(eyes, sho"s that 7et"een 3u*ust 1/ and Septe%7er 1=,

Eurotrust o##ered to sell to 38P.M3I +arious %ar>eta7le securities, includin* *o+ern%ent

securities, such as 7ut not li%ited to treasury notes, treasury 7ills, and an> o# the Philippines

onds and 3sset Participation Certi#icates-

(elyin* on a can+ass conducted 7y one o# its e%ployees, Cristina Cornista, 38P.M3I decided

to purchase se+eral securities a%ountin* to P12=,===,===-== #ro% Eurotrust- 8ro% 8e7ruary

1= to Septe%7er 1=, a total o# 21 transactions "ere entered into 7et"een Eurotrust and 38P.

M3I- Eurotrust deli+ered to 38P.M3I treasury notes a%ountin* to P) %illion- ?o"e+er,

Eurotrust #raudulently 7orro"ed all those treasury notes #ro% the 38P.M3I #or purposes o#

+eri#ication "ith the Central an>- Despite 38P.M3Is repeated de%ands, Eurotrust #ailed to

return the said treasury notes- Instead it deli+ered 21 postdated chec>s in #a+or o# 38P.M3I

"hich "ere dishonored upon present%ent #or pay%ent- Eurotrust nonetheless %ade partial

pay%ent to 38P.M3I a%ountin* to P)!,1!1,6)-2- ?o"e+er, a#ter deductin* this partial

pay%ent, the a%ounts o# P) %illion treasury notes "ith interest and P)!,1!1,6)-2 ha+ere%ained unpaid- Conse@uently, 38P.M3I #iled "ith the O##ice o# the City Prosecutor o#

5ueon City a co%plaint #or +iolation o# P 22 and esta#a a*ainst Elsa (eyes-

(eyes interposed the de#ense o# no+ation and insisted that 38P.M3Is clai% o# unreturned P)

%illion "orth o# *o+ern%ent securities has 7een satis#ied upon her pay%ent o# P)= %illion- Bith

respect to the re%ainin* P0) %illion, the sa%e "as paid "hen Eurotrust assi*ned its

Participation Certi#icates to 38P.M3I-

E+entually, the O##ice o# the City Prosecutor o# 5ueon City issued a resolution reco%%endin*

the #ilin* o# an in#or%ation a*ainst (eyes #or +iolation o# P 22 and esta#a-

Bhereupon, (eyes #iled a petition #or re+ie" "ith respondent Secretary o# $ustice- 9he latter

dis%issed the petition on the *round that only resolutions o# the prosecutors dis%issin* cri%inal

co%plaints are co*nia7le #or re+ie" 7y the Depart%ent o# $ustice- [2]
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On 8e7ruary 2, 10, petitioner see>in* the nulli#ication o# either o# the t"o resolutions o#

the respondent Secretary o# $ustice #iled a petition #or certiorari, prohi7ition

and mandamus[)]"ith the respondent court "hich, ho"e+er, denied and dis%issed her petition-

?er %otion #or reconsideration[0]"as li>e"ise denied in a (esolution[!]dated $une 2, 1!-

?ence, this present petition-

9he #irst Depart%ent o# $ustice (esolution dated $anuary 2), 12 "hich sustained the

Pro+incial Prosecutors decision dis%issin* petitioners co%plaints a*ainst respondent Eleaar #or

+iolation o# -P- 22 and esta#a ruled that the contract o# loan 7et"een petitioner and respondent

Eleaar had 7een no+ated "hen they a*reed that respondent Eleaar should settle her #ir%s

4E(MIC' loan o7li*ations directly "ith 38P.M3I and DECS.IMC instead o# settlin* it "ith

petitioner (eyes- 9his #indin* "as a##ir%ed 7y the respondent court "hich pointed out that the

#irst contract "as no+ated in the sense that there "as a su7stitution o# creditor[6]"hen respondent

Eleaar, "ith the a*ree%ent o# (eyes, directly paid her o7li*ations to 38P.M3I-

Be cannot see ho" no+ation can ta>e place considerin* the surroundin* circu%stances

"hich ne*ate the sa%e- 9he principle o# no+ation 7y su7stitution o# creditor "as erroneously

applied in the #irst @uestioned resolution in+ol+in* the contract o# loan 7et"een petitioner and

respondent Eleaar-

3d%ittedly, in order that a no+ation can ta>e place, the concurrence o# the #ollo"in*

re@uisites[]is indispensa7le&

1- there %ust 7e a pre+ious +alid o7li*ation,

2- there %ust 7e an a*ree%ent o# the parties concerned to a ne" contract,

)- there %ust 7e the ea7ly sho"s that there "as nothin* therein that "ould

e+ince that respondent 38P.M3I a*reed to su7stitute #or the petitioner as the ne" creditor o#
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respondent Eleaar in the contract o# loan- It is e+ident that the t"o letters %erely *a+e

respondent Eleaar an authority to directly settle the o7li*ation o# petitioner to 38P.M3I and

DECS.IMC- It is essentially an a*ree%ent 7et"een petitioner and respondent Eleaar only- 9here

"as no %ention "hatsoe+er o# 38P.M3Is consent to the ne" a*ree%ent 7et"een petitioner

and respondent Eleaar %uch less an indication o# 38P.M3Is intention to 7e the su7stitute

creditor in the loan contract- Bell settled is the rule that no+ation 7y su7stitution o# creditor

re@uires an a*ree%ent a%on* the three parties concerned . the ori*inal creditor, the de7tor and

the ne" creditor-[1=]It is a ne" contractual relation 7ased on the %utual a*ree%ent a%on* all the

necessary parties- ?ence, there is no no+ation i# no ne" contract "as e her al%ost se+enteen %onths 4#ro%

$uly , 12 to 8e7ruary 2, 10' to challen*e the $anuary 2), 12 (esolution "hen she #iled

the petition #or certiorari"ith the respondent court on 8e7ruary 2, 10,[1)]"hich resol+ed to

a##ir% the a#oresaid resolution o# the Secretary o# $ustice-

Petitioner "ho chose her #oru% 7ut un#ortunately lost her clai% is 7ound 7y such ad+erse

ud*%ent on account o# #inality o# ud*%ent, other"ise, there "ould 7e no end to

liti*ation-iti*ation %ust end and ter%inate so%eti%e and so%e"here, and it is essential to ane##ecti+e ad%inistration o# ustice that once a ud*%ent has 7eco%e #inal, the issue or cause

therein should 7e laid at rest-[10]Bhile the respondent Secretary o# $ustice "as in error in

applyin* the rule on no+ation in the $anuary 2), 12 (esolution, such irre*ularity, ho"e+er,

does not a##ect the +alidity o# the proceedin*s in the Depart%ent o# $ustice- Erroneous

application o# a le*al principle cannot 7rin* a ud*%ent that has already attained the status o#

#inality to an a7solute nullity under the "ell entrenched rule o# #inality o# ud*%ent- 9he 7asic
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rule o# #inality o# ud*%ent is *rounded on the #unda%ental principle o# pu7lic policy and sound

practice that at the ris> o# occasional error, the ud*%ent o# court and a"ard o# @uasi.udicial

a*encies %ust 7eco%e #inal at so%e de#inite date #iin* relie# in a court o# la" a#ter she intentionally and

unreasona7ly #ails to *uard o# her ri*hts- aches is the #ailure or ne*lect #or an unreasona7le and

unee in

this particular case-

(e*ardin* the second (esolution o# respondent Secretary o# $ustice dated $anuary 12, 1)

"hich a##ir%s the City Prosecutors #indin* o# aprima facie case a*ainst petitioner #or +iolation

o# -P- l*- 22 and esta#a in+ol+in* the contract o# sale o# securities, petitioner a+ers that she

could not 7e held cri%inally lia7le #or the cri%e char*ed 7ecause the contract o# sale o# securities

7et"een her and respondent 38P.M3I "as no+ated 7y su7stitution o# de7tor- 3ccordin* topetitioner, the o7li*ation assu%ed 7y respondent Eleaar pursuant to the authority *i+en 7y her to

respondent Eleaar in a letter dated March 1, 11 "as precisely her 4petitioners' o7li*ation to

respondent 38P.M3I under the contract o# sale o# securities- She clai%s that pri+ate

respondent Eleaar, instead o# #ul#illin* her o7li*ation under the contract o# loan to pay petitioner

the a%ount o# de7ts, assu%ed petitioners o7li*ation under the contract o# sale to %a>e pay%ents

to respondent 38P.M3I directly-[1/]

9his contention is 7ere#t o# any le*al and #actual 7asis- $ust li>e in the #irst @uestioned

resolution, no no+ation too> place in this case- 3 thorou*h e


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No+ation "hich consists in su7stitutin* a ne" de7tor in the place o# the ori*inal one, %ay 7e

%ade e+en "ithout or a*ainst the "ill o# the latter, b- (o /o- e o(3e( o e

re)or. Pay%ent 7y the ne" de7tor *i+es hi% the ri*hts %entioned in 3rticles 12)6 and 12)-

9he consent o# the creditor to a no+ation 7y chan*e o# de7tor is as indispensa7le as the creditors

consent in con+entional su7ro*ation in order that a no+ation shall le*ally ta>e place- 9he %ere

circu%stance o# 38P.M3I recei+in* pay%ents #ro% respondent Eleaar "ho ac@uiesced to

assu%e the o7li*ation o# petitioner under the contract o# sale o# securities, "hen there is clearly

no a*ree%ent to release petitioner #ro% her responsi7ility, does not constitute no+ation, at %ost,

it only creates a uridical relation o# co.de7torship or suretyship on the part o# respondent Eleaar

to the contractual o7li*ation o# petitioner to 38P.M3I and the latter can still en#orce the

o7li*ation a*ainst the petitioner- In 3a< Mar>etin* and De+elop%ent Corporation vs.Court o#

3ppeals,[2=]"hich is rele+ant in the instant case, "e stated that .

In the sa%e +ein, to e##ect a su7ecti+e no+ation 7y a chan*e in the person o# the de7tor, it is

necessary that the old de7tor 7e released ee ne"- So it is deeply rooted

in the (o%an a" urisprudence, the principle . novatio non praesumitur. that no+ation is ne+er

presu%ed- 3t 7otto%, #or no+ation to 7e a ural reality, its animus %ust 7e e+er present, debitum

pro debito7asically e

reyes vs. ca to babst vs ca

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