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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
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UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
April-2008 Jurisprudence                 

  • A.C. No. 6567 - JOSE C. SABERON v. ATTY. FERNANDO T. LARONG

  • A.M. No. 00-10-496-RTC and A.M. NO. RTJ-02-1681 - GLORIA ESPIRITU v. JUDGE ERLINDA PESTANO-BUTED, ETC.

  • A.M. No. 2007-13-SC - RE: HABITUAL ABSENTEEISM OF MR. ERWIN A. ABDON, Utility Worker II

  • A.M. No. 08-1-30-MCTC - RE: FINANCIAL REPORT ON THE AUDIT CONDUCTED IN THE MUNICIPAL CIRCUIT TRIAL COURT, APALIT - SAN SIMON, PAMPANGA

  • A.M. No. 2007-13-SC - RE: HABITUAL ABSENTEEISM OF MR. ERWIN A. ABDON, Utility Worker II

  • A.M. No. 12535-Ret - RE: APPLICATION FOR RETIREMENT/GRATUITY BENEFITS UNDER R.A. NO. 910 AS AMENDED BY R.A. NO. 5095 AND P.D. NO. 1438 FILED BY MRS. CECILIA BUTACAN, SURVIVING SPOUSE OF THE LATE HON. JIMMY R. BUTACAN (FORMER JUDGE, MUNICIPAL TRIAL COURT I

  • A.M. No. MTJ-08-1695 Formerly OCA IPI 03-1380-MTJ - JULIANITO M. SALVADOR v. JUDGE MANUEL Q. LIMSIACO, JR., ET AL.

  • A.M. No. MTJ-08-1702 - EDWIN LACANILAO v. JUDGE MAXWELL S. ROSETE, ET AL.

  • A.M. No. P-04-1765 - JUDGE FELIPE G. BANZON v. RUBY B. HECHANOVA

  • A.M. No. P-04-1914 - GLANIE FLORES, ET AL. v. MYRNA S. LOFRANCO, ETC.

  • A.M. No. P-05-2054 - MILA L. DACDAC v. VICTOR C. RAMOS, ETC.

  • A.M. No. P-06-2142 Formerly OCA I.P.I. No. 05-2294-P - BRANCH CLERK OF COURT MARIZEN B. GRUTAS v. REYNALDO B. MADOLARIA

  • Adm. Matter No. P-06-2214 - GEMMA LETICIA F. TABLATE v. JORGE C. RA ESES

  • A.M. No. P-08-2431 Formerly OCA IPI No. 03-1682-P - EDITHA P. ELAPE v. ALBERTO R. ELAPE, ETC.

  • A.M. No. P-08-2447 Formerly A.M. OCA I.P.I. No. 06-2447-P - ELVISA ROSALES v. DOMINADOR MONESIT, SR.

  • A.M. No. P-08-2455 Formerly OCA I.P.I. No. 05-2175-P, A.M. NO. P-08-2456 Formerly OCA I.P.I. No. 05-2228-P and A.M. NO. RTJ-08-2113 Formerly OCA I.P.I. No. 06-2449-RTJ - JUDGE FATIMA GONZALES-ASDALA v. VICTOR PEDRO A. YANEZA

  • A.M. RTJ-07-2039 Formerly A.M. No. 05-1-37, A.M. OCA IPI No. 04-2055-RTJ and A.M. NO. 05-2177-RTJ - RTC - RE: JUDICIAL AUDIT CONDUCTED IN THE REGIONAL TRIAL COURT (RTC), BRANCH 14, DAVAO CITY, PRESIDED OVER BY JUDGE WILLIAM M. LAYAGUE

  • A.M. No. RTJ-08-2109 Formerly A.M. OCA IPI No. 06-2463-RTJ and Formerly A.M. OCA I.P.I. No. 06-1-45-RTC - OFFICE OF THE COURT ADMINISTRATOR v. JUDGE MOISES M. PARDO, ET AL.

  • G.R. No. 105608 and G.R. NO. 113199 - TIRSO D. MONTEROSO v. COURT OF APPEALS, ET AL.

  • G.R. No. 127545 - ANDRES SANCHEZ, ET AL. v. COMMISSION ON AUDIT

  • G.R. No. 136225 - THE PRESIDENTIAL AD-HOC FACT-FINDING COMMITTEE ON BEHEST LOANS (FFCBL) v. HON. OMBUDSMAN ANIANO A. DESIERTO, ET AL.

  • G.R. No. 140944 - RAFAEL ARSENIO S. DIZON ETC. v. COURT OF TAX APPEALS, ET AL.

  • G.R. No. 146053 - DIOSCORO F. BACSIN v. EDUARDO O. WAHIMAN

  • G.R. No. 148187 - PHILEX MINING CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

  • G.R. No. 150283 - RYUICHI YAMAMOTO v. NISHINO LEATHER INDUSTRIES, INC., ET AL.

  • G.R. No. 151243 - LOLITA R. ALAMAYRI v. ROMMEL, ELMER, ERWIN, ROILER AND AMANDA, ALL SURNAMED PABALE

  • G.R. No. 151790 - SPS. ABNER AND ESTRELLA ANCHINGES v. SPS. FERMIN AND LORNA ALBARILLO, ET AL.

  • G.R. No. 152457 - RODOLFO R. MAHINAY v. COURT OF APPEALS, ET AL.

  • G.R. No. 152666 - MARCIANO TAN v. PHILIPPINE COMMERCIAL INTERNATIONAL BANK

  • G.R. No. 153420 - PARAISO INTERNATIONAL PROPERTIES, INC. v. COURT OF APPEALS, ET AL.

  • G.R. No. 154740 - HENRY DELA RAMA CO. v. ADMIRAL UNITED SAVINGS BANK

  • G.R. No. 155806 - TIBLE & TIBLE COMPANY, INC., ET AL. v. ROYAL SAVINGS AND LOAN ASSOCIATION, ET AL.

  • G.R. No. 156421 - HON. JOSE FERNADEZ, ET AL. v. SPS. GREGORIO ESPINOZA and JOJI GADOR-ESPINOZA

  • G.R. No. 156470 - FREDERICK DAEL v. SPS. BENEDICTO & VILMA BELTRAN

  • G.R. No. 158026 - DORIE ABESA NICOLAS v. DEL-NACIA CORPORATION

  • G.R. No. 158040 - SPOUSES ONESIFORO and ROSARIO ALINAS v. SPOUSES VICTOR and ELENA ALINAS

  • G.R. No. 158271 - CHINA BANKING CORPORATION v. ASIAN CONSTRUCTION and DEVELOPMENT CORPORATION

  • G.R. No. 158788 - ELY AGUSTIN v. PEOPLE OF THE PHILIPPINES

  • G.R. No. 158881 - PETRON CORPORATION v. MAYOR TOBIAS M. TIANGCO, ET AL.

  • G.R. No. 158965 - NESTORIO W. LAYA, ET AL. v. SPOUSES EDWIN and LOURDES TRIVIÑO

  • G.R. No. 159585 and G.R. NO. 165318 - AMANDO A. PONTAOE, ET AL. v. TEODORA A. PONTAOE, ET AL.

  • G.R. No. 159731 - EASTERN ASSURANCE and SURETY CORPORATION v. CON-FIELD CONSTRUCTION and DEVELOPMENT CORPORATION

  • G.R. No. 160113 - CHINA BANKING CORP. v. TAFA INDUSTIRES INC., ET AL.

  • G.R. No. 160671 - LUIS L. CO v. HON. RICARDO R. ROSARIO, ET AL.

  • G.R. No. 160811 - RICKY BASTIAN v. HON. COURT OF APPEALS, ET AL.

  • G.R. No. 160855 - CONCEPCION CHUA GAW v. SUY BEN CHUA, ET AL.

  • G.R. No. 161004 - TECNOGAS PHILIPPINES MANUFACTURING CORPORATION v. PHILIPPINE NATIONAL BANK

  • G.R. No. 161070 - JOHN HILARIO y SIBAL v. PEOPLE OF THE PHILIPPINES

  • G.R. No. 161390 - RAUL H. SESBRE O v. HON. COURT OF APPEALS, ET AL.

  • G.R. No. 161933 - STANDARD CHARTERED BANK EMPLOYEES UNION (SCBEU-NUBE) v. STANDARD CHARTERED BANK and ANNEMARIE DURBIN, ET AL.

  • G.R. No. 162195 - BAHIA SHIPPING SERVICES, INC. v. REYNALDO CHUA

  • G.R. No. 162356 - DONG SEUNG INCORPORATED v. BUREAU OF LABOR RELATIONS, ET AL.

  • G.R. No. 162420 - JAGUAR SECURITY and INVESTIGATION AGENCY v. RODOLFO A. SALES, ET AL.

  • G.R. No. 162808 - FELICIANO GALVANTE v. HON. ORLANDO C. CASIMIRO, ET AL.

  • G.R. No. 162956 - FAUSTINO REYES, ET AL. v. PETER B. ENRIQUEZ, ET AL.

  • G.R. No. 163013 - EUREKA PERSONNEL AND MANAGEMENT SERVICES, INC. v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 163684 - FAUSTINA CAMITAN, ET AL. v. FIDELITY INVESTMENT CORPORATION

  • G.R. No. 164081 - MITSUBISHI MOTORS PHILS. CORPORATION v. ROLANDO SIMON, ET AL.

  • G.R. No. 164150 - THE GOVERNMENT OF THE KINGDOM OF BELGIUM v. HON. COURT OF APPEALS, ET AL.

  • G.R. No. 164195 - APO FRUITS CORP, ET AL. v. THE HON. COURT OF APPEALS, ET AL.

  • G.R. No. 164298 - ENGR. ROGER F. BORJA v. THE PEOPLE OF THE PHILIPPINES

  • G.R. No. 164805 - SOLIDBANK CORP., ETC. v. GATEWAY ELECTRONICS CORP., ET AL.

  • G.R. No. 164824 - ROLANDO V. AROMIN v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 164909 - RONNIE AMBAIT Y SAURA v. THE COURT OF APPEALS, ET AL.

  • G.R. No. 165284 - MP ACEBEDO OPTICAL SHOPS/ACEBEDO OPTICAL CO., INC. v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 165696 - ALEJANDRO B. TY v. SYLVIA S. TY, ETC.

  • G.R. No. 165776 - GENEVIEVE O. GAAS, ET AL. v. RASOL L. MITMUG, ETC.

  • G.R. No. 165968 - PEPSI COLA PRODUCTS PHILIPPINES, INC., ET AL. v. EMMANUEL V. SANTOS

  • G.R. No. 166051 - SOLID HOMES, INC. v. EVELINA LASERNA, ET AL.

  • G.R. No. 166245 - ETERNAL GARDENS MEMORIAL PARK CORPORATION v. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY

  • G.R. No. 166246 - ANTONIO NEPOMUCENO v. PEOPLE OF THE PHILIPPINES

  • G.R. No. 166658 - EUSTAQUIO B. CESA v. OFFICE OF THE OMBUDSMAN, ET AL.

  • G.R. No. 166703 - AMA COMPUTER COLLEGE, INC. v. ELY GARCIA, ET AL.

  • G.R. No. 166809 - ATTY. ROMEO L. ERECE v. LYN B. MACALINGAY, ET AL.

  • G.R. No. 167011 - SPS. CARLOS AND ERLINDA ROMUALDEZ v. COMMISSION ON ELECTIONS, ET AL.

  • G.R. NO. 167011 - G.R. NO. 167011 - CARPIO - DISSENTING OPINION

  • G.R. NO. 167011 - G.R. NO. 167011 - TINGA - DISSENTING OPINION

  • G.R. No. 167280 - METROPOLITAN BANK AND TRUST COMPANY v. SPS. ELMOR V. BANCE AND ROSARIO J. BANCE

  • G.R. No. 167756 - THE PEOPLE OF THE PHILIPPINES v. JERRY NAZARENO

  • G.R. No. 168116 - BELLE CORPORATION v. ARTURO N. MACASUSI

  • G.R. No. 168862 - GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) v. EMMANUEL P. CUNTAPAY

  • G.R No. 168999 - RAUL DAZA v. RONAN P. LUGO

  • G.R. No. 169370 - EUSTACIO ATWEL, ET AL. v. CONCEPCION PROGRESSIVE ASSOCIATION, INC.

  • G.R. NOS. 169408 & 170144 - HANJIN HEAVY INDUSTRIES & CONSTRUCTION CO. LTD v. DYNAMIC PLANNERS AND CONSTRUCTION CORP.

  • G.R. No. 169790 - CONGREGATION OF THE RELIGIOUS OF THE VIRGIN MARY, ETC. v. EMILIO OROLA, ET AL.

  • G.R. NOS. 169829-30 - STEEL CORPORATION OF THE PHILIPPINES v. SCP EMPLOYEES UNION-NATIONAL FEDERATION OF LABOR UNIONS

  • G.R. No. 169914 and G.R. No. 174166 - ASIA'S EMERGING DRAGON CORPORATION v. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, ET AL.

  • G.R. No. 169914/G.R. No. 174166 - G.R. No. 169914/G.R. No. 174166 - J. CORONA - DISSENTING OPINION

  • G.R. No. 170112 - DEL PILAR ACADEMY, ET AL. v. DEL PILAR ACADEMY EMPLOYEES UNION

  • G.R. No. 170141 - JAPAN AIRLINES v. JESUS SIMANGAN

  • G.R. No. 170243 - NANCY H. ZAYCO, ET AL. v. ATTY. JESUS V. HINLO, JR.

  • G.R. No. 170691 - REBECCA E. BADIOLA v. HON. COURT OF APPEALS, ET AL.

  • G.R. No. 170813 - B.F. METAL (CORPORATION) v. SPS. ROLANDO M. LOMOTAN and LINAFLOR LOMOTAN, ET AL.

  • G.R. No. 171374 - TEOFILA ILAGAN-MENDOZA, ET AL. v. HON. COURT OF APPEALS, ET AL.

  • G.R. No. 171500 - FERNANDO C. PARMA JR. v. THE OFFICE FO THE DEPUTY OMBUDSMAN FOR LUZON, ET AL.

  • G.R. No. 172038 - DANTE D. DE LA CRUZ v. MAERSK FILIPINAS CREWING, INC., ET AL.

  • G.R. No. 172299 - ALFREDO TAGLE v. EQUITABLE PCI BANK, ETC., ET AL.

  • G.R. No. 172410 - REPUBLIC OF THE PHILIPPINES v. HOLY TRINITY REALTY DEVELOPMENT CORP.

  • G.R. No. 172470 - PEOPLE OF THE PHILIPPINES v. SAMMY RAMOS Y DALERE

  • G.R. No. 172595 - BIENVENIDO EJERCITO, ET AL. v. M.R. VARGAS CONSTRUCTION, ET AL.

  • G.R. No. 172890 - S.L. TEVES, INC., ETC., ET AL. v. CASIANO ERAN

  • G.R. No. 172953 - JUNIE MALILLIN Y. LOPEZ v. PEOPLE OF THE PHILIPPINES

  • G.R. No. 173192 - ROSENDO BACALSO, ET AL. v. MAXIMO PADIGOS, ET AL.

  • G.R. No. 173918 - REPUBLIC OF THE PHILIPPINES v. PILIPINAS SHELL PETROLEUM CORPORATION

  • G.R. No. 174011 - AIR TRANSPORTATION OFFICE, ET AL. v. ANGELUS TONGOY ET AL.

  • G.R. No. 174672 - MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY v. HEIRS OF MARCELINA L. SERO, ETC., ET AL.

  • G.R. No. 174826 - OFFICE OF THE OMBUDSMAN v. ENGR. ALFONSO P. ESPIRITU

  • G.R. No. 174935 - CIVIL SERVICE COMMISSION v. TRISTAN C. COLANGGO

  • G.R. No. 175005 - THE ESTATE OF POSEDIO ORTEGA v. THE COURT OF APPEALS, ET AL.

  • G.R. No. 175201 - HONORABLE OMBUDSMAN SIMEON V. MARCELO, ET AL. v. LEOPOLDO F. BUNGUBUNG, ET AL.

  • G.R. No. 175338 - AIR MATERIEL WING SAVINGS AND LOAN ASSOCIATION, INC., ETC., ET AL. v. COL. LUVIN S. PANAY, ET AL.

  • G.R. No. 175338 - G.R. No. 175338 - J. NACHURA - DISSENTING OPINION

  • G.R. No. 175371 - BENITO J. BRIZUELA v. ABRAHAM DINGLE, ET AL.

  • G.R. No. 175460 - METRO TRANSIT ORGANIZATION INC., ET AL. v. PIGLAS NFWD-KMO, ET AL.

  • G.R. No. 175600 - PEOPLE OF THE PHILIPPINES v. LEONEL PASAOL PALAC

  • G.R. No. 175604 - THE PEOPLE OF THE PHILIPPINES v. SALVADOR PE AFLORIDA, JR.

  • G.R. No. 175952 - SOCIAL SECURITY SYSTEM v. ATLANTIC GULF AND PACIFIC COMPANY OF MANILA, INC., ET AL.

  • G.R. No. 176065 - PEOPLE OF THE PHILIPPINES v. RAMON ARIVAN y FORNILLO

  • G.R. No. 176084 - CARMENCITA G. CARINO v. MERLIN DE CASTRO

  • G.R. No. 176265 - THE PEOPLE OF THE PHILIPPINES v. JOSE MAGBANUA Y MORI O

  • G.R. No. 176324 - ABAYA INVESTMENTS CORPORATION v. MERIT PHILIPPINES, ET AL.

  • G.R. No. 177666 - EUGENIO R. AVENIDO v. CIVIL SERVICE COMMISSION

  • G.R. No. 178546 - PEOPLE OF THE PHILIPPINES v. MUKIM ELING y MA ALAC

  • G.R. No. 179035 - THE PEOPLE OF THE PHILIPPINES v. JESUS PAYCANA, JR.

  • G.R. No. 179261 - THE OMBUDSMAN, ET AL. v. BEATRIZ S. PELINO

  • G.R. No. 179337 - JOSEPH SALUDAGA v. FAR EASTERN UNIVERSITY, ET AL.

  • G.R. No. 179499 - PEOPLE OF THE PHILIPPINES v. TORIBIO JABINIAO, JR., ET AL.

  • G.R. No. 179851 - MAYOR JOSE UGDORACION, JR. v. COMMISSION ON ELECTIONS, ET AL.

  • G.R. No. 179901 - BANCO DE ORO-EPCI, INC., ETC. v. JAPRL DEVELOPMENT CORPORATION, ET AL.

  • G.R. No. 179940 - PEOPLE OF THE PHILIPPINES v. NORBERTO DEL MONTE y GAPAY

  • G.R. No. 180444 - FEDERICO T. MONTEBON, ET AL. v. COMMISSION ON ELECTION, ET AL.

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    G.R. No. 154740 - HENRY DELA RAMA CO. v. ADMIRAL UNITED SAVINGS BANK

      G.R. No. 154740 - HENRY DELA RAMA CO. v. ADMIRAL UNITED SAVINGS BANK

    PHILIPPINE SUPREME COURT DECISIONS

    THIRD DIVISION

    [G.R. NO. 154740 : April 16, 2008]

    HENRY DELA RAMA CO., Petitioner, v. ADMIRAL UNITED SAVINGS BANK, Respondent.

    D E C I S I O N

    NACHURA, J.:

    On appeal is the February 19, 2002 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 42167, setting aside the May 18, 1991 Decision2 of the Regional Trial Court (RTC) of Quezon City, Branch 100, as well as its subsequent Resolution,3 denying petitioner's motion for reconsideration.

    On February 28, 1983, Admiral United Savings Bank (ADMIRAL) extended a loan of Five Hundred Thousand Pesos (P500,000.00) to petitioner Henry Dela Rama Co (Co), with Leocadio O. Isip (Isip) as co-maker. The loan was evidenced by Promissory Note No. A1-0414 dated February 28, 1983 and payable on or before February 23, 1984, with interest at the rate of 18% per annum and service charge of 10% per annum. The note also provided for liquidated damages at the rate of 3% per month plus incidental cost of collection and/or legal fees/cost, in the event of non-payment on due date.

    Co and Isip failed to pay the loan when it became due and demandable. Demands for payment were made by ADMIRAL, but these were not heeded. Consequently, ADMIRAL filed a collection case against Co and Isip with the RTC of Quezon City, docketed as Civil Case No. Q-48543.

    Co answered the complaint alleging that the promissory note was sham and frivolous; hence, void ab initio. He denied receiving any benefits from the loan transaction, claiming that ADMIRAL merely induced him into executing a promissory note. He also claimed that the obligations, if any, had been paid, waived or otherwise extinguished. Co allegedly ceded several vehicles to ADMIRAL, the value of which was more than enough to cover the alleged obligation. He added that there was condonation of debt and novation of the obligation. ADMIRAL was also guilty of laches in prosecuting the case. Finally, he argued that the case was prematurely filed and was not prosecuted against the real parties-in-interest.5

    Pending resolution of the case, Isip died. Accordingly, he was dropped from the complaint.

    Co then filed a third party complaint against Metropolitan Rentals & Sales, Inc. (METRO RENT). He averred that the incorporators and officers of METRO RENT were the ones who prodded him in obtaining a loan of P500,000.00 from ADMIRAL. The proceeds of the loan were given to the directors and officers of METRO RENT, who assured him of prompt payment of the loan obligation. METRO RENT also assured him that he would be discharged from all liabilities under the promissory note, but it did not make good its promise. Co, thus, prayed that METRO RENT be adjudged liable to ADMIRAL for the payment of the obligation under the promissory note.6

    Traversing the third party complaint, METRO RENT denied receiving the loan proceeds from Co. It claimed that the loan was Co's personal loan from which METRO RENT derived no benefit, thus, it cannot be held liable for the payment of the same.7

    In due course and after hearing, the RTC rendered a Decision8 on May 18, 1991, dismissing the complaint on the ground that the obligation had already been paid or otherwise extinguished. It primarily relied on the release of mortgage executed by the officers of ADMIRAL, and on Co's testimony that METRO RENT already paid the loan. The RTC also dismissed Co's third party complaint against METRO RENT, as well as his counterclaim against ADMIRAL for lack of basis.

    ADMIRAL appealed the dismissal of the complaint to the CA.9 On February 19, 2002, the CA rendered the assailed decision.10 Reversing the RTC, the CA found preponderance of evidence to hold Co liable for the payment of his loan obligation to ADMIRAL. It rejected Co's assertion that he merely acted as an accommodation party for METRO RENT, declaring that Co's liability under the note was apparent in his express, absolute and unconditional promise to pay the loan upon maturity. The CA further held that whatever agreement Co had with METRO RENT cannot bind ADMIRAL since there is no showing that the latter was aware of the agreement, let alone consented to it. The CA also rejected Co's alternative defense that METRO RENT already paid the loan, finding the testimonial evidence in support of the assertion as pure hearsay.

    The CA disposed, thus:

    UPON THE VIEW WE TAKE OF THIS CASE, THUS, the judgment appealed from must be as it hereby is, REVERSED and SET ASIDE, and a new one entered CONDEMNING [petitioner] Henry Dela Rama Co to pay [respondent] Admiral United Savings Bank: (1) the sum of FIVE HUNDRED THOUSAND (P500,000.00) PESOS, Philippine Currency, with interest at eighteen percent (18%) per annum, and charges of ten percent (10%) per annum, reckoned from 28 February 1984, until fully paid; (2) the sum equivalent to three percent (3%) per month from said due date until fully paid, by way of liquidated damages; and, (3) the sum equivalent to twenty-five percent (25%) of the total amount due in the concept of attorney's fees.

    For insufficiency of evidence, the third party complaint against third party defendant Metropolitan Rental and Sales, Incorporated, is DISMISSED. Without costs.

    SO ORDERED.11

    Co filed a motion for reconsideration, but the CA denied the same on August 7, 2002.12

    Hence, this appeal by Co faulting the CA for reversing the RTC.

    The appeal lacks merit.

    Co has not denied the authenticity and due execution of the promissory note. He, however, asserts that he is not legally bound by said document because he merely acted as an accommodation party for METRO RENT. He claimed the he signed the note only for the purpose of lending his name to METRO RENT, without receiving value therefor.

    The argument fails to persuade.

    The document, bearing Co's signature, speaks for itself. To repeat, Co has not questioned the genuineness and due execution of the note. By signing the promissory note, Co acknowledged receipt of the loan amounting to P500,000.00, and undertook to pay the same, plus interest, to ADMIRAL on or before February 28, 1984. Thus, he cannot validly set up the defense that he did not receive the value of the note or any consideration therefor.

    At any rate, Co's assertion that he merely acted as an accommodation party for METRO RENT cannot release him from liability under the note. An accommodation party who lends his name to enable the accommodated party to obtain credit or raise money is liable on the instrument to a holder for value even if he receives no part of the consideration.13 He assumes the obligation to the other party and binds himself to pay the note on its due date. By signing the note, Co thus became liable for the debt even if he had no direct personal interest in the obligation or did not receive any benefit therefrom.

    In Sierra v. Court of Appeals,14 we held that:

    A promissory note is a solemn acknowledgment of a debt and a formal commitment to repay it on the date and under the conditions agreed upon by the borrower and the lender. A person who signs such an instrument is bound to honor it as a legitimate obligation duly assumed by him through the signature he affixes thereto as a token of his good faith. If he reneges on his promise without cause, he forfeits the sympathy and assistance of this Court and deserves instead its sharp repudiation.

    Co is not unfamiliar with commercial transactions. He is a certified public accountant, who obtained his bachelor's degree in accountancy from De La Salle University. Certainly, he fully understood the import and consequences of what he was doing when he signed the promissory note. He even mortgaged his own properties to secure payment of the loan. His disclaimer, therefore, does not inspire belief.

    Co also offered the alternative defense that the loan had already been extinguished by payment. He testified that METRO RENT paid the loan a week before April 11, 1983.15

    In Alonzo v. San Juan,16 we held that the receipts of payment, although not exclusive, were deemed to be the best evidence of the fact of payment.

    In this case, no receipt was presented to substantiate the claim of payment. Instead, Co presented a Release of Real Estate Mortgage17 dated April 11, 1983 to prove his assertion. But a cancellation of mortgage is not conclusive proof of payment of a loan, even as it may serve as basis for an inference that payment of the principal obligation had been made.

    Unfortunately for Co, no such inference can be made from the deed he presented. The Release of Real Estate Mortgage reads:

    The ADMIRAL UNITED SAVINGS BANK, a banking institution duly organized and existing under and by virtue of the laws of the Philippines, with offices at S. Medalla Building, EDSA corner Gen. MacArthur, Cubao, Quezon City, Metro-Manila, represented in this act by its First Vice-President, MR. EMMANUEL ALMANZOR, and its Asst. Vice President, MR. ROSSINI PETER G. GAMALINDA, the mortgagee of the properties described in Transfer Certificates of Title Nos. 3478 and 95759 of the Registry of Deeds of Laguna in the MORTGAGE executed on February 24, 1983 and acknowledged on the same date before Atty. Benjamin Baens del Rosario, Notary Public for and in Quezon City, Metro Manila who entered in his notarial protocol as Doc. No. 70, Page No. 15, Book No. IV, Series of 1983, in favor of the said Bank, by HENRY DE[LA] RAMA CO, hereby RELEASES and DISCHARGES the mortgage on the aforesaid Transfer Certificates of Title Nos. 3478 and 95759 of the Registry of Deeds of Laguna.18

    The record is bereft of any showing that the promissory note was secured by a mortgage over properties covered by TCT Nos. 3478 and 95759. Thus, it cannot be assumed that the mortgage executed on February 28, 1983, and released on April 11, 1983, was the security for the subject promissory note.

    In addition, TCT Nos. 3478 and 95759, the supposed collaterals for the loan, are still with the bank.19 If indeed there was payment of the principal obligation and cancellation of the mortgage in 1983, Co should have immediately demanded for the return of the TCTs. This he failed to do.20 It was only on June 11, 1987, after the filing of the complaint with the RTC, that Co demanded for the return of TCT Nos. 3478 and 95759.21 Co's inaction militates against his assertion.

    Jurisprudence is replete with rulings that in civil cases, the party who alleges a fact has the burden of proving it. Burden of proof is the duty of a party to present evidence on the facts in issue necessary to prove the truth of his claim or defense by the amount of evidence required by law.22 Thus, a party who pleads payment as a defense has the burden of proving that such payment had, in fact, been made. When the plaintiff alleges nonpayment, still, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove nonpayment.23

    Verily, Co failed to discharge this burden. His bare testimonial assertion that METRO RENT paid the loan a week before April 11, 1983 or forty-five (45) days after [the] release of the loan, cannot be characterized as adequate and competent proof of payment. Accordingly, the CA rightly rejected his alternative defense of payment.

    Similarly, Co's protestation that the cancellation of the real estate mortgage extinguished his obligation to pay the loan cannot be sustained. We perceive it as a strained attempt to rationalize his untenable position.

    A real estate mortgage is but an accessory contract to secure the loan in the promissory note. Its cancellation does not automatically result in the extinguishment of the loan. Being the principal contract, the loan is unaffected by the release or cancellation of the mortgage. Certainly, a debt may subsist even without a mortgage. Thus, in the case at bench, ADMIRAL can still run after Co for the payment of the loan under the promissory note, even after the release of the mortgage on the properties, especially because there was no showing that the mortgage was constituted as a security for the loan covered by the promissory note.

    In sum, the CA committed no reversible error in holding Co liable for the payment of the loan.

    However, we find a need to modify the damages awarded in favor of ADMIRAL.

    The CA, in conformity with the terms of the promissory note, awarded to ADMIRAL the amount of P500,000.00 with interest at 18% per annum, and service charge at the rate of 10% per annum, computed from February 28, 1984 until fully paid. It also awarded the sum equivalent to three percent (3%) per month from said due date until fully paid, by way of liquidated damages, and the sum equivalent to twenty-five (25%) of the total amount due in the concept of attorney's fees.24

    We sustain the interest rate of 18% per annum for being fair and reasonable. However, equity dictates that we reduce the service charge, liquidated damages and attorney's fees awarded in favor of ADMIRAL.

    In L.M. Handicraft Manufacturing Corporation v. Court of Appeals,25 we held that a bank is only entitled to a maximum of 2% per annum service charge for amounts not over P500,000.00. We, therefore, modify the amount of service charge from 10% to 2%, or P10,000.00 per annum beginning February 28, 1984 until full payment of the loan obligation.

    As to the awards of liquidated damages and attorney's fees, we acknowledge that the law allows a party to recover liquidated damages and attorney's fees under a written agreement, thus:

    [T]he attorney's fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a penal clause. It has been said that so long as such stipulation does not contravene law, morals, or public order, it is strictly binding upon defendant. The attorney's fees so provided are awarded in favor of the litigant, not his counsel.

    On the other hand, the law also allows parties to a contract to stipulate on liquidated damages to be paid in case of breach. A stipulation on liquidated damages is a penalty clause where the obligor assumes a greater liability in case of breach of an obligation. The obligor is bound to pay the stipulated amount without need for proof on the existence and on the measure of damages caused by the breach.26

    Nonetheless, courts are empowered to reduce such penalty if the same is iniquitous or unconscionable. Article 1229 of the Civil Code states:

    ART. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

    This sentiment is echoed in Article 2227 of the same Code:

    ART. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.

    ADMIRAL is more than adequately protected from a possible breach of contract because of the stipulations on the payment of interest, service fee, liquidated damages and attorney's fees. Thus, this Court finds the award of liquidated damages and attorney's fees by the CA exorbitant. After all, liquidated damages and attorney's fees serve the same purpose, that is, as penalty for breach of contract.27 Accordingly, we reduce the liquidated damages to P150,000.00, and attorney's fees to 10% of the principal loan or P50,000.00.

    WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 42167 is AFFIRMED with MODIFICATIONS. Petitioner Henry Dela Rama Co is ordered to pay Admiral United Savings Bank P500,000.00, with interest at 18% per annum from February 28, 1984 until the loan is fully paid. In addition, Co is adjudged liable to pay ADMIRAL a service charge equivalent to 2% of the principal loan, or P10,000.00 per year also from February 28, 1984 until the full payment of the loan; P150,000.00, as liquidated damages; and P50,000.00, as attorney's fees.

    SO ORDERED.

    Endnotes:


    1 Penned by Associate Justice Renato C. Dacudao (retired), with Associate Justices Perlita J. Tria Tirona (retired) and Mariano C. Del Castillo, concurring; rollo, pp. 66-74.

    2 Rollo, pp. 34-40.

    3 Id. at 103.

    4 Records, p. 180.

    5 Id. at 12.

    6 Id. at 64-65.

    7 Id. at 114-115.

    8 Supra note 2.

    9 Rollo, pp. 41-64.

    10 Supra note 1.

    11 Id. at 73.

    12 Id. at 103.

    13 Ang v. Associated Bank, G. R. No. 146511, September 5, 2007, 532 SCRA 244, 273.

    14 G. R. No. 90270, July 24, 1992, 211 SCRA 785, 795.

    15 TSN, April 24, 1990, p. 12.

    16 G.R. No. 137549, February 11, 2005, 451 SCRA 45, 56.

    17 Exhibit "3"; records, pp. 224-225.

    18 Id. at 224.

    19 TSN, February 12, 1990, p. 17.

    20 Id. at 19.

    21 Records, pp. 43-44.

    22 RULES OF COURT, Rule 131, Sec. 1.

    23 See Bulos, Jr. v. Yasuma, G.R. No. 164159, July 17, 2007, 527 SCRA 727, 739; Alonzo v. San Juan, supra note 16, at 56.

    24 Rollo, p. 73.

    25 G.R. No. 90047, June 18, 1990, 186 SCRA 640, 645.

    26 Titan Construction Corporation v. Uni-Field Enterprise, G.R. No. 153874, March 1, 2007, 517 SCRA 180, 189.

    27 Id.

    G.R. No. 154740 - HENRY DELA RAMA CO. v. ADMIRAL UNITED SAVINGS BANK


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