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[G.R. No. 142519. July 10, 2000]

MANILA NEWTOWN DEV'T CORP. vs. PHILIPPINE BANKING CORP.

SECOND DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated JUL 10 2000.

G.R. No. 142519 (Manila Newtown Development Corporation vs. Philippine Banking Corporation.)

On November 20. 1981, petitioner Manila Newtown Corporation obtained a loan from respondent Philippine Banking Corporation in the amount of P367,000.00 with interest at the rate of 21% per annum and subject to the payment of a penalty of 1% per month if the loan was not paid on its maturity. On June 15, 1982, petitioner obtained another loan in the amount of P7,311,000.00 under the same terms. The loans were evidenced by promissory notes and secured by a continuing surety agreement signed by Vicente G. Puyat. As the loans were not paid upon their maturity, respondent filed a complaint for sum of money against petitioner and Vicente G. Puyat.

It appears that Puyat was served summons on May 16, 1990. Petitioner, however, could not be served summons because it had moved out of its office at the Manilabank building in Makati. The second alias summons was also returned unserved as petitioner had ceased holding office at 11^th Floor, Strata 100, Emerald Avenue. Respondent, therefore, moved that the third alias summons be served on any of petitioner's directors, among whom were Vicente G. Puyat, Victor G. Puyat, and Jesus P. Tambunting. The third and fourth alias summons, however, could not be served on Tambunting and Vicente G. Puyat, respectively. A fifth alias summons was again attempted to be served on Puyat, but the return thereof, dated May 26, 1993, stated that he had already passed away. On July 22, 1993, respondent moved that a sixth alias summons be served on petitioner's remaining directors. On August 27, 1993, the process server made a return of the sixth alias summons stating that the same had been duly served on Victor G. Puyat at the later's address.

On May 20, 1994, respondent moved to declare petitioner in default and to dismiss the case against Vicente G. Puyat on account of the latter's death. This was granted by the trial court which then allowed the presentation of respondent's evidence ex-parte.

On March 29, 1995, the trial court rendered its decision ordering petitioner to pay respondent P367,000.00 with interest at the rate of 21% per annum from November 21, 1981 and penalty of 1% per month from June 16, 1989 until the loan is fully paid; P7,311,000.00 with interest at the rate of 21% per annum from June 16, 1982 and penalty of 1% per month from June 16, 1989 until the loan is fully paid; attorney's fees equal to 25% of the total indebtedness and costs.

Petitioner was notified of the decision through the office of Victor G. Puyat on April 5, 1995. It moved for a new trial, but its motions was denied. On appeal, the Court of Appeals affirmed the trial court's decision. Petitioner's motion for reconsideration was denied. Hence, this petition.

First. Petitioner contends that service of the sixth alias summons on Victor G. Puyat could not be deemed service on it as Victor G. Puyat was at that time neither a director nor an officer of the corporation.

This contention has no merit. As correctly held by the Court of Appeals, petitioner's mere allegation cannot overcome the presumption, that, indeed, Victor G. Puyat is a director of the corporation as shown by the amended Articles of Incorporation and the Director's Certificates of petitioner corporation.

Second. Petitioner's contention that the promissory note covering the P7,311,000.00 loan does not contain a de-escalation clause for which reason the interest rate imposed therein is invalid is likewise without merit.

The presence of the de-escalation clause becomes important in case there exists an escalation clause in the parties' loan agreement. (See Banco Filipino Savings & Mortgage Bank v. Navarro, 152 SCRA 346 (1987)) But, in this case, the promissory note provides for a flat rate of 21% interest per annum. In any case, petitioner does not claim that the 21% per annum rate of interest exceeds the legal rate of interest allowed at that time.

Third. It is also contended that it has not been established that the persons who executed the loan documents and promissory notes had been authorized to do so by petitioner. This argument, however, was not raised by petitioner either in the trial or in the appellate court. It cannot, therefore, be raised for the first time in this appeal. (Ruby Industrial Corporation v. Court of Appeals, 284 SCRA 445 (1998))

WHEREFORE, the petition is DENIED for lack of showing that the Court of Appeals committed any reversible error.

Very truly yours,

(Sgd.) TOMASITA B. MAGAY-DRIS

Clerk of Court�

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