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[G.R. No.167800.� July 27, 2005-A]
PAGUIO vs. PNB
SECOND DIVISION
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated JUL 27 2005-A.
G.R. No. 167800 (ALICIA, BRENDA, DIANA and FREDERICK, all surnamed PAGUIO vs. PHILIPPINE NATIONAL BANK.)
For resolution is a Petition for Review on Certiorari seeking the reversal of the Court of Appeals Decision [1] cralaw dated 13 April 2005 which affirmed the Decision dated 19 June 2000 of the Regional Trial Court.
As synthesized by the appellate court, the facts of the case are as follows:
Sometime in August 1997, plaintiffs-appellants, represented by Serafin Paguio, their father and attorney-in-fact, negotiated for the sale of their properties to MCBI, represented by Atty. Nicanor Lazaro, for a consideration of P18,000,000.00.
MCBI had a credit line of P25,000,000.00 with defendant-appellee Philippine National Bank (PNB), Caloocan Branch. It requested for an additional loan of P15,000,000.00 from PNB in order to buy the subject properties.
A letter dated August 11, 1997 was sent by Edwin G. David, Manager and OIC, PNB-Kalookan Business Center, to Serafin Paguio. Said letter reads in full:
We wish to inform you that we have approved a Credit line in favor of M.C. Bernardo, Inc. (MCBI), hereinafter referred to as 'Client,' to finance the acquisition of a real estate property located at the corner [of] Rizal Ave. and F. Yuseco St., Sta. Cruz, Manila, covered by TCT Nos. 179463 and 179464 owned by Alicia Paguio, Fermin S. Catalan, Brenda Paguio, Redento Aragon, Jr., Diana Paguio, Philip Dunlao, Evelyn Paguio, Frederick Paguio and Carmencita Paguio.
In this connection, we wish to borrow the abovementioned certificates of title to allow the bank to transfer the titles in the name of MCBI and to annotate the Bank's mortgage lien on the property. Please entrust the titles to our duly authorized representative for our mutual protection.
Following the transfer of titles of the property in the name of MCBI and annotation of our mortgage lien, this Bank undertakes to remit directly to you, in the form of a Manager's Check so much amount as to fully pay our client's obligations with you but not to exceed� PESOS: FIFTEEN��������� MILLION��������� (P15,000,000.00). In the event said amount is not sufficient to fully pay the obligations of our client, any deficiency thereof shall be for the account of our client.
If the foregoing conditions are acceptable to you, please indicate your conformity by signing on the space provided below and return to us the signed copy of this letter.
Serafin Paguio affixed his conformity to said letter and gave the same to Atty. Nicanor Lazaro. An undated handwritten notation appears on the lower right hand portion of said letter, bearing the name and signature of Atty. Lazaro, which reads:
Received TCT's # 179463 & 179464 for registration according to the PNB undertaking. Balance of 3M will be paid separately to make up for the actual purchase price of 18M.
On September 11, 1997, Serafin Paguio, as attorney-in-fact of plaintiffs-appellants, executed a Deed of Absolute Sale conveying the properties covered by TCTs Nos. 179463 and 179464 and the building thereon in favor of MCBI, represented by Atty. Lazaro, for and in consideration of the sum of P3,000,000.00, receipt of which was acknowledged by Serafin Paguio.
Pursuant to the deed of absolute sale, the certificates of title in the names of plaintiffs-appellants were cancelled and TCTs Nos. 235456 and 235457 were issued in the name of MCBI on September 26, 1997.
On October 2, 1997, Edwin G. David acknowledged receipt from Serafin Paguio of copies of the deed of absolute sale, special power of attorney in favor of Serafin Paguio, real property tax� receipts and the original and owner's copies of TCTs Nos. 235456 and 235457.
On November 4, 1997, PNB caused the annotation at the back of TCTs Nos. 235456 and 235457 of the mortgage in its favor in the amount of P40,000,000.00.
On July 28, 1998, Serafin Paguio, through counsel, sent a letter to PNB demanding compliance with its undertaking, pursuant to its letter dated August 11, 1997, to pay MCBI's obligation to him in the amount of P9,000,000.00, representing the unpaid balance of the agreed purchase price of the subject properties, and stating that plaintiffs-appellants were deceived and fraudulently deprived of their properties by MCBI, in conspiracy with the bank.
In a letter dated August 7, 1998, PNB informed the counsel of Serafin Paguio that MCBI did not fully draw the P15,000,000.00 term loan inasmuch as Serafin Paguio accepted an alternative form of payment, i.e., installment payments for the property that he sold to MCBI, which issued several checks totaling P18,000,000.00 to cover the installment payments, and that MCBI's P15,000,000.00 loan, which was supposed to be used to partially pay for the subject properties, was secured by said properties and another property situated in Cebu.
On September 14, 1998, plaintiffs-appellants filed a complaint against PNB, Edwin David and MCBI to recover the amount of P9,000,000.00, representing the unpaid balance of the consideration for the sale of their properties, pursuant to the letter of undertaking dated August 11, 1998, plus moral and exemplary damages and attorney's fees.
PNB and David denied any liability to plaintiffs-appellants for the reasons that the latter did not sign the letter dated August 11, 1997 nor return the same to the bank; that plaintiffs-appellants did not entrust to the bank the certificates of title over the subject properties; that the deed of absolute sale executed by plaintiffs-appellants and MCBI stated a consideration of only P3,000,000.00; that without their knowledge, plaintiffs-appellants negotiated with MCBI on the manner of payments of the consideration for the sale of their properties and they accepted postdated checks in the total sum of P18,000,000.00 from MCBI; and that they are not privy to the negotiations between plaintiffs-appellants and MCBI. They filed a cross-claim against MCBI for indemnity should they be made liable to plaintiffs-appellants, in view of its assurance that it had settled its obligations with the latter.
On the other hand, MCBI claimed that the undertaking of PNB was novated when plaintiffs-appellants accepted the checks issued by it in payment of the purchase price on the subject properties; that the balance of P9,000,000.00 is secured by postdated checks; that the consideration for the sale is deemed fully paid; that the titles to the property were already transferred in its name by virtue of the deed of absolute sale in its favor; and that the instant action is not the proper remedy and plaintiffs-appellants should have filed a case against the drawer/maker of the checks.
After trial on the merits, the court a quo rendered judgment, the dispositive portion of which reads:
WHEREFORE, judgment is rendered:
1.������ Dismissing the complaint against Philippine National Bank and Edwin G. David, as well as the counterclaim of said defendants against the plaintiffs;
2.������ Ordering the defendant M.C. Bernardo, Inc., to pay the plaintiffs the sum of P9,000,000.00, plus interest thereon at the rate of 14% per annum computed from September 29, 1998, until the principal obligation is fully paid;
3.������ With costs assessed against defendant M.C. Bernardo, Inc.; and
4.������ Serve a copy of this decision on (sic) the Bureau of Internal Revenue for assessment and collection of proper taxes.
The Court of Appeals affirmed in toto the Decision of the lower court. We likewise put our imprimatur to these decisions.
PNB's letter of undertaking clearly and unequivocally provides that it will remit directly to petitioners "so much amount as to fully pay our client's obligations with you but not to exceed PESOS: FIFTEEN MILLION (P 15,000.000.00)." [2] cralaw As culled from the facts of the case, as far as PNB is concerned, its client's obligation to petitioners was only P3 Million as this was the full consideration stated in the Deed of Absolute Sale executed between petitioners and their buyer (i.e., PNB's client, MCBI). However, as the Deed of Absolute Sale provides that the sum of P3 Million was "in hand paid by the herein buyer receipt of which we [the petitioners] fully acknowledge, to our full satisfaction," there was nothing for PNB to remit to petitioners, as its client's obligation under the Deed of Absolute Sale was already fully satisfied.
Petitioners, however, insist that PNB was very much aware that the real contract price was P18 Million, thus, it was still obligated under its letter of undertaking to remit the unpaid balance of P9 Million. To this argument, we quote with approval the appellate court's response:
... The deed of absolute sale was executed by Serafin Paguio and
MCBI on September 11, 1997. On the other hand, it was only on October 2, 1997
that Edwin David acknowledged receipt from Serafin Paguio of a copy of the deed
of absolute sale and the original and owner's copies of TCTs Nos. 235456 and
235457 in the name of MCBI. The fact that Serafin Paguio turned over a copy of
the deed of absolute sale and the original and owner's copies of TCTs Nos.
235456 and 235457 to PNB shows that it was not the latter which caused the preparation
of the deed of absolute sale and the transfer of the title over the subject
properties in the name of MCBI, thereby lending credence to PNB's claim that it
was not privy to the transactions between Serafin Paguio and MCBI after it had
approved the loan application of the latter to finance the acquisition of the
subject properties. Thus, the acceptance by Serafin Paguio of nine (9)
postdated checks in the total amount of P18,000,000.00 from MCBI
covering their agreed consideration for the sale of the subject properties, the
failure of Serafin Paguio to give his conformity to PNB's letter of undertaking
dated August 11, 1997 and to return the same, together with
plaintiffs-appellants' certificates of title to PNB, and the execution by the
plaintiffs-appellants and MCBI of a deed of absolute sale whereby the former
acknowledged receipt from the latter of the amount of P3,000,000.00 to
their full satisfaction, effectively released PNB from its obligation under the
letter of undertaking dated August 11, 1997. Edwin David explained that he
could only release the amount of P3,000,000.00, as it is the
consideration stated in the deed of absolute sale. However,
plaintiffs-appellants acknowledged receipt of said amount. The fact that Edwin
David admitted prior knowledge that the agreed price for the sale of the
property was P18,000.000.00 is of no moment inasmuch as the deed of
absolute sale, which stated a consideration of P3,000,000.00, was
executed by plaintiffs-appellants and MCBI without his participation.
Moreover, it is very much evident that the Deed of Absolute Sale contained the much lower consideration of P3 Million in order to unlawfully reduce the amount of taxes petitioners had to pay. To favor petitioners' interpretation of PNB's letter of undertaking would be to countenance an obvious wrongdoing. To adopt an old, if not trite, adage, petitioners cannot have their cake and eat it too. As succinctly put by the lower court:
Unscrupulous persons would voluntarily enter into contracts tainted with fraud and misrepresentation to cheat the Government and evade payment of the proper and rightful amount of taxes. But when they are confronted and feel the adverse effects of their foolish acts, they seek the same Government, which they refuse to support, to extricate and relieve them from their fraudulent deeds. [3] cralaw
Thus, in the ultimate analysis, petitioners' only recourse is to collect from the party privy to the private agreement to sell the property at P18 Million who is no less than the buyer of the property, MCBI.
WHEREFORE, finding no reversible error on the part of the Court of Appeals, the instant petition is hereby DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
Very truly yours,
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
Endnotes:
[1] cralaw Penned by Associate Justice Marina L. Buzon with Associate Justices Mario L. Guari�a III and Santiago Javier Ranada, concurring.
[2] cralaw Emphasis supplied.
[3] cralaw Rollo, p.41.
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