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FIRST DIVISION G.R. No. 111797 July 17, 1995 CARLOS ANG GOBONSENG, JR. and THERESITA MIMIE ONG-GOBONSENG, Petitioners, v. HON. COURT OF APPEALS, STATE INVESTMENT HOUSE, INC., and BENJAMIN V. DISPUTADO, in his capacity as the Clerk of Court of the Regional Trial Court and Sheriff of the Province of Negros Oriental, Respondents. DAVIDE, JR., J.: Well-settled is the rule that the jurisdiction of this Court in cases brought before it from the Court of Appeals is limited to the review or revision of errors of law and not to analyze or weigh the evidence all over again. 1 The findings of fact of the Court of Appeals are thus final and conclusive, except in some cases as where such findings are contrary to those of the trial court, 2 as in this case where the Court of Appeals and the trial court are hopelessly opposed to each other on their respective findings concerning the issues presented. This Court is thus called upon to peruse the voluminous records of the case with the trial court and the Court of Appeals and re-evaluate the evidence adduced by the parties.chanroblesvirtualawlibrarychanrobles virtual law library The petitioners seek the review and reversal of the decision 3of 16 December 1992 of the Court of Appeals in CA-G.R. CV No. 30380, as well as its Resolution 4of 17 February 1993 denying their motion for its reconsideration. This decision reversed the decision 5of the Regional Trial Court (RTC), Branch 30, Negros Oriental, of 15 October 1990 in Civil Case No. 8428, entitled "Carlos Ang Gobonseng, Jr., et al. vs. State Investment House, Inc., et al."chanrobles virtual law library Civil Case No. 8428 was commenced on 21 June 1984 with the filing of a complaint 6for the annulment of/or reformation of documents, signed in blank, such as promissory notes, credit agreement, real estate mortgage contracts, amended real estate mortgage contracts, credit agreement, deed of absolute sale, agreement to sell, dacion en pago, and others, and for damages with preliminary injunction and restraining order by the petitioners (hereinafter Gobonsengs) against private respondent State Investment House, Inc. (hereafter SIHI) and public respondent sheriff.chanroblesvirtualawlibrarychanrobles virtual law library The factual antecedents which led to the filing of the complaint are briefly summarized in the assailed decision of the Court of Appeals as follows:
On 27 June 1984, the trial court issued a temporary restraining order directing the provincial sheriff of Negros Oriental to cease and desist, until further orders from the court, from conducting extrajudicial foreclosure proceedings of the real estate mortgages executed by the Gobonsengs. 8 It also set for hearing on 11 July 1984 the application for a writ of preliminary injunction 9 which SIHI vigorously opposed. 10 In its Answer filed on 30 July 1984, 11 SIHI denied the material allegations in the complaint and alleged the following: (1) the credit agreement for P2 million which the Gobonsengs signed on 27 December 1982 was amended and correspondingly adjusted to P900,000.00 on 19 January 1983; (2) on 21 January 1983, the Gobonsengs executed a Consultancy Contract; (3) they later availed of their P900,000.00 credit line and were granted by SIHI a loan in the said amount which was renewed from time to time for a term averaging sixty days; (4) on 23 August 1983, the Gobonsengs, upon an additional collateral, applied for and were granted an additional loan of P800,000.00 which was renewed from time to time on an average term of sixty days, the last of which prior to the filing of the complaint, was on 2 March 1984 to mature sixty-one days thereafter, or on 2 May 1984; (5) the loan of P900,000.00 was last renewed on 15 March 1984 prior to the filing of the case and which was to mature forty-eight days thereafter, or on 2 May 1984; (6) when both the P800,000.00 and P900,000.00 loans matured on 2 May 1984, the Gobonsengs failed to remit correct payments thus placing their loans on past-due status; and (7) since demands for payment were to no avail, SIHI initiated the extrajudicial foreclosure of the real estate mortgage contracts.chanroblesvirtualawlibrarychanrobles virtual law library After due hearing, the trial court denied on 10 July 1985 the application for a writ of preliminary injunction for lack of "clear, convincing and unquestioned evidence." 12After their motion for its reconsideration 13was denied in an order dated 13 September 1985, 14 the Gobonsengs sought relief therefrom in the then Intermediate Appellate Court through a special civil action for certiorari which was docketed as AC-G.R. SP No. 07153. In its decision of 20 September 1985, 15 the said court dismissed the case for lack of merit. The Gobonsengs then filed with this Court a petition under Rule 45 of the Rules of Court to seek the review of the dismissal of AC-G.R. SP No. 07153. That petition was docketed as G.R. No. 72131. Upon its filing, this Court issued a temporary restraining order enjoining the provincial sheriff of Negros Oriental from proceeding with the publication of the notice of the auction sale of the mortgaged lots set on 28 September 1985, 5 October 1985, 12 October 1985, and 16 October 1985. 16 Eventually, in a resolution dated 22 October 1986, this Court denied the petition for lack of merit considering that "the basic controversy between the parties involves factual issues, particularly, the maturity dates of the promissory notes evidencing the indebtedness, petitioners claiming six (6) years, while the SIHI 60 to 48 days" 17 The Gobonsengs seasonably filed a motion for reconsideration which was denied with finality in the resolution of 18 February 1987. 18 With leave of court, 19 they filed a second motion for reconsideration 20 based on alleged newly discovered evidence consisting of photocopies of advice slips sent by SIHI to the Gobonsengs and an inter-office memorandum dated 13 December 1992 of one Shirley T. Uy addressed to Marline Chiu Ostia, who were the officer-in-charge and assistant officer-in-charge of SIHI's Cebu City Branch Office, respectively, showing that the Gobonsengs' loans were for a period of six years. This Court granted the motion in the resolution of 20 May 1987, 21 and set aside the decision of the Court of Appeals, remanded the case to the trial court for trial on the merits of the main case, and issued a temporary restraining order enjoining SIHI from foreclosing the real estate mortgage executed by the Gobonsengs until after the merits of the main case shall have been resolved. In the said resolution, this Court stated, inter alia:
As a consequence of the foregoing resolution, the trial court issued two separate orders: the first, denying SIHI's urgent motion to require the sheriff to proceed with the foreclosure sale, 23 and the second, setting the case for pre-trial. 24 At the pre-trial on 26 August 1987, the parties stipulated on the issues to be resolved, to wit:
and agreed that the evidence they had adduced on the application for preliminary injunction would be deemed reproduced as part of their evidence on the merits of the main case. 25 Thereafter, they presented their additional evidence.chanroblesvirtualawlibrarychanrobles virtual law library On 15 October 1990, the trial court rendered its decision, 26 the dispositive portion of which reads as follows:
It found "overwhelming evidence that the term of Plaintiffs' loan with Defendant SIHI was SIX (6) years - evidence which Defendant SIHI failed to overthrow," and "[s]ince the loan[s] of P900,000.00 and P800,000.00 were obtained by Plaintiffs sometime in the year 1983, they did not yet mature sometime in June, 1984 when Defendant SIHI wrote to the Provincial Sheriff of Negros Oriental seeking foreclosure of the mortgages." 28 In upholding the theory of the Gobonsengs that the term of the loans of P900,000.00 and P800,000.00 was six years, the trial court gave credit to the testimonies of petitioner Carlos Gobonseng, Jr. and Joaquin Castro. It also favorably considered Exhibits "GGG" and "EEEE" which are photocopies of the alleged inter-office memorandum of 13 December 1982 on a letterhead of SIHI from Shirley T. Uy to Marline Chiu Ostia (Officer-in-charge and Assistant officer-in-charge, respectively, of SIHI's Cebu office) with Exhibit "EEEE" purporting to be a true photocopy certified by one Azonne Tan (Loan-in-charge), as well as the photocopies of alleged credit advice slips marked as Exhibits "III," "JJJ," "JJJ-1," "JJJ-2," and "JJJ-3," which indicate the following notations:
Exhibit "EEEE," which is quoted in the challenged decision of the Court of Appeals, reads as follows:
The trial court believed the allegations of the Gobonsengs that they obtained Exhibit "GGG" from SIHI's Manila Office on 23 March 1987 and Exhibit "EEEE" on 19 November 1987 and that they came into possession of Exhibits "III," "JJJ," "JJJ-1," "JJJ-2," and "JJJ-3," contained in SIHI's window envelopes (Exhibits "CCCC-1" to "CCCC-4"), only sometime in March 1987 when Carlos Gobonseng, Jr. was told by his septuagenarian mother while they were in their beach house in Bacong, Negros Oriental, that she received them at his old address. Carlos Gobonseng, Jr. further testified that when he went to SIHI's office in Manila in March 1987 he was shown his loan record and on that occasion saw the credit availment and the inter-office memorandum (Exhibit "GGG").chanroblesvirtualawlibrarychanrobles virtual law library Joaquin Castro, former Credit Supervisor and later Assistant Manager of SIHI's Cebu Branch who was the first appraiser assigned by SIHI to appraise the properties offered as security by the Gobonsengs, confirmed the existence of the inter-office memorandum (Exhibits "GGG" and "EEEE") and described the loan of the Gobonsengs as "long term," for a term of six years.chanroblesvirtualawlibrarychanrobles virtual law library The trial court disregarded the testimony of Augusto Lopez-Dee, SIHI's Vice-President, that he did not send any telex to the Cebu Branch because Shirley Uy failed to categorically deny the inter-office memorandum which Joaquin Castro said he saw at the time it was prepared. It also disregarded the documentary evidence for SIHI showing that the original copies (Exhibits "26," "27," "28," "29," and "30") of the credit advice slips offered in evidence by the Gobonsengs have unfilled blanks for the lines PERIOD-PRINCIPAL and PERIOD-INTEREST while the box for Description in each has the entry Purchase of Commercial Papers for (days indicated) because the photocopies presented by the Gobonsengs appear to be that of the CLIENT'S COPY of a set of credit advices and, although Dee testified that SIHI does not "normally" send photocopies thereof, there was no evidence that the normal practice was followed with respect to the Gobonsengs' credit advices. 30 In concluding that the promissory notes did not reflect the true intention of the parties, the trial court relied heavily on the signing by the Gobonsengs of several documents, including blank promissory notes and authority to apply loan proceeds (Exhibits "II," "II-A" to "II-J") whose blanks were thereafter filled up by SIHI without the participation of the Gobonsengs. The signing by the Gobonsengs of these documents in blank is admitted by SIHI in its Answer and by its witnesses Mariano Borromeo, who executed on 28 April 1983 a receipt (Exhibit "K") acknowledging delivery to him by the Gobonsengs of six sets of signed blank promissory notes, and Shirley Uy, who explicitly admitted that the Gobonsengs were made to sign blank SIHI forms such as promissory notes. The trial court also considered the receipt by SIHI of twenty sets of blank promissory notes (Exhibit "L") from the Gobonsengs on 13 November 1983. In the authority to apply loan proceeds, the Gobonsengs "purportedly authorized Defendant SIHI to apply the plaintiffs' 'loan proceeds' under certain Code numbers as 'full/partial payment' of another loan with another Code based on certain maturity dates." 31 The trial court also observed that the Consultancy Contract dated 21 January 1983 (Exhibit "UU," also Exhibit "8") provides, inter alia, "that (such consultancy) services and professional advises can be communicated with directly or indirectly, verbally or in writing," and such fees are to be fixed "on the basis of manhours spent in rendering the service or on the basis of the volume of consultancy work"; such fees are "payable to the CONSULTANT (SIHI) by the CLIENT upon presentation of the bill to the CLIENT." 32 It found, however, that SIHI had not presented satisfactory evidence of consultancy service, for it had not communicated to the Gobonsengs "either directly or indirectly, verbally or in writing" the nature and extent of such consultancy services and had not presented to them a "bill" therefor based on manhours spent in rendering the same. Moreover, it noted that the official receipts issued by SIHI to the Gobonsengs for the so-called consultancy services show that the amounts periodically paid are almost uniform, despite the fact that such fees are supposed to be based on "manhours spent" or on "volume of consultancy work"; and considering that "it may be assumed that the manhours spent or the volume of consultancy work are bigger at the beginning of any business venture, they [should] considerably decrease to a minimum as time goes on and the businessman, in the process, acquires certain skills and familiarity with appropriate business techniques [such] that he naturally would need only a little more help or even none of it at all, from his consultant." 33 It then concluded that this uniformity is indicative of payment of interests and not of consultancy fees.chanroblesvirtualawlibrarychanrobles virtual law library In allowing the release of excess collaterals, the trial court gave credit to the evidence of the Gobonsengs that the assessed or market value of the four mortgaged lots is "much bigger than their loan indebtedness of P1,700,000.00, which is now even reduced by P7,415.86 as of May 2, 1984 (Exh. "16-A")," 34and since the offer of the said properties "was predicated on the availability of a credit line of P4,300,000.00 which was approved by Defendant SIHI but was not fully satisfied," it then "stands to reason that some of those properties must be . . . released." 35 On appeal to the Court of Appeals (CA-G.R. CV No. 30380), this decision was "reversed and set aside" in the appellate court's decision of 16 December 1992. 36 The findings and conclusion of the Court of Appeals revolve on the "basic issue [of] whether or not the 'newly discovered evidence' of the Gobonsengs . . . have proved that the term of the two loans is 6 years instead of the terms reflected in the loan documents." Resolving the said issue, it stated:
Since their motion for a reconsideration of the decision was denied, the petitioners filed on 24 September 1993 the instant petition for review. They impute to the Court of Appeals the commission of the following errors:
The parties themselves are to be blamed for the difficulty in determining the term of the loans in question and the disagreement thereon between the trial court and the Court of Appeals. For reasons only known to themselves, they did not disclose to the trial court all the pieces of evidence which could establish their true agreement as to such term. The Gobonsengs did not ask for the production of the entire records of their transactions with SIHI which necessarily started with their application for a credit line. Neither did SIHI offer them in evidence. The application and the approval thereof would shed much light on the issue, yet SIHI opted to suppress from the court the said records. SIHI's Vice-President, Augusto Lopez-Dee, proved to be of little help since he could not categorically testify that the actual term of the credit facility was six years. The best that he could do was to state that it was short term, "around 60 days normally," 39 and to deny having sent a telex advice on 13 December 1982 to the Cebu Branch Office to the effect that the approved Gobonseng loan was for P4.3 million for the term of six years with interest of 15.5% per annum as purportedly indicated in Exhibit "GGG." 40 Further compounding the matter is Shirley Uy's claim that "there was no such arrangement on such terms" 41 and the established fact that the Gobonsengs affixed their signatures even before the approval of the application for a credit line on blank SIHI standard forms of credit agreement, real estate mortgage contracts, promissory notes, consultancy agreement, authority to apply loans, and other documents.chanroblesvirtualawlibrarychanrobles virtual law library All that we have then on the alleged 6-year term of the credit line are the declarations of Carlos Gobonseng, Jr. and Joaquin Castro that such was the term with interest at 15.5% per annum, and Exhibits "GGG," "EEEE," "III," "JJJ," "JJJ-1," "JJJ-2" and "JJJ-3."chanrobles virtual law library Carlos Ang Gobonseng, Jr. declared as follows:
He further testified that on 23 March 1987 when he went to the head office of SIHI in Binondo, Manila, the officer-in-charge of the Branch Department showed him a folder pertaining to his credit line availment which disclosed that his approved loan applications was for six years with interest of 15.5% per annum. 44 Joaquin Castro also testified that the Gobonsengs' loan was for a period of six years at 15.5% interest per annum. Thus:
Castro further stated that the Gobonsengs' loan was a long term loan because it was in excess of P500,000.00 and, therefore, carried a longer maturity period of over two years, 46 and that although he knew that SIHI charged consultancy fees, he did not know the reason therefor 47 because he did not see SIHI render any such service. 48 Confronted with these direct and positive testimonies, SIHI should have produced its file of the Gobonseng account to demonstrate beyond doubt that the documents claimed to have been seen by Carlos Gobonseng, Jr. and Castro are but figments of their imagination. Nevertheless, unlike the trial court, we cannot give credit to the claims of Carlos Gobonseng, Jr. and Joaquin Castro that they saw the telex indicating that the approved loan was for P4.2 million for a term of six years with interest of 15.5% per annum.chanroblesvirtualawlibrarychanrobles virtual law library On cross-examination, Carlos Gobonseng, Jr. admitted that he saw the telex before he signed the documents in blank. Thus:
However, his previous testimony on direct examination, during the hearing for the Petition for Injunction, is to the effect that he signed the documents in blank before the approval of the application of the credit line. 50 This was confirmed by Shirley Uy herself who testified on cross-examination as follows:
Clearly then, since the signing of the blank documents took place before the approval of the application for a credit line, Carlos Gobonseng, Jr. could not have seen the telex he imagined he saw. Also, the Gobonsengs, thru Exhibits "GGG" and "EEEE," tried to represent that, as conveyed by Vice-President Augusto Lopez-Dee through the telex of 13 December 1982, the approved loans were for a total of P4.3 million with a term of six years and with interest of 15.5% per annum. They forgot that by their oral evidence they had proved another version, i.e., the approved loan was for P2 million. Carlos Gobonseng, Jr. was very emphatic in his testimony that in December of 1982 his transaction with SIHI involved only a loan of P2 million, thus:
and that the telex purportedly shown to him by Shirley Uy mentioned a grant of his request for a P2 million loan. Thus:
As also earlier shown in the quoted portion of his testimony, Joaquin Castro referred to an approved loan of P2 million and a telex relative to the approval thereof. Furthermore, the Gobonsengs exerted no effort in securing the production through compulsory process of the original copies of this telex and the inter-office memorandum supposedly referring to it. Their existence then becomes doubtful.chanroblesvirtualawlibrarychanrobles virtual law library We agree with the Court of Appeals that Exhibits "GGG" and "EEEE" are inadmissible in evidence, not because the inter-office memorandum concerned ought to be kept only in the office of SIHI or that Corazon (Azonne) Tan was not authorized by SIHI to certify the authenticity of the photocopy or that the so-called certification by Corazon Tan on Exhibit "EEEE" was fraudulently obtained as disclosed in her testimony, but because of the fact that they are mere photocopies, hence their admission is barred by the best evidence rule under Section 2, Rule 130 of the Rules of Court. The fraud in obtaining the certification of Corazon Tan is, of course, obvious upon the face of the exhibit itself. It is placed at the bottom left hand corner of the paper several inches below the body of the alleged inter-office memorandum that occupies only the upper half of the paper. This strange and unusual location of the certification is consistent with and strengthens the testimony of Corazon Tan that what she was asked to do was merely to write her name and telephone number which she did on a folded white bond paper as requested by a "boy" who came to the office as a representative of Carlos Gobonseng, Jr. 54 It may be noted that Exhibit "EEEE" is a photocopy with the words CERTIFIED TRUE XEROX COPY typed thereon as shown by the impression at the back thereof. Moreover, it appears in Exhibit "EEEE" that Corazon Tan was the Loan-in-charge, when in fact she was the Security Custodian of the loans section of SIHI. 55 The Court of Appeals also correctly ruled that Exhibits "III," "JJJ," JJJ-1," "JJJ-2," and "JJJ-3" are inadmissible in evidence. They are plain photocopies, hence, their admission in evidence are also barred by the best evidence rule. The explanation of Carlos Gobonseng, Jr. that these were received by his 75-year old mother in his old address who told him about the said window envelopes 56 only on 8 March 1987 does not inspire belief because he candidly admitted on cross-examination that aside from these exhibits he never received from SIHI photocopies of any other documents. 57 In other words, what he used to receive were not photocopies. What can be concluded then is that the Gobonsengs actually received the original documents which they should have produced and that the said exhibits were photocopies of the client's copies for the words Client Copy are clearly reproduced therein. 58 Nonetheless, even if Exhibits "GGG," "EEEE," "III," "JJJ", "JJJ-1,""JJJ-2" and "JJJ-3" are to be disregarded, the attendant circumstances in this case overwhelmingly support a conclusion that the credit line applied for was for a longer term or duration which is to be availed of by promissory notes based on the interest period of, normally, sixty days. Firstly, Shirley Uy convincingly testified that the Gobonsengs applied for a credit line which, when approved, would be evidenced by a credit agreement. 59 According to Shirley Uy, a credit agreement is "merely a general agreement wherein SIHI gives clients the privilege of [its] credit line until such time that the line is revoked, cancelled or the line has defaulted." 60 Thus, it is indefinite.chanroblesvirtualawlibrarychanrobles virtual law library Secondly, the Gobonsengs, on two separate occasions, had stated that the credit facility was needed to finance the working capital for their palay and corn grits business, as testified to by Shirley Uy, 61 and/or for their drugstore, as testified to by Augusto Lopez Dee. 62 Indeed, the Attachment to the Credit Agreement (Exhibit "7"), 63 expressly provides:
And because the unequivocal purpose of obtaining the credit facility or the loan is to finance the working capital for any of their businesses, the parties, SIHI and the Gobonsengs, could not have contemplated a short term credit line.chanroblesvirtualawlibrarychanrobles virtual law library Thirdly, a credit line may be availed of by the issuance of promissory notes for as long as the credit line lasts. It was precisely for this reason that the Gobonsengs signed even before the approval of their application for a credit line SIHI's standard promissory notes the blanks of which would be filled up by SIHI at appropriate times, such as upon the release of the original loans or upon the subsequent renewals or roll-overs, if the principal is unpaid, on the basis of the interest period. Under the credit line in question, no fresh money was given to the Gobonsengs after the first and succeeding renewals of their P900,000.00 and P800,000.00 loans because they were not able to pay the principals. The succeeding availments by way of promissory notes were issued in "payment" of the immediately preceeding availments or promissory notes with, however, the obligation to pay the interests. This arrangement was made possible because the Gobonsengs had signed in advance several copies of so-called written authority authorizing SIHI to apply the proceeds of succeeding availments to the immediately preceeding availments. 64 Also, the Attachment to the Credit Agreement 65 authorizes the use of the proceeds of the roll-overs or renewals of the promissory notes, to wit:
The Gobonsengs are estopped from denying these roll-overs or renewals because they voluntarily paid the interests thereon 66 and received the receipts therefor. 67 They even wrote a letter to Shirley Uy on 25 May 1984 advising the latter that the amount of P21,411.11 which they remitted on 2 May 1984 "represents prepaid interest for the P800,000.00 and not for the P900,000.00" and "covers the interest good for 61 days from May 02nd 1984 or until July 02nd 1984"; and that on the P900,000.00 loan, they "already paid the interest for 60 days from March 15th to May 14th 1984," hence, "[t]he interest for the next term of 60 days will cover from May 14th 1984 to July 13th 1984" for which they "will be remitting the corresponding interest on or before July 13th 1984." 68 Clearly then, the credit line granted to the Gobonsengs was for a period longer than sixty days but is not six years as asserted by the Gobonsengs. The credit line was availed of by promissory notes with interest duration of, normally, sixty days, 69 and that for as long as the interests were paid, roll-overs of the promissory notes within the term of the credit line were automatic since it was SIHI itself which filled up for the purpose the unfilled promissory notes signed by the Gobonsengs.chanroblesvirtualawlibrarychanrobles virtual law library It was duly established by the Gobonsengs that interests on the last renewal of the P800,000.00 and the P900,000.00 loan evidenced by the promissory notes dated 2 March 1984 to be due on 2 May 1984 70and 15 March 1984 to be due also on 2 May 1984, 71 respectively, were duly paid by them as indicated in their letter of 25 May 1984 72 and as evidenced by Exhibits "DDD" and "DDD-2". As a matter of fact, an amount of P7,417.86 was credited to the principal in the promissory note with the code IF-84-CB022- Indisputably, the application for foreclosure of the mortgage on 9 June 1984 75 was premature because by then, the Gobonsengs had not yet defaulted on the payments of either the principal or the interest of their loans. As the Gobonsengs stated in their 25 May 1994 letter to Shirley Uy, the interest on the P800,000.00 loan for the period ending 2 July 1994 had already been pre-paid on 2 May 1994, and the payment for the interest on the P900,000.00 loan was due at the end of the next term which was 13 July 1994 yet. SIHI never controverted these claims by the Gobonsengs and so we are constrained to accept them as true. Nevertheless, because the Gobonsengs did not pay the remaining unpaid portion of the principal and the interests due thereon every sixty days thereafter at any time after the foreclosure proceedings were initiated, the real estate mortgages could have been validly foreclosed after the Gobonsengs failed to make payments and even if the Gobonsengs are correct and the term of the credit line was six years, which then expired on 19 January 1989.chanroblesvirtualawlibrarychanrobles virtual law library Likewise, there is no evidence that the Gobonsengs had made any payment on the interest and on the unpaid balance of the principal even after the filing of Civil Case No. 8428. The payment therefor has long become overdue. Justice end equity demand that they be required to pay them within thirty days from their receipt of this decision, otherwise the real estate mortgages may be foreclosed.chanroblesvirtualawlibrarychanrobles virtual law library On the amount purportedly due SIHI as consultancy fees, we agree with the trial court that it has no basis in fact. As correctly found by it, SIHI had not communicated to the Gobonsengs, as required in the consultancy contract, the nature and extent of its consultancy services and had not presented to them a bill therefor based on manhours spent in the rendition thereof. There is no proof that SIHI performed its obligation under the consultancy contract (Exhibits "UU" and "8"), which is "to render financial consultancy services to the Gobonsengs for the formulation of financial plans, financial advisory matters and financial packaging for medium and long term capital requirements." The consultancy fees thus paid were not legally due for absence of proof of its rendition and must be returned to the Gobonsengs. However, by way of set-off, the fees already paid by the Gobonsengs may be applied as partial payment of the interests due on the principal of the loans in question. They are not to be treated as interests, contrary to the view of the trial court, because SIHI is an "investment" house, and as such it can render the above mentioned consultancy services for which fees can be charged.chanroblesvirtualawlibrarychanrobles virtual law library Finally, the release of alleged excess collaterals is unwarranted. The Gobonsengs voluntarily offered the collaterals and they did not protest when the credit line was reduced from P2 million to P900,000.00 after a re-appraisal of the loan value of the collaterals. They did not even intimate in their complaint a desire for the return of excess collaterals.chanroblesvirtualawlibrarychanrobles virtual law library WHEREFORE, the petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV No. 30380 is SET ASIDE, and another is hereby rendered:
No pronouncement as to costs.chanroblesvirtualawlibrarychanrobles virtual law library SO ORDERED. Bellosillo, Quiason and Kapunan, JJ., concur.chanroblesvirtualawlibrarychanrobles virtual law library Padilla, J., took no part. Endnotes: 1 De Los Santos vs. Reyes, 205 SCRA 437 [1992]; Pantranco North Express, Inc. vs. Court of Appeals, 224 SCRA 477 [1993], citing Chan vs. Court of Appeals, 33 SCRA 737 [1970].chanrobles virtual law library 2 Cayabyab vs. Intermediate Appellate Court, 232 SCRA 1 [1994]. See Garcia vs. Court of Appeals, 33 SCRA 622 [1970]; Remalante vs. Tibe, 158 SCRA 138 [1988]; Medina vs. Asistio, 191 SCRA 218 [1990]; Borillo vs. Court of Appeals, 209 SCRA 130 [1992].chanrobles virtual law library 3 Annex "B" of Petition; Rollo, 98-110-A. Per Guiterrez, A., J., De Pano, N. and Elbinias, J., JJ., concurring.chanrobles virtual law library 4 Annex "C"; Id., 112.chanrobles virtual law library 5 Annex "A"; Id., 68-96. Per Judge Enrique C. Garovillo.chanrobles virtual law library 6 Original Records (OR), Civil Case No. 8428, 1. Subsequent reference to "OR" means OR of Civil Case No. 8428.chanrobles virtual law library 7 Rollo, 98-100. Exhibits indicated in brackets are in the footnotes in the decision.chanrobles virtual law library 8 OR, 23.chanrobles virtual law library 9 Id., 24.chanrobles virtual law library 10 Id., 49.chanrobles virtual law library 11 Id., 41.chanrobles virtual law library 12 OR, 260-265.chanrobles virtual law library 13 Id., 358-363.chanrobles virtual law library 14 Id., 386.chanrobles virtual law library 15 Id., 388-390. Per Griño-Aquino, C., J., Racela, J. and Purisima, F., JJ., concurring.chanrobles virtual law library 16 OR, 392-394.chanrobles virtual law library 17 Id., 458.chanrobles virtual law library 18 Id., 497.chanrobles virtual law library 19 Id., 499-500.chanrobles virtual law library 20 Id., 501-524.chanrobles virtual law library 21 Id., 591-595.chanrobles virtual law library 22 OR, 593-594.chanrobles virtual law library 23 Id., 596.chanrobles virtual law library 24 Id., 597.chanrobles virtual law library 25 Id., 637-638.chanrobles virtual law library 26 OR, 1191-1221; Rollo, 68-96.chanrobles virtual law library 27 OR, 1219-1221; Rollo, 94-96.chanrobles virtual law library 28 Id., 1202; Id., 79.chanrobles virtual law library 29 Rollo, 105.chanrobles virtual law library 30 OR, 1194-1202; Rollo, 71-79.chanrobles virtual law library 31 OR, 1204; Rollo, 80.chanrobles virtual law library 32 Id., 1206; Id., 82.chanrobles virtual law library 33 OR, 1207; Rollo, 83.chanrobles virtual law library 34 Id., 1213; Id., 89.chanrobles virtual law library 35 OR, 1214; Rollo, 90.chanrobles virtual law library 36 Supra note 3.chanrobles virtual law library 37 Rollo, 109-110-A.chanrobles virtual law library 38 Rollo, 30-31.chanrobles virtual law library 39 TSN, 18 May 1988 (morning), 12, 34.chanrobles virtual law library 40 Id., 40.chanrobles virtual law library 41 TSN, 10 June 1985, 103.chanrobles virtual law library 42 TSN, 1 August 1984, 25-26.chanrobles virtual law library 43 TSN, 1 August 1984, 31-32.chanrobles virtual law library 44 TSN, 26 August 1987 (trial proper - morning), 10-15.chanrobles virtual law library 45 TSN, 27 May 1985, 14-17.chanrobles virtual law library 46 TSN, 27 May 1985, 20-21.chanrobles virtual law library 47 Id., 26.chanrobles virtual law library 48 Id., 33.chanrobles virtual law library 49 TSN, 17 April 1985, 35.chanrobles virtual law library 50 TSN, 1 August 1984, 18-22.chanrobles virtual law library 51 TSN, 11 June 1985, 17-18.chanrobles virtual law library 52 TSN, 1 August 1984, 5.chanrobles virtual law library 53 Id., 25.chanrobles virtual law library 54 TSN, 17 May 1988 (morning), 34-41.chanrobles virtual law library 55 Id., 31.chanrobles virtual law library 56 TSN, 27 August 1987 (morning), 5-9, 11.chanrobles virtual law library 57 TSN, 17 February 1988 (morning), 41.chanrobles virtual law library 58 Augusto Lopez Dee testified that a set of SIHI's credit advice slips consists of four copies allocated as follows: (a) the first, made of white thick paper, for the LMB (Loans Management Department), (b) the second, or pink copy, for the client and so indicated as Client Copy at the right bottom corner thereof, (c) the third, also white, or Cash Copy, and (d) the fourth, or blue copy, for the Accounting Department [TSN, 18 May 1988 (morning), 14-16].chanrobles virtual law library 59 TSN, 11 June 1985, 55, 60.chanrobles virtual law library 60 TSN, 10 June 1985, 101. A credit line is defined as the maximum amount which a bank agrees to lend in a lump sum or by several payments to the customer, and which may be overdrawn by promissory notes" [AGATON SIBAL, Philippine Legal Encyclopedia 195 (1986 ed.)].chanrobles virtual law library 61 TSN, 26 June 1985, 5-6.chanrobles virtual law library 62 TSN, 18 May 1988, 4.chanrobles virtual law library 63 OR, 75.chanrobles virtual law library 64 Exhibits "11," "11-A" to "11-J," inclusive.chanrobles virtual law library 65 Exhibit "7"; OR, 75.chanrobles virtual law library 66 Their Exhibits "QQQ" and "QQQ-1" summarize their paid interests for the interest periods beginning 21 January 1983 to 22 March 1983.chanrobles virtual law library 67 E.g., Exhibits "S," "U," "X," "Y," "II," "KK," "LL," "NN," "OO," "QQ," "DDD" and "DDD-2".chanrobles virtual law library 68 Exhibits "YY" and "17." 69 Exhibit "10" shows that there were instances of longer duration at 61 days and shorter duration at 48, 52, 55, and 56 days.chanrobles virtual law library 70 Exhibit "12"; OR, 82.chanrobles virtual law library 71 Exhibit "13"; Id., 83.chanrobles virtual law library 72 Exhibit "YY"; Exhibit "17." 73 Exhibit "13"; OR, 83.chanrobles virtual law library 74 Exhibit "DDD-4." 75 Annex "B" of Complaint; OR, 14-16. |
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