Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82688:56503&catid=1580&Itemid=566
Timestamp: 2019-04-21 04:42:19+00:00

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BIGNAY EX–IM PHILIPPINES, INC., Petitioner, v. UNION BANK OF THE PHILIPPINES,Respondent.
UNION BANK OF THE PHILIPPINES, Petitioner, v. BIGNAY EX–IM PHILIPPINES, INC., Respondent.
The gross negligence of the seller in defending its title to the property subject matter of the sale – thereby contravening the express undertaking under the deed of sale to protect its title against the claims of third persons resulting in the buyer’s eviction from the property – amounts to bad faith, and the buyer is entitled to the remedies afforded under Article 1555 of the Civil Code.
Before us are consolidated Petitions for Review on Certiorari1 assailing the August 25, 2005 Decision2 of the Court of Appeals (CA) in CA–G.R. CV No. 67788 as well as its February 10, 2006 Resolution3 denying the parties’ respective motions for reconsideration.
In 1984, Alfonso de Leon (Alfonso) mortgaged in favor of Union Bank of the Philippines (Union Bank) real property situated at Esteban Abada, Loyola Heights, Quezon City, which was registered in his and his wife Rosario’s name and covered by Transfer Certificate of Title (TCT) No. 286130 (TCT 286130).
The property was foreclosed and sold at auction to Union Bank. After the redemption period expired, the bank consolidated its ownership, whereupon TCT 362405 was issued in its name in 1987.
In 1988, Rosario filed against Alfonso and Union Bank, Civil Case No. Q–52702 for annulment of the 1984 mortgage, claiming that Alfonso mortgaged the property without her consent, and for reconveyance.
The property is the subject of a pending litigation between Rosario de Leon and Union Bank for nullification of the foreclosure before the Regional Trial Court of Quezon City. Should this offer be approved by your management, we suggest that instead of the usual conditional sale, a deed of absolute sale be executed to document the transaction in our favor subject to a mortgage in favor of the bank to secure the balance.
On December 27, 1989, Bignay mortgaged the property to Union Bank, presumably to secure a loan obtained from the latter.
Sale and mortgage by and between Union Bank and Bignay Ex–Im Phil. Inc. on December 27, 1989 over the subject conjugal property as annotated on T.C.T. No. 362405 (Exh. O).
Further, the Court hereby declares plaintiff Rosario T. de Leon the owner still of the undivided ONE HALF (1/2) of the subject property covered by T.C.T. No. 286130.
The order dated February 2, 1988 granting a writ of possession in favor of Union Bank is hereby SET ASIDE and QUASHED.
Defendant Alfonso de Leon, Jr. is hereby ordered to pay his co–defendant Union Bank of the Philippines the sum of his P1M loan with interest from the time the same was extended to him which is hereby charged against his other undivided share of ONE HALF (½) of the subject property with T.C.T. No. 286130.
No damages is [sic], however, adjudicated against defendant Union Bank of the Philippines there being no substantial evidence that it is in complicity with defendant Alfonso de Leon, Jr. in the presentation of the forged signature of his wife plaintiff on the Special Power of Attorney (Exh. M).
Without cost, except for the professional fee, if any, for the examination of the forged signature (Exh. M–1) which shall be paid by defendant Alfonso de Leon, Jr.
Meanwhile, as a result of the December 12, 1991 Decision in Civil Case No. Q–52702, Bignay was evicted from the property; by then, it had demolished the existing structure on the lot and begun construction of a new building.
had authorized all of Robles’s acts relative to the sale.
Union Bank interposed a Motion to Dismiss19 grounded on lack of or failure to state a cause of action, claiming that it made no warranties in favor of Bignay when it sold the property to the latter on December 20, 1989. The trial court deferred the resolution of the motion on finding that the ground relied upon did not appear to be indubitable. Union Bank thus filed its Answer Ad Cautelam,20 where it alleged that Bignay was not an innocent purchaser for value, knowing the condition of the property as evidenced by Siy’s September 6, 1989 letter–proposal to purchase the same. It interposed a counterclaim as well, grounded on two promissory notes signed by Siy in favor of the bank – 1) Promissory Note No. 90–1446 dated December 20, 1990 for the amount of P1.5 million payable on demand with annual interest of 33%, and 2) Promissory Note No. 91–0286 dated February 26, 1991 for the amount of P2 million payable on demand with annual interest of 30% – which resulted in outstanding liabilities, inclusive of interest and penalties, in the total amount of more than P10.4 million as of December 20, 1996.
Evidence on Union Bank’s counterclaim was likewise received by the trial court.
WHEREFORE, decision is hereby rendered ordering the defendant to pay plaintiff the sum of Four Million ( P4,000,000.00) Pesos representing the cost of the land and Twenty Million ( P20,000,000.00) Pesos representing the value of the building constructed on the subject land, and the costs of this suit.
The counterclaim interposed by defendant is hereby dismissed without prejudice.
The trial court found that Union Bank’s Senior Vice President, Robles, maintained a secret alliance and relationship of trust with Bignay’s Siy, whereby Robles would look out for desirable properties from the bank’s asset inventory, recommend them to Siy, then facilitate the negotiation, sale and documentation for her. In return, he would receive a 3% commission from Siy, or some other benefit; in fact, Siy made him an incorporator and director of one of her corporations, IGAPC. The trial court believed Siy’s claim that she signed papers in blank and left them with Robles in order to facilitate the negotiation and purchase of bank properties which they both considered to be cheap and viable. In this connection, the trial court concluded that it was Robles – and not Siy – who prepared the September 6, 1989 letter–proposal on a piece of paper signed in blank by Siy, and that even though the pending Civil Case No. Q–52702 was mentioned in the letter–proposal, Siy in fact had no knowledge thereof. This is proved by the fact that she proceeded to construct a costly building on the property; if Siy knew of the pending Civil Case No. Q–52702, it is highly doubtful that she would do so.
(5) The damages and interests, and ornamental expenses, if the sale was made in bad faith.
Thus, it held that Bignay was entitled to the return of the value of the property ( P4 million), as well as the cost of the building erected thereon ( P20 million), since Union Bank acted in bad faith. At the same time, the trial court held that the bank’s counterclaim was not at all connected with Bignay’s Complaint, which makes it a permissive counterclaim for which the docket fees should accordingly be paid. Since the bank did not pay the docket fees, the trial court held that it did not acquire jurisdiction over its counterclaim; thus, it dismissed the same.
WHEREFORE, the instant Appeal is PARTLY GRANTED. Judgment is hereby rendered ordering defendant–appellant to pay plaintiff–appellee the sum of P4,000,000.00 representing the cost of the land and P20,000,000.00 representing the value of the building constructed on the subject land.
On the Counterclaim, judgment is rendered ordering plaintiff–appellee to pay defendant–appellant the principal amount of P1,500,000.00 under Promissory Note No. 90–1446 dated December 18, 1990, plus the stipulated interests and stipulated penalty charges from date of maturity of the loan or from June 6, 1991 until its full payment and also to pay the principal amount of P2,000,000.00 under Promissory Note No. 90–0286 dated February 25, 1991, plus the stipulated interests and stipulated penalty charges from date of maturity of the loan or from August 26, 1991 until full payment thereof.
Applying Articles 1548 and 1549 of the Civil Code,28 the CA held that Union Bank is liable pursuant to its commitment under the December 20, 1989 deed of sale to defend the title to the property against the claims of third parties. It shared the trial court’s opinion that the bank was guilty of negligence in the handling and prosecution of Civil Case No. Q–52702, for which reason it should be made answerable, since it lost its title to the whole property when it could have protected its right to Alfonso’s share therein considering that the Decision in Civil Case No. Q–52702 merely awarded Rosario’s conjugal share. In other words, the CA intimated that if Union Bank exercised prudence, it could have maintained at least its rights and title to Alfonso’s one–half share in the property, and the trial court’s Decision completely nullifying the Alfonso–Union Bank mortgage, the bank’s new title TCT 362405, and the Union Bank–Bignay sale could have been avoided.
The CA added that the declaration contained in the September 6, 1989 letter–proposal to the effect that Siy knew about the pending Civil Case No. Q–52702 cannot bind Bignay because the proposal was supposedly prepared and signed by Siy in her personal capacity, and not for and in behalf of Bignay. It further affirmed the trial court’s view that it was Robles – and not Siy – who prepared the said letter–proposal on a piece of paper which she signed in blank and left with Robles to facilitate her transactions with Union Bank.
Regarding the bank’s counterclaim, the CA held that Union Bank timely paid the docket fees therefor – amounting to P32,940.00 – at the time it filed its Answer Ad Cautelam on November 4, 1994, as shown by Official Receipt Nos. 4272579 and 4271965 to such effect and the rubberstamped mark on the face of the answer itself. It added that since the trial court received the bank’s evidence on the counterclaim during trial, it should have made a ruling thereon.
Bignay filed its Motion for Partial Reconsideration29 questioning the appellate court’s ruling on Union Bank’s counterclaim. On the other hand, Union Bank in its Motion for Reconsideration30 took exception to the CA’s application of Articles 1548 and 1549 of the Civil Code, as well as its finding that the bank was negligent in the handling and prosecution of Civil Case No. Q–52702.
On February 10, 2006, the CA issued the second assailed Resolution denying the parties’ respective motions for reconsideration.
Thus, the present Petitions were filed. G.R. No. 171590 was initiated by Bignay, while G.R. No. 171598 was filed by Union Bank. In a June 21, 2006 Resolution31 of the Court, both Petitions were ordered consolidated.
IN A PERMISSIVE COUNTERCLAIM, WHEN SHOULD THE DOCKET FEES BE PAID TO ENABLE THE TRIAL COURT TO ACQUIRE JURISDICTION OVER THE CASE?
G.R. No. 171590. As petitioner in G.R. No. 171590, Bignay registers its doubts as to whether Union Bank indeed paid the docket fees on its permissive counterclaim, arguing that if the bank indeed paid the docket fees, the trial court would have so held in its March 21, 2000 Decision; instead, it specifically declared therein that the docket fees on the counterclaim remained unpaid at that point in time. In other words, Bignay appears to insinuate that there was an irregularity surrounding the bank’s alleged payment of the docket fees on its counterclaim. It adds that since Union Bank is guilty of negligence and bad faith in transacting with Bignay, it should be penalized through the proper dismissal of its counterclaim; the Court should instead require Union Bank to prosecute its claims in a separate action.
Bignay thus prays in its Petition that the assailed dispositions of the CA be modified to the extent that Union Bank’s counterclaim should be denied and dismissed.
In its Comment34 praying that the CA’s ruling on its counterclaim be affirmed, Union Bank insists that it timely paid the docket fees on its counterclaim, arguing that the official receipts proving payment as well as the rubber stamp–mark on the face of its answer may not be overturned by Bignay’s baseless suspicions, claims and insinuations not supported by controverting evidence or proof. It adds that, contrary to Bignay’s assertion, a separate case for the prosecution of its counterclaim is unnecessary since the same may sufficiently be tried in Civil Case No. 94–1129 precisely as a permissive counterclaim; and by allowing its permissive counterclaim, multiplicity of suits is avoided.
In a Reply35 to the bank’s Comment, Bignay among others vehemently insists that at the time of the rendition of the trial court’s judgment in Civil Case No. 94–1129, Union Bank had not yet paid the docket fees on its counterclaim; the bank’s claim that it paid the docket fees when it filed its Answer Ad Cautelam is absolutely questionable. If indeed the bank paid the docket fees, then it should have questioned the trial court’s dismissal of its counterclaim in a motion for reconsideration and attached the receipts showing its payment of the fees; yet it did not. Besides, if indeed the fact of payment of docket fees was stamped on the face of the bank’s Answer Ad Cautelam when it filed the same, the trial court should have noticed it, or at least its attention would have been directed to the fact; but it was not. And if indeed the docket fees were paid as early as 1994, it is incredible how Union Bank never informed the trial court of its payment, even after the adverse Decision in the case was rendered. Bignay adds that in a September 12, 2005 letter36 to the Clerk of Court of the Makati City RTC, its counsel inquired into the circumstances surrounding the sudden appearance of official receipts – copies of which were attached to the letter – indicating that Union Bank paid the docket fees on its permissive counterclaim, when it appears that no such payment was in fact made; up to now, however, it has not received any reply from the said office.
G.R. No. 171598. In its Petition in G.R. No. 171598, Union Bank insists that the September 6, 1989 letter–proposal effectively limited its liability for eviction since from said letter it is seen that Bignay knew beforehand of the pendency of Civil Case No. Q–52702. It insists that under the December 20, 1989 deed of sale, it did not make any representations or warranty with respect to the property; thus, the application of Articles 1548 and 1549 of the Civil Code by the CA was erroneous. Thus, the bank seeks a partial reversal of the CA’s disposition – particularly the portion of the Decision which holds it liable to pay Bignay the respective sums of P4 million for the cost of the land, and P20 million for the cost of the building.
In its Comment,37 Bignay claims that in urging the Court to consider the testimony of Robles and Siy’s declaration in the September 6, 1989 letter–proposal, Union Bank is raising questions of fact in its Petition which this Court may not resolve. It likewise reiterates its argument relating to the bank’s counterclaim; only this time, Bignay claims that the official receipts evidencing the bank’s supposed payment of the docket fees were falsified.
The Court finds for Bignay.
Indeed, this Court is convinced – from an examination of the evidence and by the concurring opinions of the courts below – that Bignay purchased the property without knowledge of the pending Civil Case No. Q–52702. Union Bank is therefore answerable for its express undertaking under the December 20, 1989 deed of sale to “defend its title to the Parcel/s of Land with improvement thereon against the claims of any person whatsoever.” By this warranty, Union Bank represented to Bignay that it had title to the property, and by assuming the obligation to defend such title, it promised to do so at least in good faith and with sufficient prudence, if not to the best of its abilities.
Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.40 In case eviction occurs, the vendee shall have the right to demand of the vendor, among others, the return of the value which the thing sold had at the time of the eviction, be it greater or less than the price of the sale; the expenses of the contract, if the vendee has paid them; and the damages and interests, and ornamental expenses, if the sale was made in bad faith.41 There appears to be no dispute as to the value of the building constructed on the property by Bignay; the only issue raised by Union Bank in these Petitions is the propriety of the award of damages, and the amount thereof is not in issue. The award in favor of Bignay of P4 million, or the consideration or cost of the property, and P20 million – the value of the building it erected thereon – is no longer in issue and is thus in order.
More than the above, this Court finds true and credible the trial court’s express declaration that no docket fees have been paid on the bank’s counterclaim; the trial court’s pronouncement enjoys the presumption of regularity. Indeed, the sudden appearance of the receipts supposedly evidencing payment of the docket fees is highly questionable and irregular, and deserves to be thoroughly investigated; the actuations of the bank relative thereto go against the common experience of mankind, if they are not entirely anomalous.
1. The Petition in G.R. No. 171590 is GRANTED. The August 25, 2005 Decision and February 10, 2006 Resolution of the Court of Appeals in CA–G.R. CV No. 67788 are MODIFIED, in that Union Bank of the Philippines’s counterclaim is ordered DISMISSED.
1Rollo, G.R. No. 171590, pp. 9–32; G.R. No. 171598, pp. 66–84.
2 CA rollo, pp. 219–235; penned by Associate Justice Lucenito N. Tagle and concurred in by Associate Justices Martin S. Villarama, Jr. and Bienvenido L. Reyes (now Members of this Court).
4 Records, Vol. I, p. 232.
8 Id. at 35–45; penned by Judge Pedro T. Santiago.
10Rollo, G.R. No. 171590, pp. 37–38.
11 Docketed as CA–G.R. SP No. 31689.
12Rollo, G.R. No. 171590, p. 38.
13 Additional Requisites For Petitions Filed With The Supreme Court And The Court Of Appeals To Prevent Forum Shopping Or Multiple Filing Of Petitions And Complaints.
14Rollo, G.R. No. 171590, p. 38; Records, Vol. II, pp. 371–376.
15 Records, Vol. 1, pp. 243–252.
16Rollo, G.R. No. 171590, pp. 38–39.
17 Records, Vol. I, pp. 1–14.
21Rollo, G.R. No. 171590, p. 57.
25 Records, Vol. II, pp. 492–502; penned by Judge Manuel D. Victorio.
28 Art. 1548. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.
The vendor shall answer for the eviction even though nothing has been said in the contract on the subject.
The contracting parties, however, may increase, diminish, or suppress this legal obligation of the vendor.
Art. 1549. The vendee need not appeal from the decision in order that the vendor may become liable for eviction.
29 CA rollo, pp. 254–268.
31Rollo, G.R. No. 171590, p. 69.
38Bankard, Inc. v. Dr. Feliciano, 529 Phil. 53, 61 (2006), citing Fores v. Miranda, 105 Phil. 266, 276 (1959).
39Cagungun v. Planters Development Bank, 510 Phil. 51, 63 (2005).
40 CIVIL CODE, Art. 1548.
41 CIVIL CODE, Art. 1555.
42 Records, Vol. II, p. 501.
43People v. De Guzman, G.R. No. 192250, July 11, 2012, 676 SCRA 347, 360.

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