People Bank and Trust CoPonente: OzaetaFacts: The question raised in this appeal is the validity of the survivorship

agreement made by and between EdgarStephenson, deceased, and Ana Rivera. Ana Rivera was employed by Edgar Stephenson as housekeeper. Stephenson openedan account in his name with the Peoples Bank by depositing therein the sum of P1,000. On October 17, 1931, when there wasa balance ofP2,072 in said account, the survivorship agreement in question wasexecuted and the said accountwastransferred to the name of "EdgarStephenson and/orAna Rivera." Atthe time ofStephenson'sdeath Ana Rivera held thedepositbook,and there wasa balance in said accountofP701.43,which Ana Rivera claimed butwhich the bank refused topay to her upon advice ofits attorneys,who gave the opinion that the survivorship agreement wasofdoubtful validity.Thereupon Ana Rivera instituted the present action against the bank, and Minnie Stephenson, administratrix of the estate of the deceased, intervened and claimed the amount for the estate,alleging that the moneydeposited in said accountwas andis the exclusive propertyof the deceased.The trial court held that the agreement in question was a mere power of attorney authorizing Ana Rivera towithdraw the deposit, which power terminated upon the death of Stephenson.Viewed from itseffectafter the death of eitherof the parties, the agreementwasa donation mortis causa with reference to the balance remaining atthe death ofoneof them, which,not having been executed with the formalitiesofa testamentarydisposition as required byarticle 620 CC,was of no legal effect.Issue: WON the survivorship agreement was validHeld: YesRatio: We find no basis for the conclusion that the survivorship agreement was a mere power of attorney from Stephenson toAna Rivera, or that it is a gift mortis causa of the bank account in question from him to her. Such conclusion is evidentlypredicated on the assumption that Stephenson was the exclusive owner of the funds deposited in the bank, whichassumption was in turn based on the facts (1) thatthe accountwasoriginallyopened in the name of Stephenson alone and(2) thatAna Rivera "served only ashousemaid of the deceased." But itnotinfrequentlyhappens thata person depositsmoney in the bank in the name ofanother;and in the instant case italso appears thatAna Rivera served hermaster foraboutnineteen years without actually receiving her salary from him. The fact that subsequently Stephenson transferred theaccount to the name ofhimselfand/orAna Rivera and executed with the latter the survivorship agreement in questionalthough there was no relation of kinship between them but only that of master and servant, nullifies the assumption thatStephenson was the exclusive ownerof the bankaccount. In the absence, then,of clear proof to the contrary,we mustgivefull faith and credit to the certificate of deposit, which recites in effect that the funds in question belonged to EdgarStephenson and Ana Rivera; that they were jointowners thereof;and thateitherof them could withdraw anypartor thewhole of said accountduring the lifetime ofboth,and the balance, ifany,upon the death ofeither,belonged to the survivor.Is the survivorship agreement valid? Prima facie, we think it is valid. It is an aleatory contract supported by a lawfulconsideration the mutual agreement of the joint depositors permitting either of them to withdraw the whole deposit duringtheir lifetime,and transferring the balance to the survivorupon the death ofone ofthem. The trial courtsaid that the CivilCode "contains no provisions sanctioning such an agreement." We think itis covered by article 1790 of the CivilCode.The case ofMacam vs.Gatmaitan is in point: "This court is of the opinion that Exhibit C is an aleatory contract whereby, according toarticle 1790 of the Civil Code, one of the parties or both reciprocally bind themselves to give or do something as an equivalent for that which the other partyis to give or do in case of the occurrence of an event which is uncertain or will happen at an indeterminate time. As already stated, Leonarda was the ownerof the house and Juana of the Buick automobile and most of the furniture. By virtue of Exhibit C, Juana would become the owner of the house in caseLeonarda died first, and Leonarda would become the owner of the automobile and the furniture if Juana were to die first. In this manner Leonarda and Juanareciprocally assigned their respective property to one another conditioned upon who might die first, the time of death determining the event upon whichthe acquisition of such right by the one or the other depended. This contract, as any other contract, is binding upon the parties thereto. Inasmuch asLeonarda had died before Juana, the latter thereupon acquired the ownership of the house, in the same manner as Leonarda would have acquired theownership of the automobile and of the furniture if Juana had died first." Furthermore, "it is well established that a bank account may be so created thattwo persons shall be joint owners thereof during their mutual lives, and the survivor take the whole on the death of the other. The right to make such jointdeposits has generally been held not to be done away with by statutes abolishing joint tenancy and survivorship generally as they existed at common law." But although the survivorship agreement is per se not contrary to law, its operation or effect may be violative of thelaw. For instance, if it be shown in a given case that such agreement is a mere cloak to hide an inofficious donation, totransfer property in fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled upon suchgrounds. No such vice has been imputed and established against the agreement involved in this case. G.R. No. 32576 November 6, 1930 FULTRON IRON WORKS CO., plaintiff-appellee, vs. CHINA BANKING CORPORATION, ET AL., defendants. CHINA BANKING CORPORATION, appellant.

This action was instituted on June 23, 1926, in the Court of First Instance of the City of Manila by the Fulton Iron Works Co., a Delaware corporation having its principal place of business in St. Louis, Missouri, and duly authorized under the laws of the Philippine Islands to engage in business in this country. The defendants named in the complaint are the China Banking Corporation, a domestic corporation having its principal place of business in the City of Manila, and one S. C. Schwarzkopf. In the petitory part of the complaint judgment is sought against the two defendants jointly and severally for the sum of P131,197.10, with interest. As a ground of action against the two defendants it is asserted in the complaint that the amount claimed by the plaintiff is part of a larger sum of money (P176, 197.10) belonging to the plaintiff which had been deposited in the defendant bank by Schwarzkopf during the year 1922, and which had been misappropriated and embezzled by him, with the full knowledge and consent of the defendant bank. The idea underlying the action, as against the bank, is that it has been guilty of what may perhaps be styled a civil complicity in the misappropriation of the money for which recovery is sought. Upon hearing the cause, upon the separate answers of the two defendants, the trial court absolved Schwarckopf from the complaint, for the reason that in two prior criminal proceedings he had been convicted of the offense of estafa, based upon his misappropriated of the same money, and in said proceedings the obligation to indemnify the plaintiff had been imposed upon him in the amount of P146,197.40. His Honor, however, gave judgment in favor of the plaintiff, the Fulton Iron Works Co., to recover of the defendant bank the sum of P127,200.36, with lawful interest from June 23, 1926, the date of the filing of the complaint, and with costs. From this judgment the defendant bank appealed. It appears that in the month of March, 1921, the plaintiff the Fulton Iron Works Co., of St. Louis, Missouri, sold to the Binalbagan Estate, Inc., a Philippine corporation, machinery for a sugar mill, for which the purchaser executed three notes amounting to about $80,000. The first of these notes became due October 1, 1921, and the other two on April 1, 1922. Neither of the three notes was paid at maturity, owing to the fact that, before the notes fell due, the Binalbagan Estate, Inc. suspended payments and passed into the hands of the Philippine National Bank, its principal creditor, for administration. The consequently delay in the payments of the notes caused the plaintiff to employ a firm of lawyers in Manila, of which S. C. Schwarzkopf was then a member, to represent the plaintiff in an effort to obtain security for the indebtedness, with a view to its later collection. At the time this retainer was effect, Schwarzkopf was in St. Louis, on a visit to the United States, and in order that the plaintiff might comply with the laws of the Philippine Islands in the matter of obtaining a license to transact business here, the plaintiff executed a formal power of attorney authorizing the members of Schwarzkopf's firm jointly and severally to accept service in actions and to do other things necessary to enable the plaintiff to secure the contemplated license. It is noteworthy that the authority of Schwarzkopf's firm to represent the plaintiff in the collection of the claims above mentioned did not proceed from this power, but had its origin in the employment of said firm as attorneys in the matter. Schwarzkopf returned to Manila in the early part of November, 1921, and the law firm to which he pertained was dissolved on November 15, 1921. Under the dissolution agreement the matter of handling this collection devolved upon Schwarzkopf, and he alone was thereafter concerned in the matter. On December 13, 1921, Schwarzkopf opened a personal account, as a depositor, in the China Banking Corporation by making a deposit, on that date, of the sum of P578. This account was at all times modest in sized, and on January 1, 1922, the credit balance therein was P543.35. This account has little or no significance in the case, and it became defunct by September 1, 1922. It may be observed, however, that a few of the deposits in this account appear to have been taken from account No. 2 to which reference will presently be made. In the early part of the year 1922, the financial condition of the Binalbagan Estate, Inc. began to improve; and on January 13, 1922, D. M. Semple, manager of the Philippine Sugar Centrals Agency, a department of the Philippine National Bank, drew check No. 574 for the sum of P10,000, payable to the order of Sydney C. Schwarzkopf, and delivered the same to him in part payment of the indebtedness owing to the plaintiff from the Binalbagan Estate, Inc. Upon receiving this check Schwarzkopf signed a receipt as "attorney-in-fact of Fulton Iron Works Co." The character of attorney-in-fact, thus assumed by Schwarzkopf, was of course a mere fiction, as the power of attorney which he really possessed was limited to other matters. The point, however, is really of no moment.

The check for P10,000 above mentioned was duly indorsed by Schwarzkopf and deposited by him in a new account with the defendant bank, known as "No. 2 account." This money was thereafter withdrawn from the bank from time to time by Schwarzkopf, upon his personal checks, and used for his individual purposes. In the appealed judgment the defendant is held liable for this money, a mere oversight resulting apparently, from a confusion of this matter with the more important issues involved in other parts of the case. There is no proof that the defendant bank had any knowledge, or was chargeable with notice, that the P10,000 thus deposited and drawn out belonged to any person other than Schwarzkopf himself; and, as depositor, Schwarzkopf of course had absolute control of the account. A depositor is presumed to be the owner of funds standing in his name in a bank deposit; and where a bank is not chargeable with notice that the money deposited in such account is the property of some other person than the depositor, the bank is justified in paying out the money to the depositor or upon his order, and cannot be liable to any other person as the true owner. It is hardly necessary to cite authority upon a proposition so manifestly in accord with the usage and the common sense of the commercial community. The proposition stated is implicit in all the cases concerned with the question of the liability of a bank to its depositors and other persons claiming an interest in the deposits. Proceeding to the next collection effected by Schwarzkopf upon account of the plaintiff's claim against the Binalbagan Estate, Inc., we find that on April 11, 1922, Schwarkopf received, from the manager of the Philippine Sugar Centrals Agency, a check for the sum of P61,237.50. This check was made payable on its face to "S. C. Schwarkopf Attorney-in-Fact, Fulton Iron Works Co., or order." After indorsing this check in the form in which it was drawn, Schwarzkopf opened a new account with the defendant bank, entitled "S. C. Schwarzkopf, Attorney- in-Fact, Fulton Iron Works Co.," and deposited said check therein. This account remained undisputed on the books of the bank for some two months, during which period it had an accretion of about P130. Meanwhile, the No. 2 account which had been established back in January, became depleted, but the manager of the bank, in view, no doubt, of the funds to Schwarzkopf's credit in the third account conceded to him a credit in No. 2 account of P25,000. By June 15, 1922, said account became overdrawn to the extend of P22, 144.39, and it was obvious that the limit of the conceded credit would soon be reached. The manager of the bank then intervened and requested Schwarzkopf to settle the overdraft. To accomplish this Schwarkopf merely transferred, by check, the money to his credit in his special account as plaintiff's attorney-in-fact to the No. 2 account. The amount thus transferred was P61,360.81, and the effect of the transfer was to absorb the overdraft and place a credit balance of nearly P40,000 in No. 2 account. Schwarzkopf then purchased a draft on New York in the amount of $15,000, and after some delay transmitted the same by mail to the plaintiff. This draft cost Schwarzkopf the sum of P30,375.02, and it was the only remittance ever made by him to his client. The principal question that arises upon the facts above stated is, whether the defendant bank is liable to the plaintiff for the sum of P22, 144.39 which was thus applied to the payment of Schwarzkopf's personal indebtedness resulting from his overdraft in the No. 2 account. Upon this point the first thing to be noted is that the very form in which the third account was carried on the books of the defendant bank was sufficient to charge the bank with notice of the fact that the money deposited in said account belonged to the Fulton Iron Works Co. and not to Schwarzkopf. It is commonly said, and truly said in a legal sense, that money has no earmarks. But bank accounts and commercial paper can have earmarks, and these earmarks consist of the word or words which infallibly convey to the mind notice that the money or credit represented by the account with which they are associated or the instrument upon which they are written rightfully belongs to some other person than the one having control thereof. A bank cannot permit, much less require, a depositor who is in control of a trust fund to apply any part of the same to his individual indebtedness to the bank. The decisions to this effect are uniformly accordant and it is believed no creditable authority to the contrary can be produced from any source. The expression "trust fund," in this connection, is not a technical term, and is applied in a loose sense to indicate the situation where a bank account or negotiable securities of any sort are under the control of a person other than the true owner. The following decisions are instructive as illustrating different phases of the rule above stated, the selection having been made with a view to the fact that the cases cited are for the most part accessible in one or more series of annotated reports; Central Nat. Bank of Baltimore vs. Conn. Mut. Life Ins. Co., 104 U. S., 54; 26 Law. ed., 693; Union Stock Yards Nat. Bank vs. Moore, 25 C. C. A., 150; 79 Fed., 705 Sayre vs. Weil, 94 Ala., 466; 15 L. R. A., 544; Am. Trust & Banking Co. vs. Boone, 102 Ga., 202; 40 L. R. A., 250; 66 Am. St. Rep., 167; First Denton Nat. Bank vs. Kenney, 116 Md., 24; Ann. Cas. 19193B, 1337; Allen vs. Puritan Trust Co., 211 Mass., 409; L. R. A. 1915C, 518 (and note); Emerado Farmers' El. Co. vs. Farmers' Bank, 20 N. D., 270; 29 L. R. A. (N. S.), 567; Baird vs. Lorenz (N. D.), 61 L. R. A., 1385, 1389 (note); Walters Nat. Bank vs. Bantock, 41 Okla.,, 153; L. R. A. 1915C, 531; Interstate Nat. Bank vs. Claxton 97 Tex., 569; 65 L. R. A., 820; 104 Am. St. Rep., 885; Boyle vs. Northwestern Nat. Bank of Superior, 125 Wis., 498; 1 L. R. A. (N. S.) 1110 Am. St. Rep., 851; United

States Fidelity & Gy. Co. vs. Adoue, 104 Tex., 379; 37 L. R. A. (N. S.), 409; Ann. Cas. 1914B, 667; Underwood Ltd. vs. Bank of Liverpool (1924), 1 K. B., 755. Upon the facts before us it is evident that when credit to the extent of P25,000 was conceded to Schwarzkopf in his personal account No. 2, the eye of the banker was fixed upon the large amount then upon deposit to Schwarkopf's credit in his account as attorney-in-fact; but of course, if a bank cannot apply the money in such an account, or even permit it to be applied, to the personal indebtedness of the fiduciary depositor, it is not permissible for the bank to extend personal credit to such depositor upon the faith of the trust account. From any point that the matter be viewed, the liability of the bank is clear to the extent of P22144.39 this being the amount derived from Schwarkopf's account as attorney-in-fact which was absorbed by his overdraft in account No. 2 when the transfer of the balance in the former account to the latter account was effected, in the manner already stated. We next proceed to consider the disposition made of the proceeds of the third check collected by Schwarzkopf upon account of plaintiff's claim against the Binalbagan Estate, Inc., from the Philippine National Bank. The amount of this collection was P104, 959.60, and it was paid, on October 11, 1922, by a cashier's check on the Philippine National Bank, payable "to the order of S. C. Schwarzkopf, attorney-in-fact, Fulton Iron Works Co." Upon receiving this check, Schwarzkopf indorsed it in proper form, by writing thereon the words "S. C. Schwarzkopf, attorney-in-fact, Fulton Iron Works Co.," to which he added another indorsement consisting of his own name alone, and deposited the check in his personal account No. 2 with the defendant bank. The check thus delivered to the bank was collected by it from the Philippine National Bank in ordinary course. Thereafter, in the course of the next few months, Schwarzkopf withdrew, upon checks written by himself, the entire amount of the money to his credit in account No. 2, thus misappropriating the money in said account to his own use. It will be noted that the money thus squandered comprised not only the proceeds of the check last mentioned but the residue, consisting of a few thousand pesos, which had been left in No. 2 account after the overdraft had been paid and Schwarzkopf had remitted the draft of $15,000 to his principal in the United States. We consider that, from a legal point of view, the situation with respect to this money is precisely the same as that presented with respect to the money which came into the account later by deposit of the check for P104,959.60 above mentioned, because as to both funds, liability is sought to be fixed upon the bank by reason of its knowledge of the source from which said funds were derived; and in this connection it should be noted that there is no proof showing that the defendant bank had any knowledge of the misappropriation of this money by Schwarzkopf other than such as might have been derived from an inspection of its own books and the checks by which the money was paid in and paid out. The feature of the case now under consideration brings us, it must be admitted, into debatable territory, but a discriminating analysis of the legal principles involved leads to the conclusion that the defendant cannot be held liable for money paid out by it in ordinary course on checks, in regular form, drawn by Schwarzkopf on the No. 2 account. The specialized function of bank is to serve as a place of deposit for money, to keep it safely while on deposit, and to pay it out, upon demand to the person who effected the deposit or upon his order. A bank is not a guardian of trust funds deposited with it in the sense that it must see to their proper application nor is it its business to pry into the uses to which moneys on deposit in its vault are being put; and so long as it serves its function and pays the money out in good faith to the person who deposited it, or upon his order, without knowledge or notice that it is in fact assisting in the misappropriation of the fund, the bank will be protected. As is well said by the author of the monographic article on Banks and Banking in Ruling Case Law, It would seriously interfere with commercial transactions to charge banks with the duty of supervising the administration of trust funds, when, in due course of business, they receive checks and drafts in proper form drawn upon such funds in their custody. The law imposes no such duty upon them (3 R. C. L., 549; see also cases cited in 7 C. J., 644, 645, note 25). There are, it is true, decisions from a few courts, deservedly held in high esteem, to the effect that a bank makes itself an effective accomplice in the conversion of a trust fund when, with notice of the character of such fund, it permits the person in control thereof to deposit it in his personal account. But the decided weight of judicial authority is to the contrary; and it is generally held that the mere act of a bank in entering a trust fund to the personal account of the fiduciary, knowing it to be a trust fund, will not make the bank liable in case of the subsequent misappropriation of the money by the fiduciary. (United States Fidelity & Gy. Co. vs. First Nat. Bank, 18 Cal. App., 437: Goodwin vs. Am. Nat. Bank, 48 Conn., 550; Batchelder vs. Cen. Nat. Bank of Boston, 188 Mass., 25; Allen vs. Puritan Trust Co., 211

Mass., 409; L. R. A. 1915C, 518; Gate City Bldg. & Loan Assoc. vs. National Bank of Commerce, 126 Mo., 82; 27 L. R. A., 401; 47 Am. St. Rep., 630; Bischoff vs. Yorkville Bank, 218 N. Y., 106; Havana C. R. Co. vs. Knickerbocker Trust Co., 198 N. Y., 422; L. R. A. 1915B, 720). The bank has the right to presume that the fiduciary will apply a trust fund to its proper purpose, and at any rate the bank is not required to send a courier with the money to see that it reaches a proper destination. In the case before us an intimate study of the checks which came into the defendant bank against account No. 2 over a series of months, would have led a discerning person to the conclusion that the plaintiff's money was being squandered, but such an inference could not legitimately have been drawn from the first few checks which were drawn upon the fund, and it would be hard to say just where the bank, supposing its suspicions to have been aroused, should have intervened. No such a duty is imposed. Of course, when the bank became a party to the application of part of the plaintiff's money to the satisfaction of the overdraft in No. 2 account, it was directly chargeable with knowledge of the misappropriation of the fund to the extent of the overdraft and that fact, as we have already said, made the bank liable. But this rule cannot be extented to subsequent acts of malversation and misappropriation committed by the fiduciary against the real owner of the fund. Furthermore, it is undeniable that a bank may incur liability by assisting the fiduciary to accomplish a misappropriation, although the bank does not actually profit by the misappropriation. A decision illustrating this aspect of the law is found in Washborn vs. Linscott State Bank (87 Kan., 698), where a bank, to help the treasurer of a lodge to conceal his defalcations, permitted him to overdraw, and when his account were to be audited, issued to him a deposit certificate for the shortage, payable to the lodge. After the audit was made, the certificate was returned and cancelled, and the shortage reappeared. The court held that a loan had been made to the treasurer personally, and that the bank became liable to the lodge upon cancelling the deposit certificate.lawphil.net Our discussion of this phase of the case should not be concluded without reference to Bischoff vs. Yorville Bank (218 N. Y., 106), which undoubtedly affords some support to the contention of the appellee that the defendant bank is liable not only for the proceeds of the last check collected by Schwarzkopf, but for all of the money which was transferred to account No. 2 from the account of Schawarzkopf as attorney-in-fact. This decision comes, it must be admitted, from a court of high repute. But we are unable to accept the court's conclusions, as applicable to the facts before us. In the case mentioned it appeared that an executor, named Poggenburg, having money on deposit in a certain bank to his credit as executor, gradually withdrew about $13,000 from said deposit by checks drawn by him, over a long period of time, in the character of executor. These checks were indorsed by Poggenburg in his own name simply and deposited in the defendant Yorkville Bank to his personal credit. At the inception of this series of transactions Poggenburg was indebted by note to the defendant and payments were made on this note and other notes thereafter executed in favor of the bank, out of the funds transferred as above stated. The court held, upon the facts before, it that the defendant knew at all times that the credits created by the various deposits through checks of the executor were assets pertaining to the estate of which Poggenburg was executor; and from this fact, in connection with the misapplication of part of the money to the payment of the personal notes of Poggenburg, the court held that the defendant bank was liable to the extent of the whole amount misappropriated by means of the personal account. It will be noted that this decision was made in third instance, after a trial in first instance possibly before a jury and after the judgment against the bank been affirmed upon appeal in the appellate division of the Supreme Court. The prior history of the case was therefore such as to entitle the findings of fact of the two prior courts of great weight, and these courts had found in effect that the defendant bank had acted in bad faith. If not explicable upon this ground, the decision in the Court of Appeals must be considered a unique variant from accepted doctrine in this that while repudiating the idea, favored by a few courts that the act of depositing a trust fund in the personal accounts of the fiduciary is an effective act of conversion on the part both of bank and fiduciary, the court nevertheless held that the act of the bank in permitting the application of part of the money to the personal indebtedness of the fiduciary afforded a sufficient basis for finding the bank to have been an accomplice in the subsequent misapplication, by the fiduciary, of other portions of the deposit. We can accede to the first of these propositions but not to the second. In this connection we refer to the Annotation appended to Allen vs. Puritan Trust Co. (L. R. A. 1915C, 518, 529), where the pertinent cases are analyzed and the conclusion stated 1 that, by the weight of authority, the placing of a trust fund in the personal account of the fiduciary does not make the bank liable for a subsequent misappropriation of the money by the former. For the rest it is enough to say that there is no proof in this case that the defendant bank had any guilty connection in fact with the dishonest acts of Schwarzkopf, in squandering the contents of the No. 2 account after he had made his remittance of $15,000 to his principal.

In conclusion we ought to add that the legal principles involved in this decision are not directly deducible from the provisions of the Negotiable Instruments Law, which is in force in this jurisdiction (Act No. 2031); and there is no provision of the Civil Code or Code of Commerce directly bearing upon the point under consideration. The liability of the defendant bank, to the extent recognized in this decision proceeds upon the fundamental idea that a creditor cannot apply to the obligation of his debtor money which as he knows belongs to another, without the consent of the latter, a principle implicit in all law. We note that the attorneys for the appellant bank have suggested in their brief that, supposing the bank to have been an accomplice of Schwarzkopf in the misappropriation of the plaintiff's money, its subsidiary liability was extinguished as a result of the criminal proceedings against Schwarzkopf. This suggestion is clearly untenable, with respect to the liability which is fixed upon the bank by this decision. From what has been said it follows that the appealed judgment must be modified and the same is hereby modified by reducing the amount of the judgment against the bank to the sum of P22,144.39 with lawful interest from June 23, 1926 until date of payment, 2without pronouncement as to costs. So ordered. GO V BSP THE FACTS: On August 20, 1999, an Information[6] for violation of Section 83 of Republic Act No. 337 (RA 337) or the General Banking Act, as amended by Presidential Decree No. 1795, was filed against Go before the RTC. The charge reads: That on or about and during the period comprised between June 27, 1996 and September 15, 1997, inclusive, in the City of Manila, Philippines, the said accused, being then the Director and the President and Chief Executive Officer of the Orient Commercial Banking Corporation (Orient Bank), a commercial banking institution created, organized and existing under Philippines laws, with its main branch located at C.M. Recto Avenue, this City, and taking advantage of his position as such officer/director of the said bank, did then and there wilfully, unlawfully and knowingly borrow, either directly or indirectly, for himself or as the representative of his other related companies, the deposits or funds of the said banking institution and/or become a guarantor, indorser or obligor for loans from the said bank to others, by then and there using said borrowed deposits/funds of the said bank in facilitating and granting and/or caused the facilitating and granting of credit lines/loans and, among others, to the New Zealand Accounts loans in the total amount of TWO BILLION AND SEVEN HUNDRED FIFTY-FOUR MILLION NINE HUNDRED FIVE THOUSAND AND EIGHT HUNDRED FIFTY-SEVEN AND 0/100 PESOS, Philippine Currency, said accused knowing fully well that the same has been done by him without the written approval of the majority of the Board of Directors of said Orient Bank and which approval the said accused deliberately failed to obtain and enter the same upon the records of said banking institution and to transmit a copy of which to the supervising department of the said bank, as required by the General Banking Act. CONTRARY TO LAW. [Emphasis supplied.] On May 28, 2001, Go pleaded not guilty to the offense charged. After the arraignment, both the prosecution and accused Go took part in the pre-trial conference where the marking of the voluminous evidence for the parties was accomplished. After the completion of the marking, the trial court ordered the parties to proceed to trial on the merits. Before the trial could commence, however, Go filed on February 26, 2003[7] a motion to quash the Information, which motion Go amended on March 1, 2003.[8] Go claimed that the Information was defective, as the facts charged therein do not constitute an offense under Section 83 of RA 337 which states: No director or officer of any banking institution shall either directly or indirectly, for himself or as the representative or agent of another, borrow any of the deposits of funds of such banks, nor shall hebecome a guarantor, indorser, or surety for loans from such bank, to others, or in any manner be an obligor for money borrowed from the bank or loaned by it, except with the written approval of the majority of the directors of the bank, excluding the director concerned. Any such approval shall be entered upon the records of the corporation and a copy of such entry shall be transmitted forthwith to the appropriate supervising department. The office of any director or officer of a bank who violates the provisions of this section shall immediately become vacant and the director or officer shall be punished by imprisonment of not less than one year nor more than ten years and by a fine of not less than one thousand nor more than ten thousand pesos. The Monetary Board may regulate the amount of credit accommodations that may be extended, directly or indirectly, by banking institutions to their directors, officers, or stockholders. However, the outstanding credit accommodations which a bank may extend to each of its stockholders owning two percent (2%) or more of the subscribed capital stock, its directors, or its officers, shall be limited to an amount equivalent

to the respective outstanding deposits and book value of the paid-in capital contribution in the bank. Provided, however, that loans and advances to officers in the form of fringe benefits granted in accordance with rules and regulations as may be prescribed by Monetary Board shall not be subject to the preceding limitation. (As amended by PD 1795) In addition to the conditions established in the preceding paragraph, no director or a building and loan association shall engage in any of the operations mentioned in said paragraphs, except upon the pledge of shares of the association having a total withdrawal value greater than the amount borrowed. (As amended by PD 1795) In support of his motion to quash, Go averred that based on the facts alleged in the Information, he was being prosecuted for borrowing the deposits or funds of the Orient Bank and/or acting as a guarantor, indorser or obligor for the banks loans to other persons. The use of the word and/or meant that he was charged for being either a borrower or a guarantor, or for being both a borrower and guarantor. Go claimed that the charge was not only vague, but also did not constitute an offense. He posited that Section 83 of RA 337 penalized only directors and officers of banking institutions who acted either as borrower or as guarantor, but not as both. Go further pointed out that the Information failed to state that his alleged act of borrowing and/or guarantying was not among the exceptions provided for in the law. According to Go, the second paragraph of Section 83 allowed banks to extend credit accommodations to their directors, officers, and stockholders, provided it is limited to an amount equivalent to the respective outstanding deposits and book value of the paid-in capital contribution in the bank. Extending credit accommodations to bank directors, officers, and stockholders is not per se prohibited, unless the amount exceeds the legal limit. Since the Information failed to state that the amount he purportedly borrowed and/or guarantied was beyond the limit set by law, Go insisted that the acts so charged did not constitute an offense. Finding Gos contentions persuasive, the RTC granted Gos motion to quash the Information on May 20, 2003. It denied on June 30, 2003 the motion for reconsideration filed by the prosecution. The prosecution did not accept the RTC ruling and filed a petition for certiorari to question it before the CA. The Information, the prosecution claimed, was sufficient. The word and/or did not materially affect the validity of the Information, as it merely stated a mode of committing the crime penalized under Section 83 of RA 337. Moreover, the prosecution asserted that the second paragraph of Section 83 (referring to the credit accommodation limit) cannot be interpreted as an exception to what the first paragraph provided. The second paragraph only sets borrowing limits that, if violated, render the bank, not the director-borrower, liable. A violation of the second paragraph of Section 83 under which Go is being prosecuted is therefore separate and distinct from a violation of the first paragraph. Thus, the prosecution prayed that the orders of the RTC quashing the Information be set aside and the criminal case against Go be reinstated. On October 26, 2006, the CA rendered the assailed decision granting the prosecutions petition for certiorari.[9] The CA declared that the RTC misread the law when it decided to quash the Information against Go. It explained that the allegation that Go acted either as a borrower or a guarantor or as both borrower and guarantor merely set forth the different modes by which the offense was committed. It did not necessarily mean that Go acted both as borrower and guarantor for the same loan at the same time. It agreed with the prosecutions stand that the second paragraph of Section 83 of RA 337 is not an exception to the first paragraph. Thus, the failure of the Information to state that the amount of the loan Go borrowed or guaranteed exceeded the legal limits was, to the CA, an irrelevant issue. For these reasons, the CA annulled and set aside the RTCs orders and ordered the reinstatement of the criminal charge against Go. After the CAs denial of his motion for reconsideration,[10] Go filed the present appeal by certiorari. THE PETITION In his petition, Go alleges that the appellate court legally erred in overturning the trial courts orders. He insists that the Information failed to allege the acts or omissions complained of with sufficient particularity to enable him to know the offense being charged; to allow him to properly prepare his defense; and likewise to allow the court to render proper judgment. Repeating his arguments in his motion to quash, Go reads Section 83 of RA 337 as penalizing a director or officer of a banking institution for either borrowing the deposits or funds of the bank, or guaranteeing or indorsing loans to others, but not for assuming both capacities. He claimed that the prosecutions shotgun approach in alleging that he acted as borrower and/or guarantor rendered the Information highly defective for failure to specify with certainty the

specific act or omission complained of. To petitioner Go, the prosecutions approach was a clear violation of his constitutional right to be informed of the nature and cause of the accusation against him. Additionally, Go reiterates his claim that credit accommodations by banks to their directors and officers are legal and valid, provided that these are limited to their outstanding deposits and book value of the paid-in capital contribution in the bank. The failure to state that he borrowed deposits and/or guaranteed loans beyond this limit rendered the Information defective. He thus asks the Court to reverse the CA decision to reinstate the criminal charge. In its Comment,[11] the prosecution raises the same defenses against Gos contentions. It insists on the sufficiency of the allegations in the Information and prays for the denial of Gos petition. HILARIO P. SORIANO, Petitioner, vs.PEOPLE OF THE PHILIPPINES, BANGKO SENTRAL NG PILIPINAS (BSP), PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC), PUBLIC PROSECUTOR ANTONIO C.BUAN, and STATE PROSECUTOR ALBERTO R. FONACIER, Respondents. A bank officer violates the DOSRI2 law when he acquires bank funds for his personal benefit, even if such acquisition was facilitated by a fraudulent loan application. Directors, officers, stockholders, and their related interests cannot be allowed to interpose the fraudulent nature of the loan as a defense to escape culpability for their circumvention of Section 83 of Republic Act (RA) No. 337.3 Before us is a Petition for Review on Certiorari4 under Rule 45 of the Rules of Court, assailing the September 26, 2003 Decision5 and the February 5, 2004 Resolution6 of the Court of Appeals (CA) in CA-G.R. SP No. 67657. The challenged Decision disposed as follows: WHEREFORE, premises considered, the instant petition for certiorari is hereby DENIED.7 Factual Antecedents: Sometime in 2000, the Office of Special Investigation (OSI) of the Bangko Sentral ng Pilipinas (BSP), through its officers,8 transmitted a letter9 dated March 27, 2000 to Jovencito Zuo, Chief State Prosecutor of the Department of Justice (DOJ). The letter attached as annexes five affidavits,10 which would allegedly serve as bases for filing criminal charges for Estafa thru Falsification of Commercial Documents, in relation to Presidential Decree (PD) No. 1689,11 and for Violation of Section 83 of RA 337, as amended by PD 1795,12 against, inter alia, petitioner herein Hilario P. Soriano. These five affidavits, along with other documents, stated that spouses Enrico and Amalia Carlos appeared to have an outstanding loan of P8 million with the Rural Bank of San Miguel (Bulacan), Inc. (RBSM), but had never applied for nor received such loan; that it was petitioner, who was then president of RBSM, who had ordered, facilitated, and received the proceeds of the loan; and that the P8 million loan had never been authorized by RBSM's Board of Directors and no report thereof had ever been submitted to the Department of Rural Banks, Supervision and Examination Sector of the BSP. The letter of the OSI, which was not subscribed under oath, ended with a request that a preliminary investigation be conducted and the corresponding criminal charges be filed against petitioner at his last known address. Acting on the letter-request and its annexes, State Prosecutor Albert R. Fonacier proceeded with the preliminary investigation. He issued a subpoena with the witnesses affidavits and supporting documents attached, and required petitioner to file his counter-affidavit. In due course, the investigating officer issued a Resolution finding probable cause and correspondingly filed two separate informations against petitioner before the Regional Trial Court (RTC) of Malolos, Bulacan.13 The first Information,14 dated November 14, 2000 and docketed as Criminal Case No. 237-M-2001, was for estafa through falsification of commercial documents, under Article 315, paragraph 1(b), of the Revised Penal Code (RPC), in relation to Article 172 of the RPC and PD 1689. It basically alleged that petitioner and his co-accused, in abuse of the confidence reposed in them as RBSM officers, caused the falsification of a number of loan documents, making it appear that one Enrico Carlos filled up the same, and thereby succeeded in securing a loan and converting the loan proceeds for their personal gain and benefit.15 The information reads: That in or about the month of April, 1997, and thereafter, in San Miguel, Bulacan, and within the jurisdiction of this Honorable Court, the said accused HILARIO P. SORIANO and ROSALINDA ILAGAN, as principals by direct participation, with unfaithfulness or abuse of confidence and taking advantage of their position as President of the Rural Bank of San Miguel (Bulacan), Inc. and Branch Manager of the Rural Bank of San Miguel San Miguel Branch [sic], a duly organized banking institution under Philippine Laws, conspiring, confederating and mutually helping one another, did then and there, willfully and feloniously falsify loan documents consisting of undated loan

application/information sheet, credit proposal dated April 14, 1997, credit proposal dated April 22, 1997, credit investigation report dated April 15, 1997, promissory note dated April 23, 1997, disclosure statement on loan/credit transaction dated April 23, 1997, and other related documents, by making it appear that one Enrico Carlos filled up the application/information sheet and filed the aforementioned loan documents when in truth and in fact Enrico Carlos did not participate in the execution of said loan documents and that by virtue of said falsification and with deceit and intent to cause damage, the accused succeeded in securing a loan in the amount of eight million pesos (PhP8,000,000.00) from the Rural Bank of San Miguel San Ildefonso branch in the name of Enrico Carlos which amount of PhP8 million representing the loan proceeds the accused thereafter converted the same amount to their own personal gain and benefit, to the damage and prejudice of the Rural Bank of San Miguel San Ildefonso branch, its creditors, the Bangko Sentral ng Pilipinas, and the Philippine Deposit Insurance Corporation. CONTRARY TO LAW.16 The other Information17 dated November 10, 2000 and docketed as Criminal Case No. 238-M-2001, was for violation of Section 83 of RA 337, as amended by PD 1795. The said provision refers to the prohibition against the so-called DOSRI loans. The information alleged that, in his capacity as President of RBSM, petitioner indirectly secured an P8 million loan with RBSM, for his personal use and benefit, without the written consent and approval of the bank's Board of Directors, without entering the said transaction in the bank's records, and without transmitting a copy of the transaction to the supervising department of the bank. His ruse was facilitated by placing the loan in the name of an unsuspecting RBSM depositor, one Enrico Carlos.18 The information reads: That in or about the month of April, 1997, and thereafter, and within the jurisdiction of this Honorable Court, the said accused, in his capacity as President of the Rural Bank of San Miguel (Bulacan), Inc., did then and there, willfully and feloniously indirectly borrow or secure a loan with the Rural Bank of San Miguel San Ildefonso branch, a domestic rural banking institution created, organized and existing under Philippine laws, amounting to eight million pesos (PhP8,000,000.00), knowing fully well that the same has been done by him without the written consent and approval of the majority of the board of directors of the said bank, and which consent and approval the said accused deliberately failed to obtain and enter the same upon the records of said banking institution and to transmit a copy thereof to the supervising department of the said bank, as required by the General Banking Act, by using the name of one depositor Enrico Carlos of San Miguel, Bulacan, the latter having no knowledge of the said loan, and one in possession of the said amount of eight million pesos (PhP8,000,000.00), accused converted the same to his own personal use and benefit, in flagrant violation of the said law CONTRARY TO LAW.19 Both cases were raffled to Branch 79 of the RTC of Malolos, Bulacan.20 On June 8, 2001, petitioner moved to quash21 these informations on two grounds: that the court had no jurisdiction over the offense charged, and that the facts charged do not constitute an offense. On the first ground, petitioner argued that the letter transmitted by the BSP to the DOJ constituted the complaint and hence was defective for failure to comply with the mandatory requirements of Section 3(a), Rule 112 of the Rules of Court, such as the statement of address of petitioner and oath and subscription.22 Moreover, petitioner argued that the officers of OSI, who were the signatories to the "letter-complaint," were not authorized by the BSP Governor, much less by the Monetary Board, to file the complaint. According to petitioner, this alleged fatal oversight violated Section 18, pars. (c) and (d) of the New Central Bank Act (RA 7653). On the second ground, petitioner contended that the commission of estafa under paragraph 1(b) of Article 315 of the RPC is inherently incompatible with the violation of DOSRI law (as set out in Section 83 23 of RA 337, as amended by PD 1795),24 hence a person cannot be charged for both offenses. He argued that a violation of DOSRI law requires the offender to obtain a loan from his bank, without complying with procedural, reportorial, or ceiling requirements. On the other hand, estafa under par. 1(b), Article 315 of the RPC requires the offender to misappropriate or convert something that he holds in trust, or on commission, or for administration, or under any other obligation involving the duty to return the same.25 Essentially, the petitioner theorized that the characterization of possession is different in the two offenses. If petitioner acquired the loan as DOSRI, he owned the loaned money and therefore, cannot misappropriate or convert it as contemplated in the offense of estafa. Conversely, if petitioner committed estafa, then he merely held the money in trust for someone else and therefore, did not acquire a loan in violation of DOSRI rules.

Ruling of the Regional Trial Court: In an Order26 dated August 8, 2001, the trial court denied petitioner's Motion to Quash for lack of merit. The lower court agreed with the prosecution that the assailed OSI letter was not the complaint-affidavit itself; thus, it need not comply with the requirements under the Rules of Court. The trial court held that the affidavits, which were attached to the OSI letter, comprised the complaint-affidavit in the case. Since these affidavits were duly subscribed and sworn to before a notary public, there was adequate compliance with the Rules. The trial court further held that the two offenses were separate and distinct violations, hence the prosecution of one did not pose a bar to the other.27 Petitioners Motion for Reconsideration was likewise denied in an Order dated September 5, 2001.28 Aggrieved, petitioner filed a Petition for Certiorari29 with the CA, reiterating his arguments before the trial court. The CA denied the petition on both issues presented by petitioner. On the first issue, the CA determined that the BSP letter, which petitioner characterized to be a fatally infirm complaint, was not actually a complaint, but a transmittal or cover letter only. This transmittal letter merely contained a summary of the affidavits which were attached to it. It did not contain any averment of personal knowledge of the events and transactions that constitute the elements of the offenses charged. Being a mere transmittal letter, it need not comply with the requirements of Section 3(a) of Rule 112 of the Rules of Court.30 The CA further determined that the five affidavits attached to the transmittal letter should be considered as the complaint-affidavits that charged petitioner with violation of Section 83 of RA 337 and for Estafa thru Falsification of Commercial Documents. These complaint-affidavits complied with the mandatory requirements set out in the Rules of Court they were subscribed and sworn to before a notary public and subsequently certified by State Prosecutor Fonacier, who personally examined the affiants and was convinced that the affiants fully understood their sworn statements.31 Anent the second ground, the CA found no merit in petitioner's argument that the violation of the DOSRI law and the commission of estafa thru falsification of commercial documents are inherently inconsistent with each other. It explained that the test in considering a motion to quash on the ground that the facts charged do not constitute an offense, is whether the facts alleged, when hypothetically admitted, constitute the elements of the offense charged. The appellate court held that this test was sufficiently met because the allegations in the assailed informations, when hypothetically admitted, clearly constitute the elements of Estafa thru Falsification of Commercial Documents and Violation of DOSRI law.32 Petitioners Motion for Reconsideration33 was likewise denied for lack of merit. HUERTA ALBA RESORT, INC., petitioner, vs. COURT OF APPEALS and SYNDICATED MANAGEMENT GROUP, INC., respondents. Litigation must at some time be terminated, even at the risk of occasional errors. Public policy dictates that once a judgment becomes final, executory and unappealable, the prevailing party should not be denied the fruits of his victory by some subterfuge devised by the losing party. Unjustified delay in the enforcement of a judgment sets at naught the role of courts in disposing justiciable controversies with finality. At bar is a petition assailing the Decision, dated November 14, 1996, and Resolution, dated March 11, 1997, of the Court of Appeals in CA-G.R. No. 38747, which set aside the Order, dated July 21, 1995, and Order, dated September 4, 1997, of the Regional Trial Court of Makati City, in Civil Case No. 89-5424. The aforesaid orders of the trial court held that petitioner had the right to redeem subject pieces of property within the one-year period prescribed by Section 78 of Republic Act No. 337 otherwise known as the General Banking Act.
TheCase

Section 78 of R.A. No. 337 provides that in case of a foreclosure of a mortgage in favor of a bank, banking or credit institution, whether judicially or extrajudicially, the mortgagor shall have the right, within one year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to redeem the property.
T h e F a c t s In

a complaint for judicial foreclosure of mortgage with preliminary injunction filed on October 19, 1989, docketed as Civil Case No. 89-5424 before the Regional Trial Court of Makati City, the herein private respondent sought the foreclosure of four (4) parcels of land mortgaged by petitioner to Intercon Fund Resource, Inc. (Intercon).

Private respondent instituted Civil Case No. 89-5424 as mortgagee-assignee of a loan amounting to P8.5 million obtained by petitioner from Intercon, in whose favor petitioner mortgaged the aforesaid parcels of land as security for the said loan. In its answer below, petitioner questioned the assignment by Intercon of its mortgage right thereover to the private respondent, on the ground that the same was ultra vires. Petitioner also questioned during the trial the correctness of the charges and interest on the mortgage debt in question. On April 30, 1992, the trial court, through the then Judge now Court of Appeals Justice Buenaventura J. Guerrero, came out with its decision granting herein private respondent SMGIs complaint for judicial foreclosure of mortgage, disposing as follows: WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff the following: (1) P8,500,000.00 representing the principal of the amount due; (2) P850,000.00 as penalty charges with interest at 6% per annum, until fully paid; (3) 22% per annum interest on the above principal from September 6, 1998, until fully paid; (4) 5% of the sum total of the above amounts, as reasonable attorneys fees; and, (5) Costs. All the above must be paid within a period of not less than 150 days from receipt hereof by the defendant. In default of such payment, the four parcels of land subject matter of the suit including its improvements shall be sold to realize the mortgage debt and costs, in the manner and under the regulations that govern sales of real estate under execution.[1] Petitioner appealed the decision of the trial court to the Court of Appeals, the appeal docketed as CA-G.R. CV No. 39243 before the Sixth Division of the appellate court, which dismissed the case on June 29, 1993 on the ground of late payment of docket fees. Dissatisfied with the dismissal of CA-G.R. No. 39243, petitioner came to this Court via a petition for certiorari, docketed as G.R. No. 112044, which this court resolved to dismiss on December 13, 1993, on the finding that the Court of Appeals erred not in dismissing the appeal of petitioner. Petitioners motion for reconsideration of the dismissal of its petition in G.R. No. 112044 was denied with finality in this Courts Resolution promulgated on February 16, 1994. On March 10, 1994, leave to present a second motion for reconsideration in G.R. No. 112044 or to submit the case for hearing by the Court en banc was filed, but to no avail. The Court resolved to deny the same on May 11, 1994. On March 14, 1994, the Resolution dated December 13, 1993, in G.R. No. 112044 became final and executory and was entered in the Book of Entries of Judgment. On July 4, 1994, private respondent filed with the trial court of origin a motion for execution of the Decision promulgated on April 30, 1992 in Civil Case No. 89-5424. The said motion was granted on July 13, 1994. Accordingly, on July 15, 1994 a writ of execution issued and, on July 20, 1994, a Notice of Levy and Execution was issued by the Sheriff concerned, who issued on August 1, 1994 a Notice of Sheriffs Sale for the auction of subject properties on September 6, 1994. On August 23, 1994, petitioner filed with the same trial court an Urgent Motion to Quash and Set Aside Writ of Execution ascribing to it grave abuse of discretion in issuing the questioned Writ of Execution. To support its motion, petitioner invited attention and argued that the records of the case were still with the Court of Appeals and therefore, issuance of the writ of execution was premature since the 150-day period for petitioner to pay the judgment obligation had not yet lapsed and petitioner had not yet defaulted in the payment thereof since no demand for its payment was made by the private respondent. In petitioners own words, the dispute between the parties was principally on the issue as to when the 150-day period within which Huerta Alba may exercise its equity of redemption should be counted. In its Order of September 2, 1994, the lower court denied petitioners urgent motion to quash the writ of execution in Civil Case No. 89-5424, opining that subject judgment had become final and executory and consequently, execution thereof was a matter of right and the issuance of the corresponding writ of execution became its ministerial duty. Challenging the said order granting execution, petitioner filed once more with the Court of Appeals another petition for certiorari and prohibition with preliminary injunction, docketed as C.A.-G.R. SP No. 35086, predicated on the same grounds invoked for its Motion to Quash Writ of Execution.

On September 6, 1994, the scheduled auction sale of subject pieces of properties proceeded and the private respondent was declared the highest bidder. Thus, private respondent was awarded subject bidded pieces of property. The covering Certificate of Sale issued in its favor was registered with the Registry of Deeds on October 21, 1994. On September 7, 1994, petitioner presented an Ex-Parte Motion for Clarification asking the trial court to clarify whether or not the twelve (12) month period of redemption for ordinary execution applied in the case. On September 26, 1994, the trial court ruled that the period of redemption of subject property should be governed by the rule on the sale of judicially foreclosed property under Rule 68 of the Rules of Court. Thereafter, petitioner then filed an Exception to the Order dated September 26, 1994 and Motion to Set Aside Said Order, contending that the said Order materially altered the Decision dated April 30, 1992 which declared that the satisfaction of the judgment shall be in the manner and under the regulation that govern sale of real estate under execution. Meanwhile, in its Decision of September 30, 1994, the Court of Appeals resolved the issues raised by the petitioner in C.A.-G.R. SP No. 35086, holding that the one hundred-fifty day period within which petitioner may redeem subject properties should be computed from the date petitioner was notified of the Entry of Judgment in G.R. No. 112044; and that the 150-day period within which petitioner may exercise its equity of redemption expired on September 11, 1994. Thus: Petitioner must have received the resolution of the Supreme Court dated February 16, 1994 denying with finality its motion for reconsideration in G.R. No. 112044 before March 14, 1994, otherwise the Supreme Court would not have made an entry of judgment on March 14, 1994. While, computing the 150-day period, petitioner may have until September 11, 1994, within which to pay the amounts covered by the judgment, such period has already expired by this time, and therefore, this Court has no more reason to pass upon the parties opposing contentions, the same having become moot and academic.[2](Underscoring supplied). Petitioner moved for reconsideration of the Decision of the Court of Appeals in C.A.-G.R. SP No. 35086. In its Motion for Reconsideration dated October 18, 1994, petitioner theorized that the period of one hundred fifty (150) days should not be reckoned with from Entry of Judgment but from receipt on or before July 29, 1994 by the trial court of the records of Civil Case No. 89-5424 from the Court of Appeals. So also, petitioner maintained that it may not be considered in default, even after the expiration of 150 days from July 29, 1994, because prior demand to pay was never made on it by the private respondent. According to petitioner, it was therefore, premature for the trial court to issue a writ of execution to enforce the judgment. The trial court deferred action on the Motion for Confirmation of the Certificate of Sale in view of the pendency of petitioners Motion for Reconsideration in CA-G.R. SP No. 35086. On December 23, 1994, the Court of Appeals denied petitioners motion for reconsideration in CA-G.R. SP No. 35086. Absent any further action with respect to the denial of the subject motion for reconsideration, private respondent presented a Second Motion for Confirmation of Certificate of Sale before the trial court. As regards the Decision rendered on September 30, 1994 by the Court of Appeals in CA G.R. SP No. 35086 it became final and executory on January 25, 1995. On February 10, 1995, the lower court confirmed the sale of subject properties to the private respondent. The pertinent Order declared that all pending incidents relating to the Order dated September 26, 1994 had become moot and academic. Conformably, the Transfer Certificates of Title to subject pieces of property were then issued to the private respondent. On February 27, 1995, petitioner filed with the Court of Appeals a Motion for Clarification seeking clarification of the date of commencement of the one (1) year period for the redemption of the properties in question. In its Resolution dated March 20, 1995, the Court of Appeals merely noted such Motion for Clarification since its Decision promulgated on September 30, 1994 had already become final and executory; ratiocinating thus: We view the motion for clarification filed by petitioner, purportedly signed by its proprietor, but which we believe was prepared by a lawyer who wishes to hide under the cloak of anonymity, as a veiled attempt to buy time and to delay further the disposition of this case.

Our decision of September 30, 1994 never dealt on the right and period of redemption of petitioner, but was merely circumscribed to the question of whether respondent judge could issue a writ of execution in its Civil Case No. 895424 xxx. We further ruled that the one-hundred fifty day period within which petitioner may exercise its equity of redemption should be counted, not from the receipt of respondent court of the records of Civil Case No. 89-5424 but from the date petitioner was notified of the entry of judgment made by the appellate court. But we never made any pronouncement on the one- year right of redemption of petitioner because, in the first place, the foreclosure in this case is judicial, and as such, the mortgagor has only the equity, not the right of redemption xxx. While it may be true that under Section 78 of R.A. 337 as amended, otherwise known as the General Banking Act, a mortgagor of a bank, banking or credit institution, whether the foreclosure was donejudicially or extrajudicially, has a period of one year from the auction sale within which to redeem the foreclosed property, the question of whether the Syndicated Management Group, Inc., is a bank or credit institution was never brought before us squarely, and it is indeed odd and strange that petitioner would now sarcastically ask a rhetorical question in its motion for clarification.[3] (Underscoring supplied). Indeed, if petitioner did really act in good faith, it would have ventilated before the Court of Appeals in CA-G.R. No. 35086 its pretended right under Section 78 of R.A. No. 337 but it never did so. At the earliest opportunity, when it filed its answer to the complaint for judicial foreclosure, petitioner should have averred in its pleading that it was entitled to the beneficial provisions of Section 78 of R.A. No. 337; but again, petitioner did not make any such allegation in its answer. From the said Resolution, petitioner took no further step such that on March 31, 1995, the private respondent filed a Motion for Issuance of Writ of Possession with the trial court. During the hearing called on April 21, 1995, the counsel of record of petitioner entered appearance and asked for time to interpose opposition to the Motion for Issuance of /Writ of Possession. On May 2, 1995, in opposition to private respondents Motion for Issuance of /writ of Possession, petitioner filed a Motion to Compel Private Respondent to Accept Redemption. It was the first time petitioner ever asserted the right to redeem subject properties under Section 78 of R.A. No. 337, the General Banking Act; theorizing that the original mortgagee, being a credit institution, its assignment of the mortgage credit to petitioner did not remove petitioner from the coverage of Section 78 of R.A. No. 337. Therefore, it should have the right to redeem subject properties within one year from registration of the auction sale, theorized the petitioner which concluded that in view of its right of redemption, the issuance of the titles over subject parcels of land to the private respondent was irregular and premature. In its Order of July 21, 1995, the trial court, presided over by Judge Napoleon Inoturan, denied private respondents motion for a writ of possession, opining that Section 78 of the General Banking Act was applicable and therefore, the petitioner had until October 21, 1995 to redeem the said parcels of land, said Order ruled as follows: It is undisputed that Intercon is a credit institution from which defendant obtained a loan secured with a real estate mortgage over four (4) parcels of land. Assuming that the mortgage debt had not been assigned to plaintiff, there is then no question that defendant would have a right of redemption in case of foreclosure, judicially or extrajudicially, pursuant to the above quoted Section 78 of RA 337, as amended. However, the pivotal issue here is whether or not the defendant lost its right of redemption by virtue of the assignment of its mortgage debt by Intercon to plaintiff, which is not a bank or credit institution. The issue is resolved in the negative. The right of redemption in this case is vested by law and is therefore an absolute privilege which defendant may not lose even though plaintiff-assignee is not a bank or credit institution (Tolentino versus Court of Appeals, 106 SCRA 513). Indeed, a contrary ruling will lead to a possible circumvention of Section 78 because all that may be needed to deprive a defaulting mortgagor of his right of redemption is to assign his mortgage debt from a bank or credit institution to one which is not. Protection of defaulting mortgagors, which is the avowed policy behind the provision, would not be achieved if the ruling were otherwise. Consequently, defendant still possesses its right of redemption which it may exercise up to October 21, 1995 only, which is one year from the date of registration of the certificate of sale of subject properties (GSIS versus Iloilo, 175 SCRA 19, citing Limpin versus IAC, 166 SCRA 87). Since the period to exercise defendants right of redemption has not yet expired, the cancellation of defendants transfer certificates of title and the issuance of new ones in lieu thereof in favor of plaintiff are therefore illegal for being premature, thereby necessitating reconveyance (see Sec. 63 (a) PD 1529, as amended). WHEREFORE, the Court hereby rules as follows: (1) The Motion for Issuance of Writ of Possession is hereby denied; (2) Plaintiff is directed to accept the redemption on or before October 21, 1995 in an amount computed according to

the terms stated in the Writ of Execution dated July 15, 1994 plus all other related costs and expenses mentioned under Section 78, RA 337, as amended; and (3) The Register of Deeds of Valenzuela, Bulacan is directed (a) to reconvey to the defendant the following titles of the four (4) parcels of land, namely TCT Nos. V-38878, V-38879, V38880, and V-38881, now in the name of plaintiff, and (b) to register the certificate of sale dated October 7, 1994 and the Order confirming the sale dated February 10, 1995 by a brief memorandum thereof upon the transfer certificates of title to be issued in the name of defendant, pursuant to Sec. 63 (a) PD 1529, as amended. The Omnibus Motion dated June 5, 1995, together with the Opposition thereto, is now deemed resolved. SO ORDERED.[4] Private respondent interposed a Motion for Reconsideration seeking the reversal of the Order but to no avail. In its Order dated September 4, 1995, the trial court denied the same. To attack and challenge the aforesaid order of July 21, 1995 and subsequent Order of September 4, 1995 of the trial court, the private respondent filed with this court a Petition for Certiorari, Prohibition and Mandamus, docketed as G.R. No. 121893, but absent any special and cogent reason shown for entertaining the same, the Court referred the petition to the Court of Appeals, for proper determination. Docketed as G.R. No. 387457 on November 14, 1996, the Court of Appeals gave due course to the petition and set aside the trial courts Order dated July 21, 1995 and Order dated September 4, 1995. In its Resolution of March 11, 1997, the Court of Appeals denied petitioners Motion for Reconsideration of the Decision promulgated on November 14, 1996 in CA-G.R. No. 38747. Undaunted, petitioner has come to this Court via the present petition, placing reliance on the assignment of errors, that: Avelino Baluran v. Hon. Ricardo Navarro G.R. No. L-44428, September 30, 1977 Facts: Spouses Domingo Paraiso and Fidela Q. Paraiso were the owners of a residential lot of around 480 square meters. On or about February 2, 1964, the Paraisos executed an agreement entitled BARTER whereby as party of the first part they agreed to barter and exchange with spouses Avelino and Benilda Baluran their residential lot with the latters unirrigated riceland, of approximately 223 square meters without any permanent improvements. On May 6, 1975 Antonio Obendencio filed a complaint to recover the above-mentioned residential lot from Avelino Baluran claiming that he is the rightful owner of said residential lot having acquired the same from his mother, Natividad Paraiso Obedencio, and that he needed the property for purposes of constructing his house thereon inasmuch as he had taken residence in his native town, Sarrat. Obedencio accordingly prayed that he be declared owner of the residential lot and that defendant Baluran be ordered to vacate the same forfeiting his (Obedencio) favor the improvements defendant Baluran had built in bad faith. At the pre-trial, the parties agreed to submit the case for decision on the basis of their stipulation of facts. It was likewise admitted that the aforementioned residential lot was donated on October 4, 1974 by Natividad Obedencio to her son Antonio Obedencio, and that since the execution of the agreement of February 2, 1964 Avelino Baluran was in possession of the residential lot, paid the taxes of the property, and constructed a house thereon with an value of P250.00. On November 8, 1975, the trial Judge Ricardo Y. Navarro rendered a decision. Issue: Whther or not the happening of the resolutory condition provided for in the agreement, the right of usufruct of the parties is extinguished and each is entitled to a return of his property. Held: The use of the term barter in describing the agreement of February 2, 1964, is not controlling. The stipulations in said document are clear enough to indicate that there was no intention at all on the part of the signatories thereto to convey the ownership of their respective properties; all that was intended, and it was so provided in the agreement, was to transfer the material possession thereof. With the material ion being the only one transferred, all that the parties acquired was the right of usufruct which in essence is the right to enjoy the property of another. A resolutory condition is one which extinguishes rights and obligations already existing. The right of material possession granted in the agreement of February 2, 1964, ends if and when any of the children of Natividad Paraiso, Obedencio would reside in the municipality and build his house on the property. Inasmuch as the condition opposed is not dependent solely on the will of one of the parties to the contract the spouses Paraiso but is part dependent on the will of third persons, Natividad Obedencio and any of her children, the same is valid. the plaintiff or respondent Obedencio could not demand for the recovery of possession of the residential lot in question, not until he acquired that right from his mother, Natividad Obedencio, and which he did acquire when his mother donated to him the residential lot on October 4, 1974. In view of the ruling that the barter agreement of February 2, 1964, did not transfer the ownership of the respective properties mentioned therein, it follows that petitioner Baluran remains the owner of the unirrigated riceland and is now entitled to its Possession. With the happening of the resolutory condition provided for in the agreement, the right of usufruct of the parties is extinguished and each is entitled to a return of his property.