Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27155 May 18, 1978
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE COURT OF APPEALS, RITA GUECO TAPNIO, CECILIO GUECO a! THE
PHILIPPINE AMERICAN GENERAL INSURANCE COMPAN", INC., respondents.
Medina, Locsin, Corua, & Sumbillo for petitioner.
Manuel Lim & Associates for private respondents.
ANTONIO, J.:
Certiorari to revie the decision of the Court of !ppeals hich a"r#ed the
$ud%#ent of the Court of &irst Instance of Manila in Civil Case No. '()*+, orderin%
petitioner, as third,part- defendant, to pa- respondent Rita .ueco /apnio, as third,
part- plainti0, the su# of P1,'23.2), plus )14 interest per annu# fro# Septe#ber
)3, )3+2 until the sa#e is full- paid, P155.55 attorne-6s fees and costs, the sa#e
a#ounts hich Rita .ueco /apnio as ordered to pa- the Philippine !#erican
.eneral Insurance Co., Inc., to be paid directl- to the Philippine !#erican .eneral
Insurance Co., Inc. in full satisfaction of the $ud%#ent rendered a%ainst Rita .ueco
/apnio in favor of the for#er7 plus P+55.55 attorne-6s fees for Rita .ueco /apnio and
costs. /he basic action is the co#plaint 8led b- Phila#%en 9Philippine !#erican
.eneral Insurance Co., Inc.: as suret- a%ainst Rita .ueco /apnio and Cecilio .ueco,
for the recover- of the su# of P1,'23.2) paid b- Phila#%en to the Philippine
National ;an< on behalf of respondents /apnio and .ueco, pursuant to an inde#nit-
a%ree#ent. Petitioner ;an< as #ade third,part- defendant b- /apnio and .ueco on
the theor- that their failure to pa- the debt as due to the fault or ne%li%ence of
petitioner.
/he facts as found b- the respondent Court of !ppeals, in a"r#in% the decision of
the Court of &irst Instance of Manila, are =uoted hereunder>
Plainti0 e?ecuted its ;ond, E?h. !, ith defendant Rita .ueco
/apnio as principal, in favor of the Philippine National ;an< ;ranch
at San &ernando, Pa#pan%a, to %uarantee the pa-#ent of
defendant Rita .ueco /apnio6s account ith said ;an<. In turn, to
%uarantee the pa-#ent of hatever a#ount the bondin% co#pan-
ould pa- to the Philippine National ;an<, both defendants
e?ecuted the inde#nit- a%ree#ent, E?h. ;. @nder the ter#s and
conditions of this inde#nit- a%ree#ent, hatever a#ount the
plainti0 ould pa- ould earn interest at the rate of )14 per
annu#, plus attorne-6s fees in the a#ount of )+ 4 of the hole
a#ount due in case of court liti%ation.
/he ori%inal a#ount of the bond as for P(,555.557 but the
a#ount as later reduced to P1,555.55.
It is not disputed that defendant Rita .ueco /apnio as indebted
to the ban< in the su# of P1,555.55, plus accu#ulated interests
unpaid, hich she failed to pa- despite de#ands. /he ;an< rote
a letter of de#and to plainti0, as per E?h. C7 hereupon, plainti0
paid the ban< on Septe#ber )*, )3+2, the full a#ount due and
oin% in the su# of P1,'23.3), for and on account of defendant
Rita .ueco6s obli%ation 9E?hs. D and D,):.
Plainti0, in turn, #ade several de#ands, both verbal and ritten,
upon defendants 9E?hs. E and &:, but to no avail.
Defendant Rita .ueco /apnio ad#itted all the fore%oin% facts. She
clai#s, hoever, hen de#and as #ade upon her b- plainti0 for
her to pa- her debt to the ;an<, that she told the Plainti0 that she
did not consider herself to be indebted to the ;an< at all because
she had an a%ree#ent ith one Aacobo,NaBon hereb- she had
leased to the latter her unused e?port su%ar =uota for the )3+C,
)3+2 a%ricultural -ear, consistin% of ),555 piculs at the rate of
P1.*5 per picul, or for a total of P1,*55.55, hich as alread- in
e?cess of her obli%ation %uaranteed b- plainti06s bond, E?h. !.
/his lease a%ree#ent, accordin% to her, as ith the <noled%e of
the ban<. ;ut the ;an< has placed obstacles to the consu##ation
of the lease, and the dela- caused b- said obstacles forced 6NaBon
to rescind the lease contract. /hus, Rita .ueco /apnio 8led her
third,part- co#plaint a%ainst the ;an< to recover fro# the latter
an- and all su#s of #one- hich #a- be ad$ud%ed a%ainst her
and in favor of the plaiti0 plus #oral da#a%es, attorne-6s fees and
costs.
Insofar as the contentions of the parties herein are concerned, e
=uote ith approval the folloin% 8ndin%s of the loer court based
on the evidence presented at the trial of the case>
It has been established durin% the trial that Mrs.
/apnio had an e?port su%ar =uota of ),555 piculs
for the a%ricultural -ear )3+C,)3+2 hich she
did not need. She a%reed to allo Mr. Aacobo C.
/uaBon to use said =uota for the consideration of
P1,+55.55 9E?h. D(D,.ueco:. /his a%ree#ent as
called a contract of lease of su%ar allot#ent.
!t the ti#e of the a%ree#ent, Mrs. /apnio as
indebted to the Philippine National ;an< at San
&ernando, Pa#pan%a. Eer indebtedness as
<non as a crop loan and as secured b- a
#ort%a%e on her standin% crop includin% her
su%ar =uota allocation for the a%ricultural -ear
correspondin% to said standin% crop. /his
arran%e#ent as necessar- in order that hen
Mrs. /apnio harvests, the P.N.;., havin% a lien on
the crop, #a- e0ectivel- enforce collection
a%ainst her. Eer su%ar cannot be e?ported
ithout su%ar =uota allot#ent So#eti#es,
hoever, a planter harvest less su%ar than her
=uota, so her e?cess =uota is utiliBed b- another
ho pa-s her for its use. /his is the arran%e#ent
entered into beteen Mrs. /apnio and Mr. /uaBon
re%ardin% the for#er6s e?cess =uota for )3+C,
)3+2 9E?h. D(D,.ueco:.
Since the =uota as #ort%a%ed to the P.N.;., the
contract of lease had to be approved b- said
;an<, /he sa#e as sub#itted to the branch
#ana%er at San &ernando, Pa#pan%a. /he latter
re=uired the parties to raise the consideration of
P1.*5 per picul or a total of P1,*55.55 9E?h. D1,
.uecoD: infor#in% the# that Dthe #ini#u#
lease rental acceptable to the ;an<, is P1.*5 per
picul.D In a letter addressed to the branch
#ana%er on !u%ust )5, )3+C, Mr. /uaBon
infor#ed the #ana%er that he as a%reeable to
raisin% the consideration to P1.*5 per picul. Ee
further infor#ed the #ana%er that he as read-
to pa- said a#ount as the funds ere in his
folder hich as <ept in the ban<.
E?plainin% the #eanin% of /uaBon6s state#ent as
to the funds, it as stated b- hi# that he had an
approved loan fro# the ban< but he had not -et
utiliBed it as he as intendin% to use it to pa- for
the =uota. Eence, hen he said the a#ount
needed to pa- Mrs. /apnio as in his folder
hich as in the ban<, he #eant and the
#ana%er understood and <ne he had an
approved loan available to be used in pa-#ent
of the =uota. In said E?h. DC,.uecoD, /uaBon also
infor#ed the #ana%er that he ould ant for a
notice fro# the #ana%er as to the ti#e hen
the ban< needed the #one- so that /uaBon
could si%n the correspondin% pro#issor- note.
&urther Consideration of the evidence discloses that hen the
branch #ana%er of the Philippine National ;an< at San &ernando
reco##ended the approval of the contract of lease at the price of
P1.*5 per picul 9E?h. ) ),;an<:, hose reco##endation as
concurred in b- the Vice,president of said ;an<, A. V.
;uenaventura, the board of directors re=uired that the a#ount be
raised to )'.55 per picul. /his act of the board of directors as
co##unicated to /uaBon, ho in turn as<ed for a reconsideration
thereof. On Nove#ber )3, )3+C, the branch #ana%er sub#itted
/uaBon6s re=uest for reconsideration to the board of directors ith
another reco##endation for the approval of the lease at P1.*5 per
picul, but the board returned the reco##endation unacted upon,
considerin% that the current price prevailin% at the ti#e as P'.55
per picul 9E?h. 3,;an<:.
/he parties ere noti8ed of the refusal on the part of the board of
directors of the ;an< to %rant the #otion for reconsideration. /he
#atter stood as it as until &ebruar- 11, )3+2, hen /uaBon rote
a letter 9E?h. )5,;an< infor#in% the ;an< that he as no lon%er
interested to continue the deal, referrin% to the lease of su%ar
=uota allot#ent in favor of defendant Rita .ueco /apnio. /he
result is that the latter lost the su# of P1,*55.55 hich she should
have received fro# /uaBon and hich she could have paid the
;an< to cancel o0 her indebtedness,
/he court belo held, and in this holdin% e concur that failure of
the ne%otiation for the lease of the su%ar =uota allocation of Rita
.ueco /apnio to /uaBon as due to the fault of the directors of the
Philippine National ;an<, /he refusal on the part of the ban< to
approve the lease at the rate of P1.*5 per picul hich, as stated
above, ould have enabled Rita .ueco /apnio to realiBe the
a#ount of P1,*55.55 hich as #ore than su"cient to pa- o0 her
indebtedness to the ;an<, and its insistence on the rental price of
P'.55 per picul thus unnecessaril- increasin% the value b- onl- a
di0erence of P155.55. inevitabl- brou%ht about the rescission of
the lease contract to the da#a%e and pre$udice of Rita .ueco
/apnio in the aforesaid su# of P1,*55.55. /he unreasonableness of
the position adopted b- the board of directors of the Philippine
National ;an< in refusin% to approve the lease at the rate of P1.*5
per picul and insistin% on the rate of P'.55 per picul, if onl- to
increase the retail value b- onl- P155.55 is shon b- the fact that
all the accounts of Rita .ueco /apnio ith the ;an< ere secured
b- chattel #ort%a%e on standin% crops, assi%n#ent of leasehold
ri%hts and interests on her properties, and suret- bonds, aside
fro# the fact that fro# E?h. *,;an<, it appears that she as
o0erin% to e?ecute a real estate #ort%a%e in favor of the ;an< to
replace the suret- bond /his state#ent is further bolstered b- the
fact that Rita .ueco /apnio apparentl- had the #eans to pa- her
obli%ation fact that she has been %ranted several value of al#ost
P*5,555.55 for the a%ricultural -ears fro# )3+1 to +C.
1
Its #otion for the reconsideration of the decision of the Court of !ppeals havin%
been denied, petitioner 8led the present petition.
/he petitioner contends that the Court of !ppeals erred>
9): In 8ndin% that the rescission of the lease contract of the ),555 piculs of su%ar
=uota allocation of respondent Rita .ueco /apnio b- Aacobo C. /uaBon as due to the
un$usti8ed refusal of petitioner to approve said lease contract, and its unreasonable
insistence on the rental price of P'.55 instead of P1.*5 per picul7 and
91: In not holdin% that based on the statistics of su%ar price and prices of su%ar
=uota in the possession of the petitioner, the latter6s ;oard of Directors correctl-
8?ed the rental of price per picul of ),555 piculs of su%ar =uota leased b-
respondent Rita .ueco /apnio to Aacobo C. /uaBon at P'.55 per picul.
Petitioner ar%ued that as an assi%nee of the su%ar =uota of /apnio, it has the ri%ht,
both under its on Charter and under the Corporation Fa, to safe%uard and protect
its ri%hts and interests under the deed of assi%n#ent, hich include the ri%ht to
approve or disapprove the said lease of su%ar =uota and in the e?ercise of that
authorit-, its
;oard of Directors necessaril- had authorit- to deter#ine and 8? the rental price per
picul of the su%ar =uota sub$ect of the lease beteen private respondents and
Aacobo C. /uaBon. It ar%ued further that both under its Charter and the Corporation
Fa, petitioner, actin% thru its ;oard of Directors, has the perfect ri%ht to adopt a
polic- ith respect to 8?in% of rental prices of e?port su%ar =uota allocations, and in
8?in% the rentals at P'.55 per picul, it did not act arbitraril- since the said ;oard as
%uided b- statistics of su%ar price and prices of su%ar =uotas prevailin% at the ti#e.
Since the 8?in% of the rental of the su%ar =uota is a function lod%ed ith petitioner6s
;oard of Directors and is a #atter of polic-, the respondent Court of !ppeals could
not substitute its on $ud%#ent for that of said ;oard of Directors, hich acted in
%ood faith, #a<in% as its basis therefore the prevailin% #ar<et price as shon b-
statistics hich ere then in their possession.
&inall-, petitioner e#phasiBed that under the appealed $ud%#ent, it shall su0er a
%reat in$ustice because as a creditor, it shall be deprived of a $ust clai# a%ainst its
debtor 9respondent Rita .ueco /apnio: as it ould be re=uired to return to
respondent Phila#%en the su# of P1,'23.2), plus interest, hich a#ount had been
previousl- paid to petitioner b- said insurance co#pan- in behalf of the principal
debtor, herein respondent Rita .ueco /apnio, and ithout recourse a%ainst
respondent Rita .ueco /apnio.
Ge #ust advert to the rule that this Court6s appellate $urisdiction in proceedin%s of
this nature is li#ited to reviein% onl- errors of la, acceptin% as conclusive the
factual 8n din%s of the Court of !ppeals upon its on assess#ent of the evidence.
2
/he contract of lease of su%ar =uota allot#ent at P1.+5 per picul beteen Rita
.ueco /apnio and Aacobo C. /uaBon as e?ecuted on !pril )2, )3+C. /his contract
as sub#itted to the ;ranch Mana%er of the Philippine National ;an< at San
&ernando, Pa#pan%a. /his arran%e#ent as necessar- because /apnio6s
indebtedness to petitioner as secured b- a #ort%a%e on her standin% crop
includin% her su%ar =uota allocation for the a%ricultural -ear correspondin% to said
standin% crop. /he latter re=uired the parties to raise the consideration to P1.*5 per
picul, the #ini#u# lease rental acceptable to the ;an<, or a total of P1,*55.55.
/uaBon infor#ed the ;ranch Mana%er, thru a letter dated !u%ust )5, )3+C, that he
as a%reeable to raisin% the consideration to P1.*5 per picul. Ee further infor#ed
the #ana%er that he as read- to pa- the said su# of P1,*55.55 as the funds ere
in his folder hich as <ept in the said ;an<. /his referred to the approved loan of
/uaBon fro# the ;an< hich he intended to use in pa-in% for the use of the su%ar
=uota. /he ;ranch Mana%er sub#itted the contract of lease of su%ar =uota
allocation to the Eead O"ce on Septe#ber 2, )3+C, ith a reco##endation for
approval, hich reco##endation as concurred in b- the Vice,President of the
;an<, Mr. A. V. ;uenaventura. /his notithstandin%, the ;oard of Directors of
petitioner re=uired that the consideration be raised to P'.55 per picul.
/uaBon, after bein% infor#ed of the action of the ;oard of Directors, as<ed for a
reconsideration thereof. On Nove#ber )3, )3+C, the ;ranch Mana%er sub#itted the
re=uest for reconsideration and a%ain reco##ended the approval of the lease at
P1.*5 per picul, but the ;oard returned the reco##endation unacted, statin% that
the current price prevailin% at that ti#e as P'.55 per picul.
On &ebruar- 11, )3+2, /uaBon rote a letter, infor#in% the ;an< that he as no
lon%er interested in continuin% the lease of su%ar =uota allot#ent. /he crop -ear
)3+C,)3+2 ended and Mrs. /apnio failed to utiliBe her su%ar =uota, resultin% in her
loss in the su# of P1,*55.55 hich she should have received had the lease in favor
of /uaBon been i#ple#ented.
It has been clearl- shon that hen the ;ranch Mana%er of petitioner re=uired the
parties to raise the consideration of the lease fro# P1.+5 to P1.*5 per picul, or a
total of P1,*55,55, the- readil- a%reed. Eence, in his letter to the ;ranch Mana%er of
the ;an< on !u%ust )5, )3+C, /uaBon infor#ed hi# that the #ini#u# lease rental of
P1.*5 per picul as acceptable to hi# and that he even o0ered to use the loan
secured b- hi# fro# petitioner to pa- in full the su# of P1,*55.55 hich as the
total consideration of the lease. /his arran%e#ent as not onl- satisfactor- to the
;ranch Mana%er but it as also approves b- Vice,President A. V. ;uenaventura of the
PN;. @nder that arran%e#ent, Rita .ueco /apnio could have realiBed the a#ount of
P1,*55.55, hich as #ore than enou%h to pa- the balance of her indebtedness to
the ;an< hich as secured b- the bond of Phila#%en.
/here is no =uestion that /apnio6s failure to utiliBe her su%ar =uota for the crop -ear
)3+C,)3+2 as due to the disapproval of the lease b- the ;oard of Directors of
petitioner. /he issue, therefore, is hether or not petitioner is liable for the da#a%e
caused.
!s observed b- the trial court, ti#e is of the essence in the approval of the lease of
su%ar =uota allot#ents, since the sa#e #ust be utiliBed durin% the #illin% season,
because an- allot#ent hich is not 8lled durin% such #illin% season #a- be
reallocated b- the Su%ar Huota !d#inistration to other holders of
allot#ents.
#
/here as no proof that there as an- other person at that ti#e illin%
to lease the su%ar =uota allot#ent of private respondents for a price hi%her than
P1.*5 per picul. D/he fact that there ere isolated transactions herein the
consideration for the lease as P'.55 a piculD, accordin% to the trial court, Ddoes not
necessaril- #ean that there are ala-s read- ta<ers of said price. D /he
unreasonableness of the position adopted b- the petitioner6s ;oard of Directors is
shon b- the fact that the di0erence beteen the a#ount of P1.*5 per picul o0ered
b- /uaBon and the P'.55 per picul de#anded b- the ;oard a#ounted onl- to a total
su# of P155.55. Considerin% that all the accounts of Rita .ueco /apnio ith the
;an< ere secured b- chattel #ort%a%e on standin% crops, assi%n#ent of leasehold
ri%hts and interests on her properties, and suret- bonds and that she had apparentl-
Dthe #eans to pa- her obli%ation to the ;an<, as shon b- the fact that she has
been %ranted several su%ar crop loans of the total value of al#ost P*5,555.55 for
the a%ricultural -ears fro# )3+1 to )3+CD, there as no reasonable basis for the
;oard of Directors of petitioner to have re$ected the lease a%ree#ent because of a
#easl- su# of P155.55.
Ghile petitioner had the ulti#ate authorit- of approvin% or disapprovin% the
proposed lease since the =uota as #ort%a%ed to the ;an<, the latter certainl-
cannot escape its responsibilit- of observin%, for the protection of the interest of
private respondents, that de%ree of care, precaution and vi%ilance hich the
circu#stances $ustl- de#and in approvin% or disapprovin% the lease of said su%ar
=uota. /he la #a<es it i#perative that ever- person D#ust in the e?ercise of his
ri%hts and in the perfor#ance of his duties, act ith $ustice, %ive ever-one his due,
and observe honest- and %ood faith,
$
/his petitioner failed to do. Certainl-, it <ne
that the a%ricultural -ear as about to e?pire, that b- its disapproval of the lease
private respondents ould be unable to utiliBe the su%ar =uota in =uestion. In failin%
to observe the reasonable de%ree of care and vi%ilance hich the surroundin%
circu#stances reasonabl- i#pose, petitioner is conse=uentl- liable for the da#a%es
caused on private respondents. @nder !rticle 1) of the Ne Civil Code, Dan- person
ho ilfull- causes loss or in$ur- to another in a #anner that is contrar- to #orals,
%ood custo#s or public polic- shall co#pensate the latter for the da#a%e.D /he
afore,cited provisions on hu#an relations ere intended to e?pand the concept of
torts in this $urisdiction b- %rantin% ade=uate le%al re#ed- for the untold nu#ber of
#oral ron%s hich is i#possible for hu#an foresi%ht to speci8call- provide in the
statutes.
5
! corporation is civill- liable in the sa#e #anner as natural persons for torts,
because D%enerall- spea<in%, the rules %overnin% the liabilit- of a principal or
#aster for a tort co##itted b- an a%ent or servant are the sa#e hether the
principal or #aster be a natural person or a corporation, and hether the servant or
a%ent be a natural or arti8cial person. !ll of the authorities a%ree that a principal or
#aster is liable for ever- tort hich he e?pressl- directs or authoriBes, and this is
$ust as true of a corporation as of a natural person, ! corporation is liable, therefore,
henever a tortious act is co##itted b- an o"cer or a%ent under e?press direction
or authorit- fro# the stoc<holders or #e#bers actin% as a bod-, or, %enerall-, fro#
the directors as the %overnin% bod-.D
%
GEERE&ORE, in vie of the fore%oin%, the decision of the Court of !ppeals is hereb-
!&&IRMED.
Co&'o&a() La* Ca+) ,-.)+(/ PNB 0. CA 119782 Ca+) B&-)3
..R. No. F,12)++ Ma- )*, )32*
Fessons !pplicable> Fiabilit- for /orts 9Corporate Fa:
FACTS/
PN; e?ecuted its bond I Rita .ueco /apnio as principal, in favor of the PN;
to %uarantee the pa-#ent of /apnio6s account ith PN;.
Inde#nit- !%ree#ent I )14 int. and )+4 att-. fees
Sept )* )3+2> PN; sent a letter of de#and for /apnio to pa- the reduced
a#ount of 1,'23.3)
PN; de#anded both oral and ritten but to no avail
/apnio #ort%a%ed to the ban< her lease a%ree#ent I Aacobo /uaBon for
her unused e?port su%ar =uota at P1.*5 per picular or a total of P1,*55
hich as #ore than the value of the bond
PN; insisted on raisin% it to P'.55 per picular so /uaBon re$ected the o0er
ISSUE/ GIN PN; should be liable for tort
HEL,/ JES. a"r#ed.
Ghile /apnio had the ulti#ate authorit- of approvin% or disapprovin% the
proposed lease since the =uota as #ort%a%ed to the ban<, it certainl-
C!NNO/ escape its responsibilit- of observin%, for the protection of the
interest of /apnio and /uaBon, that the de%ree of care, precaution and
vi%ilance hich the circu#stances $ustl- de#and in approvin% or
disapprovin% the lease of said su%ar =uota
!rt. 1) of the Civil Code> an- person ho ilfull- causes loss or in$ur- to
another in a #anner that is contrar- to #orals, %ood custo#s or public
polic- shall co#pensate the latter for the da#a%e.