TOPIC:BreachofObligation

ComsavingsBank(nowGSISFamilyBank)v.Sps.DaniloandEstrellaCapistrano
G.R.No.170942,August28,2013
Facts: RespondentsweretheownersofaresidentiallotinBacoor,Cavite.Desirousof
buildingtheirownhouseonthelot,theyavailedthemselvesoftheUHLPimplemented
by the National Home Mortgage Finance Corporation (NHMFC). They executed a
constructioncontractwithCarmencitaCruzBay,theproprietorofGCBBuilders.To
finance the construction, GCB Builders facilitated their loan application with
ComsavingsBank,anNHFMCaccreditedoriginator.TheyexecutedinfavorofGCB
Builders a deed of assignment. Comsavings Bank informed respondent Estrella
Capistranothatshewouldhavetosignvariousdocumentsaspartoftherequirementsfor
thereleaseoftheloan.Amongthedocumentswasacertificateofhousecompletionand
acceptance. Comsavings Bank informed respondents of the approval of the interim
financingloanwhichwasgiventoGCBBuildersasconstructioncost.
Respondents inquired from GCB Builder when their house would be completed
consideringthattheircontractstipulatedacompletionperiodof75days.CruzBaygave
variousexcusesforthedelay.Theyear1992endedwiththeconstructionofthehouse
unfinished.Whenrespondentsdemandedthecompletionofthehouse,GCBBuilders
askedforanadditionalconstructioncost.RespondentsreceivedaletterfromNHMFC
advisingthattheyshouldalreadystartpayingtheirmonthlyamortizationsbecausetheir
loanhadbeenreleaseddirectlytoComsavingsBank.EstrellaCapistranowenttothe
constructionsiteandfoundtoherdismaythatthehousewasstillunfinished.Respondents
wrotetoNHMFCprotestingthedemandforamortizationpaymentsconsideringthatthey
hadnotsignedanycertificationofcompletionandacceptance,andthateveniftherewas
suchacertificationofcompletionandacceptance,itwouldhavebeenforged.
Respondents sued GCB Builders and Comsavings Bank for breach of contract and
damages,andamendedtheircomplainttoimpleadNHMFCasanadditionaldefendant.
TheRTCrenderedadecisioninfavorofrespondents.TheCApromulgatedtheappealed
decision,affirmingtheRTCsubjecttothemodificationthatNHMFCwasabsolvedof
liability,andthatthemoralandexemplarydamageswerereduced.Hence,Comsavings
BankappealedthecasetotheSupremeCourt.
Issue:WhetherpetitionerbankliablewithGCBBuildersforbreachofobligation
Held: Yes. TheCArightfullydeclaredComsavingsBanksolidarilyliablewithGCB
Buildersforthedamagessustainedbyrespondents.However,theCourtpointedoutthat
such liability did not arise from Comsavings Banks breach of warranties under its
purchaseofloanagreement withNHMFC.Underthe purchaseofloanagreement,it
undertook, for value received, to sell, transfer and deliver to NHMFC the loan
agreements,promissorynotesandothersupportingdocumentsthatithadenteredintoand
executedwithrespondents,andwarrantedthegenuinenessoftheloandocumentsandthe

constructionoftheresidentialunits.HavingmadethewarrantiesinfavorofNHMFC,
it would be liable in case of breach of the warranties to NHMFC, not respondents,
eliminatingbreachofsuchwarrantiesasasourceofitsliabilitytowardsrespondents.
Instead,theliabilityofComsavingsBanktowardsrespondentswasbasedonArticle20
andArticle1170ofthe Civil Code. Basedontheprovisions,abankinginstitutionlike
ComsavingsBankisobligedtoexercisethehighestdegreeofdiligenceaswellashigh
standards of integrity and performance in all its transactions because its business is
imbuedwithpublicinterest.Grossnegligenceconnoteswantofcareintheperformance
ofonesduties;itisanegligencecharacterizedbythewantofevenslightcare,actingor
omittingtoactinasituationwherethereisdutytoact,notinadvertentlybutwillfullyand
intentionally,withaconsciousindifferencetoconsequencesinsofarasotherpersonsmay
be affected. It evinces a thoughtless disregard of consequences without exerting any
efforttoavoidthem.
ThereisnoquestionthatComsavingsBankwasgrosslynegligentinitsdealingswith
respondentsbecauseitdidnotcomplywithitslegalobligationtoexercisetherequired
diligenceandintegrity.AsabankinginstitutionservingasanoriginatorundertheUHLP
andbeingthemakerofthecertificateofacceptance/completion,itwasfullyawarethat
thepurposeofthesignedcertificatewastoaffirmthatthehousehadbeen completely
constructedaccordingtotheapprovedplansandspecifications,andthatrespondentshad
therebyacceptedthedeliveryofthecompletehouse.Giventhepurposeofthecertificate,
itshouldhavedesistedfrompresentingthecertificatetorespondentsfortheirsignature
withoutsuchconditionshavingbeenfulfilled.HadComsavingsBankbeenfairtowards
themasitsclients,itshouldnothavemadethempresignthecertificateuntilithad
confirmedthattheconstructionofthehousehadbeencompleted.
Comsavings Bank asserts that it submitted the certificate to NHMFC after the
constructionofthehousehadbeencompleted.Theassertioncouldnotbetrue,however,
becauseAtty.CoronaofNHMFCtestifiedthathehadinspectedthehouseonAugust4,
1993andhadfoundtheconstructiontobeincompleteanddefective.HadComsavings
Bankcompliedwithitsdutyofobservingthehighestdegreeofdiligence,itwouldhave
checkedfirstwhetherthepicturescarriedthesignaturesofrespondentsontheirdorsal
sides,andwhetherthehousedepictedonthepictureswasreallythehouseofrespondents,
beforereleasingtheproceedsoftheloantoGCBBuildersandbeforesubmittingthe
picturestoNHMFCforthereimbursement.Again,thisisanindicationofComsavings
Banksgrossnegligence.