BSA Tower Condominium Corp. v. Ilusorio

FIRST DIVISION

[G.R. No. 224694. * June 16, 2021.]

BSA TOWER CONDOMINIUM CORP., petitioner, vs.MARIETTA K. ILUSORIO, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedJune 16, 2021which reads as follows:

"G.R. No. 224694 (BSA Tower Condominium Corp. v. Marietta K. Ilusorio).

We resolve the Petition for Review on Certiorari1 assailing the August 28, 2015 Decision 2 and May 16, 2016 Resolution 3 of the Court of Appeals (CA) in CA-G.R. CV No. 101853. The CA affirmed in toto the June 25, 2013 Decision 4 of the Regional Trial Court, Makati City, Branch 146 (RTC), ordering BSA Tower Condominium Corporation to pay the amount of Five Hundred Thousand Pesos (P500,000.00) plus interest, in favor of Marietta K. Ilusorio.

Antecedents

We quote the factual summary provided by the CA in the assailed decision, viz.:

On January 25, 2007, Marietta K. Ilusorio (Ilusorio) issued a check in the amount of Five Hundred Thousand [Pesos (Php500,000.00)] to BSA Tower Condominium Corporation (BSATCC). On even date, BSATCC's President, Dionisio Capistrano, issued a Certification and Promissory Note acknowledging receipt of the check and promising to pay Ilusorio the amount as soon as BSATCC funds become available. The check was also deposited in BSATCC's account on the same day. Subsequently, or on February 1, 2007, BSATCC's Board of Directors acknowledged BSATCC's receipt of the amount and Capistrano's execution of the January 25, 2007 Certification and Promissory Note.

On October 22, 2008, Ilusorio sent a letter to BSATCC demanding the payment of the Five Hundred Thousand [Pesos (PhP500,000.00)]. On November 19, 2008, she received the response of BSATCC, through its current President, Waldo Q. Flores (Flores), informing her that, per BSATCC's records, she and her family have accounts payable to BSATCC in the amount of Seven Hundred Five Thousand Seven Hundred Fifty-Six Pesos and Seventy-One [Centavos (PhP705,756.71)] such that, after deducting the Five Hundred Thousand [Pesos (Php500,000.00)] from her and her family's obligation, she still owes BSATCC the amount of Two Hundred Five Thousand Seven Hundred Fifty-Six Pesos and Seventy-One [Centavos (PhP205,756.71)]. Thus, Ilusorio's demands for payment went unheeded.

On February 9, 2009, Ilusorio filed the complaint below against BSATCC and Flores alleging, in essence, that the Five Hundred Thousand [Pesos (PhP500,000.00)] was a loan from her to BSATCC in order for the latter to pay its overdue and matured bills. As such, said amount should be paid by BSATCC as the same has already matured. Thus, she prayed that BSATCC be ordered to pay the said obligation plus interests and that she be awarded damages on account of BSATCC's unjustified refusal to pay its debt.

In their joint Answer, BSATCC and Flores denied the material allegations in Ilusorio's complaint. They averred that Flores is not a party in the transaction between BSATCC and Ilusorio such that the former cannot be held liable therefor. With respect to the loan, BSATCC claimed that the same was not approved by its Board of Trustee[s]. Further, the Board of Directors' meeting held on February 1, 2007 whereby the loan was acknowledged and Capistrano's execution of the Certification and Promissory note was ratified is anomalous because therein "directors," Ilusorio and Wilfredo Villarama, were subsequently removed as it [is] a pre-requisite that a director or trustee must be a unit owner of the condominium and they are not unit owners therein. They also maintained that the ratification is of doubtful validity because Ilusorio is one of the directors who approved the same despite that she is the same person who seeks to collect the same. Thus, they prayed that the complaint be dismissed and, by way of counterclaim, the award to them of damages for Ilusorio's purported filing of a baseless suit. HEITAD

There being no amicable settlement between the parties, a full-blown trial ensued.

Ilusorio presented Maria Maricel Dela Vega (Dela Vega) and Atty. Alberto II Celestino Bornon Reyes (Reyes) as witnesses. Dela Vega, a bank employee of the Bank of [the] Philippine Islands (BPI), testified that she appeared in court by way of compliance with the subpoena duces tecum ad testificandum issued to the Bank Manager of BPI, Corinthian Plaza Branch; that she is duly authorized by the said Bank Manager to so appear; and, that she brought with her the Statement of Account of BSATCC under Peso Current Account No. 3211-0901-29 which shows that Ilusorio's BPI check with a face value of Five Hundred Thousand [Pesos (PhP500,000.00)] was deposited and credited to the said account. For his part, Reyes testified that he was the former counsel and had also been a corporate secretary of BSATCC; that the latter did not object to his having represented Ilusorio in this case; and, that he also has a pending collection case against BSATCC.

On their part, BSATCC and Flores presented Norma Caramay (Caramay), Treasurer and a member of the Board of Trustees of BSATCC, who testified, in fine, that she prepared the Accounts/Receivables Worksheet and, thus, found out that Ilusorio owes BSATCC the amount of Seven Hundred Five Thousand Seven Hundred Fifty-Six Pesos and Seventy-One [Centavos (PhP705,756.71)] arising from unpaid rental of storage areas, cash advances, and construction costs of personal business entered into by the former's family. She maintained that Ilusorio used her position as BSATCC's Director and Treasurer to avail of the corporation's funds, resources, and facilities for her own benefit; and, that Ilusorio was eventually removed from the said positions as it was required that, to be such, one must be a unit owner of BSA Tower.

On cross-examination, Caramay acknowledged that the Five Hundred Thousand [Pesos (PhP500,000.00)] lent by Ilusorio was used to pay the electric, water, and other bills of BSA Tower; and, that BSATCC owes Ilusorio's daughter, Kelly, the amount of Seven Hundred Thousand [Pesos (PhP700,000.00)] as backwages and that said backwages have not been paid because BSATCC still has no money. She also averred that BSATCC refused to pay Ilusorio because Kelly owes money to BSATCC in that the latter funded several of Kelly's personal expenses such as the construction of the latter's water station, extra refilling station, the water used for the said stations, and the use of storage areas. The storage rentals of Ilusorio's mother, Erlinda, were also unpaid. She admitted that there are no supporting documents to the claims they charged to Ilusorio apart from the summaries made by their clerk and part-time book keeper but that, when asked, Flores agreed that she [charged] said expenses/debts to Ilusorio. 5 (citations omitted)

The RTC Ruling

On June 25, 2013, the RTC rendered a Decision 6 in respondent's favour, thus:

WHEREFORE, judgment is rendered ordering defendant BSATCC to pay plaintiff the amount of FIVE HUNDRED THOUSAND [PESOS (Php500,000.00)] plus interest of twelve (12%) percent per annum from October 17, 2008, date of extrajudicial demand and the amount of ONE HUNDRED FIFTY THOUSAND [PESOS (P150,000.00)] as and for attorney's fees and to pay the costs of suit.

The complaint against defendant Waldo Q. Flores is dismissed for lack of merit.

The counterclaims of defendants are dismissed for lack of merit.

SO ORDERED. 7

The trial court found respondent to have preponderantly established that petitioner had entered into a valid contract with her and had become obligated to comply with the terms thereof under Article Nos. 1159 and 1306 of the Civil Code. Furthermore, petitioner's Board of Trustees became aware of and ratified the receipt of the loan by Capistrano as President of petitioner. The RTC denied petitioner's claim of compensation due to its failure to establish respondent's overdue financial obligations.

Petitioner filed a motion for reconsideration but was denied by the RTC in its October 2, 2013 Order. 8 Consequently, petitioner filed a Notice of Appeal. 9

The CA Ruling

On August 28, 2015, the CA promulgated the now assailed Decision denying petitioner's appeal and affirming in toto the ruling of the RTC. The CA noted the ratification made by the Board of Trustees on the loan obtained by Capistrano and his execution of the certification and promissory note. It also held that technical estoppel applies against petitioner because it used the subject amount to pay its bills. As regards the claim of compensation by set-off, the CA held that petitioner failed to submit proof that the parties had agreed to such an agreement. ATICcS

Issues

Petitioner submits the following arguments in support of its petition:

I

The Court of Appeals decided a question of substance not in accord with law and with the applicable decisions of the Supreme Court, in that:

A.

Contrary to law, the Court of Appeals condoned the unauthorized act of an individual to bind a corporation to a monetary obligation;

B.

Contrary to the law, the Court of Appeals upheld the award of interest on an alleged loan where there was no express stipulation in writing for the payment of interest.

II.

The Court of Appeals sanctioned a departure by the Regional Trial Court from the accepted and usual course of judicial proceedings so as to call for an exercise of the power of supervision, in that:

xxx xxx xxx

C.

Contrary to established jurisprudence, the Court of Appeals sanctioned an award of attorney's fees by the Regional Trial Court which is inequitable, exorbitant and unreasonable, equivalent to 30% of the principal claim;

D.

Contrary to established jurisprudence, the Court of Appeals abandoned its duty to re-examine the questions of fact specifically raised as an error by herein petitioner, and by that abandonment of duty, affirmed by silent acquiescence the Regional Trial Court's rejection of petitioner's counterclaim. 10

Petitioner insists that under Section 2, Art. II and Sec. 2, Art. III of its by-laws, Capistrano had no authority to bind the company to a loan obligation. The Board of Trustees did not issue a resolution authorizing him to incur such loan obligation, 11 and the purported February 1, 2007 meeting was only attended by three (3) persons, including respondent and a certain Willy B. Villarama who were not directors/trustees. Petitioner also argues that the CA erred in applying technical estoppel because the subject loan obligation was void for lack of consent. 12 It also maintains that the CA erred in awarding interest because there was no stipulation thereon; 13 while the attorney's fees that it imposed was inequitable, exorbitant and unreasonable as it was equivalent to 30% of the principal obligation. 14 Finally, petitioner contends that the CA did not make its own factual determination and merely adopted the facts of the RTC; hence, it arrived at the same conclusion, especially on the counterclaims that it filed against respondent. 15

Respondent counters that there was nothing erroneous with the decision of the CA; that in BSA Tower Corporation v. Baria, 16 petitioner admitted in its petition the P500,000.00 loan from respondent to prove to its debtors that the company was financially challenged; 17 that assuming there was no consent, the subject loan obligation is not void, but merely voidable; that the legal interest imposed is valid; that the award of attorney's fees is valid under Art. 2208 of the Civil Code; and that compensation or set-off cannot be applied because petitioner did not submit evidence of her financial obligations, and that such obligations belong to her daughter and her mother. 18

Our Ruling

We PARTLY GRANT the petition.

It is basic that only pure questions of law should be raised in petitions for review on certiorari under Rule 45 of the Rules of Court. The Court will not entertain questions of fact as the factual findings of appellate courts are final, binding or conclusive on the parties and upon this Court when supported by substantial evidence. 19

Here, petitioner challenges the decision of the CA by putting forth as issues the loan extended by respondent and the ratification made by petitioner's Board of Trustees. Evidently, these involve questions of fact which are not allowed in a Rule 45 petition. Although there are exceptions to this rule, 20 petitioner failed to convince us that the instant petition should be exempted from the rule.

At any rate, the Court does not find as erroneous the conclusions reached by the CA and the RTC that petitioner owes and is obligated to pay respondent the amount of P500,000.00. Petitioner's insistence that it did not provide Capistrano with authority to enter into a loan obligation, and that the ratification made by the Board of Trustees was not valid, deserve scant consideration. The Court agrees with the following ratiocination by the CA in addressing the matter, viz.: TIADCc

Settled, however, that the corporation can also act through its corporate officers who may be authorized either expressly by the by-laws or board resolutions or impliedly such as by general practice or policy or as are implied from express powers. In which case, the general principles of agency govern the relation between the corporation and its officers or agents. When authorized, their acts can bind the corporation[, but] when unauthorized, their acts cannot bind it. Needless to stress, the acts of an agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same expressly or impliedly. In other words, a corporation may ratify the unauthorized act of its corporate officer such that the act, which was theretofore unauthorized, becomes the authorized act of the party so making the ratification. x x x

xxx xxx xxx

It must be reiterated that, in this case, the Defendant-Appellant's Board of Directors held a board meeting on February 1, 2007 where they resolved to acknowledge the loan obtained by Capistrano and his execution of the Certification and Promissory Note. True, the Plaintiff-Appellee was one of the directors present during the said meeting, nonetheless, it is sheer speculation to ascribe corrupt intent simply because she took part therein. To be sure, no proof of evident bad faith on her part was adduced. 21 (citations omitted)

Furthermore, in the February 3, 2007 Minutes of the Continuation of the Meeting of the Board of Trustees of BSATCC, 22 the Board had knowledge of the P500,000.00 "cash advance" made by respondent for the purpose of paying petitioner's outstanding bills. The pertinent portions of the said minutes read:

The President stated that in the face of the silence and apathy of Director-Treasurer [Ilusorio] to make good her representation during the unit-owner's meeting [on] 13 Jan. 2007 that she can "very well advance" from her personal funds the needed funds for [the] payment of urgent bills, the President prepared a letter on the matter on 25 Jan. 2007, addressed to all the unit-owners, informing them that [Ilusorio] seems to have reneged on this representation and that BSATC Building might have no electricity and no water in a few days (which was not posted by her loyal "subalterns" at the premises of BSA Tower, contrary to instructions). She was instead advised regarding that letter. The fact remains, however, that his (the President's) offer to himself advance the amount needed for the electric and water bills, provided a pre-signed open-dated check is given to him, was met with deafening silence. Thence, the said Director-Treasurer, in the face of a possible rally and confrontation by the unit-owners at her residence at Colonnade Condominium, sure as night follows day, immediately sent her personal check for P500,000.00. 23 (emphasis supplied)

Accordingly, petitioner cannot feign ignorance of receiving such amount when the same was discussed, without opposition, by the members of its Board of Trustees who attended the February 3, 2007 meeting. Likewise, the Board did not invalidate, during the same meeting, its prior ratification on the certification and promissory note executed by Capistrano. It also bears emphasis that ratification can be made either expressly or impliedly. Implied ratification may take various forms — like silence or acquiescence, acts showing approval or adoption of the act, or acceptance and retention of benefits flowing therefrom. 24

Indeed, petitioner validly obtained the P500,000.00 loan from respondent and therefore had the corresponding obligation to pay the same. Hence, the CA did not err in holding that petitioner was estopped from denying its obligation, considering that it admitted to having used the amount in paying its outstanding bills. Moreover, petitioner's insistence to offset the P500,000.00 loan extended by respondent from her alleged unpaid obligations, conflicts with its position that it did not validly enter and receive the subject loan.

Despite the obligation of petitioner to pay respondent the loaned amount having been established, the Court, however, finds partial merit in petitioner's objections against the interest and attorney's fees imposed by the courts a quo.

It is settled that there are two (2) types of interest: monetary and compensatory interest. Monetary interest is the compensation fixed by the parties for the use or forbearance of money. On the other hand, compensatory interest is that imposed by law or by the courts as penalty or indemnity for damages. In other words, the right to recover interest arises only either by virtue of a contract (monetary interest) or as damages for the delay or failure to pay the principal loan on which the interest is demanded (compensatory interest). 25

In this case, petitioner's objection against the imposition of interest applies to monetary interest, or the right to recover by virtue of a contract. Indeed, in the absence of any written agreement, respondent cannot recover monetary interest against petitioner. However, by reason of the damages sustained by respondent due to petitioner's failure to pay its obligation, the latter may be held liable to pay compensatory interest. In line with the ruling in Nacar v. Gallery Frames26(Nacar), petitioner should pay interest of twelve percent (12%) per annum from date of extrajudicial demand, or on October 22, 2008, until June 30, 2013, and six percent (6%) per annum from July 1, 2013 until finality of this resolution.

As regards the attorney's fees awarded in favor of respondent, We note that the RTC awarded the same pursuant to Art. 2208 of the Civil Code, not only because respondent was forced to litigate, but also because the amount of P150,000.00 was agreed upon by respondent and counsel 27 based on a Letter-Agreement. 28 However, despite the presence of such stipulation, the Court may reduce the amount of attorney's fees if it is unreasonable. 29

In Lim v. Security Bank, 30 the Court reduced the amount of attorney's fees when it found that the sum of the interests, penalties, and attorney's fees was iniquitous, as it would amount to more than the principal obligation. Here, the above interest to be imposed, plus the amount of P150,000.00 attorney's fees awarded, would require petitioner to pay more than the principal obligation. Accordingly, We reduce the amount of attorney's fees to Fifty Thousand Pesos (P50,000.00). AIDSTE

Finally, in conformity with Nacar, all monetary awards in respondent's favor shall earn legal interest of six percent (6%) per annum from date of finality of this resolution until fully paid.

WHEREFORE, the Court PARTLY GRANTS the petition. The August 28, 2015 Decision and May 16, 2016 Resolution of the Court of Appeals in CA-G.R. CV No. 101853 are hereby AFFIRMED with MODIFICATION. Petitioner BSA Tower Condominium Corporation is hereby ORDERED to PAY respondent Marietta K. Ilusorio the amount of Five Hundred Thousand Pesos (P500,000.00), plus interest of twelve percent (12%) per annum from October 22, 2008, date of extrajudicial demand, until June 30, 2013, and thereafter at the rate of six percent (6%) per annum until finality of this Resolution, and the amount of Fifty Thousand Pesos (P50,000.00) as attorney's fees. All monetary awards due to respondent shall earn legal interest at the rate of six percent (6%) per annum from date of finality of this Resolution until fully paid.

Costs against petitioner.

SO ORDERED."Gaerlan, J., no part; Lopez, M., J., designated Additional Member per Raffle dated May 26, 2021.

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

* Part of the Supreme Court Case Decongestion Program.

1.Rollo, pp. 14-48.

2.Id. at 55-66; penned by Associate Justice Normandie B. Pizarro, with Associate Justices Samuel H. Gaerlan (now a Member of this Court), and Ma. Luisa C. Quijano-Padilla, concurring.

3.Id. at 68-69.

4.Id. at 193-203; penned by Judge Encarnacion Jaja G. Moya.

5.Rollo, pp. 56-59.

6.Id. at 193-203; penned by Judge Encarnacion Jaja G. Moya.

7.Id. at 202-203.

8.Id. at 250.

9.Id. at 251-252.

10.Id. at 28-43.

11.Id. at 30-32.

12.Id. at 34-38.

13.Id. at 39-40.

14.Id. at 41-43.

15.Id. at 43-47.

16. Docketed as G.R. No. 198987.

17.Rollo, pp. 409-411.

18.Id. at 502-505.

19.Maricalum Mining Corp. v. Florentino, 836 Phil. 655, 677 (2018); Pascual v. Burgos, 776 Phil. 167, 182 (2016).

20. Namely: (1) the conclusion is grounded on speculations, surmises or conjectures: (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the findings of absence of facts are contradicted by the presence of evidence on record; (8) the findings of the Court of Appeals are contrary to those of the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the Court of Appeals are beyond the issues of the case; and (11) such findings are contrary to the admissions of both parties. (Bank of the Philippine Islands v. Spouses Sarda, G.R. No. 239092, June 26, 2019; Dionio v. ND Shipping Agency and Allied Services, Inc., G.R. No. 231096, August 15, 2018).

21.Rollo, pp. 62-63.

22.Id. at 100-109.

23.Id. at 103 (Annex "3").

24.San Miguel Foods, Inc. v. Magtuto, G.R. No. 225007, July 24, 2019; Yasuma v. Heirs of Cecilio S. De Villa, 531 Phil. 62, 68 (2006).

25.Decena v. Asset Pool A (SPV-AMC), Inc., G.R. No. 239418, October 12, 2020; Odiamar v. Valencia, G.R. No. 213582, September 12, 2018.

26. 716 Phil. 267 (2013).

27.Rollo, p. 336.

28.Id. at 330.

29.Metropolitan Bank & Trust Company v. Lu Tan, 792 Phil. 70 (2016); Lim v. Security Bank, 729 Phil. 345, 354 (2014).

30.Supra at 354.