FIRST DIVISION
[G.R. No. 221614. March 9, 2022.]
EQUITABLE SAVINGS BANK, INC. (NOW BDO UNIBANK, INC.), petitioner, vs.LEORINA F. PAULINO AND DANILO D. PAULINO, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedMarch 9, 2022which reads as follows:
"G.R. No. 221614 (Equitable Savings Bank, Inc. (now BDO Unibank, Inc.) v. Leorina F. Paulino and Danilo D. Paulino). — Challenged in this Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Court filed by Equitable Savings Bank, Inc. (now BDO Unibank, Inc.) (petitioner) is the Decision 2 of the Court of Appeals (CA) promulgated on September 18, 2014, in CA-G.R. CV No. 101078, which dismissed petitioner's appeal and affirmed the Regional Trial Court's (RTC) Decision 3 in Civil Case No. 05-0448 CFM dated February 12, 2009, which in turn dismissed petitioner's Complaint for Recovery of Possession with Replevin with Alternative Prayer for Sum of Money and Damages.
The Antecedents
On January 28, 2004, Spouses Leorina F. Paulino and Danilo D. Paulino (respondents) obtained a loan from petitioner in the amount of P738,144.00 for the purchase of a 2003 Model Honda Civic car. Respondents then executed a promissory note for the said amount, wherein they agreed to pay petitioner in 48 equal monthly installments of P15,378.00; that in case of respondents' failure to pay any installment, the remaining balance shall be due and demandable at the option of petitioner. To secure the promissory note, respondents executed a Chattel Mortgage over the car in favor of petitioner.
The parties likewise agreed for an Automatic Debit Arrangement (ADA), wherein respondents authorized petitioner to debit from their savings account the amount of monthly installment due in case they fail to pay the due amount over the counter. Petitioner was given the option to terminate their ADA should respondents' deposit in their Savings Account be found insufficient to cover an unpaid amortization. 4 AScHCD
Respondents defaulted in their monthly installments for the months of January, February, and March 2005. Petitioner, thus, demanded the payment of the remaining balance of the promissory note in the amount of P568,986.00. 5 After inquiry, respondents were allowed by petitioner, through its In-House Collector, Michelle Manalo (Manalo), to settle their unpaid dues by paying the amount of P52,089.06 (corresponding to their 3 months unpaid monthly amortizations) or just depositing the same to their savings account. 6
On April 8 and 18, 2005, respondents made deposits to their savings account in the sum of P52,089.06 to cover their unpaid monthly amortizations for the months of January to March 2005. They again made a deposit in the amount of P15,500.00 to cover the April 2005 installment. 7
Thereafter, petitioner instituted a Complaint for Recovery of Possession and Replevin with Alternative Prayer for Sum of Money and Damages, after Manalo recommended the institution of a legal action against respondents. Petitioner argued that the remaining balance of the Promissory Note had already become due and demandable as of January 2005 since failure to pay any installment makes the whole amount due and demandable. Petitioners likewise asserted that the ADA was terminated as of January 2005 due to respondents' failure to deposit a sufficient amount to its savings account to cover the unpaid installments. Petitioner, thus, concluded that the deposits made by respondents on April 2005 to cover their monthly amortizations cannot be accepted on these grounds. 8
In response, respondents claim that the amortizations due for the months of January to March 2005 had already been paid as evidenced by their April 2005 statements of account, which had sufficient funds to cover their unpaid monthly installments. As of June 2005, however, petitioner had yet to debit and apply the deposit in respondents' savings account to their unpaid installments. When respondents discovered in their May 2005 Statement of Account that no deductions were made to cover their unpaid amortizations, they informed Manalo and faxed the Statement to her per her instruction. Notwithstanding, petitioner still instituted the complaint against respondents. 9
The RTC Ruling
The RTC rendered a Decision 10 dated February 12, 2009, dismissing petitioner's complaint. The RTC ratiocinated that it has been established that respondents made the necessary deposit to their savings account to cover their unpaid installments. It was petitioner which did not exercise the diligence required in checking whether respondents were indeed remiss in their obligation after Manalo instructed the latter to make the necessary deposits. 11 The RTC, thus, disposed of the case in this wise:
IN THE LIGHT OF THE FOREGOING, the PLAINTIFF is directed to immediately return to defendants the subject motor vehicle, to pay defendants attorney's fees in the sum of P50,000.00 and to pay defendants moral damages in the sum of P100,000.00.
SO ORDERED.12
Aggrieved, petitioner appealed the RTC Decision with the CA.
The CA Ruling
In the assailed Decision, 13 the CA dismissed petitioner's appeal and affirmed the RTC Decision. AcICHD
The CA ruled that petitioner is estopped from denying its In-House Collector's authority to act for and on behalf of the bank. The CA added that in advising respondents to settle their unpaid installments, petitioner, through Manalo, its In-House Collector, had clearly exercised its option not to render the promissory note's remaining balance due and demandable, nor to terminate the ADA. 14
Finally, the CA explained that petitioner is estopped from not applying respondents' April 2005 deposits to settle their January to March 2005 unpaid dues and from arguing that the promissory note's entire balance had already become due and demandable. 15 The fallo of the assailed Decision reads:
WHEREFORE, the instant Appeal is DISMISSED. The Decision dated 12 February 2009 and the Order dated 7 November 2012 of the Regional Trial Court of Pasay City, National Capital Judicial Region, Branch 117, in Civil Case No. 05-0448 CFM, STAND.
SO ORDERED.16
Petitioner moved for reconsideration. 17 It was, however, denied per CA Resolution 18 promulgated on November 24, 2015.
Aggrieved, petitioner filed the instant Petition for Review on Certiorari raising the following issues:
The Issues
I.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN ITS INTERPRETATION OF THE PROVISIONS OF THE AUTOMATIC DEBIT AGREEMENT ("ADA") BY RULING THAT PETITIONER OPTED NOT TO TERMINATE THE AUTOMATIC DEBIT ARRANGEMENT.
II.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN RULING THAT PETITIONER WAIVED ITS RIGHT TO DECLARE THE ENTIRE OBLIGATION AS DUE AND DEMANDABLE.
III.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN RULING THAT THE PETITIONER IS BOUND BY THE ACTIONS OF ITS IN-HOUSE-COLLECTOR.
IV.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT RULING THAT RESPONDENTS SHOULD PAY THE BALANCE OF THEIR LOAN TO THE PETITIONER UNDER THE PRINCIPLE OF UNJUST ENRICHMENT.
V.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS [ERROR IN] AFFIRMING THE COURT A QUO'S AWARD FOR ATTORNEY'S FEES AND MORAL DAMAGES. 19
The Court's Ruling
The petition is partly meritorious. TAIaHE
Established are the following pertinent facts: (1) respondents failed to pay their monthly amortizations for the months of January to March 2005; (2) respondents received a demand letter requiring them to pay the remaining balance of the promissory note; (3) when respondents asked petitioner's In-House Collector whether they could still pay their installment in arrears, she accommodated them and instructed respondents to pay over the counter or deposit the necessary amount to their account, subject to the debit agreement; (4) on April 2005, respondents deposited in their account the amount of P52,196.57 corresponding to the unpaid monthly amortizations; and (5) notwithstanding, the In-House Collector recommended the filing of a complaint against respondents despite depositing the amount necessary to pay their arrears.
Under the "Doctrine of Apparent Authority" acts and contracts of the agent, as are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred, bind the principal. 20 In the case of Citystate Savings Bank v. Tobias, 21 We have further explained:
The doctrine of apparent authority or what is sometimes referred to as the "holding out" theory, or the doctrine of ostensible agency, imposes liability, not "as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists." It is defined as:
[T]he power to affect the legal relations of another person by transactions with third persons arising from the other's manifestations to such third person such that the liability of the principal for the acts and contracts of his agent extends to those which are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred. (Citations omitted)
Succinctly stating the foregoing principles, the liability of a bank to third persons for acts done by its agents or employees is limited to the consequences of the latter's acts which it has ratified, or those that resulted in performance of acts within the scope of actual or apparent authority it has vested. 22 (Citations omitted)
As applied to corporations, the doctrine of apparent authority provides that "a corporation is estopped from denying the officer's authority if it knowingly permits such officer to act within the scope of an apparent authority, and it holds him out to the public as possessing the power to do those acts." 23
This was Our ruling in the case of Westmont Bank v. Inland Construction and Development Corp., 24(Westmont Bank Case) wherein we upheld the account officer's authority to act on behalf of Westmont Bank, after it has been shown that the bank conducted its business through the account officer. As observed therein, the account officer was the one assigned to transact on Westmont Bank's behalf respecting the loan transactions and arrangements of respondents therein. We held that since it conducted business through its account officer, it is presumed that he had to sign for the bank in the Deed of Assignment. 25
In the instant case, the In-House Collector, Manalo, had apparent authority to act on behalf of petitioner. Records show that she was assigned to monitor the payment of credit loans of respondents and recommend whether or not legal actions should be instituted against them. Petitioner did not deny nor refute such fact. In fact, when Manalo recommended that a case be instituted against respondents, petitioner obliged. Likewise, there is nothing on record that would suggest that Manalo acted outside the scope of its apparent authority. cDHAES
Pursuant to the Westmont Bank Case, petitioner is bound by the actions of its In-House Collector. Whatever Manalo decides or does within the scope of her apparent authority, they are deemed the decisions and actions of petitioner. Thus, in so advising respondents to settle their arrears, petitioner, through Manalo, had clearly exercised its option not to render the promissory note's remaining balance due and demandable. Likewise, petitioner opted, again through Manalo, not to terminate the ADA. To recall, after respondents defaulted in their monthly amortizations, they consulted Manalo and asked if they could still pay their arrears. Manalo gave them the chance to settle their account and gave them instruction to deposit in their savings account the amount of P52,196.57 corresponding to the unpaid monthly amortizations, subject to the debit arrangement to which respondents complied.
While initially, petitioner opted to terminate the ADA and seek payment of the remaining balance under the promissory note, such was deemed vacated by the action of its In-House Collector who, acting within the scope of its apparent authority, allowed respondents to settle their account by depositing the amount due to respondents' savings account with petitioner. Accordingly, petitioner is already estopped from not applying respondents' April 2005 deposits to settle their January to March 2005 monthly amortizations. Further, petitioner should have fulfilled its undertaking to debit respondents' April 2005 deposits for payment of their January to March 2005 unpaid amortizations. Petitioner's failure to do so should not prejudice respondents who, as the RTC put it, demonstrated not an inclination towards shirking from their obligation but a predisposition towards honoring it. 26
Finally, We delete the award of attorney's fees.
Article 2208 of the Civil Code provides:
Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
In a plethora of cases, it has been settled that an award of attorney's fees under Article 2208 demands factual, legal, and equitable justification to avoid speculation and conjecture surrounding the grant thereof. It is therefore required for the courts to clearly and distinctly set forth in their decisions their factual findings for the basis of the award. 27 ASEcHI
In this case, the RTC and the CA failed to explain why they awarded attorney's fees in respondents' favor. On the contrary, We find that none of the exceptions above-enumerated applies in this case. Even when respondents were compelled to litigate, still, attorney's fees may not be awarded where no sufficient showing of bad faith could be reflected in petitioner's persistence in a case other than an erroneous conviction of the righteousness of its cause. 28
On the grant of moral damages, however, We agree with the RTC and the CA that because of the wrongful act of petitioner, the good standing of respondents was compromised and they suffered social humiliation.
In sum, petitioner is already estopped from not applying respondents April 2005 deposits to settle their January to March 2005 monthly amortizations. It likewise cannot claim that the ADA had already been terminated considering that its In-House Collector, who acted within the bounds of her apparent authority, gave respondents instruction to deposit in their savings account the amount of P52,196.57 corresponding to the unpaid monthly amortizations, subject to the debit arrangement.
All told, We affirm the dismissal of petitioner's Complaint for Recovery of Possession with Replevin with Alternative Prayer for Sum of Money with modification as to the award of damages.
WHEREFORE, in view of the foregoing premises, the instant petition is PARTIALLY GRANTED. The assailed September 18, 2014 Decision of the Court of Appeals in CA-G.R. CV No. 101078, is AFFIRMED WITH MODIFICATION in that the award of attorney's fees is DELETED. The award of moral damages in the amount of P100,000.00 stands. cTDaEH
SO ORDERED."
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1. Rollo, pp. 9-29.
2. Id. at 33b-42; penned by Associate Justice Jane Aurora C. Lantion, with Associate Justices Vicente S.E. Veloso and Nina G. Antonio-Valenzuela, concurring.
3. Id. at 56-63; penned by Presiding Judge Eugenio G. Dela Cruz.
4. Id. at 34.
5. Id.
6. Id. at 34-35.
7. Id. at 35.
8. Id.
9. Id. at 57-58.
10. Id. at 56-63.
11. Id. at 60-61.
12. Id. at 63.
13. Id. at 33b-42.
14. Id. at 40.
15. Id. at 41.
16. Id.
17. Id. at 43-52.
18. Id. at 54-55.
19. Id. at 12-13.
20. Banate v. Philippine Countryside Rural Bank (Liloan, Cebu), Inc., 639 Phil. 35, 47 (2010).
21. 827 Phil. 430 (2018).
22. Id. at 442-443.
23. Agro Food and Processing Corp. v. Vitarich Corp., G.R. No. 217454, January 11, 2021.
24. 601 Phil. 222 (2009).
25. Id. at 223.
26. Rollo, p. 61.
27. KLM Royal Dutch Airlines v. Tiongco, G.R. No. 212136, October 4, 2021.
28. Pardillo v. Bandojo, G.R. No. 224854, March 27, 2019, citing ABS-CBN Broadcasting Corp. v. Court of Appeals, 361 Phil. 499, 529 (1999).