FIRST DIVISION
[G.R. No. 215998. February 10, 2020.]
ESTATE OF THE LATE BIENVENIDO MARQUEZ, JR. AND SURVIVING SPOUSE ERLINDA O. MARQUEZ, petitioners,vs. QUEZON COCONUT PRODUCERS SAVINGS AND LOAN BANK, INC., respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedFebruary 10, 2020which reads as follows:
"G.R. No. 215998 (ESTATE OF THE LATE BIENVENIDO MARQUEZ, JR. and SURVIVING SPOUSE ERLINDA O. MARQUEZ v. QUEZON COCONUT PRODUCERS SAVINGS AND LOAN BANK, INC.)
Antecedents
Respondent Quezon Coconut Producers Savings and Loan Bank., Inc. is a savings and loan bank duly organized and existing under Philippine laws. On the other hand, petitioner Estate of the Late Bienvenido Marquez, Jr. is the mass of properties existing at the time of Bienvenido's death on February 6, 2001, while petitioner Erlinda Marquez is the surviving spouse of Bienvenido. 1
From 1996-1999, Bienvenido and Jose Mendoza respectively served as Chairman of the Board of Directors and President of respondent. During this period, respondent granted and released loans amounting to P10,780,000, viz.: (1) Adelia Mendoza — P3,000,000; (2) Cesar Mendoza — P3,000,000; (3) Rodolfo Regala — P500,000; (4) Dick Oliveros — P300,000; (5) Crisanto Carmelo — P1,500,000; (6) Buenaventura Lagar — P2,000,000; and (7) Rodolfo Bayani — P480,000. These loans were secured by real estate mortgages (REMs) duly supported by a special power of attorney and/or secretary's certificate from the registered owners. 2
Upon maturity, borrowers failed to pay the loans, interests, and charges despite demand. The REMs, hence, were foreclosed and sold to respondent for P21,494,421.11 which is the outstanding obligation of borrowers. 3
Respondent was consolidating its title over the properties when it discovered that such were overvalued and insufficient to cover the loans for which they were mortgaged. Based on the Appraisal Report dated October 29, 2002, the real estate properties were valued at P8,804,000 only. 4
Respondent conducted further investigation and discovered the following: (1) the loans were contracted by borrowers for and on behalf of Bienvenido and his family; (2) Bienvenido actively intervened in the processing of the loans and REMs; (3) upon release of the loans, the funds were deposited to the joint account of Bienvenido and Erlinda either at respondent or Bank of the Philippine Islands Family Savings Bank in Greenhills, San Juan; and (4) Bienvenido and Erlinda used some of the loan proceeds to purchase shares of stocks of respondent which they registered under their names or under the names of their children. As a result of this fraudulent scheme, Bienvenido is allegedly liable to respondent for P10,780,000 for the loans he granted in violation of Sections XX236-X337 of Bangko Sentral ng Pilipinas Manual of Regulations for Banks. 5
Respondent, therefore, sued petitioners, Mendoza, children of Bienvenido and Erlinda, and borrowers for damages, with prayer for issuance of a writ of preliminary attachment, before the Regional Trial Court (RTC). For failure to file their answer despite an extension granted to them, petitioners, et al., were declared in default. Petitioners, et al., thus, filed a petition for certiorari with the Court of Appeals. By Decision dated November 29, 2006, the Court of Appeals dismissed the petition. 6
On September 27, 2007, petitioners, et al., filed an Urgent Motion for Leave to File Answer and to Admit Attached Answer with Compulsory Counterclaim and Opposition to the Application for Preliminary Attachment (Urgent Motion) before the RTC. By Order dated April 8, 2008, the RTC denied the motion. Petitioners, et al., again filed a petition for certiorari with the Court of Appeals which was dismissed under Decision dated April 8, 2010. 7
Trial Court's Ruling
On July 18, 2011, the RTC dismissed the case against Mendoza, children of Bienvenido and Erlinda, and borrowers. It held petitioners liable to pay actual damages of P12,690,421.11 with legal interest upon finality of decision, exemplary damages of P1,000,000, attorney's fees of P250,000, and costs of suit. 8
Bienvenido effectuated the fraudulent scheme committed against respondent. Erlinda was also held liable as the evidence showed that the loan proceeds were deposited in her joint accounts with her late husband. The proceeds were subsequently used to purchase additional shares of stock of respondent which were registered in their names and in the names of their children. These actuations sufficiently established conspiracy between Bienvenido and Erlinda. 9
Proceedings before the Court of Appeals
On appeal, petitioners assailed the Decision of the RTC dated July 18, 2011. Their appeal was anchored on the RTC's denial of their Urgent Motion. The RTC should have been liberal in the application of procedural rules, particularly on default orders or judgments. There was also no evidence that Erlinda had personal dealings with borrowers. More, the RTC erred in considering evidence not formally offered. 10
For its part, respondent countered that the appeal is dilatory and should be dismissed outright. Petitioners only had themselves to blame for having been declared in default because they had countless opportunities to avoid it. For instance, petitioners did not comply with the requirements of lifting an order of default under Section 3 (b), Rule 9 of the Rules of Court. Too, this issue had already been resolved by the Court of Appeals in CA-G.R. SP No. 103550. 11 Further, Erlinda was properly adjudged guilty of fraud. Final, a formal offer of evidence is not required in judgments based on pleadings at the pre-trial stage in intra-corporate disputes. 12
Court of Appeals' Ruling
Under its assailed Decision dated December 22, 2014, the Court of Appeals affirmed with modification, viz.:
WHEREFORE, the appeal is DISMISSED. The Decision dated July 18, 2011 issued by the Regional Trial Court of Lucena City, Branch 57 in Civil Case No. 2002-147 is AFFIRMED WITH THE MODIFICATION in that Defendants-Appellants Estate of the Late Bienvenido Marquez, Jr. and Erlinda O. Marquez are jointly and severally liable to pay Plaintiff-Appellee Quezon Coconut Producers Savings and Loan Bank, Inc. the amount of P7,000,000, Philippine Currency as temperate damages with legal interest upon finality of the decision, P500,000, Philippine Currency as exemplary damages, and P100,000, Philippine Currency as attorney's fees and costs of the suit. 13
The RTC correctly denied petitioners' Urgent Motion. There was a standing order declaring petitioners in default for their failure to file their responsive pleading within the time allowed therefor. Despite the multiple opportunities to do so, petitioners never complied with the RTC's directive for them to file their answer. The RTC had no choice but to declare petitioners in default pursuant to Section 3, Rule 9 of the Rules of Court. 14 Notably, petitioners never availed of the remedy against an order of default under Section 3 (b) of the same rule. 15 Petitioners could not have, therefore, expected the RTC to be liberal in setting aside the order of default. 16
Truth be told, even if the RTC wanted to be liberal in setting aside such order, it could not have done so without any motion for such relief. Petitioners could not have passed off their Urgent Motion as the motion contemplated in Section 3 (b), Rule 9 of the Rules of Court which requires the following: (1) a motion under oath to set aside the order of default; (2) proper showing that the failure was due to fraud, accident, mistake, or excusable negligence; and (3) an affidavit of merit. Petitioners failed to comply with these requisites. 17
Further, petitioners cannot raise the argument anew that the RTC erred in denying their Urgent Motion. The Court of Appeals had already resolved this with finality in CA-G.R. SP No. 103550. There, the Court of Appeals declared that public respondent's denial of petitioners' Urgent Motion was not tainted with grave abuse of discretion. 18
As for respondent's alleged failure to formally offer evidence, the RTC rendered judgment based on the pleading of the parties which is allowed under Section 4, Rule 4 of the Interim Rules of Procedure for Intra-Corporate Controversies. 19
Respondent sufficiently established that Bienvenido, as its Chairman of the Board of Directors, willfully and knowingly employed a fraudulent scheme to make the bank and the public believe that the borrowings were not his own — in violation of Directors, Officers, Stockholders and Related Interests (DOSRI) Rules. 20
The RTC correctly ruled that Erlinda was in conspiracy with her husband. Clearly, Bienvenido's fraudulent scheme was with the imprimatur of Erlinda as shown by the fact that the loan proceeds were deposited in their joint accounts. More, the records revealed Erlinda's knowledge and participation, to wit: (1) she never protested that her joint account had been receiving an influx of funds from the same bank where her husband served as Chairman of the Board of Directors; (2) her instructions as to the withdrawals of certain amounts in their joint accounts always came after the amounts of the loans were deposited in such accounts; and (3) the instructions to withdraw and invest the amounts in their joint accounts on shares of stock of respondent came from her. These acts clearly indicated Erlinda's concurrence with the fraudulent scheme employed by Bienvenido not only against the bank but also the public. 21
Under Article 1170 of the Civil Code, those who in the performance of their obligations are guilty of fraud, negligence, or delay and those who in any manner contravene the tenor thereof are liable for damages. Petitioners were, thus, liable for damages. The records of the case, however, revealed that respondent failed to point out specific facts that afford a basis for its claim of actual damages of P12,690,421.11. Temperate damages of P7,000,000 were, nonetheless, granted to respondent. The award of exemplary damages and attorney's fees were respectively decreased to P500,000 and P100,000. 22
The Present Petition
Petitioners now seek affirmative relief from the Court via a petition for review on certiorari. They argue once more that their Urgent Motion should not have been denied. They invoke liberality in the application of the procedural rules on default orders or judgments. More, they reiterate their argument that there is no basis to declare Bienvenido as having perpetrated a fraudulent scheme to defraud respondent. Last, they claim anew that Erlinda cannot be held to have been in conspiracy with her husband for lack of evidence to support such conclusion. 23
Issue
Did the Court of Appeals err when it adjudged petitioners jointly and severally liable to respondent for defrauding the latter?
Ruling
The petition lacks merit. The denial of petitioners' Urgent Motion was proper. To reiterate, there was a standing order declaring petitioners in default for their failure to file their responsive pleading within the time allowed therefor despite the multiple opportunities to do so. When an appellate court has once declared the law in a case, its declaration continues to be the law of that case even on a subsequent appeal, notwithstanding that the rule thus laid down may have been reversed in other cases. 24 Petitioners, hence, cannot raise the argument again that the RTC erred in denying their Urgent Motion considering the Court of Appeals had already resolved this issue with finality in CA-G.R. SP No. 103550.
More, petitioners cannot invoke liberality in the application of the procedural rules on default orders or judgments because of their failure to file a motion to lift the same as contemplated in Section 3 (b), Rule 9 of the Rules of Court.
Last, whether fraud attended the transactions and whether Erlinda can be held to have conspired with her husband are notably questions of fact which require a review of the evidence on record. These are beyond Rule 45 which only allows errors of law to be raised. Not being a trier of facts, this Court cannot take cognizance of factual issues, let alone, examine, review, or evaluate the evidence all over again. In any case, the trial court's factual findings, when affirmed by the Court of Appeals, as in this case, are binding and conclusive on this Court. 25
In any event, among the damages awarded by the Court of Appeals to respondent were temperate damages of P7,000,000 in lieu of the trial court's award of P12,690,421.11 26 as actual damages. The Court of Appeals said that this latter amount was not established by evidence. But since it was convinced that respondent indeed suffered damages from the fraudulent loan transactions of Bienvenido Marquez, Jr., an award of P7,000,000 as temperate damages would suffice.
On this score, We keenly note that the certificates of sale of seven (7) foreclosed properties reflected respondent's bids in the total amount of P15,412,402.72; the Appraisal Report dated October 29, 2002, the collective appraised value of the properties at P8,804,000. The difference between the total value of respondent's bids and total appraised value of the properties is P6,608,402.72. Markedly, this amount represents the actual damages suffered by respondent. Hence, the Court finds it proper to award actual or compensatory damages of P6,608,402.72, in lieu of the Court of Appeals award of P7,000,000 as temperate damages.
WHEREFORE, the petition is DENIED. The Decision dated December 22, 2014 of the Court of Appeals in CA-G.R. CV No. 98047 is AFFIRMED WITH MODIFICATION. The Court deletes the award of P7,000,000 as temperate damages and instead, grants the award of P6,608,402.72 as actual or compensatory damages. All monetary awards shall earn six percent (6%) interest per annum from finality of this decision until fully paid.
SO ORDERED."Reyes, J. Jr, J., on leave.
Very truly yours,
(SGD.) LIBRADA C. BUENADivision Clerk of Court
Footnotes
1.Rollo, p. 32.
2.Id. at 32-33.
3.Id. at 34.
4.Id.
5.Id.
6.Id. at 35-36.
7.Id. at 36.
8.Id. at 31-32.
9.Id. at 36-37.
10.Id. at 38-39.
11. Entitled Estate of the Late Bienvenido Marquez, Jr., et al. v. Hon. Adolfo Encomienda and Quezon Coconut Producers Savings and Loan Bank, Inc.
12.Rollo, pp. 39-41.
13.Id. at 56.
14. Section 3. Default; declaration of. — If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court.
15. Section 3. Default; declaration of. — x x x
xxx xxx xxx
(b) Relief from order of default. — A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice.
16.Rollo, pp. 41-42.
17.Id.
18.Id. at 42.
19.Id. at 43.
20.Id. at 52.
21.Id. at 52-53.
22.Id. at 56.
23.Id. at 14-15.
24.Dev't. Bank of the Phils. v. Guariña Agricultural and Realty Dev't. Corp., 724 Phil. 209, 224-225 (2014).
25.Carbonell v. Carbonell-Mendes, 762 Phil. 529, 536-537 (2015).
26. Bienvenido Marquez, Jr.'s alleged outstanding loans of P21,494,421.11 less the appraised value of the foreclosed properties of P8,804,000.