Valdez v. China Banking Corporation
REITERATIONFacts
The Antecedents: On January 11, 1978, China Banking Corporation (Chinabank) and Creative Texwood Corporation (CREATIVE), represented by its president Simeon M. Valdez, executed a Credit Agreement for US$1,000,000.00 to finance CREATIVE's importations. Simultaneously, CREATIVE executed a Promissory Note for the same amount, payable one year later. Valdez, as surety, executed a Surety Agreement binding himself for the prompt payment of the note. Chinabank issued the US$1,000,000.00 check to CREATIVE, which was subsequently indorsed back to Chinabank for payment. Procedural History: On December 15, 1986, Chinabank filed a complaint for sum of money against CREATIVE and Valdez for their failure to comply with their obligations. Valdez, in his answer, claimed the Credit Agreement was fictitious, that he signed only in his official capacity, and that the Surety Agreement was a pro-forma document. The Regional Trial Court (RTC) initially dismissed the complaint for failure to prosecute but later reinstated it. CREATIVE and Valdez were declared in default at different stages, but these orders were set aside. After trial, the RTC rendered judgment ordering CREATIVE and Valdez jointly and severally to pay Chinabank P18,069,674.38, plus interest, penalty, and attorney's fees. The RTC found Valdez liable under the Surety Agreement and rejected his defense of extinguishment of guaranty due to extension of time under Article 2079 of the Civil Code, noting that mere delay in filing suit does not constitute an extension. The Petition: Both Chinabank and Valdez appealed to the Court of Appeals (CA). Chinabank's appeal was dismissed for failure to file its brief, and its motion for reconsideration was denied. This Court also dismissed Chinabank's subsequent petition for review. The CA, however, proceeded to resolve Valdez's appeal and, in a decision dated February 28, 2002, dismissed his appeal and affirmed the RTC decision. Valdez's motion for reconsideration was denied by the CA on August 23, 2002. Valdez now seeks review of the CA's decision and resolution.
Issue(s)
Whether the Court of Appeals erred in acting on petitioner's appeal when the bank's appeal was already dismissed and considered moot and academic. Whether the Court of Appeals erred in rendering a decision and resolution that are unenforceable due to prescription. Whether the Court of Appeals erred in setting aside petitioner's failure to assign lack of consideration as an error, considering the resulting unjust enrichment. Whether there was an error in making the petitioner liable as there was no showing that the bank obtained his consent for the extension of the one-year loan period. Whether the questioned decision and resolution of the Court of Appeals are against the rule of finality of judgment and public policy.
Ruling
The petition is DENIED, and the assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs against the petitioner.
Ratio Decidendi
On the issue of the CA's jurisdiction despite the dismissal of Chinabank's appeal: The Court held that the Court of Appeals did not err in acting on petitioner's appeal. Under Section 9 (3) of Batas Pambansa Blg. 129, the Court of Appeals has exclusive appellate jurisdiction over final judgments of regional trial courts. Once jurisdiction is acquired by the appellate court through the perfection of an appeal, it continues until the case is finally terminated. Therefore, the CA could resolve Valdez's appeal even after Chinabank's appeal was dismissed. On the issue of prescription: The Court found no merit in the petitioner's claim that the decision and resolution were unenforceable due to prescription. The petition does not provide specific arguments or legal basis for this claim, and the core of the case revolves around the validity of the surety agreement and the petitioner's liability, which were addressed by the lower courts. On the issue of lack of consideration and unjust enrichment: The Court ruled that it was too late for petitioner to raise the issue of lack of consideration. Under Rule 9, Section 1 of the Rules of Court, defenses not raised in the answer are deemed waived. Petitioner never pleaded lack of consideration in his answer. Furthermore, his own answer contained admissions that CREATIVE "received the proceeds thereof" and made "substantial payment," directly contradicting his claim of lack of consideration. Thus, his argument of unjust enrichment was unsubstantiated and contrary to his own pleadings. On the issue of consent to extension of loan period: The Court found that petitioner was attempting to raise a new issue of fact regarding the inconsistency between the promissory note amount and the amount demanded, and the alleged extension of the loan period. His answer did not indicate an intent to raise this issue. Raising such factual issues for the first time on appeal would violate due process by depriving the adverse party of the opportunity to present evidence. The Court reiterated that it resolves questions of law, not issues of facts, under Rule 45. On the issue of finality of judgment and public policy: The Court found no basis to conclude that the CA's decision and resolution were against the rule of finality of judgment or public policy. The proceedings followed the established rules of procedure, and the petitioner's liability stemmed from his voluntary execution of the Surety Agreement. The Court emphasized that it is the neutral administrator of justice and cannot correct unsound business judgments, especially when a party has freely assumed obligations.
Main Doctrine
A party who admits receiving the proceeds of a credit facility and making substantial payments cannot later claim lack of consideration for the credit agreement. Defenses not raised in the answer are deemed waived and cannot be raised for the first time on appeal. Jurisdiction, once acquired by an appellate court, continues until the case is finally terminated, regardless of the dismissal of an adversary's appeal.