Pilipinas Bank v. Glee Chemical Laboratories
REITERATIONFacts
The Antecedents: Glee Chemical Laboratories, Inc. (respondent) applied for a loan of P800,000.00 from Pilipinas Bank (petitioner), to be secured by a mortgage of its real property. The Real Estate Mortgage explicitly stated that the loan proceeds were for additional working capital for the purchase of fertilizers. Respondent alleged that petitioner never delivered the loan proceeds but instead applied them to a debt owed by a certain Rustica Tan. Petitioner insisted that the mortgage secured Rustica Tan's debt, and since a balance remained, it initiated foreclosure proceedings. Respondent filed a complaint for annulment of contract and damages, later supplemented with a claim for annulment of a chattel mortgage over respondent's chattels, which Rustica Tan had allegedly mortgaged as security for an additional loan, claiming ownership of the chattels without respondent's consent. Procedural History: The Regional Trial Court (RTC) issued preliminary injunctions enjoining the foreclosure. After trial, the RTC declared the real estate mortgage and the amendment with chattel mortgage null and void ab initio, permanently enjoined the foreclosure, and ordered petitioner to pay respondent attorney's fees, moral damages, and exemplary damages. The Court of Appeals (CA) affirmed the RTC decision in toto, upholding the RTC's finding that respondent's President, Cheng Yong, was more credible and that the stipulation for Rustica Tan's benefit was inserted after Cheng Yong signed the document, thus vitiating respondent's consent. The Petition: Petitioner sought reversal of the CA decision, arguing that the CA erred in giving more credence to respondent's witnesses and that the stipulation pour autri should have been given effect as the third party had accepted its benefits. Petitioner contended that the CA's findings were based on speculations and misapprehension of facts.
Issue(s)
Whether the stipulation pour autri in the Real Estate Mortgage was validly incorporated. Whether the CA erred in giving more credence to the testimonies of respondent's witnesses over petitioner's witness. Whether the notarization of the Real Estate Mortgage rendered its due execution unquestionable.
Ruling
The petition is DENIED for utter lack of merit. The assailed Decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the validity of the stipulation pour autri: The Court held that for a stipulation pour autri to be valid, it must be the purpose and intent of the stipulating parties to benefit the third person, and it is not sufficient that the third person may be incidentally benefited. The core issue was whether the stipulation in favor of Rustica Tan was already present when respondent's President, Cheng Yong, signed the Real Estate Mortgage. Both Cheng Yong and respondent's manager testified that the stipulation was not yet typewritten when they signed, while petitioner's witness claimed he typed it the day before. The trial court, affirmed by the CA, found Cheng Yong's testimony more credible, concluding that the stipulation was inserted after the signature, thereby altering the nature of the contract without respondent's consent. Consequently, the stipulation was deemed null and void ab initio. On the credibility of witnesses: The Court reiterated the well-settled rule that factual findings of the trial court, affirmed by the Court of Appeals, are final and conclusive and may not be reviewed on appeal, unless the case falls under specific exceptions such as manifest mistake, grave abuse of discretion, or misapprehension of facts. The Court found that the present case did not fall under any of these exceptions. It emphasized that the trial court is the best judge of the credibility of witnesses due to its opportunity to observe their demeanor. Both the trial court and the CA gave more credence to respondent's witnesses, and petitioner failed to present any compelling reason to deviate from this finding. On the effect of notarization: Petitioner argued that the notarization of the document should have removed doubt as to its due execution. However, the Court noted that the presumption of regularity in the performance of official duty is rebuttable. Petitioner's own witness, Elpidio Guillermo, admitted that Cheng Yong and Melecio Hernandez did not appear before the notary public when the document was notarized. This admission effectively destroyed the presumption of regularity, rendering the notarization useless as the notary public did not witness the personal appearance and acknowledgment of the signatories. Therefore, the Court had to rely on the trial court's assessment of witness credibility.
Main Doctrine
A stipulation pour autri is void ab initio if the third party's name was inserted without the consent of the party who executed the mortgage, especially when the insertion fundamentally alters the nature of the contract. Factual findings of the trial court, affirmed by the Court of Appeals, on the credibility of witnesses are generally conclusive and binding on the Supreme Court, absent any showing that the case falls under the established exceptions.