Case Digest (G.R. No. 166401)
Facts:
Romago, Inc. and its president Francisco C. Gonzalez (petitioners) obtained three loans from Associated Bank (now United Overseas Bank) in August 1978, evidenced by Promissory Notes Nos. BD-3728 (₱300,000), BD-3750 (₱700,000), and BD-3714 (₱700,000). Petitioner fully paid the first two notes but defaulted on BD-3714. On April 30, 1983, the bank restructured the unpaid ₱700,000 into two new notes (No. 9660 for ₱700,000 and No. 9661 for ₱629,572), on which partial payments were later made. Petitioners claimed that the loan was a conduit loan for Metallor Trading Corporation, presenting letters from Metallor admitting liability and offering collateral. Metallor was impleaded as a third-party defendant but denied any obligation, invoking prescription. The Regional Trial Court held petitioners liable, dismissed Metallor, and awarded 20% attorney’s fees. The Court of Appeals affirmed. On February 22, 2023, the Supreme Court took up the Rule 45 petition under the 1987 Constitution.Case Digest (G.R. No. 166401)
Facts:
- Background and Loan Transaction
- In August 1978, Romago, Inc. and its president Francisco Gonzalez contracted three loans from Associated Bank (now United Overseas Bank Phils.) under Promissory Notes (PN) BD-3728 (₱300,000), BD-3750 (₱700,000), and BD-3714 (₱700,000).
- Romago fully paid BD-3728 and BD-3750 but defaulted on BD-3714, which was restructured on April 30, 1983 into PN 9660 (₱700,000) and PN 9661 (₱629,572). Romago paid ₱64,652.17 on PN 9660 and ₱103,632.09 on PN 9661, then stopped paying.
- Conduit Theory and Defenses
- Romago claimed it was a “conduit loan” for Metallor Trading Corporation, presenting letters in which Metallor purportedly admitted liability under PN BD-3714, offered to update interest, provide collateral, and pay Romago’s account on PN 9660.
- Metallor moved to dismiss the third-party complaint, denying liability or asserting prescription, but later adopted portions of the Bank’s evidence.
- Procedural History
- RTC (Manila, Branch 12) – Ruled for the Bank: no express novation or consent to change debtor; Romago remained liable; dismissed third-party complaint; awarded 20% of the outstanding obligation as attorney’s fees.
- CA (10th Division) – October 26, 2015 Decision and February 29, 2016 Resolution affirmed the RTC’s findings.
- SC – Romago and Gonzalez filed a Rule 45 Petition for Review on Certiorari; the Court denied the petition and modified the interest rates in its decision of February 22, 2023 (G.R. No. 223450).
Issues:
- Whether the petition for review on certiorari was proper under Rule 45, given it raised questions of fact.
- Whether novation or substitution of debtor occurred, releasing Romago from liability on the promissory notes.
- Whether the award of attorney’s fees (20% of the outstanding obligation) was proper.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)