TEOFILO C. RODRIGUEZ, PETITIONER VS. DEVELOPMENT BANK OF THE PHILIPPINES, RESPONDENT.

From the decision of the Court of First Instance of Davao,
dismissing his complaint (Civil Case No. 3422 – for mandamus) against
respondent Development Bank of the Philippines, to compel the latter to
accept his backpay certificate in payment of his obligations to it,
petitioner Teofilo C Rodriguez, interposed this appeal. The case was
submitted for decision of the trial court on the following:

“STIPULATION OF FACTS

“1. That the agreement was entered into by and
between Teofilo C. Rodriguez, now the petitioner herein and the then
Rehabilitation Finance Corporation (RFC), now called the Development
Bank of the Philippines, sometime in May, 1953, to the effect that said
Rehabilitation Finance Corporation would loan to Teofilo C. Rodriguez
the amount of P14,000.00, payable in installments;

“2. That
said loan of P14,000.00 as stated in the preceding paragraph would be
received by Teofilo C. Rodriguez in several releases;

“3.
That pursuant to the agreement aforementioned, the first release
availed of was the amount of P5,000.00, which was received by
petitioner on or about May 27, 1953.

“4. That all subsequent
releases covering the entire remaining amount of the loan was availed
of and received by petitioner after June, 1953, pursuant to the
conditions embodied in the agreement mentioned in paragraph 1 above,
the pertinent provisions of which are quoted hereunder, to wit:

‘ADDITIONAL CONDITIONS:

“(3) That the subsequent releases shall not be more than 60% of the value of the construction completed In excess of P6,000.00;

”
(5) That a sufficient amount may be withheld until the building is
completed and painted and found in accordance with plans and
specifications submitted;

“(8) That the release of the loan shall be subject to the availability of funds;”

“5.
That thereafter, payment in installments were made by petitioner and
that petitioner as early as 1954 offered to pay his entire remaining
obligation with his backpay, but respondent refused to accept the same
but ultimately accepted payment thereof in the amount of only
P5,000.00, thereby causing a remainder of about P5,000.00 at that time;

“6. That the respondent would not receive payment of releases made and availed of by the petitioner after June, 1953; and

“7.
That the amount of petitioner’s backpay can still more than cover the
petitioner’s existing obligation or balance.” In addition thereto, the
parties submitted memoranda, in support of their respective
contentions. Thereafter (on June 14, 1961) and on the basis of said
Stipulation of Facts and memoranda of the parties, the trial court
rendered the decision above adverted to.

Dissatisfied, petitioner appealed to us “on question of law”.

As stated by the trial court, the issue to be resolved in this case
is “whether the releases made after June 20, 1953 should retroact as of
May, 1953 when the contract was made and considered subsisting from
May, 1953; or the subsequent releases should be considered subsisting
as of the day the release was made,” in order to come within the
purview of the law authorizing payment, by backpay certificates, of
“obligations subsisting at the time of the approval of the amendatory
act on June 20, 1953”.

It is appellant’s contention that the entire obligation of
P14,000.00 (and not only the P5,000.00 actually received by him in May,
1953) was already subsisting on June 20, 1953 when Republic Act No. 897
was approved, hence, appellee Bank must accept his backpay certificate
in payment of the balance thereof which is P9,000.00, pursuant to
Section 2 of said Act. Appellee Bank, for its part, argues that only
the amount of P5,000.00 was subsisting as appellant’s obligation to it
when said Act was approved, the amount actually released to appellant
pursuant to the loan agreement of May, 1963, and, hence, the sum of
P9,000.00 released after the approval of Republic Act No. 897 on June
20, 1953 (it was actually released in July, 1963 and thereafter) is a
subsisting obligation after said date and, consequently, not payable
with appellant’s backpay certificate.

We are inclined to sustain appellee Bank’s argument. We agree with the trial court that-

“An analysis of the contract between the parties
entered into In May, 1953, as gleaned from the stipulation of facts and
the memoranda shows that the agreement between the parties is an
executory contract. The plaintiff became bound and liable for such
amount released and received by him on the date of the release and
receipt by him. It is noted that for each release, the plaintiff is
required to execute a promissory note. He became bound and liable for
the amount released only on the date he received the amount released
and signed the corresponding promissory note.”

It can not be said that appellant became indebted to the Bank for
the total amount of P14,000.00 from the date of the agreement. The
releases of the balance of the agreed loan were made dependent on
certain conditions (see additional conditions mentioned in paragraph 4
of the stipulation of facts, supra, among which is the availability of
funds. Non-compliance with any of these conditions will not entitle the
appellant to the release of the balance of the agreed loan and
conversely, will not entitle the bank to hold the appellant liable for
the unreleased amounts. Consequently, we hold as did the trial court,
that:

“* * *, the amounts released in July, 1953 and
thereafter cannot be considered as obligations subsisting in June,
1953. The defendant may be compelled to accept a backpay certificate in
payment of obligations subsisting when the Amendatory Act was approved
(Sec. 2, Rep. Act 897). Republic Act 897 was approved on June 20, 1953.
The defendant may not be compelled to accept plaintiff’s backpay
certificate in payment of the amounts released after June 20, 1953.”

The case of Sabelino vs. RFC (G. R. No. L-11790, Sept. 30, 1958)
relied upon by appellant is irrelevant, as the mortgage indebtedness
sought to be paid with appellee’s backpay certificate therein, appears
to have subsisted prior to the approval of Republic Act No. 897. The
only question raised and thus decided in that case was whether, because
of the nature of the funds used by Rehabilitation Finance Corporation
which required an annual yield in excess of what the 39—year term
backpay certificates would bring, the provisions of Republic Act 897
were applicable to it.

Wherefore, finding no reversible error in the decision appealed
from, the same is hereby affirmed, with costs against the
petitioner-appellant. So ordered.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Concepción,
Reyes, J. B. L., Paredes, Dizon, Regala and Makalintal, JJ., concur.