G.R. No. L-26419. October 16, 1970
GEDEON G. QUIJANO AND EUGENIA T. QUIJANO, PETITIONERS?APPELLANTS, VS. THE DEVELOPMENT BANK OF THE PHILIPPINES AND THE EX-OFICIO SHERIFF OF MISAMIS OCCIDENTAL, RESPONDENTS-APPELL…
BARREDO, J.:
Appeal from the decision of the Court of First Instance of Misamis Occidental in its Special Civil Case No. 2519,
dismissing the petition for mandamus with prayer for a writ of
preliminary injunction filed therein by the herein petitioners-appellants Gedeon G. Quijano and Eugenia T. Quijano to
compel the herein respondent-appellee Development
Bank of the Philippines to accept said petitioners-appellants’ back pay
certificate in payment of their loan from the said appellee
Bank, and to restrain the herein respondent-appellee
ex-oficio sheriff of the province of Misamis Occidental from proceeding with the scheduled foreclosure
sale of the real properties the above-named appellant spouses had mortgaged
with the Development Bank of the Philippines to secure the loan aforementioned.
The
said appealed decision was based on the following:
“STIPULATION OF FACTS
“The undersigned parties, thru counsels, hereby submit the
foregoing stipulation of facts, to wit:
“1. That the petitioners filed an application
for an urban estate loan with the Rehabilitation Finance Corporation (RFC),
predecessor-in-interest of the herein respondent-bank, in the amount of P19,
500.00;
“II. That the petitioners’ urban real estate loan
was approved per RFC Board Resolution No. 2533 on April 30, 1953;
“III. That
the mortgage contract was executed by the petitioners in favor of the
respondent-bank on March 23, 1954;
“IV. That
the said loan of P19,500.00 was to be received by the
petitioners in several releases, subject among others, to the following
conditions:
“(1) That the amount of P4,200.00
shall be released only after:
“(a) the execution and registration of the mortgage
contract;
“(b) the presentation
of a duly approved building permit;
“(c) the
construction has been started and the value of the work done amounted to
P6,500.00;
“(d) the submission of the
certificate of title covering Psu-136173, free from any encumbrance; and
“(e) the submission of evidence showing full payment
of current estate taxes;
“(2) That the subsequent releases shall not be
more than 100% of the value of the construction completed in excess of
P6,500.00; that all releases shall be made against the payroll of workers
engaged in the project, receipts of all materials used and that there are no
unpaid labor or unpaid materials;
“(3) That a sufficient amount may be withheld
until the building is completed and painted and found in accordance with the
plans and specification submitted;
“(4) That the amount of insurance of the building,
when completed, shall not be less than P18,000.00, which shall be secured by
the mortgagee, in accordance with its Board Resolution No. 3395 series of 1947;
“(5) That the construction and painting of the
building shall be completed within 120 days from the date of the mortgage
contract;
“(6) That the release of this loan is subject to
the availability of funds;
“(7) That the
lien appearing on the face of the title shall be cancelled, otherwise, Luciana
Jimenez shall sign as co-mortgagor; that this mortgage contract was registered
on March 23, 1954 with the
Register of Deeds of Misamis Occidental at Oroquieta;
“V. That the first release of P4,200 was made on April
29, 1954, and the other releases were made subsequent thereafter;
“VI. That as of July 31, 1965, the outstanding obligation of the
petitioners with the respondent-bank, including interests, was P13,983.50;
“VII. That on July 27, 1965, petitioner Gedeon Quijano, as holder of Acknowledgement
No. 10181, wrote the respondent-bank in Manila offering to pay in the amount of
P14,000.00 for his outstanding obligation with the respondent-bank, out of the
proceeds of his back pay pursuant to Republic Act No. 897;
“VIII. That the
respondent-bank, thru its Ozamiz Branch advised the
petitioners of the non-acceptance of his offer on the ground that the
loan was not incurred before or subsisting on June 20, 1953 when Republic Act
897 was approved;
“IX. That the respondent-bank, thru its Ozamiz City Branch, filed on October 14, 1965, an
application for the foreclosure of real estate mortgage executed by the petitioners, and that acting on the
application of the respondent-bank, the Provincial Sheriff, thru his
deputies, scheduled the public auction sale for January 18, 1966, after advising petitioner Gedeon Quijano of the application
for foreclosure filed by the respondent-bank.
“X. That the parties herein agree to transfer the
auction sale scheduled for January 16, 1966 to February 18, 1966, without the necessity
of republication of the notice of sale.”
Upon these facts and the submission of the parties that the only
issue is whether or not the obligation of the petitioners was subsisting at the
time of the approval of Republic Act No. 897, the Amendatory Act of June 20,
1953 to Republic Act 304, the original back pay law, the trial court dismissed
the petition, as already stated, and directed respondent sheriff to proceed and
continue with the public auction sale of the property mortgaged in accordance
with the foreclosure application of respondent Development Bank of the Philippines
after due notice to petitioners. In
their appeal, petitioners’ sole assignment of error is that: “The trial
court erred in declaring that the loan of the petitioners-appellants was not
subsisting when Republic Act No. 897 was
enacted on June 20, 1953.”
The appeal has no merit.
The pertinent portions of the controlling provisions of the
aforementioned Back Pay Law, as amended by Republic Act No. 897 on June 20, 1953,[1]
read as follows:
“SEC. 2. The Treasurer of the Philippines shall, upon
application of all persons specified in section one hereof and within one year
from the approval of this Amendatory Act, and under such rules and regulations as may be
promulgated by the Secretary of Finance, acknowledge and file requests for the
recognition of the right to the salaries and wages as provided in section one
hereof, and notice of such acknowledgment shall be issued to the applicant
which shall state the total amount of
such salaries or wages due the applicant, and certify that it shall be redeemed
by the Government of the Philippines within ten years from the date of their
issuance without interests: Provided,
That upon application and subject to such rules and regulations as may be
approved by the Secretary of Finance a certificate of indebtedness may be
issued by the Treasurer of the Philippines covering the whole or a part of the
total salaries and wages the right to which has been duly acknowledged and
recognized, provided that the face value of such certificate of indebtedness
shall not exceed the amount that the applicant may need for the payment of (1) obligations
subsisting at the time of the approval
of this Amendatory Act for which the applicant may directly be liable to the government or to any of its branches or
instrumentalities, or the corporations owned
or controlled by the Government, or to any citizen of the Philippines, or to any association or corporation organized under
the laws of the Philippines, who
may be willing to accept the same for
such settlement.; x x x“
It is indeed settled that
under the above provisions, the Government or any of its agencies does
not have any discretion in the acceptance of back pay certificates,[2]
when they are used by the applicants or original holders themselves for the
settlement of any of the obligations or liabilities specifically enumerated in
the law,[3]
It is equally clear, however, that the same provisions expressly require that the
obligations – for which certificates of indebtedness may be accepted as
payments of – must be subsisting at the time of the approval of
Republic Act No. 897; hence when, as in the instant case, such back pay certificates
are offered in payment to a government-owned corporation of an obligation
thereto which was not subsisting at the time of the enactment of said
amendatory Act on June 20, 1953, such corporation may not legally be compelled
to accept the certificates.
It is true that appellants’ application for an urban real estate
loan was approved by appellee bank on April 30, 1953. It appears, however, that appellants did not
avail of it until much later, as in
fact, they executed the mortgage contract only on March 23, 1954, and furthermore, that the release of the
amount of the said loan of P19,500.00 was to be made
in installments and subject to compliance with certain conditions by said
appellants. Under these circumstances, Our ruling in the case of Rodriguez vs. Development Bank of
the Philippines[4]
is controlling.
In that case, Rodriguez obtained a loan from the said Development Bank of the Philippines
to be received by him in several releases and to be paid later in installments,
under the terms and conditions specified in the loan agreement. Pursuant to said agreement, Rodriguez
received the first release in the sum of P5,000.00 on May 27, 1953, while the subsequent releases covering the
P9,000.00 – balance of the loan were all availed of and received by him later
than June, 1953. Later, Rodriguez paid
the installments as they fell due. When a balance of about P10,000.00
remained unpaid, Rodriguez offered to pay the said outstanding balance of the loan with his back pay
certificate. The Bank refused at first
to accept the said tender of payment in certificate, and when it accepted the
same later, it limited its acceptance only to the amount of P5,000.00 representing the portion of the loan released
before the passage of Republic Act No. 897, although the amount of the back pay
certificate offered by Rodriguez was more than sufficient to cover the
total unpaid balance of the loan. So,
Rodriguez instituted an action for mandamus in the Court of First
Instance of Davao to compel the Bank to accept his
back pay certificate in payment of his whole outstanding obligation or, in other words, even for the portions of the loan corresponding to the releases made after June 20,
1953. This action was dismissed by the trial court and upon appeal to this Court, the
dismissal was affirmed upon the following rationale:
“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. Noncompliance 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:
‘ x
x x 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 back pay
certificate in payment of obligations subsisting when the Amendatory Act was
approved (Sec. 2, Republic Act 897).
Republic Act 897 was approved on June
20, 1953. The defendant may
not be compelled to accept plaintiff’s back pay certificate in payment of the
amounts released after June 20, 1953.’
“The case of Sabelino
v. 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 back pay
certificate therein, appears to have subsisted prior to the approval of
Republic Act No. 897. x x x“
Herein appellants’ situation is even worse than that of
Rodriguez. Here appellants actually
availed of their approved loan only about nine (9) months after the enactment
of Republic Act 897 and the corresponding
releases thereof were received by appellants only after the execution of the
mortgage contract on March 23, 1954. Undoubtedly, notwithstanding the approval by
the appellee Development Bank of the Philippines
(RFC) of appellants’ loan application on April 30, 1953, appellants did not
thereby incur any obligation to pay the same; only after the corresponding
amounts were released to appellants after March 23, 1954 did such obligation
attach; and it cannot, therefore, be said that the said loan was an obligation subsisting at the time of the approval of Republic Act
No. 897 on June 20, 1953.
It may be truly said, as contended by appellants, that when their
application for the loan was approved by the appellee
Bank on April 30, 1953, an agreement was perfected between them and said Bank,
but it should be noted that under such agreement the only enforceable
obligation that was created was that of the
Bank to grant the loan applied for, whereas the obligation of appellants
to pay the same could not have arisen until
after the amount of the loan has been actually released to them; and
said release was even subject to their compliance with certain conditions
specified in the mortgage contract
executed after the approval already
of Republic Act 897. Appellants’ appeal
that a more liberal construction of the law
would enable “many crippled or disabled veterans, or their wives
and orphans, or those who had in
one way or another unselfishly sacrificed or contributed to the cause of the
last war” to take advantage of their back pay certificates, does deserve
sympathy, for indeed, among the avowed purposes of the said law are:
“First, to serve as a source of financial aid to needy veterans, like
crippled or disabled veterans, and to their wives and orphans. Secondly, to give recognition to the
sacrifices of those who joined the last war and particularly to those who have given their all for the cause of
the last war.” (Congressional Records No. 61, 2nd
Congress, 4th Regular Session, May 6, 1953, page 74, as quoted in Florentino et al
vs. PNB, 98 Phil. 959, 961-963). On the
other hand, however, We cannot see any room for
interpretation or construction in the clear and unambiguous language of the
above-quoted provision of law. This
Court has steadfastly adhered to the doctrine that its first and fundamental
duty is the application of the law according to its express terms,
interpretation being called or only when such literal application is
impossible.[5] No process of interpretation or construction
need be resorted to where a provision of law peremptorily calls for
application. Where a requirement or
condition is made in explicit and unambiguous terms, no discretion is left to
the judiciary. It must see to it that
its mandate is obeyed.[6] Thus, even before the amendment of the Back
Pay Law, when said law limited the applicability of back pay certificates to
“obligations subsisting at the time of the approval of this Act”,
this Court has ruled that obligations contracted after its enactment on June 18,
1948 cannot come
within its purview.
“Since the debt of appellants was contracted on November 24,
1948, they could not validly seek to discharge it by application of their back
pay certificate under Republic Act 304, passed on June 18, 1948, because that
Act, in terms, limited any such application to ‘obligations subsisting at the
time of the approval of this Act’ (Sec. 2)”[7]
WHEREFORE, the
judgment of the trial court is affirmed.
No costs.
Reyes, J.B.L., Acting C.J., Dizon, Makalintal, Zaldivar, Ruiz Castro,
Fernando, Teehankee, Villamor,
and Makasiar, JJ., concur.
Concepcion, C.J., on official leave.
[1]
On June 22, 1957, the
law was further amended by Republic Act 1853 to read, among others, and so far
as pertinent to this case, as follows:
“(1) obligations subsisting at the time of the
approval of this amendatory act for which the applicant may directly be liable
to the Government or to any of its branches and instrumentalities, or the
corporations owned or controlled by the Government, the provisions of their
charters, articles of incorporation, by-laws or rules and regulations to the contrary
notwithstanding, or to any citizen of the Philippines, or to any association or
corporation organized under the laws of the Philippines, who may be willing to
accept the same for such settlement; (2) x x x”
[2]
Tirona vs. City Treasurer
of Manila, L-24607, January 29,
1968; Florentino vs. PNB, 98 Phil. 959.
[3]
Republic vs. Herras,
L-26742, April 30, 1970. See also,
Republic vs. Phil. Rabbit Bus Lines, Inc., L?26862, March 30, 1970.
[4]
L-19771, February 27, 1964.
[5]
See, Pacific Oxygen & Acetylene Co.
vs. Central Bank, L-21881, March 1, 1968.
[6]
Luzon Surety Co., Inc. vs. De Garcia, et al., L-25659, Oct. 31, 1969. See, also, United Christian Missionary Society vs.
Social Security Commission, et al.,
L-26712-16, Dec. 27, 1969.
[7]
PNB vs. Ruperto, et al., 108 Phil. 810.