ALEX GO, PETITIONER, VS. COURT OF APPEALS, ASSOCIATED BANK AND LUCIANO MABASA, RESPONDENTS.

Petitioner seeks the review and reversal of the Decision^[1] of 7 January 1991 and the Resolution of 27 June 1991 of
the respondent Court of Appeals in C.A.-G.R. No. 17026, entitled “Alex Go
versus Associated Citizens Bank and Luciano Mabasa”, which, respectively,
affirmed in toto the judgment of Branch 137 (Makati) of the Regional
Trial Court of the National Capital Region in Civil Case No. 8920 dismissing
petitioner’s complaint with costs against him and denied the motion to
reconsider the decision.

This Court gave due course to the petition after private
respondent filed his Comment to the petition in compliance with the Resolution
of 4 September 1991 and the petitioner submitted his Reply thereto.

The antecedent facts, as summarized by the trial court and quoted
in the challenged decision of the respondent Court, are as follows:

“Sometime on 28 August 1978, plaintiff opened a current
account with the defendant Associated Citizens Bank, Grace Park Branch,
denominated as C/A No. 472-5 (Cf. Exh. 1). Pursuant to an understanding between plaintiff and defendant Luciano
Mabasa, Senior Vice-President, Branches Division, of defendant bank, plaintiff
was allowed to incur overdrafts (Cf. Exhs. 1-A through 1-AA), so much so that
as of 2 July 1979, plaintiff’s overdraft reached the amount of P856,986.38 (Cf.
Exh. 1-Y). Thus, on 10 July 1979,
plaintiff executed a Real Estate Mortgage (Exh. B) in favor of defendant Bank
as security for the payment of the principal sum of P235,000.00. Plaintiff also signed two (2) Promissory
Notes (Exhs. C or 2 and D or 3) in the amounts of P900,000.00 and P235,000.00,
respectively. Said promissory notes
were discounted by defendant Bank (Cf. Exhs. 2-A and 3-A), and the net proceeds
thereof were credited to plaintiff’s current account No. 472-5 (Cf. Exhs. 1-Y-1
and 1-Y-2), thereby extinguishing in full plaintiff’s overdraft balance of
P856,986.38, and resulting in creating (sic) a credit balance in plaintiff’s
said account in the amount of P112,832.55 (Cf. Exh. 1-Y). In view of plaintiff’s failure to pay the
promissory notes (Exhs. C or 2 and D or 3), the defendant Bank foreclosed on
the Mortgage (Exh. B), and on 22 December 1980, the mortgaged properties were
sold at public auction to defendant Bank, as the highest bidder, for the total
sum of P328,748.62 (Cf. Annex 4, Answer). For failure of plaintiff to redeem said properties, the title to said
properties were consolidated in the name of defendant Bank.

It is also reflected in the bank’s record (Cf. Exh. 1-W) that on 21
May 1979, plaintiff’s current account was credited with the total sum of P550,000.00
when he deposited three (3) checks in the respective amounts of P120,000.00,
P180,000.00 and P250,000.00. However,
these checks were later dishonored and returned to the defendant Bank, so the
latter debited the corresponding amounts of said checks (Cf. Exh. 1-W-1). (pp. 140-141, Records).”^[2]

Despite the foreclosure of the mortgage and the subsequent
consolidation of the title of the properties in the name of private respondent
bank, petitioner filed on 5 November 1984 with the trial
court the complaint in the abovestated Civil Case No. 8920 for a sum of money
and cancellation of mortgage against the private respondents.^[3]
In their Answer, private respondents allege that petitioner is estopped from
denying his obligation as he expressly admitted the due execution of the
promissory notes; moreover, the mortgage had already been foreclosed and
petitioner received a notice of the foreclosure sale which was published in a
newspaper of general circulation.^[4]

Private respondents were initially declared in default and the
petitioner was allowed to present his evidence ex-parte before the Branch Clerk of Court. When private respondents later appeared,
their evidence was likewise received by the Branch Clerk of Court.^[5]

On 18 September 1987, the trial court rendered a decision adverse
to the petitioner on the basis of the following findings of fact:^[6]

“From the foregoing, the issues are clear and definite. First, has plaintiff received the proceeds
of the promissory notes, Exhibits C and D? Second, is it true, as plaintiff claims, that defendant Bank withdrew
the sum of P300,000.00 on 22 May 1979 from plaintiff’s current account without
his knowledge and consent?

Upon due consideration and assessment, the Court finds and
concludes that the evidence weighs heavily in favor of the defendant Bank. Indeed, the evidence clearly demonstrates
that plaintiff has no valid cause of action against defendant Bank, much less
against defendant Luciano Mabasa.

Plaintiff has not denied the authenticity and due execution of the
Real Estate Mortgage and the promissory notes. However, plaintiff contends that he is not legally bound by said
documents because he has not received the proceeds, or any portion thereof, of
the promissory notes in question. This
contention is totally devoid of merit, as it is not borne out by the Bank’s
records. It is incontrovertible that
the net proceeds of the subject promissory notes were duly credited to
plaintiff’s current account (Cf. Exhs. 1-Y-1 and 1-Y-2). Considering that plaintiff had an overdraft
(debit) balance of P856,989.38 when the net proceeds of the promissory notes in
the respective sums of P771,074.90 (Exh. 1-Y­-2) and P204,777.59 (Exh. 1-Y-1)
were credited to plaintiff’s current account, compensation takes place by
operation of law (Art. 1286, New Civil Code), and extinguished plaintiff’s
overdraft balance in full (Art.
1290, id.). In other words, the
proceeds of the promissory notes were applied to set-off the overdraft (debit)
balance in plaintiff’s account. Hence,
it is not true that plaintiff did not receive any amount out of the promissory
notes in question.

Regarding the alleged unauthorized withdrawal of the sum of
P300,000.00 by the defendant Bank, suffice it to state that once again
plaintiff’s pretensions are controverted by the records of the bank. There is no denying that plaintiff deposited
checks in his account, but they were all dishonored. Hence, the amount initially credited to plaintiff’s account must
necessarily have to be cancelled by entering the corresponding reversing
entry. This is so because a check
deposited does not constitute a credit account until the same is
collected. Consequently, there was no
amount actually withdrawn or debited from plaintiff’s account, since there was
no amount deposited in the first place.”

Petitioner appealed the said decision to the respondent Court
and, in his Appellant’s Brief, alleged that the trial court erred:

“I

x x x in not holding that the promissory notes of P900,000.00 and
P235,000,00 and the real estate mortgage are not valid for lack of consent and
consideration;

II

x x x in not holding
that the sum of P300,000.00 was illegally withdrawn by the defendants from
plaintiff’s current account;

III

x x x in not finding that a full-blown trial before a commissioner
with both parties present, is null and void;

IV

x x x in not finding that, in any event, the foreclosure was not
valid for lack of the jurisdictional requirement of publication;

V

x x x in not granting to plaintiff his counterclaims for moral
damages in the amount of
P700,000.00 and attorney’s fees.”

As to the issue of lack of publication of the notice of
foreclosure of mortgage, private respondents asserted in their Appellee’s Brief
that this matter was raised for the first time; they further claimed that the
notice was in fact published and, as proof thereof, they attached as Annex
“A” of their Brief the printer’s affidavit of publication.^[7]
In his Reply Brief, petitioner contended that the lack of publication is
encompassed in the issue concerning the validity of the foreclosure and that,
in any event, his case falls within the exception to the rule that bars the
raising of an issue for the first time on appeal. He further declared that the affidavit of publication is false
because upon investigation in the National Library, he discovered that the
three (3) issues of the Nuevo Horizonte mentioned in the affidavit do
not contain the alleged publication. He
then reiterated his prayer in his Brief and further asked that the case be
remanded to the trial court “for further proceedings and for new trial likewise
on the ground of newly discovered evidence.”^[8]

On 7 January 1991, the respondent Court promulgated its decision
which, as earlier adverted to, affirmed in toto the decision of the
trial court on the basis of the following findings and conclusion.

“After a painstaking perusal of the case under consideration,
We find no reversible error committed by the court a quo. However, anent the contention of appellant that the proceeding below
before the Branch Clerk of Court who was appointed commissioner is null and
void, the same deserves but scant consideration in view of the ruling of the
Supreme Court in the case of Gochangco vs. CFI Negros
Occidental, Branch IV, 157 SCRA 40
holding that a Clerk of Court is authorized to received (sic) evidence ex-parte.

Moreover, it should be noted that appellants (sic) herein, raised questions which were
not raised in the lower court thus cannot (sic) be considered for the first
time on appeal (Anchuelo vs. Court of Appeals, 147 SCRA 434).”^[9]

Petitioner filed a verified “Motion for Reconsideration/New
Trial”.^[10]
The new trial aspect is based on “newly discovered evidence which shows a false
affidavit on the supposed publication of the notice of foreclosure of mortgage
when there is no publication at all;” this allegation is supported by the issue
that the “lack of publication could not have been discovered earlier as it was
cleverly hidden through a manufactured xerox copy.”^[11]

On 27 June 1991, the respondent Court promulgated a resolution
denying, for lack of merit, the motion for reconsideration. As to the prayer for new trial, it ruled
that:

“x x x this Court finds it difficult to perceive that a
reputed financial institution, such as appellee bank, would resort to
fabricating a notice of foreclosure of mortgage to prove publication. Moreover, even if appellee bank did so,
appellant should have questioned the defect during pendency of the case below,
as the same could have been discovered even before the complaint was
filed.”^[12]

Hence, this petition for review which
focuses on the following grounds:

“- A –

THE PETITIONER DESERVES TO BE GRANTED A NEW TRIAL ON GROUND OF
NEWLY DISCOVERED EVIDENCE.

– B –

THE TRIAL CONDUCTED BY A COMMISSIONER, NOT A JUDGE DULY EMPOWERED
BY LAW, IS NULL AND VOID; HENCE, THE TRIAL COURT’S JUDGMENT IS CONSEQUENTLY
NULL AND VOID.

– C –

THE COURT OF APPEALS DID NOT PASS UPON THE ASSIGNED ERRORS POSITED
BY THE PLAINTIFF-APPELLANT IN HIS BRIEF VIOLATING THE CONSTITUTIONAL
REQUIREMENT THAT A DECISION SHALL EXPRESS CLEARLY AND DISTINCTLY THE FACTS AND
THE LAW ON WHICH IT IS BASED AND THE GUIDELINES SET BY JURISPRUDENCE AND
SUPREME COURT CIRCULARS.”^[13]

After the private respondents filed their Comment^[14]
to the petition in compliance with the Resolution of 4 September 1991 and the
petitioner submitted his Reply^[15]
thereto, this Court gave due course to the petition and required the parties to
submit their respective Memoranda. Petitioner filed his Memorandum on 31 January 1992.^[16]
Private respondents earlier manifested that they were adopting their Comment
and Manifestation of 13 November 1991 as their Memorandum, but reserved their
right to file a “reply memorandum” should it become necessary.^[17]
They filed a Reply Memorandum on 5 February 1992.^[18]

A meticulous study of the pleadings in this case does not sustain
the petitioner’s position; accordingly, for lack of merit, the petition must
fail.

Indeed, as correctly held by the respondent Court, the issue of
lack of publication of the notice of foreclosure of the mortgage was raised
only on appeal. Petitioner does not
represent that he directly attacked in his complaint in Civil Case No. 8920 the
validity of the foreclosure because of such lack of notice. His own Statement of the
Facts and of the Case in the instant
petition makes no reference to such lack of notice as one, or even just as a
basis for any, of his causes of action in the complaint. He sought the cancellation of the contract
of mortgage because he allegedly never received the amounts indicated in the
promissory notes. Of course, nullity of
the mortgage due to absence of consideration is leagues apart from the nullity
of the foreclosure of a mortgage because of non-publication of the notice of
foreclosure.

Additionally, petitioner presented no evidence before the trial
court to prove the absence of publication of the notice despite the fact that
private respondents, in their Answer, squarely pleaded as a defense the
foreclosure sale and petitioner’s receipt of the “notice of the sale which
was published in a newspaper of general circulation.”^[19]
That the lack of publication of the notice of foreclosure was never raised in
issue by petitioner and that it is not within the issues framed by the parties
in the trial court are then too obvious.

Section 18, Rule 46 of the Rules of Court provides:

“SECTION 18. Questions that may be raised on appeal. — Whether or not the appellant
has filed a motion for new trial in the court below, he may include in his
assignment of errors any question of law or
fact that has been raised in the court below and which is within the
issues framed by the parties.”
(emphasis supplied)

The appellate court then will not consider
any ground or objection other than that raised in the court below,^[20]
except questions on jurisdiction over the subject-matter which may be raised at
any stage of the proceedings.

The plea for a new trial must likewise be rejected as it was
initially sought for only in the prayer of petitioner’s Reply Brief. He did not pursue it any further until after
the respondent Court promulgated its challenged decision. New trial before the Court of Appeals
is governed by Rule 53 of the Rules of
Court. Section 1 thereof reads:

“SECTION 1. Petition
— Before a final order or judgment rendered by the Court of Appeals
becomes executory, a motion for a new trial may be filed on the ground of newly
discovered evidence which could not have been discovered prior to the trial in
the court below by the exercise of due diligence and which is of such a
character as would probably change the result. The motion shall be accompanied
by affidavits showing the facts constituting the grounds therefor and the newly
discovered evidence.”

Petitioner’s Motion for
Reconsideration/New Trial^[21] is
not accompanied by the affidavit required by the above rule. Petitioner did not even care to verify it
himself. One Gloria B. Go, who
describes herself as the “duly appointed and constituted attorney-in-fact
by (sic) the plaintiff-appellant” made the verification. However, no copy of the power of attorney
appointing her as such is attached to the motion. The alleged newly discovered evidence would show the supposed
absence of publication of the notice of foreclosure which “could not have been
discovered earlier as it was cleverly
hidden through a manufactured xerox copy.”^[22]
This is hollow pretense and a shallow excuse which hardly evokes the Court’s
sympathy. As stated earlier, private
respondents explicitly alleged in their Answer the fact of foreclosure of
mortgage and petitioner’s receipt “of the notice of sale which was
published in a newspaper of general circulation.” Having been put on
guard, prudence dictates that he should have wasted no time in verifying from
the office of the sheriff concerned if indeed there was such a
publication. In the light of his
principal claim that he did not receive the consideration for the promissory
notes — a huge sum and not just a picayune amount — which he signed together
with the contract of mortgage to secure it in 1979, it is simply incredible
that upon being informed of the foreclosure sale and the consolidation of the
titles of the properties in the name of the highest bidder, herein private respondent
bank, petitioner would simply ignore the shocking information. A person is presumed to take ordinary care of his concerns.^[23]
If, as petitioner suggests, the contracts unlawfully deprived him of his
property rights, then his stony silence for years places a heavy burden on this
Court’s credulity.

Clearly, therefore, if petitioner only exercised due diligence,
he would have easily discovered the absence of publication of the notice of
foreclosure and the mortgage — if such was the fact — when the case was still
pending with the trial court and, especially, immediately after his receipt of
private respondents’ Answer.

Petitioner’s second ground is without merit. In the first place, estoppel bars him from
so raising this question. His petition
reveals that he did not object to the continuation
of the reception of evidence before the Branch Clerk of Court after the
lifting of the declaration of default. Even if indeed, as the petitioner contends, the Branch Clerk of Court
acted as a commissioner in receiving the evidence, nothing seems to be
irregular about it. Rule 33 of the
Rules of Court allows the court, on its own motion, to direct that issues of a
case be referred to a commissioner. In
the second place, what actually happened in this case is that the court
referred the reception of the evidence to the Branch Clerk of Court. In Laluan
vs. Malpaya,^[24] this
Court ruled:

“No provision of law or principle of public policy prohibits a
court from authorizing its clerk of court to receive the evidence of a party
litigant. After all, the reception of
evidence by the clerk of court constitutes but a ministerial task — the taking
down of the testimony of the witnesses and the marking of the pieces of
documentary evidence, if any, adduced by the party present. This task of receiving evidence precludes,
on the part of the clerk of court, the exercise of judicial discretion usually
called for when the other party who is present objects to questions propounded
and to the admission of the documentary evidence proferred.^[25]
More importantly, the duty to render judgment on the merits of the case still
rests with the judge who is obliged to personally and directly prepare the
decision based upon the evidence reported.^[26]

But where the proceedings before the clerk of court and the
concomitant result thereof, i.e., the judgment rendered by the court
based on the evidence presented in such limited proceedings, prejudice the
substantial rights of the aggrieved party, then there exists sufficient
justification to grant the latter complete opportunity to thresh out his case
in court.”

Gochangco vs. Court of First Instance
of Negros Occidental^[27] and Monserrate
vs. Court of Appeals^[28]
reiterated this rule. Gochangco,
decided by this Court, en banc, overruled the earlier contrary decision
in Lim Tanhu vs. Ramolete.^[29] Petitioner does not at all claim
that the decision of the trial court would have been different if the reception
of the evidence were made by it, or that his substantial rights were prejudiced
by the assailed procedure. Thus, the
contention that it abdicated its judicial responsibility or that procedural due
process was violated merits scant consideration.

Finally, petitioner is not persuasive enough in his last
ground. It is not true that the
challenged decision violates the constitutional requirement that a decision
shall expressly and distinctly state the facts and the law on which it is
based. Although the respondent Court
merely quotes the findings of the trial court and concludes that “[a]fter
a painstaking perusal of the case” it finds “no reversible error
committed by the court a quo,” and such may leave much to be
desired, there is no doubt in the
mind of this Court that the respondent Court adopted, in effect, such findings
as its own; accordingly, there
was substantial compliance with the stated constitutional requirement. Section 40 of Batas Pambansa Blg. 129,^[30]
as amended, provides:

“SECTION 40. Form of decision
of appealed cases. — Every
decision or final resolution of a court in appealed cases shall clearly and
distinctly state the findings of fact and the conclusions of law on which it is
based, which may be contained in the decision or final resolution itself, or
adopted by reference from those set forth in the decision, order, or resolution
appealed from.”

The validity of this Section has been
sustained in Romero vs. Court of
Appeals^[31] and Francisco vs. Permskul.^[32] Nonetheless, even as this Court
sustains the action taken by the respondent Court, it strongly urges all
concerned to always bear in mind the admonition of this Court in the Romero case:

“x x x However, the
authority given the appellate court to adopt by reference the findings of fact
and conclusions of law from those set forth in the appealed decisions should be exercised with caution and
prudence, because the tendency would be to follow the line of least resistance
by just adopting the findings and conclusions of the lower court without
thoroughly studying the appealed case.”

WHEREFORE, finding no reversible error in the challenged
decision, the instant petition is DISMISSED, with costs against petitioner.

SO ORDERED.

Gutierrez, Jr., (Chairman), Feliciano, Bidin, and Romero, JJ., concur.

^[1]
Per Associate Justice Manuel C. Herrera, concurred in by Associate Justices
Alfredo L. Benipayo and Fortunato A. Vailoces.

^[2]
Pages 1 and 2, Annex “A” of Petition; Rollo, 29-30.

^[3]
Rollo, 39.

^[4]
Id., 40-41.

^[5] Id.,
41.

^[6]
Id., 30-31.

^[7]
Rollo, 62.

^[8]
Rollo, 64.

^[9]
Id., 32-33.

^[10]
Annex “D” of Petition; Id., 68 et seq.

^[11]
Paragraphs 9 and 10 of Annex “D”; Rollo, 70.

^[12]
Annex “B” of Petition; Id., 34.

^[13]
Rollo, 15.

^[14]
Id., 85, et seq.

^[15]
Id., 101, et seq.

^[16]
Id., 128, et seq.

^[17]
Id., 115, et seq.

^[18]
Id., 152.

^[19]
Rollo, 12.

^[20]
MORAN, M.V., Comments on the Rules of Court,
vol. II, 1979 ed., 494-495,
citing Tan Machan vs. Trinidad, 3 Phil. 684 [1904], and many other
cases.

^[21]
Annex “D” of Petition; Rollo, 68-72.

^[22]
Paragraph 10 of the motion; Rollo, 70.

^[23]
Section 3(d),
Rule 131, Rules of Court.

^[24]
65 SCRA 494 [1975].

^[25]
Citing Wack Wack Golf and
Country Club, Inc. vs. Court of Appeals, 106 Phil. 501 [1959].

^[26]
Citing The Province of Pangasinan vs. Palisoc, 6 SCRA 299 [1962].

^[27]
157 SCRA 40 [1988].

^[28]
178 SCRA 153 [1989].

^[29]
66 SCRA 425 [1975], Second Division.

^[30]
The Judiciary Reorganization Act of 1980.

^[31]
147 SCRA 183 [1987].

^[32]
173 SCRA 324 [1989].