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Decision
258 PHIL 591-594
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citation_finder=&full_text=&issue_no=78519&ponente=&syllabus=&title=&utf8=%E2%9C%93&year_end=&year_
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FIRST DIVISION
% [G.R. No. 78519. September 26, 1989.]
& VICTORIA YAU CHU, assisted by her
husband MICHAEL CHU, petitioners,
vs. HON. COURT OF APPEALS,
' FAMILY SAVINGS BANK and/or
CAMS TRADING ENTERPRISES,
Search Matches
INC., respondents.
( )
Francisco A. Lara, Jr. for petitioner.
D.T. Ramos and Associates for respondent
Family Savings Bank.
Romulo T. Santos for respondent CAMS
Trading.
DECISION
GRIÑO-AQUINO, J : p
This is a petition for review on certiorari to annul and
set aside the Court of Appeals' decision dated
October 28, 1986 in CA-G.R. CV No. 03269 which
affirmed the decision of the trial court in favor of the
private respondents in an action to recover the
petitioners' time deposits in the respondent Family
Savings Bank.
Since 1980, the petitioner, Victoria Yau Chu, had been
purchasing cement on credit from CAMS Trading
Enterprises, Inc. (hereafter "Cams Trading" for
brevity). To guaranty payment for her cement
withdrawals, she executed in favor of Cams Trading
deeds of assignment of her time deposits in the total
sum of P320,000 in the Family Savings Bank
(hereafter the Bank). Except for the serial numbers
and the dates of the time deposit certificates, the
deeds of assignment, which were prepared by her
own lawyer, uniformly provided —
". . . That this assignment serves as a
collateral or guarantee for the payment of
my obligation with the said CAMS
TRADING ENTERPRISES, INC. on
account of my cement withdrawal from
said company, per separate contract
executed between us."
On July 24, 1980, Cams Trading notified the Bank that
Mrs. Chu had an unpaid account with it in the sum of
P314,639.75. It asked that it be allowed to encash the
time deposit certificates which had been assigned to it
by Mrs. Chu. It submitted to the Bank a letter dated
July 18, 1980 of Mrs. Chu admitting that her
outstanding account with Cams Trading was
P404,500. After verbally advising Mrs. Chu of the
assignee's request to encash her time deposit
certificates and obtaining her verbal conformity
thereto, the Bank agreed to encash the certificates. It
delivered to Cams Trading the sum of P283,737.75
only, as one time deposit certificate (No. 0048120954)
lacked the proper signatures. Upon being informed of
the encashment, Mrs. Chu demanded from the Bank
and Cams Trading that her time deposit be restored.
When neither complied, she filed a complaint to
recover the sum of P283,737.75 from them. The case
was docketed in the Regional Trial Court of Makati,
Metro Manila (then CFI of Rizal, Pasig Branch XIX),
as Civil Case No. 38861. LLphil
In a decision dated December 12, 1983, the trial court
dismissed the complaint for lack of merit.
Chu appealed to the Court of Appeals (CA-G.R. CV
No. 03269) which affirmed the dismissal of her
complaint.
In this petition for review, she alleges that the Court of
Appeals erred:
1. In not annulling the encashment of her time
deposit certificates as a pactum commissorium; and
2. In not finding that the obligations secured by
her time deposits had already been paid.
We find no merit in the petition for review.
The Court of Appeals found that the deeds of
assignment were contracts of pledge, but, as the
collateral was also money or an exchange of "peso for
peso," the provision in Article 2112 of the Civil Code
for the sale of the thing pledged at public auction to
convert it into money to satisfy the pledgor's
obligation, did not have to be followed. All that had to
be done to convert the pledgor's time deposit
certificates into cash was to present them to the bank
for encashment after due notice to the debtor.
The encashment of the deposit certificates was not a
pacto commissorio which is prohibited under Art. 2088
of the Civil Code. A pacto commissorio is a provision
for the automatic appropriation of the pledged or
mortgaged property by the creditor in payment of the
loan upon its maturity. The prohibition against a pacto
commissorio is intended to protect the obligor,
pledgor, or mortgagor against being overreached by
his creditor who holds a pledge or mortgage over
property whose value is much more than the debt.
Where, as in this case, the security for the debt is also
money deposited in a bank, the amount of which is
even less than the debt, it was not illegal for the
creditor to encash the time deposit certificates to pay
the debtors' overdue obligation, with the latter's
consent. LexLib
Whether the debt had already been paid as now
alleged by the debtor, is a factual question which the
Court of Appeals found not to have been proven for
the evidence which the debtor sought to present on
appeal, were receipts for payments made prior to July
18, 1980. Since the petitioner signed on July 18, 1980
a letter admitting her indebtedness to be in the sum of
P404,500, and there is no proof of payment made by
her thereafter to reduce or extinguish her debt, the
application of her time deposits, which she had
assigned to the creditor to secure the payment of her
debt, was proper. The Court of Appeals did not
commit a reversible error in holding that it was so.
WHEREFORE, the petition for review is denied. Costs
against the appellant.
SO ORDERED.
Narvasa, Cruz and Medialdea, JJ., concur.
Gancayco, J., I inhibit.
