367 - Pilipinas Bank v. Glee Chemical Labs.

PILIPINAS
BANK v. GLEE CHEMICAL LABORATORIES, INC.

June 15, 2006 | Austria-Martines, J. | AKGL | Disputable Presumptions

CASE SUMMARY: Glee Chemical obtained a loan from Pilipinas Bank. This was secured by REM. But,
Glee Chemical did not receive the proceeds of the loan. It was discovered that it was applied to Tan’s
loan. Because there was still a balance, the property mortgaged were foreclosed. Thus, Glee Chemical
sued Pilipinas Bank. Pilipinas Bank argued that the document, which was signed by Glee Chemical’s
officers were notarized, which carries with it the presumption of due execution.
DOCTRINE: The presumption that official duty has been regularly performed is not conclusive and the
same is destroyed where a party’s own witness admitted that when the document was notarized, those
who executed the document did not appear before the notary public, rendering the notarization useless
since there is no truth whatsoever to the notary public’s statement or acknowledgment that the persons
who executed the document personally appeared before him and the same was their free and voluntary
act.
NATURE: PETITION for review on certiorari of a decision of CA

FACTS:
• Glee Chemical Laboratories, Inc. alleged that it applied for a loan of P800T with Pilipinas Bank.
The loan would be secured by a mortgage of its real property located in San Juan. The REM
specifically stated that “[t]he MORGAGOR (Glee Chemical) shall not apply the amount obtained
from the loans of this date but for the following purpose, viz.: Additional working capital for the
purchase of fertilizers.”
• however, that Pilipinas Bank never delivered to it the loan proceeds and instead applied the
amount to a debt owed by a certain Rustica Tan from Pilipinas Bank.
• Since a balance of Rustica Tan’s debt still remained unpaid, Pilipinas Bank, through its agent
Business Assistance Group, Inc., served on Glee Chemical a notice of foreclosure and auction sale
of Glee Chemical’s mortgaged lot.
• Glee Chemical then filed with the RTC a complaint for annulment of contract and damages with
preliminary injunction against Pilipinas Bank.
• Glee Chemical also filed a Supplemental Complaint because Pilipinas Bank was also attempting
to foreclose a chattel mortgage over certain chattels owned and possessed by Glee Chemical.
o Rustica Tan executed an amendment of real estate mortgage with chattel mortgage, as
security for an additional loan of P1.200T, thereby mortgaging the chattels of Glee
Chemical.

[RTC] Issued writs of preliminary injunction. And rendered judgment in favor of Glee Chemical.
[CA] Affirmed in toto the RTC decision.
• CA upheld the factual finding of the RTC that Cheng Yong, Glee Chemical’s President, was more
credible and, thus, gave more credence to his statement that the name “Rustica Tan” typewritten
in the blank space in paragraph 16 of the Deed of Real Estate Mortgage and the typewritten
“Third-Party Liability” were not yet appearing on said document when he affixed his signature
thereto.

[Pilipinas Bank’s argument before SC]
1. The stipulation pour autri should have been given effect as the benefits thereof had already been
accepted by the third person, Rustica Tan, when she received the proceeds of the loan applied
for by Glee Chemical.
2. Because the document is notarized and had been registered with the Register of Deeds of
Pasig, then there should no longer be any doubt as to its due execution.

ISSUE: Whether at the time Cheng Yong affixed his signature on the Real Estate Mortgage, the blanks on
the document had already been filled up with the stipulation in favor of Rustica Tan?

RULING:
1. An acceptance of a stipulation pour autrui, if any, would take effect only if Glee Chemical, through
its President, Cheng Yong, indeed intended to insert or include a stipulation pour autri in the Real
Estate Mortgage.
• To constitute a valid stipulation pour autri,itmustbethe purpose and intent of the stipulating
parties to benefit the third person and it is not sufficient that the third person may be
incidentally benefited by the stipulation.

2. Generally, factual findings of the trial court, affirmed by the Court of Appeals, are final and
conclusive and may not be reviewed on appeal1.
• A close scrutiny of the records in this case leads to the conclusion that this case does not fall
under any of the above-mentioned exceptions to the general rule.

3. The presumption that official duty has been regularly performed is not conclusive. As
provided under Section 3, Rule, such presumption is rebuttable.
• The testimony of Pilipinas Bank’s own witness, Elpidio Guillermo2, destroyed this presumption
by admitting that when the document was notarized, Cheng Yong and Melecio Hernandez
did not appear before the notary public.
• Hence, the notary public did not witness Cheng Yong affixing his signature on the document.
Such notarization is useless since there is no truth whatsoever to the notary public’s statement
or acknowledgment that the person who executed the document personally appeared before
him and the same was his free and voluntary act.
• Such being the case, the Court must rely on the trial court’s observation and conclusions
regarding which witnesses are telling the truth.

DISPOSITION: IN VIEW OF THE FOREGOING, the petition is DENIED for utter lack of merit.

1 The established exceptions are: (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when
there is grave abuse of discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures;
(4) when the judgment of the Court of Appeals is based on misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7) when the findings of fact are conclusions without citation of
specific evidence on which they are based; (8) when the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties and which, if properly considered, would justify a different conclusion; and (9) when the findings
of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.
2 Testimony of Guillermo: “Because Mr. Cheng Yong and his witness signed the document in the office and after they
signed the document, I proceeded to the Notary Public to notarize the mortgage contract and after that I proceeded to the
Registry of Deeds of Pasig which is also inside the capitol compound and presented the document for registration.”

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PILIPINAS

BANK v. GLEE CHEMICAL LABORATORIES, INC.

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