Urban Bank V Pena

1/30/2017 SUPREMECOURTREPORTSANNOTATEDVOLUME659
G.R. No. 145817. October 19, 2011.*

URBAN BANK, INC, petitioner, vs. MAGDALENO M.
PEA, respondent.
G.R. No. 145822. October 19, 2011.*

DELFIN C. GONZALEZ, JR., BENJAMIN L. DE LEON,
and ERIC L. LEE, petitioners, vs. MAGDALENO M.
PEA, respondent.
G.R. No. 162562. October 19, 2011.*

MAGDALENO M. PEA, petitioner, vs. URBAN BANK,
INC., TEODORO BORLONGAN, DELFIN C. GONZALEZ,
JR., BENJAMIN L. DE LEON, P. SIERVO H. DIZON,
ERIC L. LEE, BEN T. LIM, JR., CORAZON BEJASA, and
ARTURO MANUEL, JR., respondents.
Civil Law Agency The basis of the civil law relationship of

agency is representation, the elements of which include the
following: (a) the relationship is established by the parties consent,
express or implied (b) the object is the execution of a juridical act
in relation to a third person (c) the agents act as representatives
and not for themselves and (d) agents act within the scope of their
authority.In a contract of agency, agents bind themselves to
render some service or to do something in representation or on
behalf of the principal, with the consent or authority of the latter.
The basis of the civil law relationship of agency is representation,
the elements of which include the following: (a) the relationship is
established by the parties consent, express or implied (b) the
object is the execution of a juridical act in relation to a third
person (c) agents act as representatives and not for themselves
and (d) agents act within the scope of their authority.
Same Same Agency is presumed to be for compensation.
Unless the contrary is shown, a person who acts as an agent does
so with the expectation of payment according to the agreement and
to services rendered or results effected.Agency is presumed to be
for compensation. Unless the contrary
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*SECOND DIVISION.
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intent is shown, a person who acts as an agent does so with the

expectation of payment according to the agreement and to the
services rendered or results effected. We find that the agency of
Pea comprised of services ordinarily performed by a lawyer who
is tasked with the job of ensuring clean possession by the owner of
a property. We thus measure what he is entitled to for the legal
services rendered.
Same Same When an agent performs for a principal at the
latters request, the law will normally imply a promise on the part
of the principal to pay for the reasonable worth of those services.
The intent of the principal to compensate the agent for services
performed on behalf of the former will be inferred from the
principals request for the agents.A stipulation on a lawyers
compensation in a written contract for professional services
ordinarily controls the amount of fees that the contracting lawyer
may be allowed to collect, unless the court finds the amount to be
unconscionable. In the absence of a written contract for
professional services, the attorneys fees are fixed on the basis of
quantum meruit, i.e., the reasonable worth of the attorneys
services. When an agent performs services for a principal at the
latters request, the law will normally imply a promise on the part
of the principal to pay for the reasonable worth of those services.
The intent of a principal to compensate the agent for services
performed on behalf of the former will be inferred from the
principals request for the agents.
Attorneys Quantum Meruit Lawyering is not a business it is
a profession in which duty to public service, not money, is the
primary consideration. The principle of quantum meruit applies if
lawyers are employed without a price ageed upon for their services,
in which case they would be entitled to receive what they merit for
their services, or as much as they have earned.Lawyering is not
a business it is a profession in which duty to public service, not
money, is the primary consideration. The principle of quantum
meruit applies if lawyers are employed without a price agreed
upon for their services, in which case they would be entitled to
receive what they merit for their services, or as much as they
have earned. In fixing a reasonable compensation for the services
rendered by a lawyer on the basis of quantum meruit, one may
consider factors such as the time spent and extent of services
rendered novelty and difficulty of the questions involved
importance of the subject matter skill demanded probability of
losing other employment as a result of acceptance of the proffered
case customary charges for similar services amount involved in
the controversy and the resulting benefits for the client certainty
of compensation character of employment and professional
standing of the lawyer.
420
Corporation Law A corporation, as a juridical entity, may act

only through its directors, officers and employees. Obligations
incurred as a result of the acts of the directors and officers as
corporate agents are not their personal liabilities but those of the
corporation they represent.A corporation, as a juridical entity,
may act only through its directors, officers and employees.
Obligations incurred as a result of the acts of the directors and
officers as corporate agents are not their personal liabilities but
those of the corporation they represent. To hold a director or an
officer personally liable for corporate obligations, two requisites
must concur: (1) the complainant must allege in the complaint
that the director or officer assented to patently unlawful acts of
the corporation, or that the officer was guilty of gross negligence
or bad faith and (2) the complainant must clearly and
convincingly prove such unlawful acts, negligence or bad faith.
To hold a director, a trustee or an officer personally liable for the
debts of the corporation and, thus, pierce the veil of corporate
fiction, bad faith or gross negligence by the director, trustee or
officer in directing the corporate affairs must be established
clearly and convincingly.
Judgments A void judgment never acquires finality. In
contemplation of law, that void decision is deemed nonexistent.
A void judgment never acquires finality. In contemplation of law,
that void decision is deemed nonexistent. Quod nullum est,
nullum producit effectum. Hence, the validity of the execution
pending appeal will ultimately hinge on the courts findings with
respect to the decision in which the execution is based.
Same Appeals Although discretionary execution can proceed
independently while the appeal on the merits is pending, the
outcome of the main case will greatly impact the execution pending
appeal, especially in instances where there is a complete reversal of
the trial courts decision.Although discretionary execution can
proceed independently while the appeal on the merits is pending,
the outcome of the main case will greatly impact the execution
pending appeal, especially in instances where as in this case,
there is a complete reversal of the trial courts decision. Thus, if
the decision on the merits is completely nullified, then the
concomitant execution pending appeal is likewise without any
effect. In fact, the Rules of Court expressly provide for the
possibility of reversal, complete or partial, of a final judgment
which has been executed on appeal. Precisely, the execution
pending appeal does not bar the continuance of the appeal on the
merits, for the Rules of Court explicitly provide for restitution
according to equity and justice in case the executed judgment is
reversed on appeal.
421
Same Same Execution of Judgments Execution Pending

Appeal The pendency of a collection suit by a third party creditor
which credit was obtained by the winning judgment creditor in
another case, is not a sufficiently good reason to allow execution
pending appeal as the Rules of Court provide. Execution pending
appeal is an extraordinary remedy allowed only when there are
reasons to believe that judgment debtor will not be able to satisfy
the judgment debt if the appeals process will still have to be
awaited.We rule that the pendency of a collection suit by a third
party creditor which credit was obtained by the winning judgment
creditor in another case, is not a sufficiently good reason to allow
execution pending appeal as the Rules of Court provide. Execution
pending appeal is an extraordinary remedy allowed only when
there are reasons to believe that the judgment debtor will not be
able to satisfy the judgment debt if the appeals process will still
have to be awaited. It requires proof of circumstances such as
insolvency or attempts to escape, abscond or evade a just debt.
Same Execution Pending Appeals In Florendo v. Paramount
Insurance, Corp., 610 SCRA 377 (2010), this Court explained that
the execution pending appeal is an exception to the general rule
that execution issues as a matter of right, when a judgment has
become final and executory.In Florendo v. Paramount
Insurance, Corp., 610 SCRA 377 (2010), the Court explained that
the execution pending appeal is an exception to the general rule
that execution issues as a matter of right, when a judgment has
become final and executory: As such exception, the courts
discretion in allowing it must be strictly construed and firmly
grounded on the existence of good reasons. Good reasons, it
has been held, consist of compelling circumstances that
justify immediate execution lest the judgment becomes
illusory. The circumstances must be superior, outweighing the
injury or damages that might result should the losing party
secure a reversal of the judgment. Lesser reasons would make of
execution pending appeal, instead of an instrument of solicitude
and justice, a tool of oppression and inequity. (Emphasis
supplied)
Same Same The presence or the absence of good reasons
remains the yardstick in allowing the remedy of execution pending
appeal, which should consist of exceptional circumstances of such
urgency as to outweigh the injury or damage that the losing party
may suffer, should the appealed judgment be reversed later.The
presence or the absence of good reasons remains the yardstick in
allowing the remedy of execution pending appeal, which should
consist of exceptional circumstances of such urgency as to
outweigh the injury or damage that the losing party may suffer,
should the appealed judgment be
422
reversed later. Thus, the Court held that even the financial
distress of the prevailing company is not sufficient reason to call
for execution pending appeal:
Same Same In Philippine Bank of Communications vs.
Court of Appeals, 279 SCRA 364 (1997), the Court ruled that
financial distress of the prevailing party in a final judgment which
was still pending appeal may not be likened to the situation of a
natural person who is ill, of advanced age or dying as to justify
execution pending appeal.In Philippine Bank of
Communications v. Court of Appeals, 279 SCRA 364 (1997), the
Court denied execution pending appeal to a juridical entity which
allegedly was in financial distress and was facing civil and
criminal suits with respect to the collection of a sum of money. It
ruled that the financial distress of the prevailing party in a final
judgment which was still pending appeal may not be likened to
the situation of a natural person who is ill, of advanced age or
dying as to justify execution pending appeal.
Same Same In cases where two or more defendants are made
subsidiarily or solidarily liable by the final judgment of the trial
court, discretionary execution can be allowed if all the defendants
have been found to be insolvent.In cases where the two or more
defendants are made subsidiarily or solidarily liable by the final
judgment of the trial court, discretionary execution can be allowed
if all the defendants have been found to be insolvent.
Considering that only Urban Bank, and not the other eight
individual defendants, was later on considered by the Court of
Appeals to have been in danger of insolvency, is not sufficient
reason to allow execution pending appeal, since the liability for
the award to Pea was made (albeit, mistakenly) solidarily liable
together with the bank officers.
Same Same As an exception to the general rule that only
final judgments may be executed, the grant of execution pending
appeal must perforce be based on good reasons.As an exception
to the general rule that only final judgments may be executed, the
grant of execution pending appeal must perforce be based on
good reasons. These reasons must consist of compelling or
superior circumstances demanding urgency which will outweigh
the injury or damages suffered, should the losing party secure a
reversal of the judgment or final order. The circumstances that
would reasonably justify superior urgency, demanding interim
execution of Peas claims for compensation and/or damages, have
already been settled by the financial capacity of the eight other
codefendants, the approval of the supersedeas bonds, the

subsequent takeover by EIB, and the successor banks stable
financial condition,
423
which can answer for the judgment debt. Thus, Peas interest as
a judgment creditor is already wellprotected.
Same Same The rule is that, where the executed judgment is
reversed totally or partially, or annulledon appeal or otherwise
the trial court may, on motion, issue such orders of restitution or
reparation of damages as equity and justice may warrant under
the circumstances.The rule is that, where the executed
judgment is reversed totally or partially, or annulledon appeal
or otherwisethe trial court may, on motion, issue such orders of
restitution or reparation of damages as equity and justice may
warrant under the circumstances. The Rules of Court precisely
provides for restitution according to equity, in case the executed
judgment is reversed on appeal. In an execution pending appeal,
funds are advanced by the losing party to the prevailing party
with the implied obligation of the latter to repay the
former, in case the appellate court cancels or reduces the
monetary award.
Same Same Although execution pending appeal is sanctioned
under the rules and jurisprudence, when the executed decision is
reversed, the premature execution is considered to have lost its
legal bases. The situation necessarily requires equitable restitution
to the party prejudiced thereby. As a matter of principle, courts are
authorized at any time to order the return of property erroneously
ordered to be delivered to one party, if the order is found to have
been issued without jurisdiction.Due to the complete reversal of
the trial courts award for damages, which was the basis of the
Special Order and Writ of Execution allowing execution pending
appeal, intervenor Unimega and other bidders who participated
in the public auction sales are liable to completely restore to
petitionerrespondent bank all of the properties sold and
purchased therein. Although execution pending appeal is
sanctioned under the rules and jurisprudence, when the executed
decision is reversed, the premature execution is considered to
have lost its legal bases. The situation necessarily requires
equitable restitution to the party prejudiced thereby. As a matter
of principle, courts are authorized at any time to order the return
of property erroneously ordered to be delivered to one party, if the
order is found to have been issued without jurisdiction.
Same Same In cases in which restitution of the prematurely
executed property is not longer possible, compensation shall be
made in favour of the judgment debtor.The Court adopts with
modification the rules of restitution expounded by retired Justice

Florenz D. Regalado in his seminal work on civil procedure, which
the appellate court itself cited earlier. In cases in which
restitution of the prematurely executed property is no longer
possible,
424
compensation shall be made in favor of the judgment debtor in the

following manner: a. If the purchaser at the public auction is the
judgment creditor, he must pay the full value of the property at
the time of its seizure, with interest. b. If the purchaser at the
public auction is a third party, and title to the property has
already been validly and timely transferred to the name of that
party, the judgment creditor must pay the amount realized from
the sheriffs sale of that property, with interest. c. If the judgment
award is reduced on appeal, the judgment creditor must return to
the judgment debtor only the excess received over and above that
to which the former is entitled under the final judgment, with
interest.
PETITIONS for review on certiorari of the decisions and

resolutions of the Court of Appeals.
The facts are stated in the opinion of the Court.
Ponce Enrile, Reyes and Manalastas for Eric Lee.
Baterina, Baterina, Casals, Lozada & Tiblani for
Urban Bank, Inc.
Romulo, Mabanta, Buenaventura, Sayoc & De Los
Angeles cocounsel for Urban Bank, Inc.
Angara, Abello, Concepcion, Regala & Cruz for
Gonzalez, De Leon & Lee.
Fortun, Narvasa & Salazar for Borlongan, Bejasa and
Manuel.
Poblador, Bautista and Reyes for Ben Lim and P.
Siervo Dizon.
Sayuno, Mendoza & San Jose for intervenor Unimega
Properties Holdings Corporation.
Solis & Medina Law Offices for movant Makati Sports
Club, Inc.
Chato & Eleazar Law Offices for Bejasa and Manuel,
Jr.
425
SERENO, J.:
These consolidated petitions began as a simple case for
payment of services rendered and for reimbursement of
costs. The case spun a web of suits and countersuits
because of: (1) the size of the award for agents fee rendered
in favor of Atty. Magdaleno Pea (Pea)PhP24,000,000
rendered by the trial court (2) the controversial execution
of the full judgment award of PhP28,500,000 (agents fee
plus reimbursement for costs and other damages) pending
appeal and (3) the finding of solidary liability against
Urban Bank, Inc., and several of its corporate officers and
directors together with the concomitant levying and sale in
execution of the personal (even conjugal) properties of those
officers and directors and (4) the fact that assets with
declared conservative values of at least PhP181 Million
which, together with those with undeclared values could
reach very much more than such amount,1 were levied or
sold on execution pending appeal to satisfy the PhP28.5
Million award in favor of Atty. Pea. Incidentally, two
supersedeas bonds worth PhP80 Million (2.8 times the
amount of the judgment) were filed by Urban Bank and
some of its officers and directors to stay the execution
pending appeal.
Had the four attendant circumstances not afflicted the
original case, it would have been an openandshut review
where this Court, applying even just the minimum
equitable principle against unjust enrichment would have
easily affirmed the grant of fair recompense to Atty. Pea
for services he rendered for Urban Bank if such had been
ordered by the trial court.
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1 The actual ceiling amount for the levied, garnished or executed
properties pending appeal is uncertain because of the dearth of records. It
seems that the figure could turn out to be very high, considering that the
entire Urban Bank Plaza located in Sen. Gil Puyat Avenue, corner Chino
Roces Avenue, Makati City in the name of Urban Bank was appraised at a
value of PhP2,830,559,000 as of 16 April 2002. Since 85 of the 160 or
almost half of the condominium units of Urban Bank Plaza were levied, it
is reasonable to assume that more than PhP1.4 Billion worth of bank
properties were subject of execution pending appeal. (Appraisal Report as
of 16 April 2002 of the Cuervo Appraisers Rollo [G.R. No. 145817], Vol. 2,
at pp. 13961423)
426
That Atty. Pea should be paid something by Urban

Bank is not in disputethe Court of Appeals (CA) and the
Regional Trial Court (RTC) of Bago City, agreed on that.
What they disagreed on is the basis and the size of the
award. The trial court claims that the basis is an oral
contract of agency and the award should be PhP28,500,000
while, the appellate court said that Atty. Pea can only be
paid under the legal principle against unjust enrichment,
and the total award in his favor should only amount to
PhP3,000,000.
In the eyes of the trial court, the controlling finding is
that Atty. Pea should be believed when he testified that in
a telephone conversation, the president of Urban Bank,
Teodoro Borlongan, a respondent herein, agreed to pay him
for his services 10% of the value of the property then worth
PhP240,000,000, or PhP24,000,000. Costs and other
awards additionally amount to PhP4,500,000, for a total
award of PhP28,500,000 according to the trial court. To the
Court of Appeals, such an award has no basis, as in fact, no
contract of agency exists between Atty. Pea and Urban
Bank. Hence, Atty. Pea should only be recompensed
according to the principle of unjust enrichment, and that he
should be awarded the amount of PhP3,000,000 only for his
services and reimbursements of costs.
The disparity in the size of the award given by the trial
court visvis that of the Court of Appeals (PhP28,500,000
v. PhP3,000,000) must be placed in the context of the
service that Atty. Pea proved that he rendered for Urban
Bank. As the records bear, Atty. Peas services consisted
of causing the departure of unauthorized subtenants in
twentythree commercial establishments in an
entertainment compound along Roxas Boulevard. It
involved the filing of ejectment suits against them, Peas
personal defense in the countersuits filed against him, his
settlement with them to the tune of PhP1,500,000, which
he advanced from his own funds, and his retention of
security guards and expenditure for other costs amounting
to more or less PhP1,500,000. There is no claim by Atty.
Pea of any service beyond those. He claims damages from
the threats to his life and safety from the angry tenants, as
well as a vexatious collection suit he had to face from a
creditorfriend from whom he borrowed
427
PhP3,000,000 to finance the expenses for the services he

rendered Urban Bank.
At the time the award of PhP28,500,000 by the trial
court came out in 1999, the net worth of Urban Bank was
PhP2,219,781,104.2 While the bank would be closed by the
Bangko Sentral ng Pilipinas (BSP) a year later for having
unilaterally declared a bank holiday contrary to banking
rules, there was no reason to believe that at the time such
award came out it could not satisfy a judgment of
PhP28,500,000, a sum that was only 1% of its net worth,

and a miniscule 0.2% of its total assets of
PhP11,933,383,630.3 In fact, no allegation of impending
insolvency or attempt to abscond was ever raised by Atty.
Pea and yet, the trial court granted execution pending
appeal.
Interestingly, Pea had included as codefendants with
Urban Bank in the RTC case, several officers and board
directors of Urban Bank. Not all board directors were sued,
however. With respect to those included in the complaint,
other than against Teodoro Borlongan, Corazon Bejasa,
and Arturo Manuel, no evidence was ever offered as to
their individual actions that gave rise to Atty. Peas cause
of actionthe execution of the agency contract and its
breachand yet, these officers and directors were made
solidarily liable by the trial court with Urban Bank for the
alleged breach of the alleged corporate contract of agency.
Execution pending appeal was also granted against them
for this solidary liability resulting in the levy and sale in
execution pending appeal of not only corporate properties of
Urban Bank but also personal properties of the individual
bank officers and directors. It would have been interesting
to find out what drove Atty. Pea to sue the bank officers
and directors of Urban Bank and why he chose to sue only
some, but not all of the board directors of Urban Bank, but
there is nothing on the record with which this analysis can
be pursued.
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2Report of Independent Public Accountants dated 25 February 2000 by
the Sycip Gorres & Velayo, Co.
(http://www.urbanbank.info/urbanweb/ubi_
financial.htm last visited 07 October 2011)
3Id.
428
Before us are: (a) the Petitions of Urban Bank (G.R. No.

145817) and the De Leon Group (G R. No. 145822)
questioning the propriety of the grant of execution pending
appeal, and (b) the Petition of Atty. Pea (G.R. No. 162562)
assailing the CAs decision on the substantive merits of the
case with respect to his claims of compensation based on an
agency agreement.
Ordinarily, the final resolution by the Supreme Court of
an appeal from a trial court decision would have automatic,
generallyunderstood consequences on an order issued by
the trial court for execution pending appeal. But this is no
ordinary case, and the magnitude of the disproportions in

this case is too mindboggling that this Court must exert
extra effort to correct whatever injustices have been
occasioned in this case. Thus, our dispositions will include
detailed instructions for several judicial officials to
implement.
At core, these petitions can be resolved if we answer the
following questions:
1. What is the legal basis for an award in favor of Pea
for the services he rendered to Urban Bank? Should it
be a contract of agency the fee for which was orally
agreed on as Pea claims? Should it be the
application of the Civil Code provisions on unjust
enrichment? Or is it to be based on something else or
a combination of the legal findings of both the RTC
and the CA? How much should the award be?
2. Are the officers and directors of Urban Bank liable in
their personal capacities for the amount claimed by
Pea?
3. What are the effects of our answers to questions (1)
and (2), on the various results of the execution
pending appeal that happened here?
Factual Background of the Controversy
Urban Bank, Inc. (both petitioner and respondent in

these two consolidated cases),4 was a domestic Philippine
corporation, engaged in
_______________
4 Urban Bank is a petitioner in G.R. No. 145817 while it is a
respondent in G.R. No. 162562.
429
the business of banking.5 The eight individual respondents

in G.R. No. 162562 were officers and members of Urban
Banks board of directors, who were sued in their official
and personal capacities.6 On the other hand, Benjamin L.
De Leon, Delfin C. Gonzalez, Jr., and Eric L. Lee,
(hereinafter the de Leon Group), are the petitioners in G.R.
No. 145822 and are three of the same bank officers and
directors, who had separately filed the instant Petition
before the Court.
Petitionerrespondent Atty. Magdaleno M. Pea (Pea)7
is a lawyer by profession and was formerly a stockholder,
director and corporate secretary of Isabel Sugar Company,
Inc. (ISCI).8
ISCI owned a parcel of land9 located in Pasay

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ISCI owned a parcel of land9 located in Pasay City (the

Pasay property).10 In 1984, ISCI leased the Pasay property
for a period of 10 years.11 Without its consent12 and in
violation of the lease contract,13
______________
5Urban Bank was placed under receivership by the Philippine Deposit
Insurance Corporation (PDIC), and was eventually succeeded by Export
and Industry Bank (EIB), after the PDIC approved the banks
rehabilitation plan. (BSP Minute Resolution No. 37 dated 12 July 2001
Rollo [G.R. No. 145817], Vol. 1, at pp. 843845)
6(1) Teodoro Borlongan, (2) Delfin C. Gonzales, Jr., (3) Benjamin L. de
Leon, (4) P. Siervo H. Dizon, (5) Eric L. Lee, (6) Ben T. Lim, Jr., (7)
Corazon Bejasa, and (8) Arturo Manuel, Jr.
7Atty. Pea is the respondents in both the Petitions docketed as G.R.
Nos. 145817 and 145822, while he is the petitioner in the Petition
docketed as G.R. No. 162562.
8Regional Trial Court (RTC) Bago City Decision dated 28 May 1999,
at p. 2 Rollo (G.R. No. 162562), Vol. 1, at p. 506.
9The 8,629 square meter parcel of land hosted what was then known
as the Pasay International Food and Karaoke Club Compound, which is
along Roxas Boulevard. (Exhibit F, RTC records, Vol. 3, at p. 583)
10 The Pasay property was covered by Transfer Certificate of Title
(TCT) No. T5382, under the name of ISCI. (RTC Decision dated 28 May
1999, at 1 Rollo [G.R. No. 145817], Vol. 1, at p. 78)
11 The Pasay property was leased to Mr. Ernesto P. Ochoa from 29
November 1984 to 29 November 1994. (Contract of Lease dated 29
November 1984 Rollo [G.R. No. 162562], Vol. 1, at pp. 278280)
12ISCI Complaint dated 08 December 1994, par. 5, at p. 3. (Exhibit E
2, RTC records, Vol. 3, at p. 574)
430
the lessee subleased the land to several tenants, who in

turn put up 23 establishments, mostly beer houses and
night clubs, inside the compound.14 In 1994, a few months
before the lease contract was to expire, ISCI informed the
lessee15 and his tenants16 that the lease would no longer be
renewed and that it intended to take over the Pasay
property17 for the purpose of selling it.18
_______________
13SUBLEASE PROHIBITED. That as distinguished from LESSEEs
[Mr. Ochoa] rentout operations abovementioned, the LESSEE [Mr.
Ochoa] shall not assign, cede or convey this lease, nor undertake to sub
lease the whole or substantially all of the lease premises [Pasay property]
to any single third party, without the LESSORs [ISCIs] consent in
writing (Contract of Lease dated 29 November 1984, par. 5 at p. 2

Rollo [G.R. No. 162562], Vol. 1, at p. 279)
14RTC Decision dated 28 May 1999, at p. 1 Rollo (G.R. No. 162562),
Vol. 1, at p. 505.
15Being the President, I find it proper to inform you about the non
renewal of the lease between you as lessee and our company as lessor over
the companys property situated at Pasay City, when the lease expires on
November 29, instant. (ISCIs Letter dated 04 February 1994 Rollo [G.R.
No. 162562], Vol. 1, at p. 283)
16We would also like to take this opportunity to inform you and the
other establishments that you represent that the lease contract of Mr.
Ochoa on said property [Pasay property] will expire on November 29,
1994. It may even be terminated earlier because of continued violations of
and noncompliance with the terms and conditions of the contract.
Thereafter, we will recover possession of the property and all
improvements thereon shall belong to our company [ISCI]. (ISCIs Letter
dated 31 May 1994 Rollo [G.R. No. 162562], Vol. 1, at p. 285)
17ISCI Complaint dated 08 December 1994, par. 6, at p. 3. (Exhibit E
2, RTC records, Vol. 3, at p. 574)
18BOARD RESOLUTION No. 003 Series of 1994. BE IT RESOLVES,
AS IT IS HEREBY RESOLVED that the reception of offers to buy the
Pasay property be centralized and the President be empowered and
authorized to receive, review, admit and analyze all offers for the
purchase of the Roxas Boulevard property, more specifically Lot No. 2251
covered by TCT No. T5382, consisting of an area of 8,629 square meters,
more or less. (ISCIs Secretarys Certificate dated 04 February 1994
431
Two weeks before the lease over the Pasay property was
to expire, ISCI and Urban Bank executed a Contract to
Sell, whereby the latter would pay ISCI the amount of
PhP241,612,000 in installments for the Pasay property.19
Both parties agreed that the final installment of
PhP25,000,000 would be released by the bank upon ISCIs
delivery of full and actual possession of the land, free from
any tenants.20 In the meantime, the amount of the final
installment would be held by the bank in escrow. The
escrow provision in the Contract to Sell, thus, reads:
The SELLER (ISCI) agrees that from the proceeds of the

purchase prices of the subject Property (Pasay property), the
BUYER (Urban Bank) shall withhold the amount of PHP
25,000,000.00 by way of escrow and shall release this amount
to the SELLER only upon its delivery to the BUYER of the
full and actual possession and control of the Subject
Property, free from tenants, occupants, squatters or other
structures or from any liens, encumbrances, easements or

any other obstruction or impediment to the free use and
occupancy by the buyer of the subject Property or its
exercise of the rights to ownership over the subject
Property, within a period of sixty (60) days from the date of
payment by the BUYER of the purchase price of the subject
Property net of the amounts authorized to be deducted or
withheld under Item II (a) of this Contract.21 (Emphasis
supplied)
ISCI then instructed Pea, who was its director and

corporate secretary, to take over possession of the Pasay
property22 against the tenants upon the expiration of the
lease. ISCIs president, Mr. Enrique G. Montilla III
(Montilla), faxed a letter to Pea, confirming the
_______________
19 Contract to Sell dated 15 November 1994. (Exhibit 16, RTC
records [Vol. 4] at pp. 846849)
20Id.
21Id.
Vol. 1, at p. 506.
432
latters engagement as the corporations agent to handle

the eviction of the tenants from the Pasay property, to
wit:23
MEMORANDUM
TO: Atty. Magdaleno M. Pena
Director
FROM:Enrique G. Montilla III
President
DATE:26 November 1994
You are hereby directed to recover and take possession
of the property of the corporation situated at Roxas
Boulevard covered by TCT No. 5382 of the Register of
Deeds for Pasay City immediately upon the expiration of
the contract of lease over the said property on 29
November 1994. For this purpose you are authorized to engage
the services of security guards to protect the property against
intruders. You may also engage the services of a lawyer in case
there is a need to go to court to protect the said property of the
corporation. In addition you may take whatever steps or measures
are necessary to ensure our continued possession of the property.
(sgd.) ENRIQUE G. MONTILLA III
President24
On 29 November 1994, the day the lease contract was to

expire, ISCI and Urban Bank executed a Deed of Absolute
Sale25 over the Pasay property for the amount agreed upon
in the Contract to Sell, but subject to the above escrow
provision.26 The title to the land was
_______________
Vol. 1, at p. 512). See also ISCIs letter dated 31 May 1994 Rollo (G.R. No.
162562), Vol. 1, at p. 285.
24ISCIs fax letter dated 26 November 1994 Exhibit 3, RTC records,
Vol. 4, at p. 810.
25Deed of Absolute Sale dated 29 November 1994 Exhibit 6G to 6
I, RTC records, Vol. 4, at pp. 817819.
26Deed of Absolute Sale dated 29 November 1994 Exhibit 6G to 6
I, RTC records, Vol. 4, at pp. 817819.
433
eventually transferred to the name of Urban Bank on 05

December 1994.27
On 30 November 1994, the lessee duly surrendered
possession of the Pasay property to ISCI,28 but the
unauthorized subtenants refused to leave the area.29
Pursuant to his authority from ISCI, Pea had the gates of
the property closed to keep the subtenants out.30 He also
posted security guards at the property,31 services for which
he advanced payments.32 Despite the closure of the gates
and the posting of the guards, the subtenants would come
back in the evening, force open the gates, and proceed to
carry on with their businesses.33 On three separate
occasions, the subtenants tried to break down the gates of
the property, threw stones, and even threatened to return
and inflict greater harm on those guarding it.34
In the meantime, a certain Marilyn G. Ong, as
representative of ISCI, faxed a letter to Urban Bank
addressed to respondent Corazon Bejasa, who was then the
banks Senior VicePresidentrequesting the
_______________
27 TCT No. 134451 in the name of petitioner Urban Bank dated 05
December 1994 Exhibit A, RTC records, Vol. 3, at pp. 564567.
28ISCI Complaint dated 08 December 1994, par. 7, at p. 3 Exhibit E
2, RTC records, Vol. 3, at p. 574.
Vol. 1, at p. 505.

Vol. 1, at p. 506.
31Id.
32 Pea allegedly paid PhP641,547.41 to the Perm Security and
Investigation Agency, Inc., for security services rendered in guarding the
Pasay property from 30 November 1994 to 31 March 1995. (Letter and
Certification both dated 19 November 1997 Exhibits AA and AA1,
RTC records, Vol. 3, at pp. 755756).
33The scenario continued for days when the gates would be closed in
the morning and would be forced open in the evening by the operators of
the night spots constructed on the subject property. (RTC Decision dated
28 May 1999, at p. 2 Rollo [G.R. No. 162562], Vol. 1, at p. 506)
34ISCIs Complaint dated 08 December 1994, par. 10, at p. 4. (Exhibit
E3, RTC records, Vol. 3, at p. 575)
434
issuance of a formal authority for Pea.35 Two days

thereafter, Ms. Ong faxed another letter to the bank, this
time addressed to its president, respondent Teodoro
Borlongan.36 She repeated therein the earlier request for
authority for Pea, since the tenants were questioning
ISCIs authority to take over the Pasay property.37
In response to the letters of Ms. Ong, petitioner
respondent bank, through individual respondents Bejasa
and Arturo E. ManuelSenior VicePresident and Vice
President, respectivelyadvised Pea38 that the bank had
noted the engagement of his services by ISCI and stressed
that ISCI remained as the lawyers principal.39
To prevent the subtenants from further appropriating
the Pasay property,40 petitionerrespondent Pea, as
director and representative
_______________
35Atty. Magdaleno M. Pea, who has been assigned by Isabela Sugar
Company, Inc., to take charge of inspecting the tenants would like to
request an authority similar to this from the Bank [petitioner Urban
Bank], as new owners. Can you please issue something like this today as
he needs this. (ISCIs letter dated 07 December 1994 Exhibit 1, RTC
records, Vol. 4, at p. 808).
36 Dear Mr. Borlongan, I would like to request for an authorization
from Urban Bank as per attached immediatelyas the tenants are
questioning the authority of the people there who are helping us to take
over possession of the property. (Sgd.) MARILYN G. ONG (ISCIs fax
letter dated 09 December 1994 Exhibit 2, RTC records, Vol. 4, at p. 809)
Vol. 1, at p. 512.
38This is to advise you [Pea] that we [petitioner Urban Bank] have

noted the engagement of your services by Isabela Sugar Company to
recover possession of the Roxas Boulevard property formerly covered by
TCT No. 5382, effective November 29, 1994. It is understood that your
services have been contracted by and your principal remains to be Isabela
Sugar Company, which as Seller of the property and under the terms of
our Contract to Sell dated November 29, 1994, has committed to deliver
the full and actual possession of the said property to the buyer, Urban
Bank, within the stipulated period. (Emphasis supplied petitioner Urban
Banks letter dated 15 December 1994 Exhibit 4, RTC records, Vol. 4, at
p. 811).
39RTC Decision dated 28 May 1999, at 8 Rollo (G.R. No. 162562), Vol.
1, at p. 512.
Vol. 1, at p. 506.
435
of ISCI, filed a complaint for injunction41 (the First

Injunction Complaint) with the RTCPasay City.42 Acting
on ISCIs prayer for preliminary relief, the trial court
favorably issued a temporary restraining order (TRO),43
which was duly implemented.44 At the time the First
Injunction Complaint was filed, a new title to the Pasay
property had already been issued in the name of Urban
Bank.45
On 19 December 1994, when information reached the
judge that the Pasay property had already been transferred
by ISCI to Urban Bank, the trial court recalled the TRO
and issued a breakopen order for the property. According
to Pea, it was the first time that he was apprised of the
sale of the land by ISCI and of the transfer of its title in
favor of the bank.46 It is not clear from the records how
such information reached the judge or what the breakopen
order was in response to.
_______________
41 ISCIs Complaint dated 08 December 1994 Exhibit E to E6,
RTC records, Vol.3, at pp. 572578.
42ISCIs Complaint for injunction was docketed as Civil Case No. 94
1275. (Id.)
43 WHEREFORE, to prevent the main cause of action or principal
relief sought by plaintiff (ISCI) from becoming moot and academic, the
parties herein are directed to maintain the status quo more specifically,
restraining defendants (tenants) and all persons acting in their behaves
(sic), from harassing and threatening plaintiffs personnel and from
forcefully and unlawfully interfering with plaintiffs possession of the
property until further orders from this Court. (RTC Order dated 13
December 1994 in Civil Case No. 941275 Exhibit E7 to E7c, RTC

records, Vol. 3, at pp. 579582).
44 The Regional Trial Court of Pasay City issued a Temporary
Restraining Order in favor of plaintiff on December 13, 1994 and was
implemented on December 17, 1994. (RTC Decision dated 28 May 1999,
at p. 3 Rollo [G.R. No. 162562], Vol. 1, at p. 507).
45 Title to the Pasay property (TCT No. 134451) was issued on 05
December 1994, which was four days before the First Injunction
Complaint was filed with the RTC Pasay City on 09 December 1994.
46 This is according to the Decision of RTCBago City. (RTC Decision
dated 28 May 1999, at p. 3 Rollo [G R. No. 162562], Vol. 1, at p. 507) The
records of the case in RTCPasay city are NOT with the Court, as none of
the issues raised therein are before Us.
436
On the same day that the TRO was recalled, petitioner

respondent Pea immediately contacted ISCIs president,
Mr. Montilla, who in turn confirmed the sale of the Pasay
property to Urban Bank.47 Pea told Mr. Montilla that
because of the breakopen order of the RTCPasay City, he
(Pea) would be recalling the security guards he had posted
to secure the property. Mr. Montilla, however, asked him to
suspend the planned withdrawal of the posted guards, so
that ISCI could get in touch with petitionerrespondent
bank regarding the matter.48
Later that same day, Pea received a telephone call
from respondent Bejasa. After Pea informed her of the
situation, she allegedly told him that Urban Bank would be
retaining his services in guarding the Pasay property, and
that he should continue his efforts in retaining possession
thereof. He insisted, however, on talking to the Banks
president. Respondent Bejasa gave him the contact details
of respondent Borlongan, then president of Urban Bank.49
The facts regarding the following phone conversation
and correspondences are highlycontroverted. Immediately
after talking to respondent Bejasa, Pea got in touch with
Urban Banks president, respondent Borlongan. Pea
explained that the policemen in Pasay City were
sympathetic to the tenants and were threatening to force
their way into the premises. He expressed his concern that
violence might erupt between the tenants, the city police,
and the security guards posted in the Pasay property.
Respondent Borlongan supposedly assured him that the
bank was going to retain his services, and that the latter
should not give up possession of the subject land.
Nevertheless, petitionerrespondent Pea demanded a
written letter of
_______________
47Peas Petition for Review dated 23 April 2004, at p. 6 Rollo (G.R.
No. 162562), Vol. 1, at p. 13.
Vol. 1, at p. 507.
49 RTC Decision dated 28 May 1999, at pp. 34 Rollo (G.R. No.
162562), Vol. 1, at pp. 507508.
437
authority from the bank. Respondent Borlongan acceded

and instructed him to see respondent Bejasa for the
letter.50
In the same telephone conversation, respondent
Borlongan allegedly asked Pea to maintain possession of
the Pasay property and to represent Urban Bank in any
legal action that might be instituted relative to the
property. Pea supposedly demanded 10% of the market
value of the property as compensation and attorneys fees
and reimbursement for all the expenses incurred from the
time he took over land until possession was turned over to
Urban Bank. Respondent Borlongan purportedly agreed on
condition that possession would be turned over to the bank,
free of tenants, not later than four months otherwise, Pea
would lose the 10% compensation and attorneys fees.51
Later that afternoon, Pea received the banks letter
dated 19 December 1994, which was signed by respondents
Bejasa and Manuel, and is quoted below:
This is to confirm the engagement of your services as

the authorized representative of Urban Bank, specifically
to hold and maintain possession of our abovecaptioned
property [Pasay property] and to protect the same from
former tenants, occupants or any other person who are
threatening to return to the said property and/or interfere
with your possession of the said property for and in our
behalf.
You are likewise authorized to represent Urban Bank in any
court action that you may institute to carry out the
aforementioned duties, and to prevent any intruder, squatter or
any other person not otherwise authorized in writing by Urban
[B]ank from entering or staying in the premises.52 (Emphasis
supplied)
_______________
Vol. 1, at p. 508.

162562), Vol. 1, at pp. 508509.
52 Petitioner Urban Banks Letter dated 19 December 1994 Exhibit
B, RTC records, Vol.3, at p. 568.
438
On even date, ISCI sent Urban Bank a letter, which

acknowledged ISCIs engagement of Pea and commitment
to pay for any expenses that may be incurred in the course
of his services. ISCIs letter reads:
This has reference to your property located along Roxas

Boulevard, Pasay City [Pasay property] which you purchased
from Isabela Sugar Company under a Deed of Absolute Sale
executed on December 1, 1994.
In line with our warranties as the Seller of the said property
and our undertaking to deliver to you the full and actual
possession and control of said property, free from tenants,
occupants or squatters and from any obstruction or impediment to
the free use and occupancy of the property by Urban Bank, we
have engaged the services of Atty. Magdaleno M. Pea to
hold and maintain possession of the property and to
prevent the former tenants or occupants from entering or
returning to the premises. In view of the transfer of the
ownership of the property to Urban Bank, it may be necessary for
Urban Bank to appoint Atty. Pea likewise as its authorized
representative for purposes of holding/maintaining continued
possession of the said property and to represent Urban Bank in
any court action that may be instituted for the abovementioned
purposes.
It is understood that any attorneys fees, cost of
litigation and any other charges or expenses that may be
incurred relative to the exercise by Atty. Pea of his
abovementioned duties shall be for the account of Isabela
Sugar Company and any loss or damage that may be incurred to
third parties shall be answerable by Isabela Sugar Company.53
(Emphasis supplied)
The following narration of subsequent proceedings is

uncontroverted.
Pea then moved for the dismissal of ISCIs First
Injunction Complaint, filed on behalf of ISCI, on the
ground of lack of personality to continue the action, since
the Pasay property, subject of the suit, had
_______________
53ISCIs Letter dated 19 December 1994 signed by Herman Ponce and
Julie Abad Exhibit 5, RTC records, Vol. 4, at p. 812.
439
already been transferred to Urban Bank.54 The RTCPasay

City dismissed the complaint and recalled its earlier break
open order.55
Thereafter, petitionerrespondent Pea, now in
representation of Urban Bank, filed a separate complaint56
(the Second Injunction Complaint) with the RTCMakati
City, to enjoin the tenants from entering the Pasay
property.57 Acting on Urban Banks preliminary prayer, the
RTCMakati City issued a TRO.58
While the Second Injunction Complaint was pending,
Pea made efforts to settle the issue of possession of the
Pasay property with the subtenants. During the
negotiations, he was exposed to several civil and criminal
cases they filed in connection with the task he had
assumed for Urban Bank, and he received several threats
against his life.59 The subtenants eventually agreed to
stay off the property for a total consideration of
PhP1,500,000.60 Pea advanced the payment for the full
and final settlement of their claims against Urban Bank.61
Pea claims to have borrowed PhP3,000,000 from one of
his friends in order to maintain possession thereof on
behalf of Urban Bank.62
_______________
54ISCIs Urgent Exparte Motion/Notice to Dismiss dated 21 December
1994 Exhibit I to I2, RTC records, Vol. 3, at pp. 586588.
Vol. I at p. 510.
56Petitioner Urban Banks Complaint dated 04 January 1995 Exhibit
J to J6, RTC records, Vol. 3, at pp. 589595.
57Petitioner Urban Banks Complaint was docketed as Civil Case No.
95029.
58RTCMakati Citys Order dated 06 January 1995 Exhibit K, RTC
records, Vol. 3, at p. 599.
Vol. 1, at p. 510.
60Id.
61 Receipt dated 28 April 1995 issued by Atty. Noel B. Malaya from
Pea for the amount of PhP1,500,000 Exhibit BB, RTC records, Vol. 3 at
p. 757.
62The PhP3,000,000 loan of Mr. Roberto Ignacio to Pea is covered by
three Promissory Notes dated 30 November 1994, 20 December 1994 and
27 April 1995 for PhP1,000,000 each. The three loans were all due on 30
May
440
According to him, although his creditorfriend granted him

several extensions, he failed to pay his loan when it became
due, and it later on became the subject of a separate
collection suit for payment with interest and attorneys
fees.63 This collection suit became the basis for Atty. Peas
request for discretionary execution pending appeal later on.
On 07 February 1995, within the fourmonth period
allegedly agreed upon in the telephone conversation, Pea
formally informed Urban Bank that it could already take
possession of the Pasay property.64 There was however no
mention of the compensation due and owed to him for the
services he had rendered.
On 31 March 1995, the bank subsequently took actual
possession of the property and installed its own guards at
the premises.65
Pea thereafter made several attempts to contact
respondents Borlongan and Bejasa by telephone, but the
bank officers would not take any of his calls. On 24
January 1996, or nearly a year after he turned over
possession of the Pasay property, Pea formally demanded
from Urban Bank the payment of the 10% compensation
and attorneys fees allegedly promised to him during his
telephone conversation with Borlongan for securing and
maintaining peaceful possession of the property.66
_______________
1995 with an express stipulation of five percent (5%) interest for every
month of delay. (Rollo [G.R. No. 145817], Vol. 1, at pp. 286288)
63 Mr. Ignacios Complaint dated 03 April 1999 (Civil Case No. 99
93952) Rollo (G.R. No. 145817), Vol. 1, at pp. 281285.
64 Peas letter dated 07 February 1995 to petitioner Urban Bank
Exhibit C, RTC records, Vol. 3, at p. 569.
162562), Vol. 1, at pp. 510511.
66Peas letter dated 24 January 1996 Exhibit D, RTC records, Vol.
3, at p. 570.
441
Proceedings on the Complaint for Compensation

On 28 January 1996, when Urban Bank refused to pay
for his services in connection with the Pasay property,
Pea filed a complaint67 for recovery of agents
compensation and expenses, damages and attorneys fees in
RTCBago City in the province of Negros Occidental.68
Interestingly, Pea sued only six out of the eleven members
of the Board of the Directors of Urban Bank.69 No reason
was given why the six directors were selected and the
others excluded from Peas complaint. In fact, as pointed

out, Atty. Pea mistakenly impleaded as a defendant, Ben
Y. Lim, Jr., who was never even a member of the Board of
Directors of Urban Bank while, Ben T. Lim, Sr., father and
namesake of Ben Y. Lim, Jr., who had been a director of
the bank, already passed away in 1997.70
In response to the complaint of Atty. Pea, Urban Bank
and individual bank officers and directors argued that it
was ISCI, the original owners of the Pasay property, that
had engaged the services of Pea in securing the premises
and, consequently, they could not be held liable for the
expenses Pea had incurred.71
_______________
67 Peas Complaint dated 28 February 1996 RTC records, Vol. 1 at
pp. 16.
68CA Amended Decision dated 18 August 2000, at p. 2 Rollo (G.R. No.
145817), Vol. 1, at p. 11.
69At the time the complaint was filed in 1996, the eleven members of
the Board of Directors of Urban Bank included: (1) Teodoro C.
Borlongan (2) Benjamin L. de Leon (3) Claudio R. de Luzuriaga,
Jr. (4) P. Siervo H. Dizon (5) Francisco C. Eizmendi, Jr., (6) Delfin
C. Gonzalez, Jr. (7) Noel A. Laman (8) Eric L. Lee (9) Ben T. Lim
Sr. (10) Jose P. Magno, Jr., (11) Carlos C. Salinas. (Urban Bank List of
Members of the Board of Directors for Year Ending 1995 Rollo (G.R. No.
162562), Vol. 1, at p. 840).
70Comment dated 30 March 2005 of Ben Y. Lim, Jr., and P. Siervo H.
Dizon Rollo (G.R. No. 162562), Vol. 1, at pp. 804817.
71 Petitioners Answer with Compulsory Counterclaim dated 28
October 1996 Rollo (G.R. No. 145817), Vol. 1, at pp. 245252.
442
On 28 May 1999, the RTCBago City72 ruled in favor of

Pea, after finding that an agency relationship had indeed
been created between him and Urban Bank. The eight
directors and bank officers were found to be solidarily
liable with the bank for the payment of agencys fees. The
trial court thus ordered Urban Bank and all eight
defendant bank directors and officers whom Pea sued to
pay the total amount of PhP28,500,000 (excluding costs of
suit):
WHEREFORE, premised from the foregoing, judgment is

hereby rendered ordering defendants to pay plaintiff jointly and
severally the following amounts:
1. P24,000,000 as compensation for plaintiffs services plus
the legal rate of interest from the time of demand until fully paid
2. P3,000,000 as reimbursement of plaintiffs expenses

3. P1,000,000 as and for attorneys fees
4. P500,000 as exemplary damages
5. Costs of suit.
SO ORDERED.73
Urban Bank and the individual defendant bank

directors and officers filed a common Notice of Appeal,74
which was given due course.75 In the appeal, they
questioned the factual finding that an agency relationship
existed between the bank and Pea.76
Although they put up a single defense in the proceedings
in the lower court, Urban Bank and individual defendants
contracted different counsel and filed separate Briefs on
appeal in the appellate court.
_______________
72 The Decision of the RTCBago City was then rendered by Judge
Edgardo L. Catilo.
Vol. 1, at p. 101.
74 Notice of Appeal dated 15 June 1999 RTC records, Vol. 5, at p.
1016.
75RTC Order dated 23 June 1999 RTC records, Vol. 5, at p. 1022.
76 The appeal was docketed in the Court of Appeals as CAG. R. CV
No. 65756.
443
In its Brief,77 Urban Bank78 assigned as errors the trial

courts reliance on the purported oral contract of agency
and Peas claims for compensation during the
controverted telephone conversation with Borlongan, which
were allegedly incredible.
Meanwhile, Benjamin L. de Leon, Delfin Gonzalez, Jr.,
and Eric L. Lee (the De Leon Group),79 the petitioners in
the instant Petition docketed as G.R. No. 145822, argued
that, even on the assumption that there had been an
agency contract with the bank, the trial court committed
reversible error in holding themas bank directors
solidarily liable with the corporation.80
On the other hand, Teodoro Borlongan, Corazon M.
Bejasa, Arturo Manuel, Jr., Ben Y. Lim, Jr., and P. Siervo
H. Dizon (the Borlongan Group)81 reiterated similar
arguments as those of the De Leon Group, adding that the
claimed compensation of 10% of the purchase price of the
Pasay property was not reasonable.82
_______________
77 Brief for DefendantAppellant Urban Bank, Inc., dated 25 January
2002 CA Rollo (CAG.R. CV No. 65756), Vol. 1, at pp. 110175.
78The Singson Valdez & Associates Law Office entered its appearance
for petitioner Urban Bank. (Notice of Appearance dated 07 November
2001 CA Rollo [CAG.R. CV No. 65756], Vol. 1, at pp. 5759) Although
petitioner Urban Banks previous counsel, the Poblador Bautista & Reyes
Law Office, withdrew its appearance, it remained as counsel for the other
individual petitioners. (Withdrawal of Appearance dated 07 August 2001
CA Rollo [CAG.R. CV No. 65756], Vol. 1, at pp. 3637).
79 The De Leon Group was represented by the Abello Concepcion
Regala & Cruz Law Office.
80De Leon Groups Appellants Brief dated 28 January 2002 CA Rollo
(CAG.R. CV No. 65756), Vol. 2, at pp. 177312.
81 The Poblador Bautista & Reyes Law Office initially represented
petitioner Borlongan Group, but was replaced by the Chato Eleazar
Lagmay & Arreza Law Office. (Entry of Appearance dated 05 May 2003
CA Rollo, [CAG.R. CV No. 65756], Vol. 2, at pp. 12011203) However,
Benjamin Y. Lim and P. Siervo H. Dizon (the Lim Group) retained the
Poblador Bautista & Reyes Law Office. (Withdrawal of Appearance dated
15 January 2003 CA Rollo [CAG.R. CV No. 65756], Vol. 2, at pp. 1164
1166)
82 Petitioner Borlongan Groups Brief for Appellants dated 18 April
2002 CA Rollo (CAG.R. CV No. 65756), Vol. 2, at pp. 675735.
444
Pea refuted all of their arguments83 and prayed that

the trial courts Decision be affirmed.84
Acting favorably on the appeal, the Court of Appeals85
annulled the Decision of the RTCBago City and ruled that
no agency relationship had been created. Nevertheless, it
ordered Urban Bank to reimburse Pea for his expenses
and to give him reasonable compensation for his efforts in
clearing the Pasay property of tenants in the amount of
PhP3,000,000, but absolved the bank directors and officers
from solidary liability. The dispositive portion of the CA
decision reads as follows:
WHEREFORE, in view of the foregoing considerations, the

May 28, 2000 Decision [sic] and the October 19, 2000 [sic] Special
Order of the RTC of Bago City, Branch 62,86 are hereby
ANNULLED AND SET ASIDE. However, the plaintiff
appellee [Pea] in CAGR CV No. 65756 is awarded the
amount of P3 Million as reimbursement for his expenses as
well as reasonable compensation for his efforts in clearing
Urban Banks property of unlawful occupants. The award of
exemplary damages, attorneys fees and costs of suit are deleted,

the same not having been sufficiently
_______________
83Peas Appellees Brief dated 07 September 2002 CA Rollo (CAG.R. CV No.
65756), Vol. 2, at pp. 892972.
84In a separate original petition under Rule 71, Pea also asked that Urban
Bank and the individual officers and directors as well as their counsel be cited for
indirect contempt for, among others, withholding material information from the
appellate court as well as for misrepresenting the appearance of witnesses in the
proceedings below. (Petition dated 05 September 2002 CA Rollo [CAG.R. SP No.
72698], Vol. 1, at pp. 214) This petition for indirect contempt was later
consolidated with the appeal of the main case. (CA Resolution dated 25 November
2002 CA Rollo [CAG.R. SP No. 72698], Vol. 1, at p. 295)
85 The Court of Appeals Sixth Division was then composed of CA Justices
Delilah VidallonMagtolis, Jose L. Sabio, Jr., (ponente) and Hakim S. Abdulwahid.
86The dates of the trial courts orders appearing in the dispositive portion were
later corrected by the CA and now reads the May 28, 1999 Decision and the
October 29, 2000 Special Order. (CA Resolution dated 08 March 2004, at p. 2
445
proven. The petition for Indirect Contempt against all the

respondents is DISMISSED for utter lack of merit.87 (Emphasis
supplied)
Pea duly filed a Motion for Reconsideration of the

unfavorable CA Decision.88 The appellate court, however,
denied his motion.89 The CA Decision and Resolution were
appealed by Pea to this Court, through one of the three
consolidated Rule 45 Petitions before us (G.R. No. 162562).
Execution Pending Appeal
On 07 June 1999, prior to the filing of the notice of

appeal of Urban Bank and individual bank officers,90 Pea
moved for execution pending appeal91 of the Decision
rendered by the RTCBago City,92 which had awarded him
a total of PhP28,500,000 in compensation and damages.93
In supporting his prayer for discretionary execution,
Pea cited the pending separate civil action for collection
filed against him by his creditorfriend, who was
demanding payment of a PhP3,000,000 loan.94 According to
Pea, he had used the proceeds of the loan for
_______________
87 CA Decision (CAGR SP No. 72698 & CV No. 65756) dated 06
November 2003 Rollo (G.R. No. 162562), Vol. 1, at pp. 82111.
88 Peas Motion for Reconsideration dated 04 December 2003 Rollo

(G.R. No. 162562), Vol. 1, at pp. 533565.
89 CA Resolution (CA GR SP No. 72698 & CV No. 65756) dated 08
March 2004 Rollo (G.R. No. 162562), Vol. 1, at pp. 7980.
90 Notice of Appeal dated 15 June 1999 RTC records (Vol. V) at p.
1016.
91 Peas Motion for Execution dated 07 June 1999 Rollo (G.R. No.
145817), Vol. 1, at pp. 277279 see Peas Memorandum dated 13 October
1999 Rollo (G.R. No. 145822), Vol. 1, at pp. 371376.
Vol. 1, at p. 101.
93PhP 24,000,000 (compensation) + PhP3,000,000 (reimbursement) +
PhP1,000,000 (attorneys fees) + PhP500,000 (exemplary damages) =
PhP28,500,000 (excluding costs of suit)
94The Complaint filed against Pea was a civil action for collection of
PhP3,500,000 and PhP100,000 attorneys fees, which was filed by Mr.
Roberto R. Ignacio and was docketed as Civil Case No. 9993952 with the
446
securing the banks Pasay property. No other reason for

the prayer for execution pending appeal was given
by Pea other than this collection suit.95
In opposition to the motion, Urban Bank countered that
the collection case was not a sufficient reason for allowing
execution pending appeal.96
On 29 October 1999, the RTCBago City, through Judge
Henry J. Trocino,97 favorably granted Peas motion and
issued a Special Order authorizing execution pending
appeal.98 In accordance with this Special Order, Atty.
Josephine MutiaHagad, the clerk of court and ex officio
sheriff, issued a Writ of Execution99 on the same day.100
The
_______________
Regional Trial Court of Manila. (Complaint dated 03 April 1999 Rollo
[G.R. No. 145822], Vol. 1, at pp. 213217)
95 4. Plaintiff has been unable to pay his loan precisely because
defendants have not paid him his fees. Since. Mr. Ignacio has been a long
time friend of his, he has been granted several extensions but on 4 June
1999, plaintiff received a summons issued by the Regional Trial Court of
Manila, Branch 16 for a collection case filed [by] said Mr. Ignacio.
6. It is imperative therefore that this Honorable Courts Decision
be executed immediately so that he could settle the obligation which he
would not have contracted had defendants not engaged his services.
(Peas Motion for Execution dated 07 June 1999, at 2 Rollo [G.R. No.
145817], Vol. 1, at p. 278)
96Petitioner Urban Banks Opposition (to Motion for Execution) dated

15 June 1999 Rollo (G.R. No. 145817), Vol. 1, at pp. 289300 see
Petitioner Urban Banks Memorandum dated 12 October 1999 Rollo (G.R.
No. 145822), Vol. 1, at pp. 309331.
97 Petitioner Urban Bank had earlier moved for the voluntary
inhibition of Judge Catilo. (Petitioner Urban Banks Motion for Voluntary
Inhibition by the Presiding Judge dated 15 June 1999 Rollo [G.R. No.
145817], Vol. 1, at pp. 301306)
98RTC Special Order dated 29 October 1999 Rollo (G.R. No. 145817),
Vol. 1, at pp. 880889.
99Writ of Execution dated 28 May 1999 Rollo (G.R. No. 145822), Vol.
1, at pp. 152154.
100 The trial courts Special Order and Writ of Execution were the
subjects of a Rule 65 Petition filed by Urban Bank with the CA, and later
docketed as CAG.R. SP No. 55667. (Urban Banks Petition for Certiorari
and
447
Special Order and Writ of Execution were directed at the

properties owned by Urban Bank as well as the properties
of the eight individual bank directors and officers.
On 04 November 1999, affected by the trial courts grant
of execution pending appeal, Urban Bank101 filed a Rule 65
Petition with the CA to enjoin the Special Order and Writ
of Execution issued by the trial court with a prayer for a
TRO.102
On 09 November 1999, the appellate court favorably
granted the TRO and preliminarily prohibited the
implementation of the Special Order and Writ of
Execution.103
On 12 January 2000, the CA eventually granted Urban
Banks Rule 65 Petition, and the RTCs Special Order and
Writ of Execution, which permitted execution pending
appeal, were annulled. The appellate court ruled:104
WHEREFORE, the instant petition is GRANTED. The Special

Order and writ of execution, both dated October 29, 1999, are
ANNULLED and SET ASIDE.
Respondents are directed to desist from further implementing
the writ of execution and to lift the garnishment and levy made
pursuant thereto.105
On 02 February 2000, Pea moved for the

reconsideration of the CAs Decision106 while petitioners
filed their corresponding Comment/Opposition thereto.107
_______________
Prohibition dated 29 November 1999 Rollo [G.R. No. 145817], Vol. 1, at

pp. 307345).
101Petitioner Urban Bank was represented in this Rule 65 Petition by
the Poblador Bautista & Reyes Law Offices.
102 Respondent Penas Petition for Certiorari and Prohibition with
Application for Temporary Restraining Order and Writ of Preliminary
Injunction dated 04 November 1999 Rollo (G.R. No. 145817), Vol. 1, at pp.
307338.
103CA Resolution dated 09 November 1999.
104 CA Twelfth Division composed of Justices Godardo A. Jacinto,
Marina V. Buzon (ponente) and Edgardo P. Cruz.
105CA Decision dated 12 January 2000 Rollo (G.R. No. 145817), Vol.
1, at pp. 346358.
448
During the pendency of Peas Motion for

Reconsideration, Urban Bank declared a bank holiday on
26 April 2000 and was placed under receivership of the
Philippine Deposit Insurance Corporation (PDIC).108
In its Amended Decision dated 18 August 2000, the
CA109 favorably granted Peas Motion for Reconsideration,
and reversed its earlier Decision to allow execution pending
appeal.110 The appellate court found that the bank holiday
declared by the BSP after the promulgation of its earlier
Decision, PDICs receivership of Urban Bank, and the
imminent insolvency thereof constituted changes in the
banks conditions that would justify execution pending
appeal.111
On 29 August 2000, Urban Bank and its officers moved
for the reconsideration of the Amended Decision.112 The De
Leon Group subse
_______________
106 Peas Motion for Reconsideration dated 02 February 2000 Rollo
(G.R. No. 145817), Vol. 1, at pp. 359380.
107 Petitioners Comment/Opposition dated 14 April 2000 Rollo (G.R.
No. 145817), Vol. 1, at pp. 381401.
108 The Bangko Sentral ng Pilipinas (BSP) issued Monetary Board
Resolution No. 22 placing petitioner Urban Bank under receivership of the
Philippine Deposit Insurance Corporation (PDIC), considering that the
bank was suffering from illiquidity and its capital was deficient. (Minutes
of Board Resolution No. 22 dated 26 April 2000 Rollo [G.R. No. 145817],
Vol. 1, at p. 232)
109CA Former Special Twelfth Division, Justices Godardo A. Jacinto,
Roberto A. Barrios and Edgardo P. Cruz (ponente).
110 This CA Amended Decision is the subject of petitioner Urban
Banks Rule 45 Petition in G.R. No. 145817. (Rollo [G.R. No. 145817], Vol.
1, at pp. 1021).
111 In the instant case, although petitioner Banks imminent
insolvency may not have been considered by the court a quo in allowing
immediate execution, such ground, which has in the meantime arisen,
may be relied upon by this Court in deciding the propriety of the execution
pending appeal. (CA Amended Decision dated 18 August 2000, at p. 8
Rollo (G.R. No. 145817), Vol. 1, at p. 17)
112 Petitioners Motion for Reconsideration dated 29 August 2000
Rollo (G.R. No. 145817), Vol. 1, at pp. 402419.
449
quently filed several Supplemental Motions for

Reconsideration.113 Thereafter, respondents Teodoro
Borlongan and Corazon M. Bejasa also filed their separate
Supplemental Motion for Reconsideration,114 as did
petitioner Ben T. Lim, Jr.115
On 19 October 2000, the Court of Appeals denied the
motion for reconsideration for lack of merit and the other
subsequent Supplemental Motions for Reconsideration for
being filed out of time.116 The appellate court also ordered
Pea to post an indemnity bond.117 The Amended Decision
and the Resolution were the subjects of several Rule 45
Petitions filed by Urban Bank and individual petitioners
(G.R. Nos. 145817, 145818 and 145822).
On the same day the CA denied its Motion for
Reconsideration, the De Leon Group immediately moved
for the stay of execution pending appeal upon the filing of a
supersedeas bond.118
_______________
113 Petitioner De Leon Groups Supplemental Motion for
Reconsideration dated 21 September 2000 (Rollo [G.R. No. 145822], Vol. 1,
at pp. 791815) and Second Supplemental Motion for Reconsideration
dated 11 October 2000 (Rollo [G.R. No. 145822], Vol. 1, at pp. 851867)
see also CA Resolution dated 19 October 2000, at 1 (Rollo [G.R. No.
145817], Vol. 1, at p. 23).
114 Benjamin de Leon, Delfin C. Gonzales and Eric L Lee filed three
separate Supplemental Motions for Reconsideration on 22 September
2000, 11 October 2000 and 16 October 2000. (CA Resolution dated 19
October 2000, at p. 1 Rollo [G.R. No. 145817], Vol. 1, at p. 23)
115 Petitioner Lims Supplemental Motion for Reconsideration and
Application for Temporary Restraining Order and Writ of Preliminary
Injunction dated 13 October 2000 Rollo (G.R. No. 162562), Vol. 1, at pp.
818824.
116 CA Resolution dated 19 October 2000 (CAG.R. SP No. 55667)
117Respondent Magdaleno M. Pea is directed to post, within five (5)

days from notice, an indemnity bond in the amount of P15,000,000.00 to
answer for the damages which petitioners may suffer in case of reversal
on appeal of the trial courts decision. (CA Resolution dated 19 October
2000, at p. 4 Rollo [G.R. No. 145817], Vol. 1, at p. 26).
118Petitioner De Leon Groups Ex Abundanti Cautela Urgent Motion
to Stay Execution Pending Appeal Upon Filing of Supersedeas Bond dated
19 October 2000 Rollo (G.R. No. 145822), Vol. 1, at pp. 869879.
450
On 31 October 2000, the CA119 granted the stay of the

execution upon the filing by the De Leon Group of a
PhP40,000,000 bond in favor of Pea.120 Pea moved for
the reconsideration of the stay order.121
In its Resolution dated 08 December 2000,122 the
appellate court denied Peas Motion for Reconsideration
and a stay order over the execution pending appeal was
issued in favor of the De Leon Group, after they had filed
their supersedeas bond.123 The stay of execution pending
appeal, however, excluded Urban Bank.124
On 08 December 2000, Pea posted his indemnity bond
as required by the CA.125
As mentioned earlier, Urban Bank, the De Leon Group,
and the Borlongan Group filed around December 2000
separate Rule 45 Petitions in this Court, to assail the
unfavorable CA Amended Decision and Resolution that
affirmed the execution pending appeal. The details of these
Rule 45 Petitions will be discussed in detail later on.
In the meantime, Export and Industry Bank (EIB)
submitted its proposal for rehabilitation of Urban Bank to
the BSP, and requested that the troubled bank be removed
from receivership of the PDIC. On
_______________
119 The Special Former Special Twelfth Division was composed of
Justices Bienvenido L. Reyes, Roberto A. Barrios, and Perlita J. Tria
Tirona (ponente).
120 CA Resolution dated 31 October 2000 (CAG.R. SP No. 55667)
121Peas Urgent Motion for Reconsideration dated 06 November 2000
and Supplemental Motion dated 13 November 2000 Rollo (G.R. No.
145822), Vol. 1, at pp. 9951008.
122 CA Resolution dated 08 December 2000 (CAG.R. SP No. 55667)
123 Petitioner De Leon Groups Compliance with Motion to Approve
Supersedeas Bond dated 08 November 2000 Rollo (G.R. No. 145822), Vol.
1, at pp. 990994.
124 CA Resolution dated 08 December 2000 (CAG.R. SP No. 55667)

125 Peas Compliance dated 08 December 2000 Rollo (G.R. No.
145822), Vol. 1, at pp. 10581060) see Peas Comment dated 30 April
2001, at p. 12 Rollo (G.R. No. 145817), Vol. 1, at p. 521.
451
12 July 2001, or almost a year after the Court of Appeals

amended its decision to allow execution pending appeal,
the rehabilitation plan of Urban Bank was approved by the
Monetary Board of the BSP.126 Thus, the Monetary Board
subsequently lifted PDICs statutory receivership of the
bank.127
On 14 September 2001, Urban Bank, trying to follow the
lead of the De Leon Group, made a similar request with the
Court of Appeals for approval of its own supersedeas
bond,128 for the same amount of PhP40,000,000, and
prayed that the execution of the RTCBago Citys Decision
against it be stayed as well.129
Sometime in September and October 2001, Urban Bank
began receiving notices of levy and garnishment over its
properties. After it received Notice of the impending public
execution sale of its shares in the Tagaytay Highlands
International Golf Club,130 Urban Bank reiterated its
request for the approval of the supersedeas bond with the
Court of Appeals and the issuance of the corresponding
stay order.131
The appellate court, however, merely noted Urban
Banks motion on the ground that there was no showing
whether a petition to the Supreme Court had been filed or
given due course or denied.132
_______________
126BSP Minute Resolution No. 37 dated 12 July 2001 Rollo (G.R. No.
145817), Vol. 1, at pp. 843845.
127 Petitioner Urban Banks Urgent Motion to Approve Supersedeas
Bond and to Stay Execution Pending Appeal dated 22 October 2001 Rollo
(G.R. No. 145817), Vol. 1, at pp. 660667.
128 Surety Bond (MICO Bond No. 200104456) dated 13 September
129 Petitioner Urban Banks Compliance with Motion to Approve
Supersedeas Bond dated 14 September 2001 in CAG.R. SP No. 55667
130 Notice of Sale on Execution of Personal Property dated 27
September 2001 Rollo (G.R. No. 145817), Vol. 1, at p. 714.
131 Petitioner Urban Banks Urgent Manifestation and Motion dated
02 October 2001 Rollo (G.R. No. 145817), Vol. 1, at pp. 710712.
132 CA Resolution dated 05 October 2001 in CAG.R. SP No. 55667

452
After the denial by the Court of Appeals of Urban Banks

motion for approval of its supersedeas bond, some of the
levied properties of Urban Bank and the other bank officers
were sold on public auction. The table below lists the
properties that appear on record to have been levied and/or
sold on execution pending appeal and the approximate
value of some of these properties. They do not include
properties covered by the Petition docketed as G.R. No.
145818.
TABLE OF LEVIED, GARNISHED AND/OR EXECUTED
PROPERTIES PENDING APPEAL
Owner/ Property Estimated Value Total Remarks

Defendant Description or Price at Public Amount
Auction
Urban Three Club Shares As of 06 December 4,800,000
Bank Tagaytay Highlands 1999, one share was
International Golf selling at P1.6
Club133 Million.134
Three Club Shares As of 06 December 2,000,000137 Atty. Pea
in Makati Sports, 1999, MSCI Club was one of
Club, Inc. (MSCI) Shares A and B the winning
[Covered by Stock were selling at bidders in
Certificate Nos. A PhP650,000 and the auction
1893, A2305 and B PhP700,000, sale
762]135 respectively.136 together
with his
creditor
friend,
Roberto
Ignacio, and
Atty. Ramon
Ereeta.
_______________
September 2001 Rollo (G.R. No. 145817), Vol. 1, at p. 714.
134 Quotes from GG&A Club Shares and Metroland Holdings, Corp.,
dated 06 December 1999 Rollo (G.R. No. 145822), Vol. 1, at p. 708. (At
present, one share in Tagaytay Highlands International Golf Club is
selling at PhP560,000 [http://www.ggaclubshares.com/ last visited 17
October 2011].)
135Notice of Sale on Execution of Personal Property dated 03 October
2001 Rollo (G.R. No. 145817), Vol. 1, at p. 717 RTC Orders all dated 15
present, Makati Sports Club Shares A and B are now selling at
P200,000 and P230,000 respectively [http://www.ggaclubshares.com/ last
visited 17 October 2011]).
137Two MSCI A Club Shares at PhP650,000 each and one MSCI B
Club Share at PhP700,000.
453
85 Condominium Units The highest bid price 85,000,000 Intervenor

in the Urban Bank obtained for the Unimega
138 condominium units was purchased the
Plaza, Makati City
PhP1M at the time of the 10 condominium
139
execution sale. units in the
auction sale for
P1M each or a
total of P10
140
M.
A 155 sqm. Estimates are based on 12,400,000
142
condominium unit, report of Urban Bank
Makati City (CCT No.
141
57697)
A 12.5 sqm. 500,000
condominium parking
space (Parking Three,
Unit P46) in Makati
City (CCT No.
143
57698)
A 64,677 sqm. land in Value based on estimate 35,572,350
145
Tagaytay City (TCT No. of Urban Bank
144
20471)
_______________
138 Notice of Sale on Execution of Real Property dated 03 October
2001, covering Condominium Certificates of Title (CCT) Nos. 5603439,
5605269, 5608856147, and 56154 Rollo (G.R. No. 145817), Vol. 1, at 718
739. See Certifications dated 26 October 2001 and 31 October 2001
attesting to the sale of the CCTs covering units in Makati City registered
under the name of Urban Bank Rollo (G.R. No. 145817), Vol. 1, at pp.
769770.
139 Most of the condominium units were sold anywhere for as low as
PhP100,000 to PhP1,000,000. The whole lot of 85 condominiums units in
Urban Bank Plaza were sold for a total of PhP27,400,000 only. (c/f
Properties levied and attached Rollo [G.R. No. 145817], Vol. 1, at pp. 976
980)
140Ten Certificates of Sale all dated 25 October 2001 Rollo (G.R. No.
145817), Vol. 1, at pp. 10051035.
141 Notice of Levy on Execution dated 05 November 1999 and
Condominium Certificate of Title No. 57697 under the name of Urban
Bank RTC records, Vol. 5, at pp. 13151318.
142 Urban Bank Properties, Annex of Urban Banks Letter dated 09

November 1999 RTC records, Vol. 5, at p. 1310.
143 Notice of Levy on Execution dated 05 November 1999 and
Condominium Certificate of Title No. 57698 under the name of Urban
Bank RTC records, Vol. 5, at pp. 13191322.
144Notice of Levy on Execution dated 05 November 1999 RTC records,
Vol. 5, at pp. 13321333.
145 Urban Bank Properties, Annex of Urban Banks Letter dated 09
November 1999 RTC records, Vol. 5, at p. 1310.
454
Teodoro One Club Share Borlongans club share 1,000,000 Notice of Sale on
Borlongan in Manila Polo was estimated to be Execution on
Club (No. valued at Personal Property
146 147
3433) P1,000,000. dated 25 August
148
2000
One Club Share One club share was 500,000
in SubicBay estimated to be valued
Yacht Club149 at P500,000.150
One Club Share As of 06 December 870,000
in Baguio 1999, one share was
151 152
Country Club selling at P870,000.
_______________
146Letter dated 08 November 1999 of Manila Polo Club RTC records,
Vol. 5, at p. 1312 RTC Order dated 19 December 2000 Rollo (G.R. No.
145822), Vol. 2, at pp. 25502552.
147 Petitioner Urban Banks Manifestation and Motion dated 20
September 2005, at pp. 34 Rollo (G.R. No. 145817), Vol. 2, at pp. 1721
1722. See also Petitioner De Leon Groups Memorandum dated 20
January 2004, at pp. 1516 Rollo (G.R. No. 145822), Vol. 1, at pp. 1235
1236. (At present, one club share in Manila Polo Club sells at PhP7
Million. [http://www.ggaclubshares.com last visited 17 October 2011]).
148Rollo (G.R. No. 145817), Vol. 1, at p. 422.
149RTC Order dated 31 October 2000, Rollo (G.R. No. 145822), Vol. 2,
at pp. 25422543 RTC Amended Order dated 13 December 2000 Rollo
(G.R. No. 145822), Vol. 2, at pp. 25462549 see also Lee v. Trocino, G.R.
No. 164648, 06 August 2008, 561 SCRA 178.
1236. (At present, one club share in Subic Bay Yacht Club sells at
PhP150,000. [http://www. ggaclubshares.com last visited 17 October
2011]).
at pp. 254041.
present, one share in Baguio Country Club is selling at PhP650,000
[http://www. ggaclubshares.com/ last visited 17 October 2011].).
455
One Club As of 06 December 1999, MSCI 650,000

Share in Club Shares A and B were
153
MSCI selling at PhP650,000 and
154
PhP700,000 respectively.
Real No estimate available on record.
155
Property
Delfin C. One Club Gonzales club share was 4,000,000 Notice of
Gonzales, Share in estimated to be valued at Sale on
157
Jr. Manila Polo P4,000,000. Execution
Club (No. on Personal
156
3818) Property
dated 25
August
158
2000
One Club Gonzales club share was 1,077,000
Share in estimated to be valued at
160
Baguio P1,077,000.
Country
159
Club.
_______________
at pp. 254041.
present, Makati Sports Club Shares A and B are now selling at
P200,000 and P230,000 respectively [http://www.ggaclubshares.com/ last
visited 17 October 2011]).
155Co v. Sillador, A.M. No. P072342, 31 August 2007, 531 SCRA 657.
145822), Vol. 2, at pp. 25502552 RTC Order dated 09 March 2001 Rollo
(G.R. No. 145822), Vol. 2, at pp. 25582561.
Million. [http://www.ggaclubshares.
com last visited 17 October 2011]).
September 2000 Rollo (G.R. No. 145822). Vol. 2, at p. 2520 RTC Order
dated 12 October 2000 Rollo (G.R. No. 145822), Vol. 2, at pp. 25262527
RTC Order dated 24 January 2001 Rollo (G.R. No. 145822), Vol. 2, at pp.
25542557 see also Urban Banks Manifestation and Motion dated 20
September 2005, at p. 4 Rollo (G.R. No. 145817), Vol. 2, at p. 1722.
1722. See
456
One Club Share in Alabang Gonzales club share was estimated 2,000,000
162
Country Club (Member No. to be valued at P2,000,000.
161
550)
164
30,585 shares of stock in D. C. P20.00 per share 611,700
163
Gonzales, Jr., Inc.
40Shares of stock in D. C. P50.00 per share166 2,000
165
Gonzales, Jr., Inc.
_______________
also Petitioner De Leon Groups Memorandum dated 20 January 2004,
at pp. 1516 Rollo (G.R. No. 145822), Vol. 1, at pp. 12351236. (At present,
one share in Baguio Country Club is selling at PhP650,000 [http://www.
ggaclubshares.com/ last visited 17 October 2011].)
2000 Rollo (G.R. No. 145822). Vol. 2, at p. 2523 RTC Order dated 18
October 2000, Rollo (G.R. No. 145822), Vol. 2, at pp. 25282529 see also
Urban Banks Manifestation and Motion dated 20 September 2005, at p. 4
Rollo (G.R. No. 145817), Vol. 2, at p. 1722.
1236. (At present, Alabang Country Club Shares A and B are selling at
PhP1.95 M and PhP2.95M, respectively [http://www.ggaclubshares.com/
last visited 17 October 2011].)
163 Notice of Garnishment dated 29 October 1999 Rollo (G.R. No.
145822), Vol. 2, at pp. 25712572 Notice of Sale on Execution of Personal
Property dated 20 October 2000 Rollo (G.R. No. 145822), Vol. 2, at p.
2539 RTC Order dated 31 October 2000, Rollo (G.R. No. 145822), Vol. 2,
(G.R. No. 145822), Vol. 2, at pp. 25462549 see also Lee v. Trocino, id.
at pp. 25422543.
October 2000, Rollo (G.R. No. 145822), Vol. 2, at pp. 25442545 RTC
Amended Order dated 13 December 2000 Rollo (G.R. No. 145822), Vol. 2,
at pp. 25462549 see also Lee v. Trocino, id.
at pp. 25442545.
457
One Club Share in De Leons Share was 5,050,000 Notice of

Benjamin Manila Polo Club estimated at P4 M for the Sale on
L. de (with Associate share and P1.05 M for the Execution
168
Leon Membership) [No. associate membership. on
167
0597] Personal
Property
dated 25
August
169
2000
One Club Share in De Leons share was 450,000
171
MSCI (Stock estimated at P450,000.
Certificate No. A
170
175)
One Club Share in As of 06 December 1999, 870,000
Baguio Country Club one share was selling at
172 173
(5523) least P870,000.
_______________
(G.R. No. 145822), Vol. 2, at pp. 25582561.
Million. [http://www.ggaclubshares.
com last visited 17 October 2011]).
September 2000 Rollo (G.R. No. 145822), Vol. 2, at p. 2522 RTC Order
dated 27 October 2000, Rollo (G.R. No. 145822), Vol. 2, at pp. 254041 see
also Petitioner Urban Banks Manifestation and Motion dated 20
171Urban Banks Manifestation and Motion dated 20 September 2005,
at p. 3 Rollo (G.R. No. 145817), Vol. 2, at p. 1721. (At present, a Makati
Sports Club Share A is now selling at P200,000
[http://www.ggaclubshares.com/ last visited 17 October 2011]).
dated 27 October 2000 Rollo (G.R. No. 145822), Vol. 2, at pp. 25402541.
present, one share in Baguio Country Club is selling at PhP650,000

[http://www. ggaclubshares.com/ last visited 17 October 2011].)
458
P. No records
Siervo available as to
G. properties levied,
Dizon garnished or
executed pending
appeal.
Eric One Club Share in Lees club share was 4,000,000 Notice of Sale on
L. Lee Manila Polo Club estimated to be Execution on
174
(2038) valued at Personal Property
175
P4,000,000. dated 25 August
176
2000
One Club Share in Lees club share was 15,750,000
Manila Golf Club, estimated to be
177
Inc. valued at
178
P15,750,000.
One Club Share in Lees club share was 2,000,000
Sta. Elena Golf Club, estimated to be
Inc. (Class A Share) valued at
179 180
P2,000,000.
_______________
(G.R. No. 145822), Vol. 2, at pp. 25582561.
dated 04 October 2000, Rollo (G.R. No. 145822), Vol. 2, at p. 2525 RTC
Order dated 20 December 2000 Rollo (G.R. No. 145822), Vol. 2, at p. 2553
see also Urban Banks Manifestation and Motion dated 20 September
2005, at p. 4 Rollo (G.R. No. 145817), Vol. 2, at p. 1722.
1236. (At present, one club share in Manila Golf Club sells at PhP26.5

October 2000 Rollo (G.R. No. 145822), Vol. 2, at pp. 25302531 see also
Urban Banks Manifestation and Motion dated 20 September 2005, at p. 4
Rollo (G.R. No. 145817), Vol. 2, at p. 1722.
1722. See also Peti
459
Two Club Shares in Lees club shares were 1,000,000 Notice of Sale on
Tagaytay Highlands estimated to be valued Execution on
181 182
Intl Golf Club, Inc. at P1,000,000. Personal Property
dated 25 August
2000183
One Club Share in Lees club share was 500,000
184
Subic Yacht Club estimated to be valued
185
at P500,000.
60,757 Shares of stock P20.00 per share 1,214,140
in EQL Properties,
186
Inc.
40 Shares of stock in P50.00 per share 2,000
EQL Properties,
187
Inc.
_______________
tioner De Leon Groups Memorandum dated 20 January 2004, at pp.
1516 Rollo (G.R. No. 145822), Vol. 1, at pp. 12351236. (At present, one
club share in Sta. Elena Club (both A and B) sells at PhP2.3 Million.
[http://www.ggaclubshares.com last visited 17 October 2011]).
181RTC Order dated 19 December 2000 Rollo (G.R. No. 145822), Vol.
2, at pp. 25502552 Urban Banks Manifestation and Motion dated 20
1236. (At present, one club share in Tagaytay Highlands Intl Gold Club
sells at PhP560,000. [http://www.ggaclubshares.com last visited 17
October 2011]).
183Rollo (G.R. No. 1458177), Vol. 1, at pp. 423424.
2000 Rollo (G.R. No. 145822). Vol. 2, at p. 2538 see also Urban Banks
Manifestation and Motion dated 20 September 2005, at p. 4 Rollo (G.R.
No. 145817), Vol. 2, at p. 1722.
1236. (At present, one club share in Subic Yacht Club sells at PhP150,000.
[http://www.ggaclubshares.com last visited 17 October 2011]).
460
Cash garnished 100,000

from BPI
188
Account
Ben T. No records available as to
Lim, Jr. properties levied, garnished or
executed pending appeal.
189
Corazon Real Property No
Bejasa estimated
value.
190
Arturo Real Property No
Manuel, estimated
Jr. value.
TOTAL 181,919,190
VALUE
The sum of PhP181,919,190 does not include many

other properties and it is not difficult to believe that the
total value covered reached more than that.191 In summary,
the estimated values and/or purchase prices at the auction
sale of the properties of Urban Bank and its officers
amounted to no less than PhP181,919,190 already. This
amounts to almost six times the value of the award given
by the trial court. Otherwise stated, Pea, as judgment
creditor, was overly secured by the levied and/or garnished
properties for the amount of PhP28,500,000, where the
judgment award was still subject of reversal on appeal.
_______________
189Co v. Sillador, Id.
190Id.
191 Based on the Appraisal Report as of 16 April 2002 conducted by
Cuervo Appraisers, Inc., submitted by Urban Bank in their Opposition (To
Motion for Reconsideration with Intervention) dated 29 April 2003, the
ten condominium units alone purchased by Unimega for PhP10 Million
(Units 212, 213, 215, 216, and 221 to 226) was already worth
PhP146,851,900. Meanwhile, the fair market value of the entire lot of 85
condominium units sold on execution pending appeal could reach as even

as much as PhP1.4 Billion. (Appraisal Report Rollo [G.R. No. 145817],
Vol. 2, at pp. 13961423)
461
On 22 October 2001, Urban Bank, with respect to its

pending Rule 45 Petition in this Court, moved for the
approval of its PhP40,000,000 supersedeas bond192 and
requested that the Court stay the execution pending
appeal.193 Pea opposed the motion on the ground that it
had already been rendered moot and academic by the sale
of the properties of the bank.194
On 23 October 2002, or almost a year after some of the
condominium units were sold in a public auction, EIB, as
the successor of Urban Bank, expressed to the sheriff of
RTCBago City an intent to redeem the said condominium
units.195 Thus, EIB tendered three managers checks in the
total amount of PhP22,108,800196 to redeem the properties
that were previously under the name of Urban Bank.197
Although the trial court noted the banks Manifestation,198
the sheriff returned the EIBs managers checks. Thus, on
29 October 2002, EIB,
_______________
192 Malaysian Insurance Surety Bond (MICO Bond No. 200104456)
dated 13 September 2001 Rollo (G.R. No. 145817), Vol. 1, at pp. 740741.
193 Petitioner Urban Banks Urgent Motion to Approve Supersedeas
Bond and to Stay Execution Pending Appeal dated 22 October 2001 Rollo
(G.R. No. 145817). Vol. 1, at pp. 660667.
194Peas Opposition dated 31 October 2001 Rollo (G.R. No. 145817),
Vol. 1, at pp. 752768.
195EIB letter dated 23 October 2002 Rollo (G.R. No. 145817), Vol. 2,
at p. 1277.
196 The following managers checks were attached to the
Manifestation: (a) Managers Check No. 80571 (PhP224,000) (b) Manager
Check No. 80572 (PhP13,440,000) and (c) Managers Check No. 80573
(PhP 8,440,800). (Rollo [G.R. No. 145817], Vol. 2, at p. 1281)
197Petitioner Urban Banks Manifestation with Tender of Payment of
the Redemption Price dated 24 October 2002 Rollo (G.R. No. 145817), Vol.
2, at pp. 12781281.
198 RTCBago Citys Order dated 28 October 2002 Rollo (G.R. No.
145817), Vol. 2, at p. 1286.
462
through a motion, was prompted to turn over the checks to

the trial court itself.199
When Urban Bank supposedly failed to redeem the
condominium units according to the sheriff,200 final
Certificates of Sale were issued in favor of Unimega on 04
November 2002.201 Upon the latters motion, RTCBago
City, in its Order dated 13 November 2002, ordered the
Register of Deeds of Makati to transfer the Condominium
Certificates of Title to the name of Unimega.202 It has not
been shown, though, whether this Order was followed.
This Court, acting on Urban Banks earlier motion to
approve its supersedeas bond, granted the same in its
Resolution dated 19 November 2001.203 Pea moved for
reconsideration of the approval,204 but his motion was
subsequently denied by the Court.205
_______________
199 Petitioner Urban Banks Motion with Manifestation dated 29
200 Sheriff Silladors Affidavits of NonRedemption both dated 04
November 2002 Rollo (G.R. No. No. 145817), Vol. 1, at pp. 10721074.
201 Sheriffs Certificates of Final Sale both dated 04 November 2002
202 RTCBago Citys Order dated 13 November 2002 Rollo (G.R. No.
145817), Vol. 1, at pp. 10861089.
203 SC Resolution dated 19 November 2001 Rollo (G.R. No. 145817),
Vol. 1, at pp. 794795.
204Peas Motion for Reconsideration (of the Resolution Approving the
Supersedeas Bond) dated 07 December 2001 Rollo (G.R. No. 145817), Vol.
1, at pp. 846862.
205SC Resolution dated 24 September 2003 Rollo (G.R. No. 145817),
Vol. 1, at pp. 11511152.
463
Proceedings in the Supreme Court

(G.R. Nos. 145817, 145818 & 145822)
On 21 December 2000, Urban Bank,206 represented by
its receiver, PDIC,207 filed a Rule 45 Petition with this
Court (docketed as G.R. No. 145817) to assail the CAs
Amended Decision and Resolution granting execution
pending appeal.208 In response, Pea moved for the denial
of the petition on the grounds of lack merit, violation of the
rule against forum shopping, and nonpayment of docket
fees, among others.209 In a separate Comment,210 Pea also
argued that the appellate court had committed no error
when it considered the banks imminent insolvency as a
good reason for upholding the validity of the execution

pending appeal.
On the other hand, the Borlongan Group211 filed a
separate Rule 45 Petition questioning the same Decision
and Resolution, docketed as G.R. No. 145818.212 This Court
initially denied their petition on the ground that it failed to
sufficiently show that the CA committed re
_______________
206 Petitioner Urban Banks counsel, the Poblador Bautista & Reyes
Law Office, was substituted by the Office of the Chief Legal Counsel of
PDIC, which had become the banks receiver at that time. (Substitution of
Counsel dated 24 November 2000 Rollo [G.R. No. 145817], Vol. 1, at pp.
2730)
207 PDIC, as receiver of petitioner Urban Bank, was represented by
the Ongkiko Kalaw Manhit & Acorda Law Offices. (Entry of Appearance
dated 21 December 2000 Rollo [G.R. No. 145817], Vol. 1, at pp. 183185)
208Petitioner Urban Banks Petition for Review on Certiorari dated 21
December 2000 Rollo (G.R. No. 145817), Vol. 1, at pp. 186213.
209 Peas Comment with Motion to Cite for Contempt and Urgent
Motion to Dismiss dated 12 January 2001 Rollo (G.R. No. 145817), Vol. 1,
at pp. 3277.
210 Peas Comment dated 30 April 2001 Rollo (G.R. No. 145817), at
pp. 510555.
211Petitioner Borlongan Group, comprised of individual bank directors
and officers Teodoro Borlongan, Corazon M. Bejasa, Arturo Manuel, Jr.,
Ben Y. Lim, Jr., and P. Siervo H. Dizon, was then represented by the
Poblador Bautista & Reyes Law Offices.
212 Petitioner Borlongan Groups Petition for Review on Certiorari
dated 21 November 2000 Rollo (G.R. No. 145822), Vol. 1, at pp. 887950.
464
versible order.213 The Borlongan Group twice moved for the

reconsideration of the denial of their petition but the Court
nonetheless denied both motions for lack of merit.214 This
denial of the petition in G.R. No. 145818 became final and
executory, with the issuance of the Entry of Judgment.215
Meanwhile, another Rule 45 Petition (G.R. No.
145822)216 was filed by the De Leon Group, assailing the
same Decisions of the appellate court. The Court also
preliminarily denied this petition on the ground that the
De Leon Group failed to file the appeal within the
reglementary period and to pay certain fees.217
Despite the denial of the Rule 45 Petition in G.R. No.
145822 filed by the De Leon Group, the Court nonetheless
ordered that the case be consolidated with Urban Banks
218
own Rule 45 Petition in G.R. No. 145817.
http://www.central.com.ph/sfsreader/session/00000159eb21d12eaee1cee2003600fb002c009e/t/?o=False The Court 44/77
own Rule 45 Petition in G.R. No. 145817.218 The Court

subsequently gave due course to both of these
_______________
213Considering the allegations, issues and arguments adduced in the
Petition for Review on Certiorari of the amended decision and resolution
of the Court of Appeals dated August 18, 2000 and October 19, 2000,
respectively, as well as respondents comments thereon, the Court further
Resolves to DENY the petition for failure of the petitioners to sufficiently
show that the Court of Appeals committed any reversible error in the
challenged amended decision and resolution as to warrant the exercise by
this Court of its discretionary appellate jurisdiction in this case. (SC
Resolution dated 29 January 2001 in G.R. No. 145818 Rollo (G.R. No.
145822), Vol. 1, at pp. 955956)
214SC Resolution dated 25 June 2001 in G.R. No. 145818 Rollo (G.R.
No. 145817), Vol. 1, at pp. 620621.
215 SC Entry of Judgment dated 11 May 2001 in G.R. No. 145818
216Petitioner De Leon Groups Petition for Review on Certiorari dated
06 December 2000 Rollo (G.R. No. 145822), Vol. 1, at pp. 1475.
217 SC Resolution dated 13 December 2000 Rollo (G.R. No. 145822),
Vol. 1, at pp. 955956.
Vol. 1, at p. 796.
465
petitions.219 In compliance with the Courts Order,220

Urban Bank221 and the De Leon Group222 filed their
respective Memoranda.
As detailed earlier, the Court granted and approved
Urban Banks supersedeas bond and stayed the execution
pending appeal.
Considering the favorable stay of execution pending
appeal, EIB, as the new owner and successor of Urban
Bank, immediately wrote to tell223 the corporate secretary
of MSCI not to effect the cancellation or transfer of Urban
Banks three MSCI stock certificates previously sold in a
public auction.224 In reply, MSCI explained that since there
was no injunction or stay order, it had no other option but
to comply with the trial courts Order for the transfer.
Eventually, however, it could not effect the transfer of one
of the shares to Pea because a club share had already
been previously registered in his name, and the clubs
bylaws prohibited a natural person from owning more than
one share.225 Meanwhile, one of the winning bidders in the
public auction sale of the MSCI shares wrote to the latter
to demand that the club share previously owned by Urban

Bank be transferred to him.226
_______________
Vol. 1, at pp. 11511152.
220Id.
221 Petitioner Urban Banks Memorandum dated 28 January 2004
222Petitioner De Leon Groups Memorandum dated 20 January 2004
223EIB letter dated 10 December 2001 Rollo (G.R. No. 145817), Vol. 1,
at pp. 896897 see also EIB letter dated 24 October 2001 (Rollo [G.R. No.
145817], Vol. 1, at p. 956) and EIB letter dated 06 June 2002 (Rollo [G.R.
No. 145817], Vol. 1, at p. 939)
224 Petitioner Urban Banks three shares in the Makati Sports Club
were previously sold in a public auction last 11 October 2001, conducted
by the sheriff of RTCBago City. (RTC Orders all dated 15 October 2001
Rollo [G.R. No. 145817], Vol. 1, at pp. 890895)
225 MSCIs letter dated 26 November 2001 Annex C of MSCIs
Motion for Clarification Rollo (G.R. No. 145817), Vol. 1, at pp. 875899.
226 Atty. Ereetas letter dated 16 January 2002 (Rollo [G.R. No.
145817], Vol. 1, at pp. 898899) Atty. Ereetas letter dated 30 May 2002
466
On 04 February 2002, considering the conflicting claims

of Urban Bank (through EIB) and the winning bidders of
the club shares, MSCI filed a Motion for Clarification of the
Courts Resolution staying the execution pending appeal.227
In its Motion for Clarification dated 06 August 2002,
Urban Bank likewise requested clarification of whether the
stay order suspended, as well, its right to redeem the
properties sold at a public auction.228 The copy of Urban
Banks motion for clarification intended for Pea was
mistakenly sent to the wrong counsel.
In its Resolution dated 13 November 2002, the Court
explained that its earlier stay order prohibited the MSCI
from transferring the shares, and that the oneyear period
for redemption of the banks properties was likewise
suspended:
WHEREFORE, the Court hereby RESOLVES to clarify that

as a consequence of its approval of the supersedeas bond, the
running of the oneyear period for petitioner Urban Bank
to redeem the properties sold at the public auctions held
on October 4, 11 and 25, 2001 as well as the consolidation
of the titles in favor of the buyers, is SUSPENDED OR
STAYED. MSCI is also prohibited from transferring petitioner

Urban Banks MSCI club shares to the winning bidders in the
execution sale held on October 11, 2001.229 (Emphasis supplied)
On 09 December 2002, Pea moved that the Courts

Resolution be recalled, because he was not given an
opportunity to be heard on Urban Banks Motion for
Clarification, which was sent to a different
_______________
(Rollo [G.R. No. 145817], Vol. 1, at pp. 898938). See also Atty.
Ereetas Motion to Cite in Contempt of Court dated 22 July 2002 in Civil
Case No. 754 (Rollo [G.R. No. 145817], Vol. 1, at pp. 944948).
227 Makati Sports Clubs Motion for Clarification dated 04 February
228 Petitioner Urban Banks Motion for Clarification dated 6 August
2002 Rollo (G.R. No. 145817), Vol. 1, at pp. 972975. See also petitioner
Urban Banks Urgent Motion to Resolve dated 21 October 2002 Rollo
(G.R. No. 145817), Vol. 1, at pp. 982987.
Vol. 1, at pp. 988990.
467
counsel.230 Interposing its objection, the bank argued that

the error in mistakenly sending the Motion for clarification
to a different counsel was by sheer inadvertence,231 but
Pea was nonetheless aware of the motion, and that the
Courts clarification did not create or diminish his rights in
any case.232
The Motion for Clarification filed by Urban Bank, the
Courts Resolution dated 13 November 2002 and Peas
Omnibus Motion praying for the recall of the said
Resolution became the subject of an administrative case
(Administrative Case No. 6332), which was treated as a
separate matter and later on deconsolidated with the
instant Petitions.233 The Court had even called for an
executive session234 in which Pea, among others, appeared
and was questioned by the then members of the Courts
First Division, namely retired Chief Justice Hilario Davide,
Justices Jose Vitug, Antonio Carpio and Adolfo Azcuna.
Although the Petitions had earlier been assigned to Justice
Carpio, he has since taken no part in the proceedings of
this case and this resulted in the reraffling of the
Petitions. The transfer and unloading of the case by the
subsequently assigned Justices as well as Peas numerous
motions for inhibition and/or reraffle has likewise cause
considerable delay in the disposition of the instant

Petitions and the Administrative Case.
_______________
230 Peas Urgent Omnibus Motion dated 09 December 2002 (Rollo
[G.R. No. 145817], Vol. 1, at pp. 10901102) see also Peas Supplement to
the Urgent Omnibus Motion dated 19 December 2002 (Rollo [G.R. No.
145817], Vol. 1, at pp. 11061110).
231Urban Bank attributed the mistake allegedly due to the fact that in
one of the Courts Resolution (SC Resolution dated 13 February 2002), the
ACCRA Law Office was mentioned as the counsel of respondent.
(Opposition [To Urgent Omnibus Motion and Supplement to Urgent
Omnibus Motion] dated 28 February 2003, at pp. 24 Rollo [G.R. No.
145817], Vol. 2, at pp. 12201222).
232Petitioner Urban Banks Opposition dated 28 February 2003 Rollo
(G.R. No. 145817), Vol. 2, at pp. 12191227.
233SC Resolution dated 31 August 2011.
234 SC Resolution dated 17 February 2003 Rollo (G.R. No. 145822),
Vol. 3, at pp. 32203221.
468
Unimega, which was the winning bidder of some of the

publicly executed condominium units of Urban Bank,
moved to intervene in the case and to have the Courts
same Resolution suspending the oneyear period of
redemption of the properties be reconsidered.235 Unimega
claimed that ownership of the banks titles to the 10
condominium units had already been transferred to the
former at the time the Court issued the Resolution and,
thus, there was no more execution to be suspended or
stayed. Only Urban Bank236 opposed the motion237 of
intervenor Unimega on the ground that the latter was not
a buyer in good faith, and that the purchase price was
grossly disproportional to the fair market value of the
condominium units.238
The Court eventually granted the Motion to Intervene
considering that the intervenors title to the condominium
units purchased at the public auction would be affected,
favorably or otherwise, by the judgment of the Court in this
case. However, it held in abeyance the resolution of
intervenors Motion for Reconsideration, which might
preempt the decision with respect to the propriety of
execution pending appeal.239 Thereafter, the bank adopted
its earlier Opposition to the
_______________
235 Intervenor Unimegas Motion for Reconsideration with

Intervention dated 10 December 2002 Rollo (G.R. No. 145817), Vol. 1, at
pp. 9911004.
236Petitioner De Leon Group manifested that Unimegas intervention
was only with respect to petitioner Urban Banks properties (condominium
units), but opposed the legal and factual conclusions of Unimega insofar
as it deemed the titles to the executed properties to be consolidated in
Unimegas name. (Petitioner De Leon Groups Manifestation and
Comment dated 24 February Rollo [G.R. No. 145817], Vol. 2, at pp. 1191
1196)
237Petitioner Urban Banks Opposition (to Motion for Reconsideration
with Intervention) dated 29 April 2003 Rollo (G.R. No. 145817), Vol. 2, at
pp. 13861394.
238 According to petitioner Urban Bank, the fair market value of the
condominium units (of varying sizes) purchased by Unimega, inclusive of
the parking lots attached to the units, amounted to PhP175,849,850,
which is grossly disproportional to the PhP10,000,000 paid by Unimega
for all the 10 units during the auction sale. (Petitioner Urban Banks
Opposition dated 29 April 2003, at p. 4 Rollo, [G.R. No. 145817], Vol. 2, at
p. 1389)
239SC Resolution dated 01 August 2005 Rollo (G.R. No. 145817), Vol.
2, at pp. 16231630.
469
intervention as its answer to Unimegas petitionin

intervention.240 Also in answer thereto, the De Leon Group
adopted its earlier Manifestation and Comment.241
Intervenor Unimega then requested that a writ of
possession be issued in its favor covering the 10
condominium units sold during the public auction.242 The
Court required the parties to file their comments on the
request.243 The Lim244 and Borlongan Groups245 manifested
separately that they would not be affected by a resolution
of the request of intervenor Unimega, since the latter was
not among the contending parties to the incident. Pea
similarly interposed no objection to the issuance of the writ
of possession.246 In contrast, Urban Bank opposed the
application of Unimega on the ground that the latter was
not entitled to possession of the levied properties, because
the rules of extrajudicial foreclosure were not applicable to
execution sales under Rule 39, and that intervenor was
also not a buyer in good faith.247 In a similar vein, the De
Leon Group opposed the application for a writ of
possession, and further argued that the Court had already
suspended the running of the oneyear period of
redemption in
_______________
September 2005 Rollo (G.R. No. 145817), Vol. 2, at pp. 17191725.
241 Petitioner De Leon Groups Manifestation dated 12 September
242Intervenor Unimegas Ex Parte Petition for the Issuance of a Writ
of Possession dated 28 June 2006 Rollo (G.R. No. 162562), Vol. 2, at pp.
11561169.
Vol. 2, at pp. 11711172.
244 Petitioner Lim Groups Compliance and Comment dated 25
245Petitioner Borlongan Groups (composed of the heirs of Borlongan,
Bejasa and Manuel, Jr.) Compliance dated 30 October 2006 Rollo (G.R.
No. 162562), Vol. 2, at pp. 11881189.
246 Peas Compliance and Comment dated 07 January 2008 Rollo
(G.R. No. 162562), Vol. 2, at pp. 12331241.
247 Petitioner Urban Banks Opposition (to Ex Parte Petition for the
Issuance of a Writ of Possession) dated 08 November 2006 Rollo (G.R. No.
162562), Vol. 2, at pp. 11961201.
470
the execution sale.248 Accordingly, intervenor Unimega

countered that the right of redemption of the levied
properties had already expired without having been
exercised by the judgment debtor.249
In summary, the Court shall resolve the substantial
issues in the following: (a) the Petition of Pea (G.R. No.
162562) assailing the CAs decision on the substantive
merits of the case with respect to his claims of
compensation based on an agency agreement and (b) the
Petitions of Urban Bank (G.R. No. 145817) and the De
Leon Group (G.R. No. 145822) questioning the propriety of
the grant of execution pending appeal.
Our Ruling
Pea is entitled to payment for compensation

for services rendered as agent of Urban Bank,
but on the basis of the principles of unjust
enrichment and quantum meruit, and not on the
purported oral contract.
The Court finds that Pea should be paid for services
rendered under the agency relationship that existed
between him and Urban Bank based on the civil law
principle against unjust enrichment, but the amount of

payment he is entitled to should be made, again, under the
principle against unjust enrichment and on the basis of
quantum meruit.
In a contract of agency, agents bind themselves to
render some service or to do something in representation or
on behalf of the prin
_______________
248Petitioner De Leon Groups Manifestation and Comment dated 17
November 2006 Rollo (G.R. No. 162562), Vol. 2, at pp. 12041211.
249Intervenor Unimegas Reply/Comment (to the Opposition of Urban
Bank and Manifestation/Comment of Petitioners Gonzales, Jr., De Leon
and Lee) dated 07 February 2007 Rollo (G.R. No. 162562), Vol. 2, at pp.
12121224.
471
cipal, with the consent or authority of the latter.250 The

basis of the civil law relationship of agency is
representation,251 the elements of which include the
following: (a) the relationship is established by the parties
consent, express or implied (b) the object is the execution
of a juridical act in relation to a third person (c) agents act
as representatives and not for themselves and (d) agents
act within the scope of their authority.252
Whether or not an agency has been created is
determined by the fact that one is representing and acting
for another.253 The law makes no presumption of agency
proving its existence, nature and extent is incumbent upon
the person alleging it.254
With respect to the status of Atty. Peas relationship
with Urban Bank, the trial and the appellate courts made
conflicting findings that shall be reconciled by the Court.
On one end, the appellate court made a definitive ruling
that no agency relationship existed at all between Pea
and the bank, despite the services performed by Pea with
respect to the Pasay property purchased by the bank.
Although the Court of Appeals ruled against an award of
agents compensation, it still saw fit to award Pea with
Ph3,000,000 for expenses incurred for his efforts in clearing
the Pasay property of tenants.255 On the
_______________
250CIVIL CODE, Art. 1868.
251Victorias Milling Co., Inc. v. Court of Appeals, G.R. No. 117356, 19
June 2000, 33 SCRA 663, citing Bordador v. Luz, 283 SCRA 374, 382
(1997).
252 Eurotech Industrial Technologies v. Cuizon, G.R. No. 167552, 23

April 2007, 521 SCRA 584, citing Yu Eng Cho v. Pan American World
Airways, Inc., 385 Phil. 453, 465 328 SCRA 717, 728 (2000).
253 Yun Kwan Byung v. PAGCOR, G.R. No. 163553, 11 December
2009, 608 SCRA 107, citing Angeles v. Philippine National Railways, 500
SCRA 444, 452 (2006).
254 Tuason v. Heirs of Ramos, G.R. No. 156262, 14 July 2005, 463
SCRA 408, citing Victorias Milling Co., Inc. v. Court of Appeals, 389 Phil.
184, 196 333 SCRA 663, 675676 (2000) Lim v. Court of Appeals, 321
Phil. 782, 794 251 SCRA 408 (1995).
255 WHEREFORE, in view of the foregoing considerations, the May
28, 2000 Decision [sic] and the October 19, 2000 [sic] Special Order of the
RTC of Bago City, Branch 62, are hereby ANNULLED AND SET ASIDE.
However, the plaintiffappellee in CAG.R. CV No. 65756 is awarded the
amount of P3
472
other extreme, the trial court heavily relied on the sole

telephone conversation between Pea and Urban Banks
President to establish that the principalagent relationship
created between them included an agreement to pay Pea
the huge amount of PhP24,000,000. In its defense,
Urban Bank insisted that Pea was never an agent of the
bank, but an agent of ISCI, since the latter, as seller of the
Pasay property committed to transferring it free from
tenants. Meanwhile, Pea argues on the basis of his
successful and peaceful ejectment of the subtenants, who
previously occupied the Pasay property.
Based on the evidence on records and the
proceedings below, the Court concludes that Urban
Bank constituted Atty. Pea as its agent to secure
possession of the Pasay property. This conclusion,
however, is not determinative of the basis of the
amount of payment that must be made to him by the
bank. The context in which the agency was created
lays the basis for the amount of compensation Atty.
Pea is entitled to.
The transactional history and context of the sale
between ISCI and Urban Bank of the Pasay property, and
Atty. Peas participation in the transfer of possession
thereof to Urban Bank provide crucial linkages that
establish the nature of the relationship between the lawyer
and the landownerbank.
The evidence reveals that at the time that the Contract
to Sell was executed on 15 November 1994, and even when
the Deed of Absolute Sale was executed two weeks later on
29 November 1994, as far as Urban Bank was concerned,
Pea was nowhere in the picture. All discussions and

correspondences were between the President and
Corporate Secretary of Urban Bank, on one hand, and the
President of ISCI, on the other. The title to the Pasay
property was transferred to Urban Bank on 5 December
1994. Interestingly, Pea testifies that
_______________
Million as reimbursement for his expenses as well as reasonable
compensation for his efforts in clearing Urban Banks property of unlawful
occupants. The award of exemplary damages, attorneys fees and costs of
suit are deleted, the same not having been sufficiently proven. The
petition for Indirect Contempt against all the respondents is DISMISSED
for utter lack of merit. (CA Decision [CAG.R. SP No. 72698 & CV No.
65756] dated 06 November 2003 Rollo [G.R. No. 162562], Vol. 1, at pp. 82
111)
473
it was only on 19 December 1994 that he learned that the

land had already been sold by ISCI to Urban Bank,
notwithstanding the fact that Pea was a director of ISCI.
Pea was not asked to render any service for Urban Bank,
neither did he perform any service for Urban Bank at that
point.
ISCI undertook in the Contract to Sell, to physically
deliver the property to Urban Bank, within 60 days from 29
November 1994,256 under conditions of full and actual
possession and control ..., free from tenants, occupants,
squatters or other structures or from any liens,
encumbrances, easements or any other obstruction or
impediment to the free use and occupancy by the buyer of
the subject Property or its exercise of the rights to
ownership over the subject Property....257 To guarantee
this undertaking, ISCI agreed to the escrow provision
where PhP25,000,000 (which is a little over 10% of the
value of the Pasay property) would be withheld by Urban
Bank from the total contract price until there is full
compliance with this undertaking.
Apparently to ensure that ISCI is able to deliver the
property physically clean to Urban Bank, it was ISCIs
president, Enrique Montilla who directed on 26 November
1994 one of its directors, Pea, to immediately recover and
take possession of the property upon expiration of the
contract of lease on 29 November 1994.258 Pea thus first
came into the picture as a director of ISCI who was
constituted as its agent to recover the Pasay property
against the lessee as well as the subtenants who were
occupying the property in violation of the lease

agreement.259 He was able to obtain possession of the prop
_______________
256 When Urban Bank paid the purchase price less authorized
retention money under the Deed of Absolute Sale.
257 Contract to Sell dated 15 November 1994. (Exhibit 16, RTC
records [Vol. 4] at pp. 846849).
258 ISCIs fax letter dated 26 November 1994 Exhibit 3, RTC
records, Vol. 4, at p. 810.
259SUBLEASE PROHIBITED. That as distinguished from LESSEEs
[Mr. Ochoa] rentout operations abovementioned, the LESSEE [Mr.
Ochoa] shall not assign, cede or convey this lease, nor undertake to sub
lease the whole or substantially all of the lease premises [Pasay property]
to any single
474
erty from the lessee on the following day, but the

unauthorized subtenants refused to vacate the property.
It was only on 7 December 1994, that Urban Bank was
informed of the services that Pea was rendering for ISCI.
The faxed letter from ISCIs Marilyn Ong reads:
Atty. Magdaleno M. Pea, who has been assigned by

Isabela Sugar Company, Inc., to take charge of inspecting
the tenants would like to request an authority similar to this
from the Bank, as new owners. Can you please issue something
like this today as he needs this.260
Two days later, on 9 December 1994, ISCI sent Urban

Bank another letter that reads:
Dear Mr. Borlongan, I would like to request for an

authorization from Urban Bank as per attached immediatelyas
the tenants are questioning the authority of the people
there who are helping us to take over possession of the
property. (Emphasis supplied)261
It is clear from the above that ISCI was asking Urban

Bank for help to comply with ISCIs own contractual
obligation with the bank under the terms of the sale of the
Pasay property. Urban Bank could have ignored the
request, since it was exclusively the obligation of ISCI, as
the seller, to deliver a clean property to Urban Bank
without any help from the latter.
A fullbodied and confident interpretation of the
contracts between ISCI and Urban Bank should have led
the latter to inform the unauthorized subtenants that
under its obligation as seller to Urban Bank, it was under

duty and had continuing authority to recover clean
possession of the property, despite the transfer of title. Yet,
_______________
third party, without the LESSORs [ISCIs] consent in writing
(Contract of Lease dated 29 November 1984, par. 5 at p. 2 Rollo [G.R. No.
162562], Vol. 1, at p. 279)
260 ISCIs letter dated 07 December 1994 Exhibit 1, RTC records,
Vol. 4, at p. 808.
261ISCIs fax letter dated 09 December 1994 Exhibit 2, RTC records,
Vol. 4, at p. 809.
475
what unauthorized subtenant, especially in the kind of

operations being conducted within the Pasay property,
would care to listen or even understand such argument?
Urban Bank thus chose to cooperate with ISCI without
realizing the kind of trouble that it would reap in the
process. In an apparent attempt to allow the efforts of ISCI
to secure the property to succeed, it recognized Peas role
in helping ISCI, but stopped short of granting him
authority to act on its behalf. In response to the two
written requests of ISCI, Urban Bank sent this letter to
Pea on 15 December 1994:
This is to advise you that we have noted the engagement of

your services by Isabela Sugar Company to recover possession of
the Roxas Boulevard property formerly covered by TCT No. 5382,
effective November 29, 1994. It is understood that your
services have been contracted by and your principal
remains to be the Isabela Sugar Company, which as seller of
the property and under the terms of our Contract to Sell dated
November 29, 1994, has committed to deliver the full and actual
possession of the said property to the buyer, Urban Bank, within
the stipulated period.262 (Emphasis supplied)
Up to this point, it is unmistakable that Urban Bank

was staying clear from making any contractual
commitment to Pea and conveyed its sense that whatever
responsibilities arose in retaining Pea were to be
shouldered by ISCI.
According to the RTCBago City, in the reversed
Decision, Atty. Pea only knew of the sale between ISCI
and Urban Bank at the time the RTCPasay City recalled
the TRO and issued a breakopen order:
when information reached the (Pasay City) judge that the

Pasay property had already been transferred by ISCI to Urban
Bank, the trial court recalled the TRO and issued a breakopen
order for the property. According to
_______________
262 Urban Banks letter dated 15 December 1994 Exhibit 4, RTC records,
Vol. 4, at p. 811.
475
Pea, it was the first time that he was apprised of the sale of the
land by ISCI and of the transfer of its title in favor of the
bank.263
There is something contradictory between some of the

trial courts factual findings and Peas claim that it was
only on 19 December 1994 that he first learned of the sale
of the property to Urban Bank. It is difficult to believe
Pea on this point considering: (1) that he was a board
director of ISCI and a sale of this significant and valuable
property of ISCI requires the approval of the board of
directors of ISCI and (2) that ISCI twice requested Urban
Bank for authority to be issued in his favor (07 and 9
December 1994), 12 and 10 days before 19 December 1994,
since it would be contrary to human experience for Pea
not to have been informed by an officer of ISCI beforehand
that a request for authority for him was being sent to
Urban Bank.
The sequence of fastmoving developments, edged with a
sense of panic, with respect to the decision of the RTC
Pasay City to recall the temporary restraining order and
issue a breakopen order on 19 December 1994 in the First
Injunction Complaint, is highly enlightening to this Court.
First, Pea allegedly called up the president of ISCI,
Montilla, who, according to Pea, confirmed to him that the
Pasay property had indeed been sold to Urban Bank.
Second, Pea allegedly told Montilla that he (Pea)
would be withdrawing his guards from the property
because of the breakopen order from the RTCPasay City.
Third, Montilla requested Pea to suspend the
withdrawal of the guards while ISCI gets in touch with
Urban Bank.
Fourth, apparently in view of Montillas efforts, Bejasa,
an officer of Urban Bank called Pea and according to the
latter, told him that
_______________

Vol. 1, at p. 507. However, the records of the case in RTCPasay City with
respect to the First Injunction Complaint filed by Pea on behalf of ISCI
are NOT with this Court, as none of the issues raised therein are before
Us.
477
Urban Bank would continue retaining his services and for

him to please continue with his effort to secure the
property.
Fifth, this statement of Bejasa was not enough for Pea
and he insisted that he be enabled to talk with no less than
the President of Urban Bank, Borlongan. At this point,
Bejasa gave him the phone number of Borlongan.
Sixth, immediately after the conversation with Bejasa,
Pea calls Borlongan and tells Borlongan that violence
might erupt in the property because the Pasay City
policemen, who were sympathetic to the tenants, were
threatening to force their way through the property.
At this point, if indeed this conversation took place,
which Borlongan contests, what would have been the
response of Borlongan? Any prudent president of a bank,
which has just purchased a PhP240,000,000 property
plagued by unauthorized and unruly subtenants of the
previous owner, would have sought to continue the
possession of ISCI, thru Pea, and he would have agreed to
the reasonable requests of Pea. Borlongan could also have
said that the problem of having the subtenants ejected is
completely ISCIs and ISCI should resolve the matter on its
own that without bothering the bank, with all its other
problems. But the specter of violence, especially as night
was approaching in a newlybought property of Urban
Bank, was not something that any publiclylisted bank
would want publicized. To the extent that the violence
could be prevented by the president of Urban Bank, it is
expected that he would opt to have it prevented.
But could such response embrace the following legal
consequences as Pea claims to have arisen from the
telephone conversation with Borlongan: (1) A contract of
agency was created between Pea and Urban Bank
whereby Borlongan agreed to retain the services of Pea
directly (2) This contract of agency was to be embodied in a
written letter of authority from Urban Bank and (3) The
agency fee of Pea was to be 10% of the market value as
attorneys fees and compensation and reimbursement of
all expenses of Pea from the time he took over the land
until possession is turned over to Urban Bank.
This Court concludes that the legal consequences

described in statements (1) and (2) above indeed took place
and that the facts
478
support them. However, the evidence does not support

Peas claim that Urban Bank agreed to attorneys fees
and compensation of 10% of the market value of the
property.
Urban Banks letter dated 19 December 1994 confirmed
in no uncertain terms Peas designation as its authorized
representative to secure and maintain possession of the
Pasay property against the tenants. Under the terms of the
letter, petitionerrespondent bank confirmed his
engagement (a) to hold and maintain possession of
the Pasay property (b) to protect the same from former
tenants, occupants or any other person who are
threatening to return to the said property and/or interfere
with your possession of the said property for and in our
behalf and (c) to represent the bank in any instituted
court action intended to prevent any intruder from
entering or staying in the premises.264
These three express directives of petitionerrespondent
banks letter admits of no other construction than that a
specific and special authority was given to Pea to act on
behalf of the bank with respect to the latters claims of
ownership over the property against the tenants. Having
stipulated on the due execution and genuineness of the
letter during pretrial,265 the bank is bound by the terms
thereof and is subject to the necessary consequences of
Peas reliance thereon. No amount of denial can overcome
the presumption that we give this letterthat it means
what it says.
In any case, the subsequent actions of Urban Bank
resulted in the ratification of Peas authority as an agent
acting on its behalf with respect to the Pasay property. By
ratification, even an unauthorized act of an agent becomes
an authorized act of the principal.266
_______________
264 Petitioner Urban Banks letter dated 19 December 1994 Exhibit
B, RTC records, Vol. 3, at p. 568.
265The due execution and genuineness of the letter dated December
19, 1994 sent by the defendant Urban Bank to the plaintiff (PreTrial
Order dated 23 September 1997, at p. 3 RTC records, Vol. 2, at p. 501)
266Cua v. Ocampo Tan, G.R. Nos. 18145556 & 182008, 04 December
2009, 607 SCRA 645, citing Yasuma vs. Heirs of Cecilio S. de Villa, 499
SCRA 466, 471472 (2006).
479
Both sides readily admit that it was Pea who was

responsible for clearing the property of the tenants and
other occupants, and who turned over possession of the
Pasay property to petitionerrespondent bank.267 When the
latter received full and actual possession of the property
from him, it did not protest or refute his authority as an
agent to do so. Neither did Urban Bank contest Peas
occupation of the premises, or his installation of security
guards at the site, starting from the expiry of the lease
until the property was turned over to the bank, by which
time it had already been vested with ownership thereof.
Furthermore, when Pea filed the Second Injunction
Complaint in the RTCMakati City under the name of
petitionerrespondent bank, the latter did not interpose
any objection or move to dismiss the complaint on the basis
of his lack of authority to represent its interest as the
owner of the property. When he successfully negotiated
with the tenants regarding their departure from its Pasay
property, still no protest was heard from it. After
possession was turned over to the bank, the tenants
accepted PhP1,500,000 from Pea, in full and final
settlement of their claims against Urban Bank, and not
against ISCI.268
In all these instances, petitionerrespondent bank did
not repudiate the actions of Pea, even if it was fully aware
of his representations to third parties on its behalf as
owner of the Pasay property. Its tacit acquiescence to his
dealings with respect to the Pasay property and the
tenants spoke of its intent to ratify his actions, as if these
were its own. Even assuming arguendo that it issued no
written authority, and that the oral contract was not
substantially established, the bank duly ratified his acts as
its agent by its acquiescence and
_______________
267 RTCs Order dated 04 November 1997, modifying the Pretrial
Order dated 23 September 1997 RTC records, Vol. 2, at pp. 514519.
268 Received from Atty. Magdaleno M. Pea the amount of One
Million Five Hundred Thousand Pesos (PhP1,500,000) representing full
and final settlement of our claims against Urban Bank Incorporated
arising from the closure of the Australian Club located in the former
International Food Complex along Roxas Boulevard, Pasay City, Metro
Manila. (Receipt dated 28 April 1995 Exhibit BB, RTC records, Vol. 3,
at p. 757)
480
acceptance of the benefits, namely, the peaceful turnover of

possession of the property free from subtenants.
Even if, however, Pea was constituted as the agent of
Urban Bank, it does not necessarily preclude that a third
party would be liable for the payment of the agency fee of
Pea. Nor does it preclude the legal fact that Pea while an
agent of Urban Bank, was also an agent of ISCI, and that
his agency from the latter never terminated. This is
because the authority given to Pea by both ISCI and
Urban Bank was commonto secure the clean possession
of the property so that it may be turned over to Urban
Bank. This is an ordinary legal phenomenonthat an
agent would be an agent for the purpose of pursuing a
shared goal so that the common objective of a transferor
and a new transferee would be met.
Indeed, the Civil Code expressly acknowledged instances
when two or more principals have granted a power of
attorney to an agent for a common transaction.269 The
agency relationship between an agent and two principals
may even be considered extinguished if the object or the
purpose of the agency is accomplished.270 In this case,
Peas services as an agent of both ISCI and Urban Bank
were engaged for one shared purpose or transaction, which
was to deliver the property free from unauthorized sub
tenants to the new ownera task that Pea was able to
achieve and is entitled to receive payment for.
That the agency between ISCI and Pea continued, that
ISCI is to shoulder the agency fee and reimbursement for
costs of Pea, and that Urban Bank never agreed to pay
him a 10% agency fee is established and supported by the
following:
First, the initial agency relationship between ISCI and
Pea persisted. No proof was ever offered that the letter of
26 November 1994 of Mr. Montilla of ISCI to Pea, for the
latter to immediately recover and take possession of the
property upon expiration of the contract of
_______________
269When two or more principals have granted a power of attorney for
a common transaction, any one of them may revoke the same without the
consent of the others. (Civil Code, Art. 1925)
270Agency is extinguished: (5) By the accomplishment of the object
or purpose of the agency . (Civil Code, Art. 1919)
481
lease on 29 November 1994 was terminated. It is

axiomatic that the appointment of a new agent for the
same business or transaction revokes the previous agency
from the day on which notice thereof was given to the
former agent.271 If it is true that the agency relationship
was to be borne by Urban Bank alone, Pea should have
demonstrated that his previous agency relationship with
ISCI is incompatible with his new relationship with Urban
Bank, and was thus terminated.
Second, instead, what is on the record is that ISCI
confirmed the continuation of this agency between Pea
and itself and committed to pay for the services of Pea, in
its letter to Urban Bank dated 19 December 1994 which
reads:
In line with our warranties as the Seller of the said property

and our undertaking to deliver to you the full and actual
possession and control of said property, free from tenants,
occupants or squatters and from any obstruction or impediment to
the free use and occupancy of the property by Urban Bank, we
have engaged the services of Atty. Magdaleno M. Pea to
hold and maintain possession of the property and to
prevent the former tenants or occupants from entering or
returning to the premises. In view of the transfer of the
ownership of the property to Urban Bank, it may be necessary for
Urban Bank to appoint Atty. Pea likewise as its authorized
representative for purposes of holding/maintaining continued
possession of the said property and to represent Urban Bank in
any court action that may be instituted for the abovementioned
purposes.
It is understood that any attorneys fees, cost of
litigation and any other charges or expenses that may be
incurred relative to the exercise by Atty. Pea of his
abovementioned duties shall be for the account of Isabela
Sugar Company and any loss or damage that may be incurred to
third parties shall be answerable by Isabela Sugar Company.272
(Emphasis supplied)
Third, Pea has never shown any written confirmation

of his 10% agency fee, whether in a note, letter,
memorandum or board resolu
_______________
271Civil Code, Art. 1923.
272 ISCIs Letter dated 19 December 1994 signed by Herman Ponce
and Julie Abad Exhibit 5, RTC records, Vol. 4, at p. 812.
482
tion of Urban Bank. An agency fee amounting to

PhP24,000,000 is not a trifling amount, and corporations
do not grant their presidents unilateral authority to bind
the corporation to such an amount, especially not a
banking corporation which is closely supervised by the BSP
for being a business seriously imbued with public interest.
There is nothing on record except the selfserving
testimony of Pea that Borlongan agreed to pay him this
amount in the controverted telephone conversation.
Fourth, while ordinarily, uncontradicted testimony will
be accorded its full weight, we cannot grant full probative
value to the testimony of Pea for the following reasons: (a)
Pea is not a credible witness for testifying that he only
learned of the sale of the property of 19 December 1994
when the acts of ISCI, of Urban Bank and his own up to
that point all indicated that he must have known about the
sale to Urban Bank and (b) it is incredible that Urban
Bank will agree to add another PhP24,000,000 to the cost
of the property by agreeing to the agency fee demanded by
Pea. No prudent and reasonable person would agree to
expose his corporation to a new liability of PhP24,000,000
even if, in this case, a refusal would lead to the Pasay City
policemen and unauthorized subtenants entering the
guarded property and would possibly erupt in violence.
Peas account of an oral agreement with Urban Bank
for the payment of PhP24,000,000 is just too much for any
court to believe. Whatever may be the agreement between
Pea and ISCI for compensation is not before this Court.
This is not to say, however, that Urban Bank has no
liability to Pea. It has. Payment to him is required
because the Civil Code demands that no one should be
unjustly enriched at the expense of another. This payment
is to be measured by the standards of quantum meruit.
Amount of Compensation
Agency is presumed to be for compensation. But because
in this case we find no evidence that Urban Bank agreed to
pay Pea a specific amount or percentage of amount for his
services, we turn to the principle against unjust
enrichment and on the basis of quantum meruit.
483
Since there was no written agreement with respect to

the compensation due and owed to Atty. Pea under the
letter dated 19 December 1994, the Court will resort to
determining the amount based on the wellestablished
rules on quantum meruit.
Agency is presumed to be for compensation.273

http://www.central.com.ph/sfsreader/session/00000159eb21d12eaee1cee2003600fb002c009e/t/?o=False Unless 62/77
Agency is presumed to be for compensation.273 Unless

the contrary intent is shown, a person who acts as an agent
does so with the expectation of payment according to the
agreement and to the services rendered or results
effected.274 We find that the agency of Pea comprised of
services ordinarily performed by a lawyer who is tasked
with the job of ensuring clean possession by the owner of a
property. We thus measure what he is entitled to for the
legal services rendered.
A stipulation on a lawyers compensation in a written
contract for professional services ordinarily controls the
amount of fees that the contracting lawyer may be allowed
to collect, unless the court finds the amount to be
unconscionable.275 In the absence of a written contract for
professional services, the attorneys fees are fixed on the
basis of quantum meruit,276 i.e., the reasonable worth of the
attorneys services.277 When an agent performs services for
a principal at the latters request, the law will normally
imply a promise on the part of
_______________
273 CIVIL CODE, Art. 1875 cf. National Brewery & Allied Industries
Labor Union of the Phils. v. San Miguel Brewery, Inc., G.R. No. L18170,
31 August 1963, 8 SCRA 805.
2743 Am. Jur. 2d. 246, citing Monroe v. Grolier Soc. of London, 208
Cal. 447, 281 P. 604, 65 A.L.R. 989 (1929) Chamberlain v. Abeles, 88 Cal.
App. 2d 291, 198 P.2d 927 (2d Dist. 1948).
275RULES OF COURT, Rule 138, Sec. 24 Orocio v. Anguluan, G.R. Nos.
17989293, 30 January 2009, 577 SCRA 531.
276 Quantum meruit means that in an action for work and labor,
payment shall be made in such amount as the plaintiff reasonably
deserves. (H. L. Carlos Construction, Inc. v. Marina Properties Corp.,
G.R. No. 147614, 29 January 2004, 421 SCRA 428, citing Republic v.
Court of Appeals, 359 Phil. 530, 640 [1998]).
277 Rayos v. Hernandez, G.R. No. 169079, 12 February 2007, 515
SCRA 517 Bach v. Ongkiko Kalaw Manhit & Acorda Law Offices, G.R.
No. 160334, 11 September 2006, 501 SCRA 192.
484
the principal to pay for the reasonable worth of those

services.278 The intent of a principal to compensate the
agent for services performed on behalf of the former will be
inferred from the principals request for the agents.279
In this instance, no extraordinary skills employing
advanced legal training nor sophisticated legal
maneuvering were required to be employed in ejecting 23
subtenants who have no lease contract with the property

owner, and whose only authority to enter the premises was
unlawfully given by a former tenant whose own tenancy
has clearly expired. The 23 subtenants operated beer
houses and nightclubs, ordinary retail establishments for
which no sophisticated structure prevented easy entry.
After Pea succeeded in locking the gate of the compound,
the subtenants would open the padlock and resume their
businesses at night. Indeed, it appears that only security
guards, chains and padlocks were needed to keep them out.
It was only the alleged connivance of Pasay City policemen
that Peas ability to retain the possession was rendered
insecure. And how much did it take Pea to enter into a
settlement agreement with them and make all these
problems go away? By Peas own account, PhP1,500,000
only. That means that each tenant received an average of
PhP65,217.40 only. Surely, the legal services of Pea
cannot be much more than what the subtenants were
willing to settle for in the first place. We therefore award
him the equivalent amount of PhP1,500,000 for the legal
and other related services he rendered to eject the illegally
staying tenants of Urban Banks property.
The Court of Appeals correctly reversed the trial court
and found it to have acted with grave abuse of discretion in
granting astounding monetary awards amounting to a total
of PhP28,500,000 without any basis.280 For the lower court
to have latched on to the selfserving claims of a telephone
agreement as sufficient support for extending a
_______________
278Transcontinental Underwriters Agency, S. R. L. v. American Agency
Underwriters, 680 F.2d 298, 300 (18 May 1982), citing Miller v. Wilson, 24
Pa. 114 (1854).
279Id.
280 CA Decision dated 06 November 2003, at p. 23 Rollo (G.R. No.
162562), Vol. 1, at p. 104.
485
multimillion peso award is highly irregular. Absent any

clear basis for the amount of the lawyers compensation,
the trial court should have instinctively resorted to
quantum meruit, instead of insisting on a figure with
circumstantial and spurious justification.
We cannot also agree with the Decision penned by Judge
Edgardo L. Catilo characterizing Penas 10% fee as
believable because it is nearly congruent to the PhP25
Million retention money held in escrow for ISCI until a
clean physical and legal turnover of the property is

effected:
We now come to the reasonableness of the compensation

prayed for by the plaintiff which is 10% of the current market
value which defendants claim to be preposterous and glaringly
excessive. Plaintiff [Pea] testified that defendant Borlongan
agreed to such an amount and this has not been denied by Ted
Borlongan. The term current market value of the property is
hereby interpreted by the court to mean the current market value
of the property at the time the contract was entered into. To
interpret it in accordance with the submission of the plaintiff that
it is the current market value of the property at the time payment
is made would be preposterous. The only evidence on record
where the court can determine the market value of the property
at the time the contract of agency was entered into between
plaintiff and defendant is the consideration stated in the sales
agreement between Isabela Sugar Company, Inc. and Urban bank
which is P241,612,000.00. Ten percent of this amount is a
reasonable compensation of the services rendered by the plaintiff
considering the no cure, no pay arrangement between the
parties and the risks which plaintiff had to undertake.281
In the first place, the Decision of Judge Catilo makes

Peas demand of an agency fee of PhP24 Million, an
additional burden on Urban Bank. The Decision does not
make the retention money responsible for the same, or
acquit Urban Bank of any liability to ISCI if it pays the
PhP24 Million directly to Pea instead of ISCI. In the
second place, the amount of money that is retained by
transferees of property transactions while the transferor is
undertaking acts to ensure a clean and peaceful transfer to
the transferee does not normally approximate a onetoone
relationship to the services of ejecting
_______________
281RTC Decision dated 28 May 1999, at p. 21 RTC records, Vol. 4, at
p. 962.
486
unwanted occupants. They may be inclusive of other costs,

and not only legal costs, with enough allowances for
contingencies, and may take into consideration other
liabilities as well. The amount can even be entirely
arbitrary, and may have been caused by the practice
followed by Urban Bank as advised by its officers and
lawyers or by industry practice in cases where an
expensive property has some tenancy problems. In other
words, Judge Catilos statement is a non sequitur, is

contrary to normal human experience, and sounds like an
argument being made to fit Peas demand for a shocking
payout.
In any case, 10% of the purchase price of the Pasay
propertya staggering PhP24,161,200is an
unconscionable amount, which we find reason to reduce.
Neither will the Court accede to the settlement offer of
Pea to Urban Bank of at least PhP38,000,000 for alleged
legal expenses incurred during the course of the
proceedings,282 an amount that he has not substantiated at
any time.
Lawyering is not a business it is a profession in which
duty to public service, not money, is the primary
consideration.283 The principle of quantum meruit applies if
lawyers are employed without a price agreed upon for
their services, in which case they would be entitled to
receive what they merit for their services, or as much as
they
_______________
28212. It is true that Atty. Singson had been offering the amount of
P25 million to respondent but the latter could not agree to the said
amount because his legal expenses alone since this case started in 1996
(and considering that it spawned several other case) would already have
reached P10 million. In clearing the Roxas Boulevard property, he had to
borrow P3 million (an amount which had been earning interest since
1995) from his good friend Mr. Roberto Ignacio. When respondents
services were engaged by petitioner, he was promised ten (10%) of the
propertys value which was at least P25 million. Thus, even if respondent
agreed to forego the interests that had accrued since 1996, and even if Mr.
Ignacio agreed to collect from him only the principal loaned amount, he
would still be entitled to at least P38 million. To respondents mind,
therefore, P25 million was out of the question. (Peas Consolidated
Reply dated 01 April 2003, at pp. 67 Rollo [G.R. No. 145822], Vol. 3, at
pp. 33593360)
283Adrimisin v. Javier, A.C. No. 2591, 08 September 2006, 501 SCRA
192.
487
have earned.284 In fixing a reasonable compensation for the

services rendered by a lawyer on the basis of quantum
meruit, one may consider factors such as the time spent
and extent of services rendered novelty and difficulty of
the questions involved importance of the subject matter
skill demanded probability of losing other employment as
a result of acceptance of the proffered case customary
charges for similar services amount involved in the

controversy and the resulting benefits for the client
certainty of compensation character of employment and
professional standing of the lawyer.285
Hence, the Court affirms the appellate courts award of
PhP3,000,000 to Pea, for expenses incurred corresponding
to the performance of his services. An additional award of
PhP1,500,000 is granted to him for the services he
performed as a lawyer in securing the rights of Urban
Bank as owner of the Pasay property.
II
The corporate officers and directors of Urban

Bank are not solidarily or personally liable with
their properties for the corporate liability of
Urban Bank to Atty. Pea.
The obligation to pay Peas compensation, however,
falls solely on Urban Bank. Absent any proof that
individual petitioners as bank officers acted in bad faith or
with gross negligence or assented to a patently unlawful
act, they cannot be held solidarily liable together with the
corporation for services performed by the latters agent to
secure possession of the Pasay property. Thus, the trial
court had indeed committed grave abuse of discretion when
it issued a ruling against the eight individual defendant
bank directors and officers and its Decision should be
absolutely reversed and set aside.
_______________
284 Quilban v. Robinol, A.C. Nos. 2144 & 2180, 10 April 1989, 171
SCRA 768 see Traders Royal Bank Employees Union v. National Labor
Relations Commission, G.R. No. 120592, 14 March 1997, 269 SCRA 733.
285Catly v. Navarro, G.R. No. 167239, 05 May 2010, 620 SCRA 151,
citing Orocio v. Anguluan, 577 SCRA 531, 551552 (2009).
488
A corporation, as a juridical entity, may act only through

its directors, officers and employees.286 Obligations
incurred as a result of the acts of the directors and officers
as corporate agents are not their personal liabilities but
those of the corporation they represent.287 To hold a
director or an officer personally liable for corporate
obligations, two requisites must concur: (1) the
complainant must allege in the complaint that the director
or officer assented to patently unlawful acts of the
corporation, or that the officer was guilty of gross
negligence or bad faith and (2) the complainant must

clearly and convincingly prove such unlawful acts,
negligence or bad faith.288 To hold a director, a trustee or
an officer personally liable for the debts of the corporation
and, thus, pierce the veil of corporate fiction, bad faith or
gross negligence by the director, trustee or officer in
directing the corporate affairs must be established clearly
and convincingly.289
Pea failed to allege and convincingly show that
individual defendant bank directors and officers assented
to patently unlawful acts of the bank, or that they were
guilty of gross negligence or bad faith. Contrary to his
claim, the Complaint290 in the lower court never al
_______________
286 Lambert Pawnbrokers and Jewelry Corp., v. Binamira, G.R. No.
170464, 12 July 2010, 624 SCRA 705.
287Id.
288Francisco v. Mallen, Jr., G.R. No. 173169, 22 September 2010, 631
SCRA 118, citing Section 31 of the Corporation Code and Ramoso v. Court
of Appeals, 400 Phil. 1260 347 SCRA 463 (2000).
289Magaling v. Ong, G.R. No. 173333, 13 August 2008, 562 SCRA 152.
290 7. The defendant URBAN BANK through its President,
defendant TEODORO BORLONGAN, and the defendants Board [of]
Directors as well as its Senior Vice President CORAZON BEJASA and
VICE President, Arturo Manuel, Jr., entered into an agency agreement
with the plaintiff, whereby the latter in behalf of defendant URBAN
BANK, shall hold and maintain possession of the aforedescribed property,
prevent entry of intruders, interlopers, and squatters therein and finally
turnover peaceful possession thereof to defendant URBAN BANK it was
further agreed that for the services rendered as its agent, defendant
URBAN BANK shall pay plaintiff a fee in an amount equivalent to 10% of
the market value of the property prevailing at the time of the payment.
(Peas Complaint dated 28 February 1996, at p. 2 RTC records, Vol. 1, at
p. 2)
489
leged that individual defendants acquiesced to an unlawful

act or were grossly negligent or acted in bad faith.291
Neither is there any specific allegation of gross negligence
or action in bad faith that is attributable to the individual
defendants in performance of their official duties.
In any event, Pea did not adduce any proof that the
eight individual defendants performed unlawful acts or
were grossly negligent or in bad faith. Aside from the
general allegation that they were corporate officers or
members of the board of directors of Urban Bank, no
specific acts were alleged and proved to warrant a

finding of solidary liability. At most, petitioners
Borlongan, Bejasa and Manuel were identified as those
who had processed the agency agreement with Pea
through their telephone conversations with him and/or
written authorization letter.
Aside from Borlongan, Bejasa and Manuel, Atty. Pea in
the complaint pointed to no specific act or circumstance to
justify the inclusion of Delfin C. Gonzalez, Jr., Benjamin L.
de Leon, P. Siervo H. Dizon, Eric L. Lee, and Ben T. Lim,
Jr., except for the fact that they were members of the
Board of Directors of Urban Bank at that time. That the
five other members of the Board of Directors were excluded
from Peas complaint highlights the peculiarity of their
inclusion. What is more, the complaint mistakenly included
Ben Y. Lim, Jr., who had not even been a member of the
Board of Directors of Urban Bank. In any case, his father
and namesake, Ben T. Lim, Sr., who had been a director of
the bank at that time, had already passed away in 1997.
In ruling for the solidary liability of the other bank
directors, the decision of the trial court hinged solely on the
purported admission of Arturo Manuel, Jr., that the
transactions with Atty. Pea were approved by the Board
of Directors:
In this case, plaintiff testified as to the personal participation

of defendants Ted Borlongan and Corazon Bejasa in the subject
transaction. On the other hand, with respect to the other
defendants, it was the defendants
_______________
291Peas Petition dated 23 April 2004, at pp. 6165 Rollo (G.R. No. 162562),
Vol. 1, at pp. 6872.
490
themselves, through witness Arturo Manuel, Jr., who admitted

that all the transactions involved in this case were
approved by the board of directors. Thus, the court has
sufficient basis to hold the directors jointly and severally liable
with defendant Urban Bank, Inc.292 (Emphasis supplied)
The Decision of the RTCBago City must be utterly

rejected on this point because its conclusion of any cause of
action, much less actual legal liability on the part of Urban
Banks corporate officers and directors are shorn of any
factual finding. That they assented to the transactions of
the bank with respect to Atty. Peas services without any
showing that these corporate actions were patently
unlawful or that the officers were guilty of gross negligence

or bad faith is insufficient to hold them solidarily liable
with Urban Bank. It seems absurd that the trial court will
hold the impleaded selected members of the Board of
Directors only, but not the others who also purportedly
approved the transactions. Neither is the reason behind the
finding of solidariness with Urban Bank in such liability
explained at all. It is void for completely being devoid of
facts and the law on which the finding of liability is based.
The Court of Appeals correctly rejected the claim of
personal liability against the individual petitioners when it
held as follows:
The plaintiffappellees complaint before the court a quo does

not point to any particular act of either one or all of the
defendantsappellants that will subject them to personal liability.
His complaint merely asserts that defendant Borlongan and Atty.
Bejasa acted for and in behalf of Urban Bank in securing his
services in protecting the banks newly acquired property. Hence,
We cannot allow the same.293
Pea had argued that individual defendant bank

directors and officers should be held personally and
solidarily liable with petitionerrespondent bank, since
they failed to argue for limited corporate li
_______________
292RTC Decision dated 28 May 1999, at p. 23 RTC records, Vol. 4, at
p. 964.
293CA Decision dated 06 November 2003, at pp. 2425 Rollo (G.R. No.
162562), Vol. 1, at pp. 105106.
491
ability.294 The trial court subscribed to his reasoning and

held that the failure to resort to the said defense
constituted a waiver on the part of individual
defendants.295 The Court is not persuaded.
As the complainant on the trial court level, Pea carried
the burden of proving that the eight individual defendants
performed specific acts that would make them personally
liable for the obligations of the corporation. This he failed
to do. He cannot capitalize on their alleged failure to offer a
defense, when he had not discharged his responsibility of
establishing their personal liabilities in the first place. This
Court cannot sustain the individual liabilities of the bank
officers when Pea, at the onset, has not persuasively
demonstrated their assent to patently unlawful acts of the
bank, or that they were guilty of gross negligence or bad
faith, regardless of the weaknesses of the defenses raised.

This is too basic a requirement that this Court must
demand sufficient proof before we can disregard the
separate legal personality of the corporation from its
offices.
Hence, only Urban Bank, not individual defendants, is
liable to pay Peas compensation for services he rendered
in securing possession of the Pasay property. Its liability in
this case is, however, without prejudice to its possible claim
against ISCI for reimbursement under their separate
agreements.
_______________
294Peas Petition dated 23 April 2004, supra note 126.
295 Impleaded as defendants in this case are the members of the
board of directors of Urban bank who were sought to be held liable in the
same manner as the bank. Their failure to raise the defense of limited
corporate liability in their Motion to Dismiss or in their Answer in
consequence with the provision of Rule 9 of the 1997 Rules of Civil
Procedure constitute a waiver on their part to bring up this defense. Thus,
this warrants the court to hold all the defendants in this case jointly and
severally liable with Urban Bank, Inc., This pronouncement finds basis in
plaintiffs general prayer for such further or other relief as may be deemed
just or equitable. (RTC Decision 28 May 1999, at pp. 2223 RTC records,
Vol. 4, at pp. 963964)
492
III
Considering the absolute nullification of the

trial courts Decision, the proceedings arising
from the execution pending appeal based on the
said Decision is likewise completely vacated.
Since the trial courts main Decision awarding
PhP28,500,000 in favor of Pea has been nullified above,
the execution pending appeal attendant thereto, as a
result, no longer has any leg to stand on and is thus
completely vacated.
To recall, prior to the filing of Urban Bank of its notice
of appeal in the main case,296 Pea moved on 07 June 1999
for execution pending appeal297 of the Decision,298 which
had awarded him a total of PhP28,500,000 in compensation
and damages.299 In supporting his prayer for discretionary
execution, Pea cited no other reason than the
pending separate civil action for collection filed
against him by a creditor, who was demanding payment
300
of a PhP3,000,000 loan. According to him,
http://www.central.com.ph/sfsreader/session/00000159eb21d12eaee1cee2003600fb002c009e/t/?o=False he had used 71/77
of a PhP3,000,000 loan.300 According to him, he had used

the proceeds of
_______________
296 Notice of Appeal dated 15 June 1999 RTC records (Vol. V) at pp.
10161017.
297 Peas Motion for Execution dated 07 June 1999 Rollo (G.R. No.
145817), Vol. 1, at pp. 277279 see Peas Memorandum dated 13 October
Vol. 1, at p. 101.
299PhP 24,000,000 (compensation) + PhP3,000,000 (reimbursement) +
PhP1,000,000 (attorneys fees) + PhP500,000 (exemplary damages) =
PhP28,500,000 (excluding costs of suit)
300 4. Plaintiff has been unable to pay his loan precisely because
defendants have not paid him his fees. Since. Mr. Ignacio has been a long
time friend of his, he has been granted several extensions but on 4 June
1999, plaintiff received a summons issued by the Regional Trial Court of
Manila, Branch 16 for a collection case filed [by] said Mr. Ignacio.
6. It is imperative therefore that this Honorable Courts Decision
be executed immediately so that he could settle the obligation which he
would not have contracted had defendants not engaged his services.
(Peas Motion
493
the loan for securing the banks Pasay property.301 In

opposition to the motion, Urban Bank countered that the
collection case was not a sufficient reason for allowing
execution pending appeal.302
Favorably acting on Peas motion, the RTCBago City,
through Judge Henry J. Trocino,303 issued a Special Order
authorizing execution pending appeal on the basis of Peas
indebtedness to his creditorfriend.304 In accordance with
this Special Order, Atty. Josephine MutiaHagad, the clerk
of court and ex officio sheriff, expeditiously issued a Writ of
Execution on the same day.305 The trial courts Special
Order and Writ of Execution were the subjects of a Rule 65
Petition filed by Urban Bank with the CA.306
Both the Special Order and Writ of Execution are
nullified for two reasons:
_______________
for Execution dated 07 June 1999, at p. 2 Rollo [G.R. No. 145817], Vol.
1, at p. 278)
301The Complaint filed against Pea was a civil action for collection of
PhP3,500,000 and PhP100,000 attorneys fees, which was filed by Mr.
Roberto R. Ignacio and was docketed as Civil Case No. 9993952 with the
Regional Trial Court of Manila. (Complaint dated 03 April 1999 Rollo

[G.R. No. 145822], Vol. 1, at pp. 213217)
302 Petitioner Urban Banks Opposition (to Motion for Execution)
dated 15 June 1999 Rollo (G.R. No. 145817), Vol. 1, at pp. 289300 see
Petitioner Urban Banks Memorandum dated 12 October 1999 Rollo (G.R.
No. 145822), Vol. 1, at pp. 309331.
303 Petitioner Urban Bank had earlier moved for the voluntary
inhibition of Judge Catilo. (Petitioner Urban Banks Motion for Voluntary
Inhibition by the Presiding Judge dated 15 June 1999 Rollo [G.R. No.
145817], Vol. 1, at pp. 301306)
304 The court finds that the pendency of the case for collection of
money against plaintiff is a good reason for immediate execution. (RTC
Special Order dated 29 October 1999, at p. 7 Rollo [G.R. No. 145817], Vol.
1, at p. 886)
305Writ of Execution dated 28 May 1999 Rollo (G.R. No. 145822), Vol.
1, at pp. 152154.
306The said Rule 65 Petition in the Court of Appeals was docketed as
CAG.R. SP No. 55667. (Petitioner Urban Banks Petition for Certiorari
and Prohibition dated 29 November 1999 Rollo [G.R. No. 145817], Vol. 1,
at pp. 307345)
494
(1) Since the Decision of the RTCBago City is

completely vacated, all its issuances pursuant to the
Decision, including the Special Order and the Writ of
Execution are likewise vacated and
(2) The Special Order authorizing execution
pending appeal based on the collection suit filed
against Atty. Pea had no basis under the Rules of
Court, and the same infirmity thus afflicts the Writ of
Execution issued pursuant thereto.
Since the Decision of the RTCBago City is
vacated, all orders and writs pursuant thereto
are likewise vacated.
Considering that the Special Order and Writ of
Execution was a result of the trial courts earlier award of
PhP28,500,000, the nullification or complete reversal of the
said award necessarily translates to the vacation as well of
the processes arising therefrom, including all the
proceedings for the execution pending appeal.
Considering the unconscionable award given by the trial
court and the unjustified imposition of solidary liability
against the eight bank officers, the Court is vacating the
Decision of the RTCBago City Decision. The trial court
erroneously made solidarily liable Urban Banks directors
and officers without even any allegations, much less proof,
of any acts of bad faith, negligence or malice in the
performance of their duties. In addition, the trial court

mistakenly anchored its astounding award of damages
amounting PhP28,500,000 on the basis of the mere account
of Atty. Pea of a telephone conversation, without even
considering the surrounding circumstances and the sheer
disproportion to the legal services rendered to the bank.
A void judgment never acquires finality.307 In
contemplation of law, that void decision is deemed non
existent.308 Quod nullum est, nullum
_______________
307Nazareno v. Court of Appeals, G.R. No. 111610, 27 February 2002,
378 SCRA 28.
308Id.
495
producit effectum.309 Hence, the validity of the execution

pending appeal will ultimately hinge on the courts findings
with respect to the decision in which the execution is based.
Although discretionary execution can proceed
independently while the appeal on the merits is pending,
the outcome of the main case will greatly impact the
execution pending appeal, especially in instances where as
in this case, there is a complete reversal of the trial courts
decision. Thus, if the decision on the merits is completely
nullified, then the concomitant execution pending appeal is
likewise without any effect. In fact, the Rules of Court
expressly provide for the possibility of reversal, complete or
partial, of a final judgment which has been executed on
appeal.310 Precisely, the execution pending appeal does not
bar the continuance of the appeal on the merits, for the
Rules of Court explicitly provide for restitution according to
equity and justice in case the executed judgment is
reversed on appeal.311
Considering that the Decision of the RTCBago City has
been completely vacated and declared null and void, it
produces no effect whatsoever. Thus, the Special Order and
its concomitant Writ of Execution pending appeal is
likewise annulled and is also without effect. Consequently,
all levies, garnishment and sales executed pending appeal
are declared null and void, with the concomitant duty of
restitution under the Rules of Court, as will be discussed
later on.
In any case, the trial courts grant of execution
pending appeal lacks sufficient basis under the
law and jurisprudence.
We rule that the pendency of a collection suit by a third

party creditor which credit was obtained by the winning
judgment creditor in another case, is not a sufficiently good
reason to allow execution pending
_______________
309 That which is a nullity produces no effect. (Maagad v. Maagad,
G.R. No. 171762, 05 June 2009, 588 SCRA 649)
310Rules of Court, Rule 39, Sec. 5.
311Silverio v. Court of Appeals, G.R. No. L39861, 17 March 1986, 141
SCRA 527.
496
appeal as the Rules of Court provide. Execution pending

appeal is an extraordinary remedy allowed only when there
are reasons to believe that the judgment debtor will not be
able to satisfy the judgment debt if the appeals process will
still have to be awaited. It requires proof of circumstances
such as insolvency or attempts to escape, abscond or evade
a just debt.
In Florendo v. Paramount Insurance, Corp.,312 the Court
explained that the execution pending appeal is an
exception to the general rule that execution issues as a
matter of right, when a judgment has become final and
executory:
As such exception, the courts discretion in allowing it must be

strictly construed and firmly grounded on the existence of good
reasons. Good reasons, it has been held, consist of
compelling circumstances that justify immediate
execution lest the judgment becomes illusory. The
circumstances must be superior, outweighing the injury or
damages that might result should the losing party secure a
reversal of the judgment. Lesser reasons would make of execution
pending appeal, instead of an instrument of solicitude and justice,
a tool of oppression and inequity. (Emphasis supplied)
Indeed, the presence or the absence of good reasons

remains the yardstick in allowing the remedy of execution
pending appeal, which should consist of exceptional
circumstances of such urgency as to outweigh the injury or
damage that the losing party may suffer, should the
appealed judgment be reversed later.313 Thus, the Court
held that even the financial distress of the prevailing
company is not sufficient reason to call for execution
pending appeal:
In addressing this issue, the Court must stress that the

execution of a judgment before its finality must be founded upon
good reasons. The yardstick remains the presence or the absence
of good reasons consisting of exceptional circumstances of such
urgency as to outweigh the injury or damage that the losing party
may suffer, should the appealed judgment be reversed later. Good
reason imports a superior circumstance that will outweigh injury
or damage to the adverse party. In the case at bar, petitioner
failed to show paramount and compelling reasons of urgency and
justice. Petitioner cites
_______________
312G.R. No. 167976, 20 January 2010, 610 SCRA 377.
313Diesel Construction Company, Inc. v. Jollibee Foods Corp., G.R. No. 136805,
28 January 2000, 323 SCRA 844.
497
as good reason merely the fact that it is a smalltime building

contractor that could illafford the protracted delay in the
reimbursement of the advances it made for the aforesaid
increased costs of . . . construction of the [respondents] buildings.
Petitioners allegedly precarious financial condition,
however, is not by itself a jurisprudentially compelling
circumstance warranting immediate execution. The
financial distress of a juridical entity is not comparable to a case
involving a natural personsuch as a very old and sickly one
without any means of livelihood, an heir seeking an order for
support and monthly allowance for subsistence, or one who dies.
Indeed, the alleged financial distress of a corporation does not
outweigh the long standing general policy of enforcing only final
and executory judgments. Certainly, a juridical entity like
petitioner corporation has, other than extraordinary execution,
alternative remedies like loans, advances, internal cash
generation and the like to address its precarious financial
condition. (Emphasis supplied)
In Philippine Bank of Communications v. Court of

Appeals,314 the Court denied execution pending appeal to a
juridical entity which allegedly was in financial distress
and was facing civil and criminal suits with respect to the
collection of a sum of money. It ruled that the financial
distress of the prevailing party in a final judgment which
was still pending appeal may not be likened to the
situation of a natural person who is ill, of advanced age or
dying as to justify execution pending appeal:

Urban Bank V Pena

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1/30/2017 SUPREMECOURTREPORTSANNOTATEDVOLUME659

G.R. No. 145817. October 19, 2011.*

G.R. No. 145822. October 19, 2011.*

G.R. No. 162562. October 19, 2011.*

Civil Law Agency The basis of the civil law relationship of

intent is shown, a person who acts as an agent does so with the

Corporation Law A corporation, as a juridical entity, may act

Same Same Execution of Judgments Execution Pending

codefendants, the approval of the supersedeas bonds, the

modification the rules of restitution expounded by retired Justice

compensation shall be made in favor of the judgment debtor in the

PETITIONS for review on certiorari of the decisions and

That Atty. Pea should be paid something by Urban

PhP3,000,000 to finance the expenses for the services he

PhP28,500,000, a sum that was only 1% of its net worth,

Before us are: (a) the Petitions of Urban Bank (G.R. No.

ordinary case, and the magnitude of the disproportions in

Factual Background of the Controversy

Urban Bank, Inc. (both petitioner and respondent in

the business of banking.5 The eight individual respondents

ISCI owned a parcel of land9 located in Pasay

ISCI owned a parcel of land9 located in Pasay City (the

the lessee subleased the land to several tenants, who in

writing (Contract of Lease dated 29 November 1984, par. 5 at p. 2

The SELLER (ISCI) agrees that from the proceeds of the

structures or from any liens, encumbrances, easements or

ISCI then instructed Pea, who was its director and

latters engagement as the corporations agent to handle

On 29 November 1994, the day the lease contract was to

eventually transferred to the name of Urban Bank on 05

30RTC Decision dated 28 May 1999, at p. 2 Rollo (G.R. No. 162562),

issuance of a formal authority for Pea.35 Two days

38This is to advise you [Pea] that we [petitioner Urban Bank] have

of ISCI, filed a complaint for injunction41 (the First

December 1994 in Civil Case No. 941275 Exhibit E7 to E7c, RTC

On the same day that the TRO was recalled, petitioner

authority from the bank. Respondent Borlongan acceded

This is to confirm the engagement of your services as

51 RTC Decision dated 28 May 1999, at pp. 45 Rollo (G.R. No.

On even date, ISCI sent Urban Bank a letter, which

This has reference to your property located along Roxas

The following narration of subsequent proceedings is

already been transferred to Urban Bank.54 The RTCPasay

According to him, although his creditorfriend granted him

Proceedings on the Complaint for Compensation

others excluded from Peas complaint. In fact, as pointed

On 28 May 1999, the RTCBago City72 ruled in favor of

WHEREFORE, premised from the foregoing, judgment is

2. P3,000,000 as reimbursement of plaintiffs expenses

Urban Bank and the individual defendant bank

In its Brief,77 Urban Bank78 assigned as errors the trial

Pea refuted all of their arguments83 and prayed that

WHEREFORE, in view of the foregoing considerations, the

exemplary damages, attorneys fees and costs of suit are deleted,

proven. The petition for Indirect Contempt against all the

Pea duly filed a Motion for Reconsideration of the

Execution Pending Appeal