SECOND DIVISION

[G.R. No. 104726. February 11, 1999.]

VICTOR YAM & YEK SUN LENT, doing business under the name
and style of Philippine Printing Works, petitioners, vs. THE
COURT OF APPEALS and MANPHIL INVESTMENT
CORPORATION, respondents.

Martin T. Menez and Noel S. Jose & Associates for petitioners.

Nepomuceno Hofilena & Guingona for private respondent.

SYNOPSIS

Petitioners obtained an IGLF loan from private respondent in the amount of

P300,000 with interest, monthly penalty, monthly service charge and attorney's
fees. It was secured by a chattel mortgage on their printing machineries. On April 2,
1985, private respondent was placed under receivership by the Central Bank. On
July 31, 1986, petitioners paid private respondent P410,854.47 by means of a check
corresponding to the principal amount of P295,469.47 and the interest of P 165,385
less the partial payment of P50,000.00. It was received by the Central Bank-
appointed in-house examiner Cristina Destajo who made a notation on the voucher:
"full payment of IGLF loan." Private respondent filed a collection case against
petitioners when the latter failed to pay the remaining balance of P266,146.88 plus
interests, penalties and service charges on the loan. Petitioners, in their answer,
claimed that Carlos Sobrepeñas, president of private respondent, after the
corporation had been placed under receivership, agreed to waive or condone the
penalties and service charges provided that they pay the principal and interest on
the loan on or before July 30, 1986 to which they complied with. Petitioners added
that the fact of full payment was reflected in the voucher accompanying the check
which bore the notation: "full payment of IGLF." Judgment was rendered by the trial
court in favor of private respondent. The same was affirmed on appeal by the Court
of Appeals. Hence, petitioners resorted to this action.
SCIAaT

Express condonation under Article 1270 of the Civil Code must comply with the
forms of donation. Where the value of the movable exceeds P5,000.00 as in this
case, the donation and acceptance must be made in writing, otherwise the same
shall be void.

The appointment of a receiver operates to suspend the authority of a corporation

and of its directors and officers over its properties and effects, such authority being
reposed in the receiver. Thus, Sobrepeñas had no authority to condone the debt.

The notation on the voucher covering the check payment wherein the in-house
examiner made a notation of "full payment of IGLF loan" does not bind private
respondent. It would have been different if the notation appeared in the receipt
issued by the corporation through its receiver, which would then be an admission
against interest.
EATcHD

SYLLABUS

l. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONDONATION OF OBLIGATION;

MUST COMPLY WITH FORMS OF DONATION. — Art. 1270, par. 2 of the Civil Code
provides that express condonation must comply with the forms of donation. Art.
748, par. 3 provides that the donation and acceptance of a movable, the value of
which exceeds P5,000.00, must be made in writing, otherwise the same shall be
void. In this connection, under Art. 417, par. 1, obligations, actually referring to
credits, are considered movable property.

2. ID.; ID.; ID.; NOTATION BY DEBTOR THAT ISSUED CHECK WAS IN "FULL
PAYMENT OF IGLF LOAN" DOES NOT BIND CREDITOR. — Nonetheless, petitioners
insist that the voucher covering the Pilipinas Bank check for P410,854.47,
containing the notation that the amount is in "full payment of IGLF loan,"
constitutes documentary evidence of such oral agreement. This contention is
without merit. The notation in "full payment of IGLF loan" merely states
petitioners' intention in making the payment, but in no way does it bind private
respondent. It would have been a different matter if the notation appeared in a
receipt issued by respondent corporation, through its receiver, because then it would
be an admission against interest. Indeed, if private respondent really condoned the
amount in question, petitioners should have asked for a certificate of full payment
from respondent corporation, as they did in the case of their first IGLF loan of
P500,000.00.

3. COMMERCIAL LAW; CORPORATIONS; APPOINTMENT OF RECEIVER

SUSPENDS AUTHORITY OF CORPORATION OVER ITS PROPERTY AND EFFECTS. — It
is to be noted that the alleged agreement to condone the amount in question was
supposedly entered into by the parties sometime in July 1986, that is, after
respondent corporation had been placed under receivership on November 4, 1985.
As held in Villanueva vs. Court of Appeals "the appointment of a receiver operates to
suspend the authority of a [corporation] and of its directors and officers over its
property and effects, such authority being reposed in the receiver." Thus,
Sobrepeñas had no authority to condone the debt. TEAICc

4. REMEDIAL LAW; EVIDENCE; CREDIBILITY; FINDINGS OF FACT OF THE TRIAL

COURT CONFIRMED BY THE COURT OF APPEALS, GENERALLY NOT REVIEWED ON
APPEAL. — The second assignment of error pertains to the petitioners' allegation
that they did not receive the two letters of demand sent by private respondent on
September 4 and September 25, 1986. Both the lower court and the Court of
Appeals found otherwise. We have no reason no disturb this factual finding. It is
settled that findings of fact of trial courts, adopted and confirmed by the Court of
Appeals, are final and conclusive and, as a rule, will not be reviewed on appeal.
AECacT
 DECISION

MENDOZA, J : p

This is a petition for review of the decision 1 of the Court of Appeals affirming in toto
the decision of the Regional Trial Court of Manila (Branch 149), ordering petitioners
to pay private respondent the amount of P266,146.88 plus interest, service charge,
penalty fees, and attorney's fees and the costs, otherwise the chattel mortgage
given to secure payment of the loan would be foreclosed. aisadc

The following are the facts:

On May 10, 1979, the parties in this case entered into a Loan Agreement with
Assumption of Solidary Liability whereby petitioners were given a loan of
P500,000.00 by private respondent. The contract provided for the payment of 12%
annual interest, 2% monthly penalty, 1 1/2% monthly service charge, and 10%
attorney's fees. 2 Denominated the first Industrial Guarantee and Loan Fund (IGLF),
the loan was secured by a chattel mortgage on the printing machinery in
petitioners' establishment. 3

Petitioners subsequently obtained a second IGLF loan of P300,000.00 evidenced by

two promissory notes, dated July 3, 1981 and September 30, 1981. For this
purpose, a new loan agreement 4 was entered into by the parties containing
identical provisions as the first one, except as to the annual interest which was
increased to 14% and the service charge which was reduced to 1% per annum . The
deed of chattel mortgage was amended correspondingly. 5

By April 2, 1985, petitioners had paid their first loan of P500,000.00. On November
4, 1985, private respondent was placed under receivership by the Central Bank and
Ricardo Lirio and Cristina Destajo were appointed as receiver and in-house
examiner, respectively.

On May 17, 1986, petitioners made a partial payment of P50,000.00 on the second
loan. They later wrote private respondent a letter, dated June 18, 1986, proposing
to settle their obligation. On July 2, 1986, private respondent, through its counsel,
replied with a counter-offer, namely, that it would reduce the penalty charges up to
P140,000.00, provided petitioners can pay their obligation on or before July 30,
1986. 6

As of July 31, 1986, petitioners' total liability to private respondent was

P727,001.35, broken down as follows: 7
Principal P295,469.47

Interest 165,385.00

Penalties 254,820.55

Service Charges 11,326.33

 ––––––––––

TOTAL P727,001.35
On this date, petitioners paid P410,854.47 by means of a Pilipinas Bank check,
receipt of which was acknowledged by Destajo. 8 The corresponding voucher for
the check bears the following notation: "full payment of IGLF LOAN." 9

The amount of P410,854.47 was the sum of the principal (P295,469.47) and the
interest (P165,385.00) less the partial payment of P50,000.00. The private
respondent sent two demand letters to petitioners, dated September 4, 1986 and
September 25, 1986, seeking payment of the balance of P266,146.88. As
petitioners did not respond, private respondent filed this case in the Regional Trial
Court of Metro Manila for the collection of P266,146.88 plus interests, penalties, and
service charges or, in the alternative, for the foreclosure of the mortgaged
machineries.

In their Answer, petitioners claimed that they had fully paid their obligation to
private respondent. They contended that some time after receiving private
respondent's letter of July 2, 1986 (concerning the conditional offer to reduce their
penalty charges), petitioner Victor Yam and his wife, Elena Yam, met with Carlos
Sobrepeñas, president of respondent corporation, during which the latter agreed to
waive the penalties and service charges, provided petitioners paid the principal and
interest, computed as of July 31, 1986, less the earlier payment of P50,000.00. This
is the reason why according to them they only paid P410,854.47. Petitioners added
that this fact of full payment is reflected in the voucher accompanying the Pilipinas
Bank check they issued, which bore the notation "full payment of IGLF loan."

On April 30, 1990, the lower court rendered a decision, the dispositive portion of
which reads:

WHEREFORE, in view of the foregoing, the defendants Victor Yam and Yek
Sun Lent are hereby ordered to pay jointly and severally, the principal loan
balance of P266,146.88 as of September 4, 1986 plus interest at 14% per
annum, service charge at 1% per annum and penalty fees at 2% per month
and to pay plaintiff attorney's fees equivalent to 10% of the amount to be
recovered, and to pay the costs of suit, failing in which, the chattel
mortgage instituted on the printing machineries and equipment described in
the Deed of Chattel Mortgage dated May 10, 1979, as amended, is hereby
declared foreclosed and the subject thereof sold in accordance with law to
satisfy the judgment herein rendered.

SO ORDERED. 10

On appeal, the Court of Appeals affirmed the decision of the trial court in toto.
Hence, this petition. Petitioners reiterate the same assignment of errors made by
them before the Court of Appeals, to wit: 11

FIRST ASSIGNED ERROR

 THAT THE LOWER COURT GRIEVOUSLY ERRED IN FAILING TO GIVE
CREDENCE TO THE DOCUMENTARY AS WELL AS TESTIMONIAL EVIDENCE
OF THE PETITIONERS RELATIVE TO THE PAYMENT TO THE RESPONDENT OF
THE ADDITIONAL LOAN UNDER THE AMENDMENT OF DEED OF CHATTEL
MORTGAGE (EXHIBIT K, RESPONDENT) AND AS AGAINST THE TESTIMONY
OF RESPONDENT'S WITNESS, CRISTINA L. DESTAJO. aisadc

SECOND ASSIGNED ERROR

THAT THE COURT BELOW ERRED IN NOT TOTALLY DISREGARDING

EXHIBITS E AND F OF THE RESPONDENTS

The question is whether petitioners are liable for the payment of the penalties and
service charges on their loan which, as of July 31, 1986, amounted to P266,146.88.

The answer is in the affirmative. Art. 1270, par. 2 of the Civil Code provides that
express condonation must comply with the forms of donation. 12 Art. 748, par. 3
provides that the donation and acceptance of a movable, the value of which exceeds
P5,000.00, must be made in writing, otherwise the same shall be void. In this
connection, under Art. 417, par. 1, obligations, actually referring to credits, 13 are
considered movable property. In the case at bar, it is undisputed that the alleged
agreement to condone P266,146.88 of the second IGLF loan was not reduced in
writing. 14

Nonetheless, petitioners insist that the voucher covering the Pilipinas Bank check
for P410,854.47, containing the notation that the amount is in "full payment of
IGLF loan," constitutes documentary evidence of such oral agreement. This
contention is without merit. The notation in "full payment of IGLF loan" merely
states petitioners' intention in making the payment, but in no way does it bind
private respondent. It would have been a different matter if the notation appeared
in a receipt issued by respondent corporation, through its receiver, because then it
would be an admission against interest. Indeed, if private respondent really
condoned the amount in question, petitioners should have asked for a certificate of
full payment from respondent corporation, as they did in the case of their first IGLF
loan of P500,000.00. 15

Petitioners, however, contend that the Central Bank examiner assigned to

respondent corporation, Cristina Destajo, signed the voucher in question. Destajo
claimed that, when she signed the voucher, she failed to notice the statement that
the amount of P410,854.47 was being given in "full payment of IGLF Loan." She
said she merely took note of the amount and the check number indicated therein. 16
In any event, Destajo, by countersigning the voucher, did no more than
acknowledge receipt of the payment. She cannot be held to have assented thereby
to the payment in full of petitioners' indebtedness to private respondent. It was
obvious she had no authority to condone any indebtedness, her duties being limited
to "issuing official receipts, preparing check vouchers and documentation." 17

Moreover, it is to be noted that the alleged agreement to condone the amount in

question was supposedly entered into by the parties sometime in July 1986, that is,
after respondent corporation had been placed under receivership on November 4,
1985. As held in Villanueva v. Court of Appeals 18 "the appointment of a receiver
operates to suspend the authority of a [corporation] and of its directors and officers
over its property and effects, such authority being reposed in the receiver." 19 Thus,
Sobrepeñas had no authority to condone the debt.

Indeed, Mrs. Yam herself testified that when she and her husband sought the
release of the chattel mortgage over their property, they were told that only the
Central Bank would authorize the same "because [the CB] is the receiver." 20
Considering this, petitioners cannot feign ignorance and plead good faith.

The second assignment of error pertains to the petitioners' allegation that they did
not receive the two letters of demand sent by private respondent on September 4
and September 25, 1986. Both the lower court and the Court of Appeals found
otherwise. We have no reason to disturb this factual finding. It is settled that
findings of fact of trial courts, adopted and confirmed by the Court of Appeals, are
final and conclusive and, as a rule, will not be reviewed on appeal. 21

WHEREFORE, the decision of the Court of Appeals is AFFIRMED. LLjur

SO ORDERED.

Bellosillo, Puno, Quisumbing and Buena, JJ ., concur.

Footnotes

1. Per Justice Salome Montoya, Chairman, and concurred in by Justices Eduardo

Bengzon and Fortunato Vailoces.

2. Complaint, Exh. C; Records, pp. 6-16.

3. Id., Exh. D; id., pp. 17-24.

4. Plaintiffs' Offer of Evidence, Exh. I; Records, pp. 223-228.

5. Id., Exh. D-1; id., pp. 229-231.

6. Plaintiffs' Formal Offer of Evidence, Exh. C; Records, p. 213.

7. Id., Exh. E-3; id., p. 217.

8. Defendant's Formal Offer of Evidence, Exh. 5; Records, p. 399.

9. Id., Exhs. 4 & 4-A; id., p. 398.

10. Decision, pp. 13-14; Record, pp. 535-536.

11. Petition, p. 3; Rollo, p. 7.

12. CIVIL CODE, Art. 1270, par. 2.

13. 2 TOLENTINO, CIVIL CODE OF THE PHILIPPINES 25 (4th ed., 1992).

14. TSN, pp. 9-14, Sept. 26, 1989.

15. Offer of Defendant's Evidence, Exh. 1; Records, p. 395.

16. TSN, p. 42, Oct. 27, 1987.

17. TSN, p. 7, Aug. 11, 1987.

18. 244 SCRA 395 (1995).

19. Id., p. 404 citing 65 Am. Jur. 2d Receivers , §146 [1963].

20. TSN, p. 24, July 31, 1989.

21. GSIS v. Court of Appeals , G.R. No. 128471, March 6, 1998.