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P.C. Javier & Sons, Inc. vs. Court of Appeals (2005)

Held:
G.R. No. 129552 | 2005-06-29

Subject:
Banks Not Required to Notify All Its Debtors (Change of
Corporate Name)

Banks Not Required to Notify All Its Debtors (Change of

1. Petitioners’ defense that they should first be formally
Corporate Name); Unjust Enrichment; Breach of Contract
notified of the change of corporate name of First Summa
Attended with Bad Faith or Malice to Sustain Award of
Savings and Mortgage Bank to PAIC Savings and Mortgage
Damages
Bank before they would continue paying their loan
obligations to respondent bank presupposed that there
existed a requirement under a law or regulation ordering a
bank that changes its corporate name to formally notify all its
Facts:
debtors.

P.C. Javier, through Pablo Javier, applied with First Summa

2. The SC found that there was no such requirement. The SC
Savings, which name was subsequently changed to PAIC
could not impose on a bank that changes its corporate name
Savings and Mortgage Bank, for a loan accommodation under
to notify a debtor of such change absent any law, circular or
the Industrial Guarantee Loan Fund for P1.5 Million, which
regulation requiring it. Such act would be judicial legislation.
was thereafter approved. P250,000 was collected from the
mentioned amount to become part of the collateral to the
entire loan. The Central Bank released the money in two
tranches. Eventually, P.C. Javier defaulted in paying the
3. The formal notification was discretionary on the bank.
obligation. After several demands, it still failed to pay.
Unless there was a law, regulation or circular from the SEC or
Defendant Bank then initiated extrajudicial foreclosure of the
BSP requiring the formal notification of all debtors of banks of
real estate mortgage executed by the Spouses Javier. The
any change in corporate name, such notification remained to
auction sale of the property was then scheduled.
be a mere internal policy that banks may or may not adopt.

Petitioners P.C. Javier & Sons, Inc. and Spouses Javier filed a
First Summa and PAIC Savings Were One and the Same
complaint for annulment of mortgage and foreclosure with
preliminary injunction and damages against the defendants.
The RTC ordered respondents-sheriffs to maintain the status
quo and to desist from further proceeding with the
4. First Summa Savings and Mortgage Bank and PAIC Savings
extrajudicial foreclosure of the mortgaged properties.
and Mortgage Bank were one and the same bank to which
petitioner corporation was indebted. A change in the
corporate name does not make a new corporation, whether
effected by a special act or under a general law. It has no
The RTC dismissed the filed by the petitioners. It ruled that
effect on the identity of the corporation, or on its property,
the petitioner was liable to the respondent bank for the
rights, or liabilities.
unpaid balance of the loans. It ruled that the bank was
justified in extrajudicially foreclosing the real estate
mortgages because the loans were already due and
demandable when it commenced the foreclosure
5. The corporation, upon such change in its name, is in no
proceedings. The CA affirmed the decision of the lower court
sense a new corporation, nor the successor of the original
in toto.
corporation. It is the same corporation with a different name,
and its character is in no respect changed.

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Collection of P250,000 Was Not Unjust Enrichment

12. The awarding of actual and compensatory damages, as
well as attorney's fees, was justified under the circumstances.

6. Petitioners maintained that to collect the P250,000.00

from them would be a clear case of unjust enrichment
because they have not availed or used said amount for the
same was unlawfully withheld from them. The SC disagreed.

7. The fundamental doctrine of unjust enrichment is the

transfer of value without just cause or consideration. The
elements of this doctrine are: enrichment on the part of the
defendant; impoverishment on the part of the plaintiff; and
lack of cause.

8. The main objective is to prevent one to enrich himself at

the expense of another. It is commonly accepted that this
doctrine simply means that a person shall not be allowed to
profit or enrich himself inequitably at another's expense.

9. In the case, there was no unjust enrichment to speak of.

The amount of P225,905.79 was applied as payment for
petitioner corporation's loan which was taken from the
P250,000.00, together with its accrued interest, that was
placed in time deposit with First Summa Savings.

Breach of Contract Attended with Bad Faith or Malice to

Sustain Award of Damages

10. Despite knowledge that First Summa Savings and

Mortgage Bank and PAIC Savings and Mortgage Bank were
one and the same entity, petitioners pretended otherwise. It
used this purported ignorance as an excuse to renege on its
obligation to pay its loans after they became due and after
demands for payment were made, claiming that it never
obtained the loans from respondent bank.

11. No good faith was shown by petitioner. If it were in good

faith in complying with its loan obligations since it believed
that respondent bank had no right to the payment, it should
have made a valid consignation in court.
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