First Division: Benny Y. Hung, G.R. No. 182398
First Division: Benny Y. Hung, G.R. No. 182398
First Division: Benny Y. Hung, G.R. No. 182398
CORONA, C. J.,
Chairperson,
BRION,*
- versus - DEL CASTILLO,**
ABAD, *** and
PEREZ, JJ.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
PEREZ, J.:
For our resolution is the instant petition for review by certiorari assailing the
Decision[1] dated 31 August 2007 and Resolution[2] dated 14 April 2008 of the Court
of Appeals in CA-G.R. CV No. 84641. The Court of Appeals Decision affirmed the
Order[3] dated 30 November 2004 of the Regional Trial Court (RTC) of Makati City
in Civil Case No. 99-2040, entitled BPI Card Finance Corporation v. B & R
Sportswear Distributor, Inc., finding petitioner Benny Hung liable to respondent
BPI Card Finance Corporation (BPI for brevity) for the satisfaction of the RTCs 24
June 2002 Decision[4] against B & R Sportswear Distributor, Inc. The pertinent
portion of the Decision states:
xxx
The delivery by the plaintiff to the defendant of P3,480,427.43 pursuant to the
Merchant Agreements was sufficiently proven by the checks, Exhibits B to V-
5. Plaintiffs evidence that the amount due to the defendant was P139,484.38 only was
not controverted by the defendant, hence the preponderance of evidence is in favor of
the plaintiff. The lack of controversy on the amount due to the defendant when
considered with the contents of the letter of the defendant, Exhibit TT when it returned
to plaintiff P963,604.03 as partial settlement of overpayments made by BPI Card
Corporation to B & R Sportswear, pending final reconciliation of exact amount of
overpayment amply support the finding of the Court that plaintiff indeed has a right to
be paid by the defendant of the amount of P2,516,826.68.
Plaintiff claims interest of 12%. The obligation of the defendant to return did not
arose out of a loan or forbearance of money, hence, applying Eastern Shipping Lines
Inc. vs. Court of Appeals, 234 SCRA 78 (1994) the rate due is only 6% computed from
October 4, 1999 the date the letter of demand was presumably received by the
defendant.
The foregoing effectively dispose of the defenses raised by the defendant and
furnish the reason of the Court for not giving due course to them.
Guess? Footwear and BPI Express Card Corporation entered into two
merchant agreements,[5] dated 25 August 1994 and 16 November 1994, whereby
Guess? Footwear agreed to honor validly issued BPI Express Credit Cards presented
by cardholders in the purchase of its goods and services. In the first agreement,
petitioner Benny Hung signed as owner and manager of Guess? Footwear. He signed
the second agreement as president of Guess? Footwear which he also referred to as
B & R Sportswear Enterprises.
From May 1997 to January 1999, respondent BPI mistakenly credited,
through three hundred fifty-two (352) checks, Three Million Four Hundred Eighty
Thousand Four Hundred Twenty-Seven Pesos and 23/100 (P3,480,427.23) to the
account of Guess? Footwear. When informed of the overpayments,[6] petitioner
Benny Hung transferred Nine Hundred Sixty-Three Thousand Six Hundred Four
Pesos and 03/100 (P963,604.03) from the bank account of B & R Sportswear
Enterprises to BPIs account as partial payment.[7] The letter dated 31 May 1999 was
worded as follows:
Dear Sir/Madame
This is to authorize BPI Ortigas Branch to transfer the amount of P963,604.03 from
the account of B & R Sportswear Enterprises to the account of BPI Card Corporation.
(Sgd.)
Benny Hung
BPI filed a collection suit before the RTC of Makati City naming as defendant
B & R Sportswear Distributor, Inc.[8] Although the case was against B & R
Sportswear Distributor, Inc., it was B & R Footwear Distributors, Inc., that filed an
answer, appeared and participated in the trial.[9]
The Court of Appeals affirmed the order and dismissed petitioners appeal. It
ruled that since B & R Sportswear Distributor, Inc. is not a corporation, it therefore
has no personality separate from petitioner Benny Hung who induced the respondent
BPI and the RTC to believe that it is a corporation.[13]
After his motion for reconsideration was denied, petitioner filed the instant
petition anchored on the following grounds:
I.
II.
In essence, the basic issue is whether petitioner can be held liable for the
satisfaction of the RTCs Decision against B & R Sportswear Distributor, Inc.? As
we answer this question, we shall pass upon the grounds raised by petitioner.
Petitioner also states that the real corporation B & R Footwear Distributors,
Inc. or Guess? Footwear acknowledged itself as the real defendant. It answered the
complaint and participated in the trial. According to petitioner, respondent should
have executed the judgment against it as the real contracting party in the merchant
agreements. Execution against him was wrong since he was not served with
summons nor was he a party to the case. Thus, the lower courts did not acquire
jurisdiction over him, and their decisions are null and void for lack of due process.
Citing Sections 4 and 5, Rule 10 of the Rules of Court, respondent also prays
that the name of the inexistent defendant B & R Sportswear Distributor, Inc. be
amended and changed to Benny Hung and/or B & R Footwear Distributors, Inc.
Moreover, respondent avers that petitioner cannot claim that he was not
served with summons because it was served at his address and the building standing
thereon is registered in his name per the tax declaration.
Indeed, we can validly make the formal correction on the name of the
defendant from B & R Sportswear Distributor, Inc. to B & R Footwear Distributors,
Inc. Such correction only confirms the voluntary correction already made by B & R
Footwear Distributors, Inc. which answered the complaint and claimed that it is the
defendant. Section 4, Rule 10 of the Rules of Court also allows a summary correction
of this formal defect. Such correction can be made even if the case is already before
us as it can be made at any stage of the action.[18] Respondents belated prayer for
correction is also sufficient since a court can even make the correction motu
propio. More importantly, no prejudice is caused to B & R Footwear Distributors,
Inc. considering its participation in the trial. Hence, petitioner has basis for saying
that respondent should have tried to execute the judgment against B & R Footwear
Distributors, Inc.
But we cannot agree with petitioner that B & R Footwear Distributors, Inc. or
Guess? Footwear is the only real contracting party. The facts show that B & R
Sportswear Enterprises is also a contracting party. Petitioner conveniently ignores
this fact although he himself signed the second agreement indicating that Guess?
Footwear is also referred to as B & R Sportswear Enterprises. Petitioner also tries to
soften the significance of his directive to the bank, under the letterhead of B & R
Footwear Distributors, Inc., to transfer the funds belonging to his sole proprietorship
B & R Sportswear Enterprises as partial payment to the overpayments made by
respondent to Guess? Footwear. He now claims the partial payment as his payment
to respondent in the course of their mutual transactions.
Clearly, petitioner has represented in his dealings with respondent that Guess?
Footwear or B & R Footwear Distributors, Inc. is also B & R Sportswear
Enterprises. For this reason, the more complete correction on the name of defendant
should be from B & R Sportswear Distributor, Inc. to B & R Footwear
Distributors, Inc. and Benny Hung.Petitioner is the proper defendant because his
sole proprietorship B & R Sportswear Enterprises has no juridical personality apart
from him.[19] Again, the correction only confirms the voluntary correction already
made by B & R Footwear Distributors, Inc. or Guess? Footwear which is also B &
R Sportswear Enterprises. Correction of this formal defect is also allowed by Section
4, Rule 10 of the Rules of Court.
Relatedly, petitioner cannot complain of non-service of summons upon his
person. Suffice it to say that B & R Footwear Distributors, Inc. or Guess? Footwear
which is also B & R Sportswear Enterprises had answered the summons and the
complaint and participated in the trial.
The correction on the name of the defendant has rendered moot any further
discussion on the doctrine of piercing the veil of corporate fiction. In any event, we
have said that whether the separate personality of a corporation should be pierced
hinges on facts pleaded and proved.[20] In seeking to pierce the corporate veil of B &
R Footwear Distributors, Inc., respondent complained of deceit, bad faith and illegal
scheme/maneuver. As stated earlier, respondent has abandoned such
accusation. And respondents proof the SEC certification that B & R Sportswear
Distributor, Inc. is not an existing corporation would surely attest to no other fact
but the inexistence of a corporation named B & R Sportswear Distributor, Inc. as
such name only surfaced because of its own error. Hence, we cannot agree with
the Court of Appeals that petitioner has represented a non-existing corporation
and induced the respondent and the RTC to believe in his representation.
With regard to the imposable rate of legal interest, we find application of the
rule laid down by this Court in Eastern Shipping Lines, Inc. vs. Court of
Appeals,[21] to wit:
3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.
Since this case before us involves an obligation not arising from a loan or
forbearance of money, the applicable interest rate is 6% per annum. The legal
interest rate of 6% shall be computed from 4 October 1999, the date the letter of
demand was presumably received by the defendant.[22] And in accordance with
the aforesaid decision, the rate of 12% per annum shall be charged on the total
amount outstanding, from the time the judgment becomes final and executory until
its satisfaction.
WHEREFORE, we DENY the petition for lack of merit, and ORDER B &
R Footwear Distributors, Inc. and petitioner Benny Hung TO PAY respondent BPI
Card Finance Corporation: (a) P2,516,823.40, representing the overpayments, with
interest at the rate of 6% per annum from 4 October 1999 until finality of judgment;
and (b) additional interest of 12% per annum from finality of judgment until full
payment.
No pronouncement as to costs.
SO ORDERED.
RENATO C. CORONA
Chief Justice
Chairperson
ROBERTO A. ABAD
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice
* Also referred to as Benny Y. Hung and Benny W. Hung in the records.
* Designated as an additional member in lieu of Associate Justice Teresita J. Leonardo-De Castro per Special Order
No. 856 dated 1 July 2010.
** Designated as Acting Working Chairperson in lieu of Associate Justice Presbitero J. Velasco, Jr., per Special Order
No. 853 dated 1 July 2010.
*** Designated as an additional member in lieu of Associate Justice Antonio Eduardo B. Nachura per Special Order
No. 869 dated 5 July 2010.
[1]
Penned by Associate Justice Monina Arevalo-Zenarosa, with Acting Presiding Justice Conrado M. Vasquez, Jr. and
Associate Justice Edgardo F. Sundiam, concurring. Rollo, pp. 29-41.
[2]
Penned by Associate Justice Monina Arevalo-Zenarosa, with Presiding Justice Conrado M. Vasquez, Jr. and
Associate Justice Edgardo F. Sundiam, concurring. Id. at 43-45.
[3]
Id. at 33.
[4]
Penned by Judge Sixto Marella, Jr., Id. at 92-94.
[5]
Id. at 201-202.
[6]
Id. at 30-31 and 93.
[7]
Id. at 31.
[8]
Id. at 92.
[9]
Id. at 31-32.
[10]
Based on the figures stated, the amount payable should be P2,516,823.40, or P3.28 lower. Id. at 94.
[11]
Id. at 79-83.
[12]
Id. at 33.
[13]
Id. at 38-39.
[14]
Id. at 17.
[15]
Id. at 80.
[16]
SEC. 4. Formal amendments. A defect in the designation of the parties and other clearly clerical or typographical
errors may be summarily corrected by the court at any stage of the action, at its initiative or on motion,
provided no prejudice is caused thereby to the adverse party.
[17]
SEC. 5. Amendments to conform to or authorize presentation of evidence. When issues not raised by the pleadings
are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had
been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform
to the evidence and to raise these issues may be made upon motion of any party at any time, even after
judgment; but failure to amend does not affect the result of the trial of these issues. If evidence is objected to
at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings
to be amended and shall do so with liberality if the presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may grant a continuance to enable the amendment to
be made.
[18]
See also Yao Ka Sin Trading v. Court of Appeals, G. R. No. 53820, 15 June 1992, 209 SCRA 763, 780.
[19]
Id. at 780.
[20]
See General Credit Corporation v. Alsons Development and Investment Corporation, G.R. No. 154975, 29 January
2007, 413 SCRA 225, 238.
[21]
G. R. No. 97412, 12 July 1994, 234 SCRA 78, 96-97.
[22]
Supra note 4.