July 29, 2019

G.R. No. 213156

MARIO C. TAN AND ERLINDA S. TAN, Petitioners

vs.
UNITED COCONUT PLANTERS BANK, Respondent

DECISION

REYES, J. JR., J.:

Assailed in this Petition for Review on Certiorari  filed under Rule 45 of the Rules of Court are the
1

February 28, 2013 Decision  and the June 23, 2014 Resolution  of the Court of Appeals (CA) in CA-
2 3

G.R. CV No. 96652 which affirmed the trial court's dismissal of petitioners' complaint for specific
performance and damages against respondent United Coconut Planters Bank (UCPB).

Facts

Petitioners spouses Mario C. Tan (Mario) and Erlinda S. Tan (spouses Tan) were pioneer clients of
UCPB. Since the 1980's, they continuously availed of credit lines from UCPB. 4

On August 16, 2001, spouses Tan were granted by UCPB an omnibus credit line in an amount not
exceeding ₱300 Million.

This ₱300 Million credit line was also made available as an accommodation to several other parties,
namely: (1) Lory Tan (Lory); (2) Evelyn Tan (Evelyn); (3) Allied Distributor; (4) Isabela Washington
Lumber Hardware & Electrical Supply; and (5) Beatriz Siok Ping Tang (Beatriz), proprietress of
Ready Traders. 5

To secure the ₱300 Million credit line, the following collaterals were agreed upon:

ARTICLE IV
COLLATERALS

Section 4.01. This AGREEMENT, including all release(s)/availment(s) made pursuant thereto is

secured by:

1) Suretyship Agreement executed in favor of the BANK by the SPS. MARIO TAN and
ERLINDA TAN to secure the loan obligations of Lory Tan; Evelyn Tan; Allied Distributor;
Isabela Washington Lumber Hardware & Electrical Supply, both owned by Mario Tan; and
Beatriz Siok Ping Tang, proprietress of Ready Traders;

2) Deed of Negative Pledge over properties covered by Transfer Certificates of Title Nos.
20601 and 20602, both located in Paranaque City, including all improvements now existing
and to be constructed thereon; and

3) Real Estate Mortgage over properties covered by Transfer Certificates of Title Nos. C-
18864 and T-164181, both located in Caloocan city, registered under the name of Mario C.
Tan, including all improvements now existing and to be constructed thereon.  (Emphasis in the
6

original)
Accordingly, spouses Tan executed a Surety Agreement dated August 16, 2001, to secure the credit
availments of the accommodated parties.  The Surety Agreement, in pertinent part, provides:
7

Section 1.01. The SURETIES, jointly and severally with the PRINCIPAL, hereby unconditionally and
irrevocably guarantee the full and complete payment when due, whether at stated maturity, by
acceleration, or otherwise, of all sums payable by the PRINCIPAL under the Credit Agreement, the
Note/s and other related documents or instruments referred to therein (herein after referred to
collectively as the "Loan Documents") the terms and conditions of which are hereby deemed
incorporated by reference. 8

Also, in accordance with the terms of the ₱300 Million credit line agreement, two previously
executed documents were carried over in favor of UCPB: (1) a Real Estate Mortgage (REM) dated
August 29, 1991, covering the two parcels of land located at Caloocan City and registered under the
names of spouses Tan; and (2) a Deed of Negative Pledge dated February 19, 1994, covering the
two parcels of land located at Parañaque City registered under the name of Mario.

On August 29, 2001, Mario sent a letter  to UCPB, instructing the latter that Beatriz must first obtain
9

a written authorization or conformity from either himself, Lory or Evelyn before Beatriz can avail of
the credit accommodation. 10

Pursuant to this instruction, written authorizations were given by Mario on October 1, 2001,  October
11

9, 2001,  and February 12, 2002,  authorizing Beatriz to avail of the credit line in various amounts
12 13

for which UCPB accordingly issued the corresponding bank undertakings.

When the ₱300 Million credit line expired in July 2002, UCPB granted spouses Tan another omnibus
credit line on August 1, 2002, in an amount not exceeding ₱500 Million and which shall expire on
July 31, 2003.  The ₱500 Million credit line was similarly made available to Lory, Evelyn, Allied
1âшphi1

Distributor and Isabela Washington Lumber Hardware & Electrical Supply. However, a credit facility
in the form of a credit certification line up to the sub-limit amount of ₱300 Million was also made
available to Beatriz, proprietress of Ready Traders and Able Transport Service.

As security for the ₱500 Million credit line, the REM over the Caloocan properties was carried over
and, in addition, a REM dated August 1, 2002, over the Parañaque properties was executed.
Spouses Tan also executed a Surety Agreement to secure any credit availments obtained by the
accommodated parties including that of Beatriz's. 14

On September 5, 2002, Mario again sent a letter  to UCPB, similarly instructing the latter that a
15

written consent from either himself, Lory or Evelyn must first be obtained by Beatriz before she is
allowed to avail of the credit line.  This letter was prompted by the fact that the ₱500 Million credit
16

line was made available to Beatriz as proprietress of Ready Traders and Able Transport Service
(unlike the ₱300 Million credit line which was made available to Beatriz as proprietress of Ready
Traders only). The letter was further necessitated by the fact that spouses Tan had been receiving
reports that UCPB has been extending credit facilities in favor of Subic Bay Distribution, Inc., (SBDI)
for Beatriz drawn from spouses Tan's credit line without the required written authority.17

In November 2002, and upon the instructions of Mario, Evelyn obtained from Cynthia Camacho
(Camacho), UCPB's account officer handling spouses Tan's credit line, a list of the outstanding
availments made by spouses Tan and the accommodated parties from the ₱300 Million and ₱500
Million credit lines.  Allegedly, Camacho confirmed that there were several bank undertakings issued
18

in favor of SBDI for the account of Beatriz but that it was taken out of Beatriz's own credit
line.  Camacho then furnished Evelyn a one page list detailing the outstanding undertakings issued
19

by UCPB to Beatriz by virtue of the P500 Million credit line, showing a total availments of
₱30,000,000.00.  Parenthetically, this list is to be later disputed by UCPB as actually composing of
20

two pages, whereby the second page detailed the bank undertakings issued in favor of SBDI for the
account of Beatriz and which were drawn from spouses Tan's credit line.

It was also in November 2002, that Mario was informed that SBDI was drawing payment against
spouses Tan's credit line pursuant to the bank undertakings issued for the account of Able Transport
Service.  Efforts to communicate with UCPB regarding this matter allegedly proved futile.
21 22

Meanwhile, when the ₱500 Million credit line expired in July 2003, spouses Tan sought to renew the
same but they were informed that UCPB could only grant a credit line in an amount not exceeding
₱250,000,000.00. Finding this unacceptable, Mario (through Jose Tan, treasurer of Isabela,
Washington Lumber) sent a letter  dated September 15, 2003, to UCPB requesting for the
23

immediate release of the REMs and the return of the certificates of title considering that the credit
line expired on July 31, 2003, without being renewed and that spouses Tan had no outstanding
liabilities. This request was reiterated in letters dated February 16, 2004  and March 17, 2004.
24 25

Finally, on March 23, 2004, UCPB replied, denying the request for the release of the REMs. UCPB
reminded Mario that the REM dated August 29, 1991 (over the Caloocan properties) secure the
payment of all loans of Mario; that the REM dated August 1, 2002 (over the Parañaque properties)
secured the payment of all loans, overdrafts, credit lines and other credit facilities or
accommodations obtained by Mario, Lory, Evelyn and Beatriz, proprietress of Ready Traders and
Able Transport Service; and that the Surety Agreement dated August 1, 2002, guaranteed full
payment of all sums payable by Beatriz. According to UCPB, it issued two bank undertakings for the
account of Beatriz in favor of SBDI and that the total credit accommodation granted by UCPB to Able
Transport Service was ₱100,000,000.00. Since there were outstanding credit accommodations to
Beatriz/Able Transport Service secured by the REMs and the Surety Agreement, UCPB declined
Mario's request. 26

Mario then received a letter dated May 12, 2004 from UCPB demanding the payment of
₱20,642,951.48 as surety for the unpaid obligations of Beatriz.  Spouses Tan denied having
27

knowledge of any outstanding obligation of Beatriz with UCPB.  No reply thereto was given by
28

UCPB. 29

The stalemate led to the filing of spouses Tan of the complaint a quo for specific performance and
damages wherein they prayed for the release of the REMs over the Caloocan and Parañaque
properties and for UCPB to return the corresponding certificates of title.

UCPB's Answer

By way of answer,  UCPB argued that the REMs and the Surety Agreement secured all the
30

obligations of Beatriz, whether or not the obligation was obtained through Mario's credit line or on
Beatriz's own account.

According to UCPB, Beatriz has an outstanding loan obligation of ₱34,513,331.89  as evidenced by
31

the following promissory notes:

Borrower Date Amount

Beatriz Siok Ping Tang March 4, 2004 32

Php5,000,000.00

Beatriz Siok Ping Tang March 12, 2004 33

Php10,000,000.00
 Beatriz Siok Ping Tang March 18, 2004 34
Php5,000,000.00

Further, UCPB argued that Beatriz has a contingent liability in the amount of ₱115,000,000.00 since
UCPB had issued the following bank undertakings in favor of SBDI upon Beatriz's request: 35

Borrower/Client Reference No. Period Amount

Beatriz Siok Ping CAL-004/02 March 6, 2002 to Php15,000,000.00 36

Tang March 1, 2003

Able Transport CAL-008/02 June 17, 2002 to Php15,000,000.00 38

Service September 30, 2002

(extended up to
November 30, 2002) 37

Able Transport CAL-010/02 June 18, 2002 to Php30,000,000.00 40

Service September 18, 2002

(extended up to
November 30, 2002) 39

Able Transport CAL-010/02 July 2, 2002 to Php30,000,000.00 42

Service September 18, 2002

(extended up to
November 30, 2002) 41

Able Transport CAL-012/02 August 5, 2002 to Php20,000,000.00 44

Service September 30, 2002

(extended up to
November 30, 2002) 43

According to UCPB, SBDI already requested to draw payment on the foregoing bank undertakings.  45

Spouses Tan countered that the aforesaid outstanding liabilities of Beatriz were incurred by her in
her own personal capacity and not as an accommodated party. They also argued that the REMs and
the Surety Agreement secure only those obligations drawn from the credit line agreements, the
former being merely accessory to the latter. Thus, obligations incurred by Beatriz which were not
drawn from either the ₱300 Million or ₱500 Million credit line agreements were not secured by the
REMs and the Surety Agreement. 46

Specifically, they pointed out that the promissory notes were executed by Beatriz in her personal
capacity in 2004, or way after the expiration of the credit line agreements. Anent the bank
undertakings, spouses Tan contend that these were issued either in favor of Beatriz in her personal
capacity or in favor of Able Transport Service which is not an accommodated party under the ₱300
Million credit line. They also emphasized that these bank undertakings were issued without the
required written authority from Mario.  Instead, they argued that the bank undertakings appear to
47

have been issued by UCPB not by virtue of spouses Tan's ₱300 Million or ₱500 Million credit line
agreements but by another credit agreement entered into between UCPB and Beatriz herself. To
prove their point, spouses Tan directed attention to a separate complaint filed by Beatriz against
UCPB wherein the latter admitted  that the bank undertakings were subject to the terms of the credit
48

agreement entered into between Beatriz and UCPB. 49

Spouses Tan also attached an Affidavit dated January 6, 2003 executed by Beatriz wherein she
attested that she was accommodated by spouses Tan to avail of the ₱500 Million credit line and that
by virtue thereof, she was granted by UCPB several bank undertakings. She, however, attested that
these bank undertakings were renewed and effected through her and UCPB's initiative and that no
prior approval was sought from Mario. 50

The RTC's Ruling

On December 30, 2010, the RTC rendered its decision dismissing spouses Tan's complaint for
specific performance. The RTC ruled that since spouses Tan allowed a third party, i.e., Beatriz, to
avail of the credit line, the latter's drawings were likewise secured by the REMs. It held that UCPB
was not negligent in handling the credit line arrangement with spouses Tan. Perusing the list of
outstanding availments given by UCPB to Evelyn in November 2002, the RTC found that there were
outstanding liabilities drawn against the credit line, as such the REMs cannot as yet be cancelled,
and the certificates of title released, and consequently, the complaint for specific performance,
suffered from prematurity.51

The RTC disposed as follows:

WHEREFORE, premises considered, this Court hereby DISMISSED [sic] the Complaint for
insufficiency of evidence or for lack of it, without pronouncement as to cost.

Moreover, the counterclaim of defendant is also hereby DISMISSED for insufficiency of evidence.

SO ORDERED. 52

Spouses Tan appealed to the CA. They argued that they have no outstanding or contingent liability
either under the ₱300 Million or ₱500 Million credit line agreements. It was their position that while
Beatriz, as proprietress of Ready Traders and Able Transport Service, was made an accommodation
party in the credit agreements, the promissory notes and the bank undertakings which were issued
in her favor or in favor of the sole proprietorships were not covered by spouses Tan's credit line
agreements.

The CA's Ruling

The CA agreed with the RTC's ruling that the release of the collaterals was still premature. It
observed that the REM dated August 1, 2002, over the Parañaque properties secured the payment
of all loans obtained by Beatriz as proprietress of Ready Traders and Able Transport Service.  The
53

CA further held that while Beatriz's financial obligations were drawn from her own separate credit
line, such was of no moment considering that the refusal to release the collaterals was due to
Beatriz's outstanding obligation in the amount of ₱34,513,331.89 which was secured by the REM
dated August 1, 2002.

According to the CA, neither should the REM over the Caloocan properties be cancelled because
spouses Tan failed to prove that their obligations with UCPB had been extinguished. Similar with the
RTC, the CA pointed to the list of outstanding availments which showed that there were outstanding
availments made by Isabela Washington Lumber Hardware & Electrical Supply and Allied Distributor
from the credit line, which availments were not shown by spouses Tan to have been
paid.   Resultantly, the CA held that unless spouses Tan present proof of full payment of their
54

principal obligations with UCPB, it would be premature for them to pray for the release of the
mortgage lien and the cancellation of the encumbrances annotated on the certificates of title.
With the denial of their appeal as well as their subsequent motion for reconsideration, spouses Tan
interposed the present petition.

Issues

Spouses Tan fault the CA for allegedly failing to resolve the material issue of whether the loan
accommodations obtained by Beatriz were drawn from the ₱300 Million or ₱500 Million credit lines.
For spouses Tan, the CA committed error when it ruled that there were outstanding obligations in the
amount of ₱34,513,331.89 when the promissony notes evidencing said obligations were not formally
offered in evidence.  The CA also allegedly erred when it failed to consider the judicial admissions
55

made by UCPB in the separate civil complaint filed by Beatriz that the latter's obligations were
incurred by her through her own credit line.  Fault is likewise attributed to the CA when, like the
56

RTC, it regarded the list of availments sent by UCPB as outstanding obligations drawn from spouses
Tan's credit line when said list supposedly only details the available credit on which spouses Tan
and their accommodated parties can draw on.  In any case, spouses Tan argue, these alleged
57

outstanding credit facilities expired without having been drawn or negotiated.  58

For its part, UCPB seeks for the immediate dismissal of the petition for raising factual issues
improper in a Rule 45 petition. Nevertheless, countering spouses Tan's arguments, UCPB maintains
that the REMs and the Surety Agreement secure all the obligations of Beatriz, whether or not they
were obtained through spouses Tan's ₱300 Million or ₱500 Million credit lines.  UCPB argues that
59

because of Beatriz's contingent liability under the bank undertakings which UCPB issued in favor of
SBDI, the collaterals cannot as yet be released.  It also argues that the written authority which
60

spouses Tan required before Beatriz is allowed to avail of the credit line could not have amended the
terms of the credit line agreements in the absence of the written agreement of all the parties
thereto.   On the bases of these arguments, UCPB prays for the dismissal of the present petition.
61

At its core, the issue to be resolved is whether the CA erred when it denied the cancellation of the
REMs and the release of the collaterals used to secure the credit lines granted to spouses Tan.

Ruling of the Court

We deny the petition.

The rule is that only questions of law may be brought in petitions for review under Rule 45 of the
Rules of Court and that findings of facts made by the Court of Appeals and trial courts are binding,
absent any showing of abuse, capriciousness or arbitrariness.  Wading through the arguments
62

advanced in the instant petition, the main issue which spouses Tan seek to be resolved is whether
the obligations incurred by Beatriz are likewise secured by the REMs executed by spouses Tan. This
is a factual issue, the determination of which necessitates a review and calibration of the evidence
presented by the parties – a function which the Court does not, as a rule, perform in a petition for
review.

As in all general rules, the rule that only questions of law may be entertained in a petition for review
also permits exceptions. As enumerated in Pascual v. Burgos: 63

However, these rules do admit exceptions. Over time, the exceptions to these rules have expanded.
At present, there are 10 recognized exceptions that were first listed in Medina v. Mayor Asistio, Jr.:

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2)
When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave
abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the
findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond
the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7)
The findings of the Court of Appeals are contrary to those of the trial court; (8) When the findings of
fact are conclusions without citation of specific evidence on which they are based; (9) When the
facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by
the respondents; and (10) The finding of fact of the Court of Appeals is premised on the supposed
absence of evidence and is contradicted by the evidence on record.  (Internal citations omitted)
64

Spouses Tan invoke the lack of sufficient support in evidence of the trial court's judgment or the
appellate court’s misapprehension of adduced facts to propel the Court's factual review. However,
mere invocation of these exceptions is not sufficient. There must be an ample demonstration on why
it should be the exception rather than the general rule that must be applied. Spouses Tan fall short in
this regard.

Even if the Court considers the facts as alleged by spouses Tan, it will still arrive at the conclusion
that they fail to establish by preponderance of evidence that they are entitled to the release of the
REMs and for the return of their certificates of title at the time they filed their complaint.

The security provided by the REMs

are continuing in nature

It is spouses Tan's position that the REMs should be released as there are no outstanding
availments from the credit lines secured by said mortgages. The terms of the REMs, however,
negate the contention that the security provided by the mortgages is confined only to the ₱300
Million and ₱500 Million credit line agreements.

On the contrary, the obligations secured under the terms of the REM dated August 29, 1991, are as
follows:

ARTICLE I

SECURED OBLIGATIONS

This MORTGAGE shall secure the following obligations:

The payment of all loans, overdrafts, credit lines and other credit facilities or accommodation
obtained or hereinafter obtained, by the MORTGAGOR and/or by MARIO C. TAN (hereinafter
referred to as

DEBTOR).

The payment of all interests, charges, penalties, reimbursements and other obligations owing by the
MORTGAGOR and/or DEBTOR to the MORTGAGEE whether direct or indirect, principal or
secondary; absolute or contingent as appearing in [accounts] books and records of the MORTAGEE.

The payment of all obligations of the MORTGAGOR and/or DEBTOR of whatever kind or nature
whether such loans have been contracted before, during, or after the constitution of this
MORTGAGE.
In case the MORTGAGOR and/or DEBTOR incur subsequent obligations whether as a renewal of
the former obligation or extension thereof, or as new loans or is given any other kind of
accommodations, the payment of said obligations, and or accommodations without the necessity of
executing new agreements. (Underscoring supplied)

The faithful and strict performance and compliance by the MORTGAGOR and/or DEBTOR of all the
terms and [conditions] of the MORTGAGE, the credit agreements, promissory notes and other loan
documents and agreements evidencing the overdrafts, credit lines and other credit accommodations
granted to the MORTGAGOR and/or DEBTOR; including all amendments thereon, such as but not
limited to changes in the interest rates, penalties, charges, or fees; accelerations of payments; and
the] like.
65

xxxx

ARTICLE XXI

ACCOMMODATION MORTGAGE:

Whenever this mortgage is executed in accommodation of a DEBTOR other than a MORTGAGOR,

the MORTGAGOR agrees (that the mortgage shall stand as security for the renewal, extension of
payment of the obligation secured by this mortgage to its [conversion) into any other credit facility
that may be agreed between the DEBTOR and the MORTGAGEE, as well as all additional loans or
credit accommodations that may be granted by the MORTGAGEE to the DEBTOR without further
need of [amending] the mortgage and the DEBTOR is deemed to be Attorney-in-Fact of the
MORTGAGOR for such purpose. The MORTGAGOR [further] agrees that this mortgage shall also
secure his/her own personal obligations with the MORTGAGEE of whatever kind and [...] whether
direct or indirect, principal or secondary, as appearing in the account, books and records of the
MORTGAGEE. [...] this mortgage were executed to secure the said personal obligations of the
MORTGAGOR under the same terms and conditions [...] for this purpose, it is hereby agreed that
the term "DEBTOR" or any other word describing the principal obligor shall otherwise mean and
include the term "MORTGAGOR" and vice versa, as the context may require.  (Underscoring
66

supplied)

In fact, the REM dated August 29, 1991 even preceded the ₱300 Million credit line and was merely
carried over to secure the latter. This previously-executed REM was likewise carried over to secure
the subsequent ₱500 Million credit line.

Quite similarly, the obligations secured under the terms of the REM dated August 1, 2002 are as
follows:

ARTICLE I

SECURED OBLIGATIONS

This MORTGAGE shall secure the following obligations:

1. The payment of all loans, overdrafts, credit lines and other credit facilities or accommodations
obtained or hereinafter obtained by the MORTGAGOR and/or by Mario Tan, Lory Tan, Evelyn Tan
and Beatriz Siok Ping Tang, proprietress of Able Transport Service and Ready Traders (hereinafter
referred to as DEBTOR)
2. The payment of all interests, charges, penalties, reimbursements and other obligations owing by
the MORTGAGOR and/or DEBTOR to the MORTGAGEE whether direct or indirect, principal or
secondary, absolute or contingent as appearing in the accounts, books and records of the
MORTGAGEE.

3. The payment of all obligations of the MORTGAGOR, and/or DEBTOR, of whatever kind and
nature whether such obligations have been contracted before, during or after, the constitution of this
MORTGAGE.

4. In case the MORTGAGOR and/or DEBTOR incurs subsequent obligations of whatever kind or
nature whether such obligations, as extension thereof, or as new loans or is given any other kind of
accommodations, the payment of said obligations, and/or accommodations, without the necessity of
executing new agreements.

5. The faithful and strict performance and compliance by the MORTGAGOR and/or DEBTOR of all
the terms and conditions of the MORTGAGE, the credit agreements, promissory notes and other
loan documents and agreements evidencing the loans, overdrafts, credit lines and other credit
accommodations granted to the MORTGAGOR and/or DEBTOR; including all amendments thereon,
such as, but not limited to, changes in the interest rates, penalties, charges, or fees; acceleration of
payments; and the like.

All the foregoing obligations secured by this MORTGAGE are hereinafter referred to as SECURED
OBLIGATIONS.   (Underscoring supplied)
67

The REMs dated August 29, 1991 and August 1, 2002, uniformly and clearly provide that the
mortgages secure the payment of "all loans, overdrafts, credit lines and other credit facilities of
accommodation, obtained or hereinafter obtained" by spouses Tan. In Bank of Commerce v.
Spouses Flores,  the Court explains the import of such phraseology as evidencing a continuing
68

guaranty, thus:

A continuing guaranty is a recognized exception to the rule that an action to foreclose a mortgage
must be limited to the amount mentioned in the mortgage contract. Under Article 2053 of the Civil
Code, a guaranty may be given to secure even future debts, the amount of which may not be known
at the time the guaranty is executed. This is the basis for contracts denominated as a continuing
guaranty or suretyship. A continuing guaranty is not limited to a single transaction, but contemplates
a future course of dealing, covering a series of transactions, generally for an indefinite time or until
revoked. It is prospective in its operation and is generally intended to provide security with respect to
future transactions within certain limits, and contemplates a succession of liabilities, for which, as
they accrue, the guarantor becomes liable. In other words, a continuing guaranty is one that covers
all transactions, including those arising in the future, which are within the description or
contemplation of the contract of guaranty, until the expiration or termination thereof.

A guaranty shall be construed as continuing when, by the terms thereof, it is evident that the object
is to give a standing credit to the principal debtor to be used from time to time either indefinitely or
until a certain period, especially if the right to recall the guaranty is expressly reserved. In other
jurisdictions, it has been held that the use of particular words and expressions, such as payment of
"any debt," "any indebtedness," "any deficiency," or "any sum," or the guaranty of any transaction" or
money to be furnished the principal debtor at any time" or "on such time" that the principal debtor
may require, has been construed to indicate a continuing guaranty.  (Citations omitted)
69

Accordingly, the Court held in Bank of Commerce that the payment of the amounts stated in the
mortgage shall not discharge the mortgage until full payment of all debts obtained and unpaid. Here,
the terms of the REMs, coupled with the fact that the REM dated August 29, 1991, was carried over
to secure the latter credit lines, show that the mortgages are intended as security for the payment
not only of the availments from the ₱300 Million and ₱500 Million credit lines, but as security for all
amounts that spouses Tan may owe UCPB, including accommodations which spouses Tan
voluntarily extended to other parties. Thus, in the absence of proof that these obligations had been
extinguished, UCPB cannot, as yet, be compelled to release the REMs.

Bank undertakings issued in favor

of Beatriz were drawn from the
₱300 Million and ₱500 Million
credit lines

Even if the Court follows spouses Tan's theory that only availments drawn from the ₱300 Million and
₱500 Million credit lines are secured by the REMs, the same conclusion will still be arrived at
because the subject bank undertakings are, in fact, demonstrated to have been drawn from said
credit lines.

To recall, UCPB refused to release the REMs because of Beatriz's outstanding obligations which
were principally composed of: (1) the promissory notes amounting to ₱34,513,331.89; and (2) bank
undertakings amounting to a contingent liability of ₱115,000,000.00.

The Court agrees with spouses Tan that, for purposes of the instant case, the promissory notes as
allegedly evidencing Beatriz's outstanding obligations in the amount of ₱34,513,331.89 cannot be
considered as these were not offered in evidence. The rule is that for evidence to be considered, it
must be formally offered. Evidence not formally offered may be admitted and considered by the trial
court if the following requisites are present: one, the documentary evidence must have been duly
identified by testimony duly recorded and, two, the same must have been incorporated in the records
of the case.  The Court is ill-equipped to determine whether Beatriz indeed incurred loans as the
70

promissory notes, which remain to be the best evidence of the loan,  were merely attached to
71

UCPB's answer but were not shown to have been identified by testimony duly recorded.

As regards the bank undertakings issued in favor of Beatriz, spouses Tan contend that these were
not drawn from the credit lines, and, thus, the REMs should not be held as security therefor. To
reiterate, the nature of the REMs as a continuing guaranty belies the claim that the REMs only
secure the availments from the P300 Million and ₱500 Million credit lines.

UCPB, on the other hand, maintains that the bank undertakings were issued precisely because of
the availability of the ₱300 Million and ₱500 Million credit lines.

To dispute this, spouses Tan argue that some of the bank undertakings had a validity period going
beyond the term of the credit lines. This argument is specious considering that the credit line
agreements provide that the term of the credit availments may go beyond the expiry date of the
accommodation, only that all outstanding availments shall become due if the accommodation is not
renewed. 72

Spouses Tan also refuse to answer for the bank undertakings because these were issued not in
favor of Beatriz as "proprietress of Ready Traders" (as provided under the ₱300 Million credit line
agreement) but in favor of Beatriz in her personal capacity, or in favor of Able Transport Service
which is not an accommodated party under the credit lines. In other words, spouses Tan argue that
Beatriz can avail of the credit line only if she does so as the proprietress of Ready Traders.

The pertinent terms of the ₱300 Million credit line provides:

 ARTICLE 1

THE ACCOMMODATION

Section 1.01. Amount and Nature. Subject to the terms and conditions hereof, the BANK agrees to
grant CLIENT an OMNIBUS LINE in the aggregate principal amount of not exceeding THREE
HUNDRED MILLION PESOS ([₱]300,000,000.00), Philippine Currency, or its foreign currency
equivalent, hereinafter referred to as the "Accommodation".

Subject to the same terms and conditions of this AGREEMENT, the Accommodation shall likewise

be made available to Lory Tan; Evelyn Tan; Allied Distributor; Isabela Washington Lumber
Hardware & Electrical Supply, both owned by Mario Tan; and Beatriz Siok Ping Tang,
proprietress of Ready Traders.  (Emphasis in the original and underscoring supplied)
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While the ₱500 Million credit line provides:

ARTICLE I

THE ACCOMMODATION

Section 1.01. Amount and Nature. Subject to the terms and conditions hereof, the BANK agrees to
grant CLIENT an OMNIBUS LINE in the aggregate principal amount of not exceeding FIVE
HUNDRED MILLION PESOS ([₱]500,000,000.00), Philippine Currency, or its foreign currency
equivalent, hereinafter referred to as the "Accommodation".

Subject to the same terms and conditions of this AGREEMENT, the Accommodation shall likewise
be made available to Lory Tan; Evelyn Tan; Allied Distributor and Isabela Washington Lumber
Hardware & Electrical Supply, both owned by Mario Tan.

Section 1.02. Purpose. The proceeds of all availments of the Accommodation shall be used
exclusively by CLIENT to finance their working capital requirements and to provide credit
certification/guaranty as required by CLIENT's suppliers.

xxxx

Section 1.04. Availment. CLIENT may avail of the Accommodation by way of any, some or all of the
credit facilities offered by the BANK provided that each or any combination of which shall in no case
exceed the aggregate principal amount stated in Section 1.01 hereof, under such terms and
conditions as may agreed upon by the Parties hereto and subject to the limits set hereunder:

CREDIT FACILITIES

1) CREDIT CERTIFICATION LINE. CLIENT may avail of this credit facility up to sub-limit amount of
THREE HUNDRED MILLION PESOS ([₱]300,000,000.00), Philippine Currency, by way of credit
certification to be issued by the BANK as required by the CLIENT’S suppliers. In case of drawdown,
CLIENT may avail of this credit facility via Promissory Note/s.

This Facility shall likewise be made available to Beatriz Siok Ping Tang, proprietress of Ready
Traders and Able Transport Service.   (Underscoring and emphasis supplied)
74
Clearly, the addition of the phrases "proprietress of Ready Traders" and "proprietress of Ready
Traders and Able Transport Service" are merely descriptive of Beatriz's registered business names.
It is a common business practice that sole proprietorships have no personality or existence separate
from its owner. Thus, whether Beatriz availed of the credit line as proprietress of Ready Traders or
Able Transport Service, will not be of material significance considering that sole proprietors are fully
personally liable for the proprietorship's debts and obligations.

In any case, spouses Tan do not appear to be too strict as to whether Beatriz availed of the credit
line in her capacity as sole proprietress. The written authorizations  which Mario gave to UCPB
75

allowed "Beatriz" (without specifying that it should be in her capacity as sole proprietress of either
business) to avail of the credit lines. Moreover, the bank undertaking dated October 9, 2001, (which
spouses Tan admit to have been duly authorized) is actually similarly-worded as the contested bank
undertakings. In all instances, the bank undertakings did not specify that these were issued in favor
of Beatriz as sole proprietress of either business.

Spouses Tan also harp on the alleged absence of a prior written authorization which should be
required from Beatriz before she is allowed to avail of the credit lines. Notably, this requirement is
not to be found on the credit line agreements, and therefore, UCPB could not be said to have
acquiesced thereto. At any rate, the required written authorization cannot be deemed to be a
principal aspect of the credit line agreement as spouses Tan unequivocally and unqualifiedly agreed
to be an accommodation party in relation to Beatriz. The absence of a written authorization will not
therefore work to invalidate the bank undertakings.

Strikingly, the facts disclose that spouses Tan knew that Beatriz had been availing of the credit lines
even without the written authorization and that UCPB had been extending bank undertakings in her
favor, and yet, spouses Tan did not bother to revoke the accommodation. On the contrary, spouses
Tan even attempted to renew the credit line for the third time despite the above protestations. This
goes to show that spouses Tan did not consider any of the above as breach of the credit line
agreements.

Spouses Tan have outstanding

availments from the credit lines

Independently of the obligations of Beatriz, it has been established in the proceedings below that
spouses Tan, in fact, had obligations which remained unpaid. Spouses Tan attempt to explain in the
present petition that while there are several availments, no drawdowns were made against the credit
line. However, the Court, not being a trier of facts, is unable to determine the veracity of this factual
allegation. Further, spouses Tan could have offered this explanation at the proceedings before the
RTC, but they did not. Basic is the rule that points of law, theories, issues and arguments not
brought to the attention of the lower court need not be, and ordinarily will not be, considered by a
reviewing court, as they cannot be raised for the first time at that late stage. Basic considerations of
due process impel this rule.76

Admissions of UCPB and Beatriz

Finally, spouses Tan point to the alleged admission made by UCPB in a separate complaint to the
effect that the bank undertakings were subject to the terms of a credit agreement entered into
between UCPB and Beatriz herself. Spouses Tan also emphasize that Beatriz, in her Affidavit,
stated that the bank undertakings were renewed through her own initiative.

Suffice to say that the separate complaint alluded to by spouses Tan pertains to the complaint filed
by Beatriz against UCPB to prevent the latter from releasing funds pursuant to the bank
undertakings in favor of SBDI on the ground that the latter did not comply with its contractual
undertaking. Although the said complaint involves the same bank undertakings, it bears no direct
relation to the issue involved in the instant case. Likewise, the Court cannot hastily jump into a
conclusion on the mere basis of a redacted sentence sourced from UCPB's answer.

With respect to Beatriz's Affidavit, it is therein stated that Beatriz was accommodated by spouses
Tan to avail of the credit line and that "by virtue thereof" she was granted by UCPB several bank
undertakings. Beatriz's Affidavit actually achieved the opposite of what spouses Tan hoped it will
serve – the Affidavit only confirmed and bolstered the fact that the bank undertakings issued upon
her request were drawn against spouses Tan's credit line.

The foregoing considered, the Court finds no reason to grant spouses Tan's prayer for the release of
the REMs and for the return of their certificates of title. Until and unless spouses Tan prove by
preponderance of evidence that the obligations had been satisfied, UCPB is well within its right to
hold onto the mortgages as security.

WHEREFORE, the instant Petition is DENIED. The Decision dated February 28, 2013 and the
Resolution dated June 23, 2014 of the Court of Appeals in CA-G.R. CV No. 96652 are AFFIRMED.

SO ORDERED.