Gonzales-Saldana vs. Niamatali

Judicial admissions contained in a party’s Answer—such as an acknowledgment of receipt of money—are conclusive and remove the admitted fact from controversy, dispensing with the need for documentary evidence; an agent who acts beyond the scope of authority and purchases different properties without the principal’s consent must return the funds received, and compensatory interest at six percent (6%) per annum attaches from the filing of the complaint as damages for breach of obligation, without any need for a written stipulation on interest.

Respondent-spouses Gordon and Amy Niamatali, then residing in the United States, manifested to petitioner Donabelle Gonzales-Saldana—an employee of the Department of Labor and Employment (DOLE)—their desire to acquire real property in Metro Manila. Petitioner informed them that a parcel of land in Las Piñas City would be sold at a public auction conducted by the DOLE Sheriff’s Office. Respondent-spouses asked petitioner to participate in the auction on their behalf and, on January 30, 2002, remitted US$60,000.00 (approximately P3,000,000.00) to petitioner’s bank account for that purpose.

• Nature of the Transaction: Respondent-spouses Gordon and Amy Niamatali, overseas-based Filipinos, informed petitioner Donabelle Gonzales-Saldana—who worked at DOLE—of their plan to acquire real estate in Metro Manila. Petitioner told them about a parcel of land in Las Piñas City scheduled for public auction by the DOLE Sheriff’s Office. Respondent-spouses instructed petitioner to bid on their behalf.

• Remittance of Funds: On January 30, 2002, respondent-spouses remitted US$60,000.00 (approximately P3,000,000.00) to petitioner’s bank account to cover the purchase of the Las Piñas property.

• Failure of the Intended Purchase: In March 2002, the auction sale of the Las Piñas property did not push through due to a third-party claim. Petitioner later sent respondent-spouses photocopies of Transfer Certificates of Title covering properties in Manila and Parañaque—not Las Piñas. She explained that the judgment creditor had agreed to sell those properties to her instead.

• Respondent-Spouses’ Demand and Petitioner’s Acknowledgment: Upon their return to the Philippines in July 2002, respondent-spouses visited the Las Piñas property, found it locked with a signboard indicating future use for a Lutheran school, and told petitioner they were no longer interested. They demanded the return of their P3,000,000.00. Petitioner agreed and even sent a letter acknowledging receipt of the money and promising to return it on or before September 14, 2002.

• Petitioner’s Version of Events: Petitioner claimed that after the Las Piñas auction was cancelled, she asked respondent-spouses if they wanted to bid on the Manila and Parañaque properties, but received no response. Allegedly acting in good faith, she asked a friend, Alninia L. Austria, to bid; Austria was declared the winning bidder. Petitioner maintained that she told respondent-spouses she would return the money only after selling those two properties.

• Demand and Filing of Suit: Despite repeated demands, petitioner failed to return any sum. Consequently, on March 6, 2006, respondent-spouses filed a complaint for collection of sum of money with moral damages and attorney’s fees.

• Judicial Admissions: Petitioner argued that the statements in her Answer were not admissions but defenses showing that the complaint stated no cause of action; the acknowledgment of receipt was taken out of context because she actually denied having persuaded respondent-spouses to remit money.

• Unjust Enrichment: Petitioner contended that the principle of unjust enrichment was raised for the first time on appeal and was inapplicable because her obligation to return the money was demandable only upon the sale of the Manila and Parañaque properties.

• Interest: Petitioner maintained that no interest could be awarded because the transaction between the parties was not a contract of loan and there was no written stipulation for the payment of interest; monetary interest is prohibited under Article 1956 of the Civil Code absent such a stipulation.

• Inadmissible Evidence: Petitioner insisted that the CA erred in giving weight to respondent-spouses’ documentary evidence—uncertified bank transfer photocopies and an un-notarized promissory note—which the trial court had correctly excluded under the Best Evidence Rule.

• Return of Money: Respondent-spouses countered that petitioner was obligated to return the P3,000,000.00 because she had not informed them of the status of the Las Piñas property since 2002, effectively failing to perform the agreed undertaking; a complaint for recovery of money is proper even if the contract is not a loan.

• Interest as Damages: Respondent-spouses argued that legal interest must be imposed because petitioner was in default and interest serves as indemnity for the delay.

• Judicial Admission: Whether the statements in petitioner’s Answer regarding receipt of P3,000,000.00 and the remittance of funds constituted binding judicial admissions that rendered the documentary evidence of respondent-spouses unnecessary.

• Obligation to Return: Whether petitioner should return the P3,000,000.00 to respondent-spouses despite the fact that the Las Piñas auction did not materialize and she acquired other properties instead.

• Compensatory Interest: Whether petitioner was liable for interest on the amount due despite the absence of a written stipulation and the absence of a loan contract between the parties.

• Judicial Admission: The statements in petitioner’s Answer were held to be judicial admissions. Petitioner admitted, in paragraphs 4(f) and 20(a) of her Answer, that respondent-spouses “sent money via bank-to-bank transaction” and that “plaintiffs may have sent money to defendant but not in the form of loan … to invest in properties, primarily Las Piñas City.” These admissions unequivocally established receipt of P3,000,000.00. Judicial admissions dispense with proof and may be contradicted only by showing palpable mistake or that no admission was made—neither of which petitioner demonstrated. Consequently, the inadmissibility of respondent-spouses’ documentary evidence became immaterial.

• Obligation to Return: Implied agency was found to exist from the dealings of the parties: respondent-spouses communicated their intention to purchase the Las Piñas property and remitted funds to petitioner for that purpose, while petitioner made inquiries and acted on their behalf. Petitioner, however, acted beyond the scope of her authority when she purchased the Manila and Parañaque properties without respondent-spouses’ knowledge and consent, after the Las Piñas auction was cancelled. An agent’s failure to perform the authorized undertaking entitles the principal to recover the money received. The obligation to return was not contingent on the sale of the substituted properties; it arose directly from the breach of the agency.

• Compensatory Interest: The interest imposed by the CA was compensatory interest, not monetary interest. Under Article 2209 of the Civil Code, when the obligation consists in the payment of a sum of money and the debtor incurs delay, legal interest may be imposed as indemnity for damages even without a written stipulation. Because petitioner breached her obligation to return the money after failing to purchase the Las Piñas property, compensatory interest at the rate of 6% per annum attached as damages. The 6% rate, applied in transactions involving breach of obligations in general, was reckoned from the date of filing of the complaint on March 6, 2006, conformably with Eastern Shipping Lines, Inc. v. Court of Appeals and Nacar v. Gallery Frames.

• Judicial Admission — A judicial admission is a verbal or written admission made by a party in the course of the proceedings in the same case. It dispenses with proof of the admitted fact, removes that fact from the field of controversy, and is conclusive against the pleader. It may be contradicted only by showing palpable mistake or that no such admission was made. (Rule 129, Section 4, Rules of Court; Alfelor v. Halasan, 520 Phil. 982 [2006]). In this case, petitioner’s statements in her Answer acknowledging the remittance of P3,000,000.00 bound her, making the inadmissibility of respondent-spouses’ documentary evidence irrelevant.

• Implied Agency — An agency may be implied from the acts of the principal (from silence, lack of action, or failure to repudiate), and acceptance by the agent may likewise be implied from acts carrying out the agency or from silence or inaction. (Civil Code, Articles 1869 and 1870). The Court inferred an agency from: (1) respondent-spouses’ communication of intent to buy and remittance of funds; and (2) petitioner’s conduct in inquiring with the DOLE sheriff and participating in the auction process.

• Compensatory Interest vs. Monetary Interest — Monetary interest is compensation fixed by the parties for the use or forbearance of money and requires (1) an express stipulation in writing and (2) agreement on the rate (Civil Code, Art. 1956). Compensatory interest is imposed by law or courts as penalty or indemnity for damages arising from breach or delay; it does not require a prior written agreement. (Siga-an v. Villanueva, 596 Phil. 760 [2009]). Here, the interest awarded was compensatory, arising from petitioner’s breach of her obligation to return the money.

• Rate of Compensatory Interest for Breach of Obligations — For obligations not involving a loan or forbearance of money, the rate of legal interest as damages for breach is six percent (6%) per annum, computed from the time the complaint is filed until the judgment becomes final and executory; thereafter, the total amount due earns the same rate until full satisfaction. (Eastern Shipping Lines, Inc. v. Court of Appeals, 304 Phil. 236 [1994]; Nacar v. Gallery Frames, 716 Phil. 267 [2013]).

• “A party who judicially admits a fact cannot later challenge [the] fact as judicial admissions are a waiver of proof; production of evidence is dispensed with. A judicial admission also removes an admitted fact from the field of controversy. Consequently, an admission made in the pleadings cannot be controverted by the party making such admission and is conclusive as to such party, and all proofs to the contrary or inconsistent therewith should be ignored, whether objection is interposed by the party or not.” — This passage defines the binding and conclusive character of judicial admissions and underpins the ruling that petitioner’s Answer itself established receipt of the money.

• “Interest may also be imposed by law or by courts as penalty or indemnity for damages. This is called compensatory interest. The right to interest arises only by virtue of a contract or by virtue of damages for delay or failure to pay the principal loan on which interest is demanded.” — Quoted from Siga-an v. Villanueva, this distinction was central to holding that the 6% interest imposed was compensatory and did not violate the no-interest-without-stipulation rule of Article 1956.

• Alfelor v. Halasan, 520 Phil. 982 (2006) — Cited as controlling on the nature and effect of judicial admissions; the Court relied on this to conclude that petitioner could not contest the admitted receipt of P3,000,000.00.

• Siga-an v. Villanueva, 596 Phil. 760 (2009) — Distinguished monetary interest from compensatory interest and explained the requisites for each; the decision adopted its doctrinal framework.

• Eastern Shipping Lines, Inc. v. Court of Appeals, 304 Phil. 236 (1994) and Nacar v. Gallery Frames, 716 Phil. 267 (2013) — Applied for the rules on the imposition of legal interest, particularly the 6% per annum rate for damages arising from breach of obligations and the reckoning point from the filing of the complaint.

• Sun Life of Canada (Phils.), Inc. v. Tan Kit, 745 Phil. 482 (2014) — Reinforced the rule that compensatory interest as a form of damages is due only if the obligor is proven to have failed to comply with the obligation.

• Rule 129, Section 4, Rules of Court — Judicial admissions may be contradicted only by showing palpable mistake or that no such admission was made. Applied to bar petitioner from denying receipt of the P3,000,000.00 after admitting the remittance and receipt in her Answer.

• Civil Code, Article 1868 — Defines the contract of agency. The Supreme Court relied on this provision to affirm the existence of an implied agency between petitioner and respondent-spouses for the purchase of the Las Piñas property.

• Civil Code, Articles 1869 and 1870 — Provide for implied agency from acts, silence, or failure to repudiate, and implied acceptance from acts carrying out the agency. These articles justified the finding of an agency linked to the parties’ dealings.

• Civil Code, Article 1956 — Mandates that no monetary interest shall be due unless expressly stipulated in writing. Distinguished; the interest awarded was compensatory, not monetary, thus the provision did not bar recovery.

• Civil Code, Article 2209 — States that if the obligation consists in the payment of a sum of money and the debtor incurs delay, legal interest may be imposed as indemnity for damages absent a stipulation. Applied to support the award of compensatory interest from the date of judicial demand.

• Civil Code, Article 2212 — Provides that interest due shall earn legal interest from the time it is judicially demanded, even if the obligation is silent. Underpins the further accrual of interest after judgment.

Associate Justice Diosdado M. Peralta (Chairperson), Associate Justice Marvic M.V.F. Leonen, and Associate Justice Alexander G. Gesmundo concurred. Associate Justice Ramon Paul L. Hernando was on wellness leave.