QUIJANO vs. DBP G.R. No.

L-26419 October 16,1970

FACTS:

A petition for mandamus with prayer for a writ of preliminary injunction was filed by petitioners-
appellants (Gedeon G. Quijano and Eugenia T. Quijano) to compel respondent-appellee (Development
Bank of the Philippines) to accept said petitioners-appellants’ back pay certificate payment for their loan
from the said appellee Bank.

It further compelled the respondent-appellee to restrain the ex-officio sheriff of the province of Misamis
Occidental from proceeding with the scheduled foreclosure sale of the real properties mortgaged by
appellant spouses to appellee Bank.

That the petitioners filed an application for an urban estate loan with the Rehabilitation Finance
Corporation (RFC), predecessor-in-interest of the herein respondent-bank, in the amount of P19,500

That the petitioners’ urban real estate loan was approved per RFC Board Resolution No. 2533 on April
30,1953

That the mortgage contract was executedby the petitioners in favor of the respondent-bank on March
23, 1954.

That the first release of P4,200 was made on April 29, 1954, and the other releases were made
subsequent thereafter

That on July 27, 1965, petitioner (as holder of Acknowledgment No. 10181) wrote the respondent-bank
in Manila offering to pay in the amount of P14,000 for his outstanding obligation with the respondent-
bank

That the respondent-bank, thru its Ozamis Branch advised the petitioners of the non-acceptance of his
offer on the ground that the loan was not incurred before or subsisting on June 20, 1953 when Republic
Act 897 was approved

ISSUE:

Whether or not the obligation of the petitioners was subsisting at the time of the approval of Republic
Act No. 897

RULING:

The Court ruled that the obligation was subsisting at the time of the approval of Republic Act No. 897
since it was availed only when they executed the mortgage contract in March 23, 1954 and received the
installments thereafter.

RATIONALE:

The Court cited the pertinent portions of the controlling provisions of the aforementioned Back Pay Law,
as amended by Republic Act No. 897 on June 20, 1953 as follows:

Sec 2. The Treasurer of the Philippines shall, upon application of all persons specified in section one
hereof and within one year from the approval of this Amendatory Act…(1) obligations subsisting at the
time of the approval of this Amendatory Act for which the applicant may directly be liable to the
government or to any of its branches or instrumentalities, or the corporations owned or controlled by
the Government, or to any citizen of the Philippines, or to any association or corporation organized
under the laws of the Philippines, who may be willing to accept the same for such settlement,…

It is clearly stated here that the provisions expressly require the obligations – for which certificates of
indebtedness may be accepted as payments of – must be subsisting at the time of the approval of R.A.
QUIJANO vs. DBP G.R. No. L-26419 October 16,1970

897. Should back pay certificates be offered in payment to a government-owned corporation of an

obligation which was not subsisting at the time of the enactment of said amendatory Act on June 20,
1953, the corporation may not legally be compelled to accept such certificates.

Although the appellants’ application for an urban real estate loan was approved by appellee bank on
April 30, 1953, the appellants only availed it when they executed the mortgage contract only on March
23, 1954.

Furthermore, the Court cited the case of Rodriquez vs DBP wherein Rodriguez obtained a loan from DBP
which he received the sum of P5000 on May 27, 1953 as first release, and the subsequent releases
covering P9000 were all availed of and received later than June 1953. When a balance of about P10000
remained unpaid, Rodriguez offered to pay the said outstanding balance of the loan with his back pay
certificate. The Bank then accepted only the amount of P5000 representing the portion of loan released
before the passage of Republic Act No. 897. So, Rodriguez institued an action of mandamus to compel
the Bank to accept his back pay certificate as payment for his whole outstanding obligation. The Court
then ruled in favor of the Bank since “…the amounts released in July 15, 1953 and thereafter cannot be
considered as obligations subsisting in June 1953.”

In the appellants’ case, the approved loan was availed only about nine (9) months after the enactment
of Republic Act 897 and the corresponding releases were received only after the execution of the
mortgage contract dated March 23, 1954. Therefore, only after the corresponding amounts were
released to appellants after March 23, 1954 did such obligation attach thereby affirming that the said
loan was not subsisting at the time of the approval of Republic Act 897 on June 20, 1953.

Despite the appeal by the appellants that a more liberal construction of the law would enable “many
crippled or disabled veterans, or their wives and orphans, or those who had in one way or another
unselfishly sacrificed or contributed to the cause of war” which was the purpose of the said law, the
Court ruled that there is no room for interpretation or construction in the clear and unambiguous
language of the above-quoted provision of law. The Court’s first and fundamental duty is the application
of law according to its express terms, interpretation being called for only when such literal application is
impossible. It must see to it that its mandate is obeyed. Therefore, even before the amendment of the
Back Pay Law, the said law still limited the applicability of the back pay certificates to “obligations
subsisting at the time of the approval of this Act” and therefore obligations contracted after its
enactment on June 18,1948 cannot be considered.