The Philippine National Bank v. Uy Teng Piao |October 21, 1932| G.R. No.

L-35252 | Justice Vickers

Nature of the Case: Appeal from the decision of the Court of First Instance of Manila
Plaintiff-Appellant: The Philippine National Bank
Defendant-Appellee: Uy Teng Piao

Summary: Uy Teng Piao was ordered by the CFI Manila to pay the sum of P17,232.42 with interest at 7% per annum,
plus 10% of the sum amount for attorney's fees and costs in favor of PNB. However, he failed to comply and so the
sheriff sold in a public auction 2 of his mortgaged properties to PNB. Subsequently, PNB obtained a waiver of his
right to redeem the 2nd parcel of land before selling it to another. After selling both properties, and crediting the
sum of 11,300 PHP to Uy Teng Piao, PNB brought the present action before the court to revive the judgment for the
rest of the balance. Uy Teng Piao opposed and argued that there was an agreement of condonation of the remaining
balance between PNB and him, which is why he agreed to sign the waiver. CFI ruled in favor of him and so the
appeal. In reversing its previous decision, the Court held that Uy Teng Piao failed to substantiate his claim of an
agreement. Plus, one of the attorneys of PNB testified that Uy Teng Piao only waived his right because a friend of
his was willing to pay the land. The court believed this testimony but still invoked Canon 19 of the Code of Legal
Ethics to remind lawyers that they should withdraw from handling the case when they choose to testify.
Topic: Rule 12.08 – Not to Testify on Behalf of Client, Canon 12

FACTS:
 This case is an appeal from a decision of the Court of First Instance of Manila which absolved Uy Teng Piao
from further paying the rest of the balance of the judgment amounting to 11, 574.33 PHP made by the
same CFI Manila in a civil case rendered in favor of PNB.
 In said civil case, Uy Teng Piao was ordered by the court to pay the sum of P17,232.42 with interest at 7%
per annum from June 1, 1924, plus 10% of the sum amount for attorney's fees and costs.
 The amount is to be deposited with the clerk of the court within 3 months from the date of the judgment,
and in case of his failure to do so that the 2 mortgaged properties (2 parcels of land) will be sold at a
public auction.
 Uy Teng Piao failed to comply with the order, so the sheriff of the City of Manila sold the 2 parcels of land
at a public auction to the Philippine National Bank for P300 and P1,000 respectively.
 Subsequently, PNB secured from Uy Teng Piao a waiver of his right to redeem the 2nd parcel of land
(situated at Ronquillo Street, Manila), and on the same date the bank sold said property to Mariano
Santos for P8,600
 Meanwhile, the 1st parcel of land was resold by the bank for P2,700, because the account of Uy Teng Piao
was credited with the sum of P11,300. In other words, the bank credited Uy Teng Piao with the full
amount realized by it when it resold the 2 parcels of land.
 The bank then brought the present action to revive the judgment for the balance of P11,574.33, with
interest at 7% per annum.
 However, Uy Teng Piao alleged as a special defense that he waived his right to redeem the land described
in the 2nd title because of an understanding between him and PNB that PNB would not collect from him
the balance of the judgment. It was on this ground that the trial court absolved the defendant from the
complaint.
 In detail, Uy Teng Piao alleged the following which the court favored:
a) That one Mr. Pecson gave a promise to him to condone the balance of the judgment rendered
against him and in favor of PNB
b) That the selling the 2nd property to Mariano Santos for P8,600 proved that PNB had undoubtedly
given the alleged promise of condonation to Uy Teng Piao.
c) that said Mr. Pecson, granting that the latter has actually given such promise to condone, could bind
PNB.
 d) that the absence of demand for payment upon Uy Teng Piao for the balance of the said judgment from
February 11, 1925 up to the year 1930 is proof of the condonation of the balance of the said judgment.
e) that the sale of the said property to Mariano Santos for the sum of P8,600, the judgment has been
more than fully paid.

ISSUE + RULING:
1) WON CFI Manila rightfully absolved Uy Teng Piao from paying PNB the rest of the balance of judgment?
HELD: No
a) Uy Teng Piao failed to prove any valid agreement on the part of the bank not to collect from him the
remainder of the judgment. His testimony of the agreement is uncorroborated.
 When asked on cross-examination if Pecson was not in Iloilo at the time of the execution of
defendant's waiver of his right to redeem, Uy Teng Piao answered that he did not know; asked
when Pecson had spoken to him about the matter, the defendant replied that he did not
remember.
 Uy Teng Piao should have presented Mr. Pecson as a witness.
b) Plus, the court states that if Mr. Pecson had really made any such agreement to Uy Teng Piao, it is only
reasonable to suppose that he would have required Uy Teng Piao to waive his right to redeem both
parcels of land, and that Uy Teng Piano, a Chines business man, would have insisted upon some evidence
of the agreement in writing.
c) THERE IS EVEN NO SHOWING THAT MR. PECSON IS AUTHORIZED TO MAKE SUCH AGREEMENT TO UY
TENG PIAO.
 Only the board of directors or the persons empowered by the board of directors could bind the
bank by such an agreement.
d) one of the attorneys for PNB testified that Uy Teng Piao renounced his right to redeem the parcel of
land in Calle Ronquillo, because a friend of his was interested in buying it.
 The court believed this and held that Uy Teng Piao must have waived his right to redeem the land
in Calle Ronquillo, because a friend of his wished to purchase it and was willing to pay therefor
P8,600, and the bank agreed to credit the defendant with the full amount of the sale.

In relation to such, comes this issue:

2) WON this testimony made by the lawyer of the PNB is admissible? YES, but…
 the court reminded that although the law does not forbid an attorney to be a witness and at the
same time an attorney in a cause, the courts prefer that counsel should not testify as a witness
unless it is necessary, and that they should withdraw from the active management of the case.
(Malcolm, Legal Ethics, p. 148.)
Canon 19 of the Code of Legal Ethics reads as follows:
“When a lawyer is a witness for his client, except as to merely formal matters, such as the attestation or
custody of an instrument and the like, he should leave the trial of the case to other counsel. Except when
essential to the ends of justice, a lawyer should avoid testifying in court in behalf of his client.”

With regard to the contention that since the bank accepted the benefit of the waiver it cannot now repudiate
the alleged agreement: The fact that the bank after having bought the land for P1,000 resold it at
the instance of the defendant for P8,600 and credited the defendant with the full amount of the resale was a
sufficient consideration for the execution of defendant's waiver of his right to redeem.

FINAL RULING:
Decision appealed from is reversed, and the defendant is condemned to pay the plaintiff the sum of P11,574.38
with interest thereon at the rate of 7 per cent per annum from August 1, 1930, and the costs of both instances.