G.R. No. 95441 December 16, 1992
CARLOS O. ELIDO, SR., petitioner, vs. COURT OF APPEALS and THE OVERSEAS BANK OF MANILA (now Commercial Bank of Manila), respondents.

FACTS

Allied Credit Integrated Services, Inc. (ALLIED) obtained credit accommodations from The Overseas Bank of Manila (later known as Commercial Bank of Manila and Boston Bank of the Philippines). On January 11, 1965, they entered into an Overdraft Agreement allowing ALLIED to overdraw up to P10,000.00 at 12% annual interest compounded monthly. To secure this, petitioner Carlos O. Elido, Sr., and Vicente M. Gomez executed a Continuing Surety Agreement, solidarily binding themselves up to P10,000.00 plus interest. Both agreements stipulated a 10% attorney’s fee if judicial proceedings were instituted. By March 23, 1965, ALLIED had an outstanding overdraft of P9,598.72. The Central Bank suspended the bank’s operations on August 13, 1968. On October 23, 1974, the Court approved the bank’s Rehabilitation Plan, Phase I of which included collecting all due and demandable loans. After sending demand letters, the bank filed a collection case on July 23, 1976, against ALLIED and Elido for P38,835.70 (principal and accrued interest). Gomez had died, and ALLIED was dropped as a defendant. During the trial, Elido repeatedly admitted and assumed the entire obligation in his motions and a written manifestation dated October 19, 1983. The Regional Trial Court rendered a decision on April 21, 1983, ordering Elido to pay P38,835.70 with 12% interest per annum compounded monthly from July 1, 1976, plus 10% attorney’s fees and costs. The Court of Appeals affirmed this decision on September 21, 1990.

ISSUE

1. Whether the complaint filed on July 23, 1976, was barred by prescription or laches.
2. Whether petitioner’s liability under the Continuing Surety Agreement was limited to P10,000.00 only, excluding interest and attorney’s fees.
3. Whether the award of attorney’s fees was proper.
4. Whether the non-joinder of the bank’s alleged successors-in-interest (Commercial Bank of Manila/Boston Bank) divested the appellate court of jurisdiction.

RULING

1. No, the action was not barred by prescription. A cause of action accrues only upon breach or refusal to pay. The obligation was payable upon demand. The judicial demand on July 23, 1976, itself constituted the accrual of the cause of action and suspended the running of the prescriptive period. Furthermore, petitioner’s unequivocal admission and confession of judgment in court negated any claim of prescription.
2. No, petitioner’s liability was not limited to P10,000.00. The Continuing Surety Agreement expressly stated that his liability was for the sum of P10,000.00 “plus the interest thereon.” The Overdraft Agreement stipulated 12% annual interest compounded monthly. Therefore, his solidary liability included the principal and the stipulated interest.
3. Yes, the award of attorney’s fees was proper. Both the Overdraft Agreement and the Continuing Surety Agreement stipulated that 10% of the amount due shall be paid as attorney’s fees in case of judicial proceedings to enforce the agreements.
4. No, the appellate court did not lose jurisdiction. There was no transfer of interest requiring joinder; the bank merely changed its name from The Overseas Bank of Manila to Commercial Bank of Manila and then to Boston Bank of the Philippines. It was never dissolved. Petitioner was aware of this change and did not raise the issue before the appellate court; thus, he cannot raise it for the first time on appeal.
The petition was DISMISSED. The decision of the Court of Appeals was affirmed.