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G.R. No. 178610. November 17, 2010.*

HONGKONG AND SHANGHAI BANKING CORP., LTD.

STAFF RETIREMENT PLAN, (now HSBC Retirement
Trust Fund, Inc.), petitioner, vs. SPOUSES BIENVENIDO
AND EDITHA BROQUEZA, respondents.

Labor Law; Benefits; Retirement; Payroll deduction is merely

a convenient mode of payment and not the sole source of payment
for the loans.—In their Answer, the spouses Broqueza admitted
that prior to Editha Broqueza’s dismissal from HSBC in
December 1993, she “religiously paid the loan amortizations,
which HSBC collected through payroll check-off.” A definite
amount is paid to HSBCL-SRP on a specific date. Editha
Broqueza authorized HSBCL-SRP to make deductions from her
payroll until her loans are fully paid. Editha Broqueza, however,
defaulted in her monthly loan payment due to her dismissal.
Despite the spouses Broqueza’s protestations, the payroll
deduction is merely a convenient mode of payment and not the
sole source of payment for the loans. HSBCL-SRP never agreed
that the loans will be paid only through salary deductions.
Neither did HSBCL-SRP agree that if Editha Broqueza ceases to
be an employee of HSBC, her obligation to pay the loans will be
suspended. HSBCL-SRP can immediately demand payment of the
loans at anytime because the obligation to pay has no period.
Moreover, the spouses Broqueza have already incurred in default
in paying the monthly installments.
Same; Same; Same; The enforcement of a loan agreement
involves debtor-creditor relations founded on contract and does not
in any way concern employee relations.—The enforcement of a
loan agreement involves “debtor-creditor relations founded on
contract and does not in any way concern employee relations. As
such it should be enforced through a separate civil action in the
regular courts and not before the Labor Arbiter.”

PETITION for review on certiorari of a decision of the

Court of Appeals.

_______________

* SECOND DIVISION.

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VOL. 635, NOVEMBER 17, 2010 227

Hongkong and Shanghai Banking Corp., Ltd. Staff
Retirement Plan vs. Broqueza

   The facts are stated in the opinion of the Court.

  Cruz, Enverga and Lucero for petitioner.
  Tañada, Vivo and Tan for respondents.

CARPIO, J.:
G.R. No. 178610 is a petition for review1 assailing the
Decision2 promulgated on 30 March 2006 by the Court of
Appeals (CA) in CA-G.R. SP No. 62685. The appellate court
granted the petition filed by Fe Gerong (Gerong) and
Spouses Bienvenido and Editha Broqueza (spouses
Broqueza) and dismissed the consolidated complaints filed
by Hongkong and Shanghai Banking Corporation, Ltd. -
Staff Retirement Plan (HSBCL-SRP) for recovery of sum of
money. The appellate court reversed and set aside the
Decision3 of Branch 139 of the Regional Trial Court of
Makati City (RTC) in Civil Case No. 00-787 dated 11
December 2000, as well as its Order4 dated 5 September
2000. The RTC’s decision affirmed the Decision5 dated 28
December 1999 of Branch 61 of the Metropolitan Trial
Court (MeTC) of Makati City in Civil Case No. 52400 for
Recovery of a Sum of Money.

The Facts

The appellate court narrated the facts as follows:

“Petitioners Gerong and [Editha] Broqueza (defendants below)

are employees of Hongkong and Shanghai Banking Corporation
(HSBC). They are also members of respondent Hongkong
Shanghai Banking Corporation, Ltd. Staff Retirement Plan
(HSBCL-SRP,

_______________

1 Under Rule 45 of the 1997 Rules of Civil Procedure.

2 Rollo, pp. 27-41. Penned by Associate Justice Ruben T. Reyes, with Associate
Justices Rebecca De Guia-Salvador and Aurora Santiago-Lagman, concurring.
3 Id., at pp. 49-54. Penned by Judge Florentino A. Tuason, Jr.
4 CA Rollo, p. 29.
5 Rollo, pp. 45-48. Penned by Judge Selma Palacio Alaras.

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Plan vs. Broqueza

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plaintiff below). The HSBCL-SRP is a retirement plan established

by HSBC through its Board of Trustees for the benefit of the
employees.
On October 1, 1990, petitioner [Editha] Broqueza obtained a
car loan in the amount of Php175,000.00. On December 12, 1991,
she again applied and was granted an appliance loan in the
amount of Php24,000.00. On the other hand, petitioner Gerong
applied and was granted an emergency loan in the amount of
Php35,780.00 on June 2, 1993. These loans are paid through
automatic salary deduction.
Meanwhile [in 1993], a labor dispute arose between HSBC and
its employees. Majority of HSBC’s employees were terminated,
among whom are petitioners Editha Broqueza and Fe Gerong.
The employees then filed an illegal dismissal case before the
National Labor Relations Commission (NLRC) against HSBC.
The legality or illegality of such termination is now pending
before this appellate Court in CA-G.R. CV No. 56797, entitled
Hongkong Shanghai Banking Corp. Employees Union, et al. vs.
National Labor Relations Commission, et al.
Because of their dismissal, petitioners were not able to pay the
monthly amortizations of their respective loans. Thus, respondent
HSBCL-SRP considered the accounts of petitioners delinquent.
Demands to pay the respective obligations were made upon
petitioners, but they failed to pay.”6

HSBCL-SRP, acting through its Board of Trustees and

represented by Alejandro L. Custodio, filed Civil Case No.
52400 against the spouses Broqueza on 31 July 1996. On
19 September 1996, HSBCL-SRP filed Civil Case No. 52911
against Gerong. Both suits were civil actions for recovery
and collection of sums of money.

The Metropolitan Trial Court’s Ruling

On 28 December 1999, the MeTC promulgated its

Decision7 in favor of HSBCL-SRP. The MeTC ruled that
the nature of HSBCL-SRP’s demands for payment is civil
and has no connection to the ongoing labor dispute. Gerong
and Editha Bro-

_______________

6 Id., at pp. 28-29.

7 Id., at pp. 45-48.

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queza’s termination from employment resulted in the loss

of continued benefits under their retirement plans. Thus,
the loans secured by their future retirement benefits to
which they are no longer entitled are reduced to unsecured
and pure civil obligations. As unsecured and pure
obligations, the loans are immediately demandable.
The dispositive portion of the MeTC’s decision reads:

“WHEREFORE, premises considered and in view of the

foregoing, the Court finds that the plaintiff was able to prove by a
preponderance of evidence the existence and immediate
demandability of the defendants’ loan obligations as judgment is
hereby rendered in favor of the plaintiff and against the
defendants in both cases, ordering the latter:
1. In Civil Case No. 52400, to pay the amount of
Php116,740.00 at six percent interest per annum from the time of
demand and in Civil Case No. 52911, to pay the amount of
Php25,344.12 at six percent per annum from the time of the filing
of these cases, until the amount is fully paid;
2. To pay the amount of Php20,000.00 each as reasonable
attorney’s fees;
3. Cost of suit.
SO ORDERED.”8

Gerong and the spouses Broqueza filed a joint appeal of

the MeTC’s decision before the RTC. Gerong’s case was
docketed Civil Case No. 00-786, while the spouses
Broqueza’s case was docketed as Civil Case No. 00-787.

The Regional Trial Court’s Ruling

The RTC initially denied the joint appeal because of the

belated filing of Gerong and the spouses Broqueza’s
memorandum. The RTC later reconsidered the order of
denial and resolved the issues in the interest of justice.

_______________

8 Id., at p. 48. 

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230 SUPREME COURT REPORTS ANNOTATED

Hongkong and Shanghai Banking Corp., Ltd. Staff
Retirement Plan vs. Broqueza

On 11 December 2000, the RTC affirmed the MeTC’s

decision in toto.9
The RTC ruled that Gerong and Editha Broqueza’s
termination from employment disqualified them from
availing of benefits under their retirement plans. As a
consequence, there is no longer any security for the loans.
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HSBCL-SRP has a legal right to demand immediate

settlement of the unpaid balance because of Gerong and
Editha Broqueza’s continued default in payment and their
failure to provide new security for their loans. Moreover,
the absence of a period within which to pay the loan allows
HSBCL-SRP to demand immediate payment. The loan
obligations are considered pure obligations, the fulfillment
of which are demandable at once.
Gerong and the spouses Broqueza then filed a Petition
for Review under Rule 42 before the CA.

The Ruling of the Court of Appeals

On 30 March 2006, the CA rendered its Decision10 which

reversed the 11 December 2000 Decision of the RTC. The
CA ruled that the HSBCL-SRP’s complaints for recovery of
sum of money against Gerong and the spouses Broqueza
are premature as the loan obligations have not yet
matured. Thus, no cause of action accrued in favor of
HSBCL-SRP. The dispositive portion of the appellate
court’s Decision reads as follows:

“WHEREFORE, the assailed Decision of the RTC is

REVERSED and SET ASIDE. A new one is hereby rendered
DISMISSING the consolidated complaints for recovery of sum of
money.
SO ORDERED.”11

_______________

9  Id., at pp. 49-54.

10 Id., at pp. 27-41.
11 Id., at p. 41.

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Hongkong and Shanghai Banking Corp., Ltd. Staff
Retirement Plan vs. Broqueza

HSBCL-SRP filed a motion for reconsideration which

the CA denied for lack of merit in its Resolution12
promulgated on 19 June 2007.
On 6 August 2007, HSBCL-SRP filed a manifestation
withdrawing the petition against Gerong because she
already settled her obligations. In a Resolution13 of this
Court dated 10 September 2007, this Court treated the
manifestation as a motion to withdraw the petition against
Gerong, granted the motion, and considered the case
against Gerong closed and terminated.

Issues
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HSBCL-SRP enumerated the following grounds to

support its Petition:

I. The Court of Appeals has decided a question of substance in a way

not in accord with law and applicable decisions of this Honorable
Court; and
II. The Court of Appeals has departed from the accepted and usual
course of judicial proceedings in reversing the decision of the
Regional Trial Court and the Metropolitan Trial Court.14

The Court’s Ruling

The petition is meritorious. We agree with the rulings of

the MeTC and the RTC.
The Promissory Notes uniformly provide:

PROMISSORY NOTE
P_____                                                Makati, M.M. ____ 19__

_______________

12 Id., at pp. 43-44.

13 Id., at p. 86.
14 Id., at p. 14.

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Hongkong and Shanghai Banking Corp., Ltd. Staff Retirement
Plan vs. Broqueza

FOR VALUE RECEIVED, I/WE _____ jointly and severally

promise to pay to THE HSBC RETIREMENT PLAN (hereinafter
called the “PLAN”) at its office in the Municipality of Makati,
Metro Manila, on or before until fully paid the sum of PESOS ___
(P___) Philippine Currency without discount, with interest from
date hereof at the rate of Six per cent (6%) per annum, payable
monthly.
I/WE agree that the PLAN may, upon written notice, increase
the interest rate stipulated in this note at any time depending on
prevailing conditions.
I/WE hereby expressly consent to any extensions or renewals
hereof for a portion or whole of the principal without notice to the
other(s), and in such a case our liability shall remain joint and
several.
In case collection is made by or through an attorney, I/WE
jointly and severally agree to pay ten percent (10%) of the amount
due on this note (but in no case less than P200.00) as and for
attorney’s fees in addition to expenses and costs of suit.
In case of judicial execution, I/WE hereby jointly and severally
waive our rights under the provisions of Rule 39, Section 12 of the
Rules of Court.”15

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In ruling for HSBCL-SRP, we apply the first paragraph

of Article 1179 of the Civil Code:

“Art. 1179. Every obligation whose performance does not

depend upon a future or uncertain event, or upon a past event
unknown to the parties, is demandable at once.
x x x.” (Emphasis supplied.)

We affirm the findings of the MeTC and the RTC that

there is no date of payment indicated in the Promissory
Notes. The RTC is correct in ruling that since the
Promissory Notes do not contain a period, HSBCL-SRP has
the right to demand immediate payment. Article 1179 of
the Civil Code applies. The spouses Broqueza’s obligation
to pay HSBCL-SRP is a pure obligation. The fact that
HSBCL-SRP was content with

_______________

15 CA Rollo, p. 59.

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VOL. 635, NOVEMBER 17, 2010 233

Hongkong and Shanghai Banking Corp., Ltd. Staff
Retirement Plan vs. Broqueza

the prior monthly check-off from Editha Broqueza’s salary

is of no moment. Once Editha Broqueza defaulted in her
monthly payment, HSBCL-SRP made a demand to enforce
a pure obligation.
In their Answer, the spouses Broqueza admitted that
prior to Editha Broqueza’s dismissal from HSBC in
December 1993, she “religiously paid the loan
amortizations, which HSBC collected through payroll
check-off.”16 A definite amount is paid to HSBCL-SRP on a
specific date. Editha Broqueza authorized HSBCL-SRP to
make deductions from her payroll until her loans are fully
paid. Editha Broqueza, however, defaulted in her monthly
loan payment due to her dismissal. Despite the spouses
Broqueza’s protestations, the payroll deduction is merely a
convenient mode of payment and not the sole source of
payment for the loans. HSBCL-SRP never agreed that the
loans will be paid only through salary deductions. Neither
did HSBCL-SRP agree that if Editha Broqueza ceases to be
an employee of HSBC, her obligation to pay the loans will
be suspended. HSBCL-SRP can immediately demand
payment of the loans at anytime because the obligation to
pay has no period. Moreover, the spouses Broqueza have
already incurred in default in paying the monthly
installments.

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Finally, the enforcement of a loan agreement involves

“debtor-creditor relations founded on contract and does not
in any way concern employee relations. As such it should
be enforced through a separate civil action in the regular
courts and not before the Labor Arbiter.”17
WHEREFORE, we GRANT the petition. The Decision of
the Court of Appeals in CA-G.R. SP No. 62685
promulgated 

_______________

16 CA Rollo, p. 50.

17  NDC-Guthrie Plantations, Inc. v. National Labor Relations
Commission, 414 Phil. 714, 726-727; 362 SCRA 416, 428 (2001). See also
Nestlé Philippines, Inc. v. National Labor Relations Commission, G.R. No.
85197, 18 March 1991, 195 SCRA 340.

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