1. Register of Deeds Manila vs. China Banking Corporation
G.R. No. L-11964 !pril "# 196" Facts: Alfonso Pangilinan and one Guillermo Chua were charged with qualifed theft, the money involved amounting to P27,!!!"!! in the Court of First #nstance of $anila" After admitting his civil lia%ility in favor of his em&loyer, the China 'an(ing Cor&oration, in relation to the o)ense, he ceded and transferred to the latter, in satisfaction thereof, a &arcel of land located in the City of $anila, registered in the name of *'elen +ta" Ana, married to Alfonso Pangilinan," -he .eed of -ransfer e/ecuted %y Pangilinan was &resented for registration %ut the register of deeds, after fnding that China 'an(ing Cor&oration, as an alien0owned cor&oration, is %arred from acquiring lands in the Phili&&ines under +ec" , Art" 1### of the Constitution, su%mitted the matter to the 2and 3egistration Commission for resolution which, in turn, denied the registration" 4ence, res&ondent herein fled the &resent a&&eal to question the resolution of the Commission" #ssue: 5hether or not res&ondent 6 an alien0owned %an( 6 can acquire ownershi& of the residential lot %y virtue of the deed of transfer e/ecuted %y Pangilinan to satisfy his civil lia%ility arising from the crime" 4eld: 7o" Paragra&h 8c9, +ection 2 of 3e&u%lic Act ::7 allows a commercial %an( to &urchase and hold such real estate as shall %e conveyed to it in satisfaction of de%ts &reviously contracted in the course of its dealings" 4owever, the *de%ts* referred to in this &rovision are only those resulting from &revious loans and other similar transactions made or entered into %y a commercial %an( in the ordinary course of its %usiness as such" ;%viously, whatever *civil lia%ility* 6 arising from the criminal o)ense of qualifed theft 6 was admitted in favor of a&&ellant %an( %y its former em&loyee, Alfonso Pangilinan, was not a de%t resulting from a loan or a similar transaction had %etween the two &arties in the ordinary course of %an(ing %usiness" -he resolution was a<rmed" ". Rep$%li& of the 'hilippines vs. (e&$rit) Credit and !&&eptan&e Corporation G.R. No. L-"*+#, -an$ar) ", 196. Facts: Articles of #ncor&oration of defendant cor&oration were registered with the +ecurities and =/change Commission" 5hen they a&&lied with +=C for the registration and licensing of their securities under the +ecurities Act, the latter referred it to the Central 'an( which in turn rendered an o&inion classifying defendant cor&oration as engaged in %an(ing" +=C then advised the cor&oration to com&ly with the requirements under the General 'an(ing Act" Pursuant to a search warrant issued %y $-C $anila, mem%ers of Central 'an( intelligence division and $anila &olice sei>ed documents and records relative to the %usiness o&erations of the cor&oration" After e/amination of the same, the intelligence division of the Central 'an( su%mitted a memorandum to the then Acting .e&uty Governor of Central 'an( fnding that the cor&oration is engaged in %an(ing o&erations" #n lieu of the memorandum, the $onetary 'oard issued a resolution declaring that the cor&oration is &erforming %an(ing o&erations without frst com&lying with the &rovisions of 3e&u%lic Act 7o" ::7" 7otwithstanding such resolution, the cor&oration, have %een and still are &erforming the functions and activities which had %een declared to constitute illegal %an(ing o&erations? the cor&oration had esta%lished 7@ %ranches in &rinci&al cities and towns throughout the Phili&&ines? that through a systematic and vigorous cam&aign underta(en %y the cor&oration, the same had managed to induce the &u%lic to o&en A,@B: savings de&osit accounts with an aggregate de&osit of PC,BDA,C:B"7@? Accordingly, the +olicitor General commenced this quo warranto &roceedings for the dissolution of the cor&oration, with a &rayer that, meanwhile, a writ of &reliminary inEunction %e issued e/ &arte, enEoining the cor&oration and its %ranches, as well as its o<cers and agents, from &erforming the %an(ing o&erations com&lained of, and that a receiver %e a&&ointed &endente lite" +u&erintendent of 'an(s of the Central 'an( was then a&&ointed %y the +u&reme Court as receiver &endente lite of defendant cor&oration" #ssue: 5hether or not defendant cor&oration was engaged in %an(ing o&erations" 4eld" Fes" An investment com&any which loans out the money of its customers, collects the interest and charges a commission to %oth lender and %orrower, is a %an(" #t is conceded that a total of A,@B: savings account de&osits have %een made %y the &u%lic with the cor&oration and its 7@ %ranches, with an aggregate de&osit of PC,BDA,C:B"7@, which has %een lent out to such &ersons as the cor&oration deemed suita%le therefore" #t is clear that these transactions &arta(e of the nature of %an(ing, as the term is used in +ection 2 of the General 'an(ing Act" 4ence, defendant cor&oration has violated the law %y engaging in %an(ing without securing the administrative authority required in 3e&u%lic Act 7o" ::7" Accordingly, the defendant cor&oration was ordered dissolved and a&&ointment of receiver was made &ermanent" ,. Da/aso 'ere0 vs. Monetar) Board G.R. No. L-",,*. -$ne ,* 196. Facts: Petitioner0a&&ellant Pere>, for himself and in a derivative ca&acity on %ehalf of the 3e&u%lic 'an(, instituted mandamus &roceedings in the Court of First #nstance of $anila against the $onetary 'oard, the +u&erintendent of 'an(s, the Central 'an( and the +ecretary of Gustice" 4is o%Eect was to com&el these res&ondents to &rosecute, among others, Pa%lo 3oman and several other 3e&u%lic 'an( o<cials for violations of the General 'an(ing Act and the Central 'an( Act, and for falsifcation of &u%lic or commercial documents in connection with certain alleged anomalous loans amounting to PC,:!:,@!!"!! authori>ed %y 3oman and the other %an( o<cials" #ssue: 5hether or not these res&ondents may %e com&elled to &rosecute criminally the alleged violators of %an(ing laws" 4eld: 7o" Petitioners cannot see( %y mandamus to com&el res&ondents to &rosecute criminally those alleged violators of the %an(ing laws" Although the Central 'an( and its res&ondent o<cials may have the duty under the Central 'an( Act and the General 'an(ing Act to cause the &rosecution of those alleged violators, yet there is nothing in said laws that im&oses a clear, s&ecifc duty on the former to do the actual &rosecution of the latter" -he Central 'an( is a government cor&oration created &rinci&ally to administer the monetary and %an(ing system of the 3e&u%lic, not a &rosecution agency li(e the fscalHs o<ce" 'eing an artifcial &erson, -he Central 'an( is limited to its statutory &owers and the nearest &ower to which &rosecution of violators of %an(ing laws may %e attri%uted is its &ower to sue and %e sued" 'ut this cor&orate &ower of litigation evidently refers to civil cases only" Central 'an( and its o<cers have already done what they can %y referring the matter to the s&ecial &rosecutors of the .e&artment of Gustice for &rosecution and investigation" $oreover, it is a settled rule that mandamus will not lie to com&el a &rosecuting o<cer, li(e the +ecretary of Gustice, to &rosecute a case in court" 2astly, violations of %an(ing laws constitute a &u%lic o)ense, the &rosecution of which is a matter of &u%lic interest and hence, anyone 6 even &rivate individuals 6 can denounce such violations %efore the &rosecuting authorities" +ince Pere> himself could cause the fling of criminal com&laints against those allegedly involved in the anomalous loans, if any, then he has a &lain, adequate and s&eedy remedy in the ordinary course of law, which ma(es mandamus against res&ondents im&ro&er" 4ence, the order of the lower court dismissing the &etition was a<rmed" 4. (i/e1 2nternational 3Manila4 2n&. vs. Co$rt of !ppeals G.R. No. ##*1, Mar&h 19 199* Facts: -he &etitioner is a &rivate cor&oration engaged in the e/&ortation of food &roducts" #t %uys these &roducts from various local su&&liers and then sells them a%road" $ost of its e/&orts are &urchased %y the &etitioner on credit" -he &etitioner was a de&ositor of the res&ondent %an( and maintained a chec(ing account in its %ranch in Cu%ao, Iue>on City which issued several chec(s against its de&osit %ut was sur&rised to learn later that they had %een dishonored for insu<cient funds" As a consequence, several su&&liers sent a letter of demand to the &etitioner, threatening &rosecution if the dishonored chec( issued to it was not made good and also withheld delivery of the order made %y the &etitioner" ;ne su&&lier also cancelled the &etitionerHs credit line and demanded that future &ayments %e made %y it in cash or certifed chec(" -he &etitioner com&lained to the res&ondent %an(" #nvestigation disclosed that the sum of PC!!,!!!"!! de&osited %y the &etitioner on $ay 2, CADC, had not %een credited to it" -he error was rectifed only a month after, and the dishonored chec(s were &aid after they were re0de&osited" -he &etitioner then fled a com&laint in the then Court of First #nstance of 3i>al against the %an( for its gross and wanton negligence" #ssue: 5hether or not the %an( can %e held lia%le for negligence 4eld: -he de&ositor e/&ects the %an( to treat his account with the utmost fdelity whether such account consists only of a few hundred &esos or of millions" -he %an( must record every single transaction accurately, down to the last centavo, and as &rom&tly as &ossi%le" -his has to %e done if the account is to reJect at any given time the amount of money the de&ositor can dis&ose of as he sees ft, confdent that the %an( will deliver it as and to whomever he directs" A %lunder on the &art of the %an(, such as the dishonour of a chec( without good reason, can cause the de&ositor not a little em%arrassment if not also fnancial loss and &erha&s even civil and criminal litigation" +. 5idelit) (avings and Mortgage Bank vs. Cen0on G.R. No. L-46"*# !pril + 199* Facts: -imoteo and ;lim&ia +antiago de&osited with the defendant Fidelity +avings 'an( the amount of P!,!!!"!! under a savings account and another P!,!!! under a certifcate of time de&osit" 4ence, the aggregate amount of the s&ouseKs de&osit is PC!!,!!!" 4owever, the $onetary 'oard su%sequently issued a resolution declaring Fidelity +avings $ortgage 'an( insolvent and for%idden the %an( from doing %usiness in the Phili&&ines" +ince Fe%ruary CA, CABA, the +u&erintendent of 'an(s has %een ta(ing charge of the assets of &etitioner %an(" Phili&&ine .e&osit #nsurance Cor&oration 8P.#C9 was only a%le to &ay the s&ouses the amount of PC!,!!!, leaving a de&osit %alance of PA!,!!!" -hrough another resolution of the $onetary 'oard, the liquidation of the %an( was ordered and is still &ending u& to the &resent" After demand for the &ayment of the de&osit %alance, the s&ouses fled an action for sum of money with damages against &etitioner %an(" -he lower court ruled in favor of s&ouses and ordered the %an( to &ay interest on un&aid de&osits even after its closure &lus moral and e/em&lary damages with attorneyKs fees and costs" #ssues: 5hether or not an insolvent %an( may %e adEudged to &ay interest on un&aid de&osits even after its closure %y the Central 'an( %y reason of insolvency without violating the &rovisions of the Civil Code on &reference of credits? and 5hether or not an insolvent %an( may %e adEudged to &ay moral and e/em&lary damages, attorneyHs fees and costs when the insolvency is caused %ecause of the anomalous real estate transactions without violating the &rovisions of the Civil Code on &reference of credits" 4eld: 7o" Petitioner cannot %e held lia%le for interest on %an( de&osits which accrued from the time it was &rohi%ited %y the Central 'an( to continue with its %an(ing o&erations" #t is settled Euris&rudence that a %an(ing institution which has %een declared insolvent and su%sequently ordered closed %y the Central 'an( of the Phili&&ines cannot %e held lia%le to &ay interest on %an( de&osits which accrued during the &eriod when the %an( is actually closed and non0o&erational" 5hat ena%les a %an( to &ay sti&ulated interest on money de&osited with it is that thru the other as&ects of its o&eration it is a%le to generate funds to cover the &ayment of such interest" Lnless a %an( can lend money, engage in international transactions, acquire foreclosed mortgaged &ro&erties or their &roceeds and generally engage in other %an(ing and fnancing activities from which it can derive income, it is inconceiva%le how it can carry on as a de&ository o%ligated to &ay sti&ulated interest" Awards of moral and e/em&lary damages and attorneyHs fees are li(ewise erroneous" #n the a%sence of fraud, %ad faith, malice or wanton attitude, &etitioner %an( may, therefore, not %e held res&onsi%le for damages which may %e reasona%ly attri%uted to the non0&erformance of the o%ligation" 5herefore, the decision a&&ealed from was modifed" 'an( is only lia%le to &ay the de&osit %alance of PA!,!!! with accrued interest until the date it was &rohi%ited from doing %usiness %y the Central 'an( with no other damages and costs" 6. (ia vs. Co$rt of !ppeals G.R. No. 1*"9.* Ma) 1, 199* Facts: Plainti) 2u>on +ia rented a safety de&osit %o/ of the defendant %an( at its 'inondo 'ranch wherein he &laced his collection of stam&s" -he said safety de&osit %o/ leased %y the &lainti) was at the %ottom or at the lowest level of the safety de&osit %o/es of the defendant %an(" .uring the Joods that too( &lace in CAD and CADB, Joodwater entered into the defendant %an(Hs &remises, see&ed into the safety de&osit %o/ leased %y the &lainti) and caused, according damage to his stam&s collection" -he defendant %an( reEected the &lainti)Hs claim for com&ensation for his damaged stam&s collection, so, the &lainti) instituted an action for damages against the defendant %an(" -he defendant %an( contended that its contract with the &lainti) over safety de&osit %o/ was one of lease and not of de&osit and, therefore, governed %y the lease agreement which should %e the a&&lica%le law? the destruction of the &lainti)Hs stam&s collection was due to a calamity %eyond o%ligation on its &art to notify the &lainti) a%out the Joodwaters that inundated its &remises at 'inondo %ranch which allegedly see&ed into the safety de&osit %o/ leased to the &lainti)" -he trial court rendered in favor of &lainti) +ia and ordered +'-C to &ay damages" #n an a&&eal, the Court of A&&eals a%solved +'-C from any lia%ility" 4ence this &etition" #ssue: 5hether or not +'-C is lia%le for negligence 4eld: Fes" +ome &rovisions of the lease agreement which are meant to e/em&t +'-C from any lia%ility for damage, loss or destruction of the contents of the safety de&osit %o/ which may arise from its own agentsK fraud, negligence or delay must %e stric(en down for %eing contrary to law and &u%lic &olicy" As correctly held %y the trial court, +'-C was guilty of negligence" +'-CHs negligence aggravated the inEury or damage to the stam& collection" +'-C was aware of the Joods of CAD and CADB? it also (new that the Joodwaters inundated the room where the safe de&osit %o/ was located" #n view thereof, it should have lost no time in notifying the &etitioner in order that the %o/ could have %een o&ened to retrieve the stam&s, thus saving the same from further deterioration and loss" #n this res&ect, it failed to e/ercise the reasona%le care and &rudence e/&ected of a good father of a family, there%y %ecoming a &arty to the aggravation of the inEury or loss" Accordingly, the aforementioned fourth characteristic of a fortuitous event is a%sent" Article CC7! of the Civil Code, which reads M-hose who in the &erformance of their o%ligation are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are lia%le for damages, is a&&lica%le" 4ence, the &etition was granted" .. Banas vs. !sia 'a&i6& 5inan&e Corporation G.R. No. 1"#.*, 7&to%er 1# "*** Facts: -eodoro 'aNas e/ecuted a Promissory 7ote in favor of C" G" .i>on Construction where%y for value received he &romised to &ay to the order of C" G" .i>on Construction the sum of P:A!,!!!"!! in installments of *P:2,!!"!! every 2th day of the month starting from +e&tem%er 2, CAD! u& to August 2, CADC"* 2ater, C" G" .i>on Construction endorsed with recourse the Promissory 7ote to A+#A PAC#F#C, and to secure &ayment thereof, C" G" .i>on Construction, through its cor&orate o<cers, Cenen .i>on, President, and Guliette '" .i>on, Oice President and -reasurer, e/ecuted a .eed of Chattel $ortgage covering three heavy equi&ment units of Cater&illar 'ulldo>er Crawler -ractors $oreover, Cenen .i>on e/ecuted a Continuing Lnderta(ing wherein he %ound himself to &ay the o%ligation Eointly and severally with C" G" .i>on Construction" #n com&liance thereof, C" G" .i>on Construction made three installment &ayments to A+#A PAC#F#C for a total of PC:!,!!!"!!" -hereafter, however, C" G" .i>on Construction defaulted in the &ayment of the remaining installments, &rom&ting A+#A PAC#F#C to send a +tatement of Account to Cenen .i>on for the un&aid %alance of P2B7,7:7"! inclusive of interests and charges, and PBB,A!A":D re&resenting attorneyHs fees" As the demand was unheeded, A+#A PAC#F#C fled a com&laint for a sum of money with &rayer for a writ of re&levin against -eodoro 'aNas, C" G" .i>on Construction and Cenen .i>on" -he trial court issued a writ of re&levin against defendant C" G" .i>on Construction for the surrender of the %ulldo>er crawler tractors" ;f the three %ulldo>er crawler tractors, only two were actually turned over %y defendants which units were su%sequently foreclosed %y A+#A PAC#F#C to satisfy the o%ligation" -he two %ulldo>ers were sold %oth to A+#A PAC#F#C as the highest %idder" Petitioners insist that A+#A PAC#F#C was organi>ed as an investment house which could not engage in the lending of funds o%tained from the &u%lic through recei&t of de&osits" -he dis&uted Promissory 7ote, .eed of Chattel $ortgage and Continuing Lnderta(ing were not intended to %e valid and %inding on the &arties as they were merely devices to conceal their real intention which was to enter into a contract of loan in violation of %an(ing laws" -he 3egional -rial Court ruled in favor of A+#A PAC#F#C holding the defendants Eointly and severally lia%le for the un&aid %alance of the o%ligation under the Promissory 7ote" -he Court of A&&eals a<rmed the decision of the trial court #ssues: 5hether the dis&uted transaction %etween &etitioners and A+#A PAC#F#C violated %an(ing laws, hence, null and void 4eld: 7o" An investment com&any refers to any issuer which is or holds itself out as %eing engaged or &ro&oses to engage &rimarily in the %usiness of investing, reinvesting or trading in securities" As defned in 3evised +ecurities Act, securities *shall include commercial &a&ers evidencing inde%tedness of any &erson, fnancial or non0fnancial entity, irres&ective of maturity, issued, endorsed, sold, transferred or in any manner conveyed to another with or without recourse, such as &romissory notes* Clearly, the transaction %etween &etitioners and res&ondent was one involving not a loan %ut &urchase of receiva%les at a discount, well within the &urview of *investing, reinvesting or trading in securities* which an investment com&any, li(e A+#A PAC#F#C, is authori>ed to &erform and does not constitute a violation of the General 'an(ing Act" 5hat is &rohi%ited %y law is for investment com&anies to lend funds o%tained from the &u%lic through recei&ts of de&osit, which is a function of %an(ing institutions" 'ut here, the funds su&&osedly *lent* to &etitioners have not %een shown to have %een o%tained from the &u%lic %y way of de&osits, hence, the ina&&lica%ility of %an(ing laws" 5herefore, the assailed decision of the Court of A&&eals was a<rmed" #. Re)es vs. Co$rt of !ppeals G.R. No. 11#49" !$g$st 1+ "**1 Facts: #n view of the 2! th Asian 3acing Conference then scheduled to %e held in +ydney, Australia, the Phili&&ine 3acing Clu%, #nc" 8P3C#9 sent four delegates to the said conference" P3C#, through its o<cers, a&&lied to the res&ondent %an( for a foreign e/change demand draft in Australian dollars" Godofredo, clu%Ks chief cashier, went to res&ondent %an( to a&&ly for a demand draft in the amount ALPC,BC!"!! &aya%le to the order of the 2! th Asian 3acing Conference +ecretariat of +ydney, Australia" 4e was attended to %y res&ondent %an(Hs assistant cashier, $r" Fasis, who at frst denied the a&&lication for the reason that res&ondent %an( did not have an Australian dollar account in any %an( in +ydney" Godofredo as(ed if there could %e a way for res&ondent %an( to accommodate P3C#Hs urgent need to remit Australian dollars to +ydney" Fasis of res&ondent %an( then informed Godofredo of a rounda%out way of e)ecting the requested remittance to +ydney thus: the res&ondent %an( would draw a demand draft against 5est&ac 'an( in +ydney, Australia 85est&ac0+ydney9 and have the latter reim%urse itself from the L"+" dollar account of the res&ondent in 5est&ac 'an( in 7ew For(, L"+"A" 85est&ac07ew For(9" -his arrangement has %een customarily resorted to since the CAB!Hs and the &rocedure has &roven to %e &ro%lem0free" P3C# and the &etitioner Gregorio 4" 3eyes, acting through Godofredo, agreed to this arrangement or a&&roach in order to e)ect the urgent transfer of Australian dollars &aya%le to the +ecretariat of the 2! th Asian 3acing Conference" Pursuant thereto, res&ondent %an( a&&roved the said a&&lication of P3C# and issued foreign e/change demand draft in the sum a&&lied for &aya%le to the order of the 2! th Asian 3acing Conference +ecretariat of +ydney, Australia, and addressed to 5est&ac0+ydney as the drawee %an(" 4owever, u&on due &resentment of the foreign e/change demand draft, the same was dishonored, with the notice of dishonor stating that there is M7o account held with 5est&ac"* $eanwhile, 5es&ac07ew For( sent a ca%le to res&ondent %an( informing the latter that its dollar account in the sum of ALP C,BC!"!! was de%ited" #n res&onse to P3C#Hs com&laint a%out the dishonor of the said foreign e/change demand draft, res&ondent %an( informed 5est&ac0+ydney of the issuance of the said demand draft, drawn against the 5es&ac0+ydney and informing the latter to %e reim%ursed from the res&ondent %an(Hs dollar account in 5est&ac07ew For(" -he res&ondent %an( on the same day li(ewise informed 5es&ac07ew For( requesting the latter to honor the reim%ursement claim of 5es&ac0+ydney" L&on its second &resentment for &ayment, the demand draft was again dishonored %y 5est&ac0 +ydney for the same reason, that is, that the res&ondent %an( has no de&osit dollar account with the drawee 5es&ac0+ydney" Petitioners Gregorio 3eyes and Consuelo Puyat03eyes arrived in +ydney on a se&arate date and %oth were humiliated and em%arrassed in the &resence of international audience after %eing denied registration of the conference secretariat since the foreign e/change draft was dishonored" Petitioners were only a%le to attend the conference after &romising to &ay in cash instead which they fulflled Petitioners fled in the 3egional -rial Court a com&laint for damages against the res&ondent %an(" -he trial court rendered Eudgment in favor of the res&ondent %an(" -he a&&ellate court a<rmed the decision of the trial court" #ssue: 5hether or not res&ondent %an( is lia%le for damages due to the dishonor of the foreign e/change demand drafts" 4eld: 7o" -he facts as found %y the courts a quo show that res&ondent %an( did not cause an erroneous transmittal of its +5#F- ca%le message to 5est&ac0+ydney" #t was the erroneous decoding of the ca%le message on the &art of 5est&ac0+ydney that caused the dishonor of the su%Eect foreign e/change demand draft" -he evidence also shows that the res&ondent %an( e/ercised that degree of diligence e/&ected of an ordinary &rudent &erson under the circumstances o%taining? the res&ondent %an( advised 5est&ac07ew For( to honor the reim%ursement claim of 5est&ac0+ydney and to de%it the dollar account
of res&ondent %an( with the former" As soon as the demand draft was dishonored, the res&ondent %an(, thin(ing that the &ro%lem was with the reim%ursement and without any idea that it was due to miscommunication, re0confrmed the authority of 5est&ac07ew For( to de%it its dollar account for the &ur&ose of reim%ursing 5est&ac0+ydney" 3es&ondent %an( also sent two more ca%le messages to 5est&ac0 7ew For( inquiring why the demand draft was not honored" -he degree of diligence required of %an(s, is more than that of a good father of a family where the fduciary nature of their relationshi& with their de&ositors is concerned" #n other words %an(s are duty %ound to treat the de&osit accounts of their de&ositors with the highest degree of care" 'ut the said ruling a&&lies only to cases where %an(s act under their fduciary ca&acity, that is, as de&ositary of the de&osits of their de&ositors" 'ut the same higher degree of diligence is not e/&ected to %e e/erted %y %an(s in commercial transactions that do not involve their fduciary relationshi& with their de&ositors" -he case at %ar does not involve the handling of &etitionersH de&osit, if any, with the res&ondent %an(" #nstead, the relationshi& involved was that of a %uyer and seller" 5herefore, the decision of the Court of A&&eals was a<rmed" 9. Consolidated Bank and 8r$st Corporation vs. Co$rt of !ppeals G.R. No. 1,#+69 (epte/%er 11 "**, Facts: +olid%an( is a domestic %an(ing cor&oration while &rivate res&ondent 2"C" .ia> and Com&any, CPAKs 8M2"C" .ia>,9, is a &rofessional &artnershi& engaged in the &ractice of accounting and which o&ened a savings account with +olid%an(" .ia> through its cashier, $ercedes $acaraya , flled u& a savings cash de&osit sli& and a savings chec(s de&osit sli&" $acaraya instructed the messenger of 2"C" .ia>, #smael Cala&re, to de&osit the money with +olid%an( and give him the +olid%an( &ass%oo(" Cala&re went to +olid%an( and &resented to -eller 7o" B the two de&osit sli&s and the &ass%oo(" -he teller ac(nowledged recei&t of the de&osit %y returning to Cala&re the du&licate co&ies of the two de&osit sli&s" +ince the transaction too( time and Cala&re had to ma(e another de&osit for 2"C" .ia> with Allied 'an(, he left the &ass%oo( with +olid%an(" 5hen Cala&re returned to +olid%an( to retrieve the &ass%oo(, -eller 7o" B informed him that some%ody got the &ass%oo(" Cala&re went %ac( to 2"C" .ia> and re&orted the incident to $acaraya" -he following day,, 2"C" .ia> through its Chief =/ecutive ;<cer, 2uis C" .ia>, called u& +olid%an( to sto& any transaction using the same &ass%oo( until 2"C" .ia> could o&en a new account followed %y a formal written request later that day" #t was also on the same day that 2"C" .ia> learned of the unauthori>ed withdrawal the day %efore of P:!!,!!! from its savings account" -he withdrawal sli& %ore the signatures of the authori>ed signatories of 2"C" .ia>, namely .ia> and 3ustico 2" $urillo" -he signatories, however, denied signing the withdrawal sli&" A certain 7oel -amayo received the P:!!,!!!" 2"C" .ia> demanded from +olid%an( the return of its money %ut to no avail" 4ence, 2"C" .ia> fled a Com&laint for 3ecovery of a +um of $oney against +olid%an( with the 3egional -rial Court" After trial, the trial court rendered a decision a%solving +olid%an( and dismissing the com&laint" Court of A&&eals reversed the decision of the trial court" #ssue: 5hether or not +olid%an( must %e held lia%le for the fraudulent withdrawal on &rivate res&ondentKs account" 4eld: -he &etition is &artly meritorious" +olid%an( is lia%le for %reach of contract due to negligence, or cul&a contractual" -he contract %etween the %an( and its de&ositor is governed %y the &rovisions of the Civil Code on sim&le loan" -here is a de%tor0creditor relationshi& %etween the %an( and its de&ositor" -he %an( is the de%tor and the de&ositor is the creditor" -he law im&oses on %an(s high standards in view of the fduciary nature of %an(ing" 3A D7AC declares that the +tate recogni>es the Mfduciary nature of %an(ing that requires high standards of integrity and &erformance", -his new &rovision in the general %an(ing law, introduced in 2!!!, is a statutory a<rmation of +u&reme Court decisions holding that Mthe %an( is under o%ligation to treat the accounts of its de&ositors with meticulous care, always having in mind the fduciary nature of their relationshi&", 4owever, the fduciary nature of a %an(0de&ositor relationshi& does not convert the contract %etween the %an( and its de&ositors from a sim&le loan to a trust agreement, whether e/&ress or im&lied" Failure %y the %an( to &ay the de&ositor is failure to &ay a sim&le loan, and not a %reach of trust" +olid%an(Ks tellers must e/ercise a high degree of diligence in insuring that they return the &ass%oo( only to the de&ositor or his authori>ed re&resentative" -he tellers (now, or should (now, that the rules on savings account &rovide that any &erson in &ossession of the &ass%oo( is &resum&tively its owner" #f the tellers give the &ass%oo( to the wrong &erson, they would %e clothing that &erson &resum&tive ownershi& of the &ass%oo(, facilitating unauthori>ed withdrawals %y that &erson" For failing to return the &ass%oo( to Cala&re, the authori>ed re&resentative of 2"C" .ia>, +olid%an( and -eller 7o" B &resum&tively failed to o%serve such high degree of diligence in safeguarding the &ass%oo(, and in insuring its return to the &arty authori>ed to receive the same" 4owever, 2"C" .ia> was guilty of contri%utory negligence in allowing a withdrawal sli& signed %y its authori>ed signatories to fall into the hands of an im&ostor" -hus, the lia%ility of +olid%an( should %e reduced" 4ence, the lia%ility of +olid%an( for actual damages was reduced to only B!Q, the remaining @!Q was %orne %y &rivate res&ondent" 1*. Ban&o de 7ro vs. -!'RL Develop/ent Corporation G.R. No. 1.99*1 !pril 14 "**# Facts: 'anco de ;ro e/tended fnancial facilities to res&ondent GAP32 amounting to P2:!,!!!,!!! with co0res&ondents 3a&id Forming Cor&oration 83FC9 and Gose Arollado acting as sureties" GAP32 defaulted in the &ayment of four trust recei&ts" Petitioner %an( su%sequently found out that GAP32 altered and falsifed its fnancial statements to &roEect itself as a via%le investment" 'ecause the demand for &ayment was unheeded, &etitioner %an( sued GAP32 and the sureties for &ayment of the %alance due on the trust recei&ts in 3-C $a(ati" 3es&ondents then hastily fled a &etition for reha%ilitation and stay order in Calam%a of 3-C which were granted" As a result, the com&laint was dismissed with res&ect to GAP32 and 3FC" Arollado remained as defendant" 3es&ondents fled a &etition for certiorari %efore the CA, contending that the trial court did not acquire Eurisdiction over them as the summons were served on a mere administrative assistant" CA granted the &etition and dismissed &etitionerKs motion for reconsideration" 4ence this &etition" #ssues: 5hether or not Eurisdiction over the defendants was acquired and whether or not they are lia%le to &ay their o%ligations 4eld: Petition granted" 5hen res&ondents moved for the sus&ension of &roceedings of the civil case %efore the $a(ati 3-C, on the %asis of the stay order of the Calam%a 3-C, they waived whatever defect there was in the service of summons and were deemed to have su%mitted themselves voluntarily to the Eurisdiction of the $a(ati 3-C" Considering the amount of &etitionerHs e/&osure in GAP32, Eustice and fairness dictate that the $a(ati 3-C hear whether or not res&ondents indeed committed fraud in securing the credit accomodation" #n this event, &etitioner can use the fnding of fraud to move for the dismissal of the reha%ilitation case in the Calam%a 3-C" $oreover, under +ec" @! of the General 'an(ing 2aw, should such statements 8fnancial9 &rove to %e false or incorrect in any material detail, the %an( may terminate any loan or credit accommodation granted on the %asis of said statements and shall have the right to demand immediate re&ayment or liquidation of the o%ligation" $eanwhile, trial court should &roceed with the case against three defendants" 11. 'hilippines National Bank vs. 9rlando 8. Rodrig$e0 et al. G.R. No. 1.*,"+ (epte/%er "6 "**# Facts: 3es&ondents0s&ouses maintained a savings and demandRchec(ing accounts with &etitioners Phili&&ines 7ational 'an( 8P7'9" -hey were engaged in the informal lending %usiness and had a discounting arrangement with the Philna%an( =m&loyees +avings and 2oan Association 8P=$+2A9, an association of P7' em&loyees, which li(ewise maintained current and savings accounts with &etitioner %an(" P=$+2A regularly granted loans to its mem%ers" +&ouses 3odrigue> would rediscount the &ostdated chec(s issued to mem%ers whenever the association was short of funds" As was customary, the s&ouses would re&lace the &ostdated chec(s with their own chec(s issued in the name of the mem%ers" #t was P=$+2AKs &olicy not to a&&rove a&&lications for loans of mem%ers with outstanding de%ts" -o su%vert this &olicy, some P=$+2A o<cers devised a scheme to o%tain additional loans des&ite their outstanding loan accounts" -hey too( out loans in the names of un(nowing mem%ers, without the (nowledge or consent of the latter" -he P=$+2A chec(s issued for these loans were then given to the s&ouses for rediscounting" -he o<cers carried this out %y forging the indorsement of the named &ayees in the chec(s" #n return, the s&ouses issued their &ersonal chec(s 83odrigue> chec(s9 in the name of the mem%ers and delivered the chec(s to an o<cer of P=$+2A" -he P=$+2A chec(s, on the other hand, were de&osited %y the s&ouses to their account" $eanwhile, the 3odrigue> chec(s were de&osited directly %y P=$+2A to its savings account without any indorsement from the named &ayees" -his usual irregular &rocedure is made &ossi%le through the facilitation of =dmundo Palermo, Gr", treasurer of P=$+2A and %an( teller in the P7' 'ranch" -he s&ouses issued BA chec(s, in the total amount of P2,:@,D!@"!!, &aya%le to @7 mem%ers of P=$+2A" After fnding out such fraudulent act, P7' closed the current account of P=$+2A" As a result, the P=$+2A chec(s de&osited %y the s&ouses were returned or dishonored for the reason *Account Closed"* -he corres&onding 3odrigue> chec(s, however, were de&osited as usual to the P=$+2A savings account" -he amounts were duly de%ited from the 3odrigue> account" -hus, %ecause the P=$+2A chec(s given as &ayment were returned, s&ouses 3odrigue> incurred losses from the rediscounting transactions" +&ouses 3odrigue> sued P=$+2A and P7'" -hey contended that %ecause P7' credited the chec(s to the P=$+2A account even without indorsements, P7' violated its contractual o%ligation to them as de&ositors" P7' &aid the wrong &ayees, hence, it should %ear the loss" -rial court ruled in favor of s&ouses and ordered P7' to &ay" CA a<rmed the decision" 4ence this &etition #ssue: 5hether or not P7' can %e made lia%le to &ay the amount of chec(s which were de&osited to the P=$+2A savings account" 4eld: Fes" -he 3odrigue> chec(s are &aya%le to order since the %an( failed to &rove that the named &ayees therein are fctitious" 4ence, the fctitious0&ayee rule which will ma(e the instrument &aya%le to %earer does not a&&ly" P7' acce&ted the BA chec(s for de&osit to the P=$+2A account even without any indorsement from the named &ayees" #t %ears stressing that order instruments can only %e negotiated with a valid indorsement" A %an( that regularly &rocesses chec(s that are neither &aya%le to the customer nor duly indorsed %y the &ayee is a&&arently grossly negligent in its o&erations" -his Court has recogni>ed the unique &u%lic interest &ossessed %y the %an(ing industry and the need for the &eo&le to have full trust and confdence in their %an(s" For this reason, %an(s are minded to treat their customerKs accounts with utmost care, confdence, and honesty" #n a chec(ing transaction, the drawee %an( has the duty to verify the genuineness of the signature of the drawer and to &ay the chec( strictly in accordance with the drawerKs instructions, i"e", to the named &ayee in the chec(" #t should charge to the drawerKs accounts only the &aya%les authori>ed %y the latter" ;therwise, the drawee will %e violating the instructions of the drawer and it shall %e lia%le for the amount charged to the drawerKs account" 1". Bank of !/eri&a N8 and (! vs. !sso&iated Citi0ens Bank G.R. No. 141**1 Ma) "1 "**9 Facts: 'A0Finance Cor&oration granted $iller ;)set Press, #nc" a credit line facility through which the latter could assign or discount its trade receiva%les with the former" -he re&resentatives of $iller 8Ly Siat Chung, Ching Ly +eng, and Ly Chung Guan +eng9 e/ecuted a Continuing +uretyshi& Agreement with 'A0Finance where%y they Eointly and severally guaranteed the full and &rom&t &ayment of any and all inde%tedness which $iller may incur with 'A0Finance" $iller discounted and assigned several trade receiva%les to 'A0Finance %y e/ecuting .eeds of Assignment in favor of the latter" #n consideration thereof, 'A0 Finance issued four chec(s &aya%le to the order of $iller with the notation *For PayeeKs Account ;nly"* -hese chec(s were drawn against 'an( of America" -he four chec(s were de&osited %y Ching Ly +eng in Associated Citi>ens 'an( with his Eoint account with Ly Chung +eng" Associated 'an( stam&ed the chec(s and guaranteed all &rior endorsements andRor lac( of endorsements and sent them through clearing" 2ater, 'an( of America as drawee %an( honored the chec(s and &aid the &roceeds to Associated 'an( as the collecting %an(" 5hen $iller failed to deliver to 'A0 Finance the &roceeds of the assigned trade receiva%les, 'A0Finance fled a collection suit against $iller and im&leaded the three re&resentative of the latter" $iller, Ly Siat Chung, and Ly Chung Guan +eng fled a Eoint answer with cross0claim against Ching Ly +eng, wherein they denied that 8C9 they received the amount covered %y the four 'an( of America chec(s, and 829 they authori>ed their co0defendant Ching Ly +eng to transact %usiness with 'A0Finance on %ehalf of $iller" Ly Siat Chung and Ly Chung Guan +eng also denied having signed the Continuing +uretyshi& Agreement with 'A0Finance" 'A0Finance fled an Amended Com&laint im&leading 'an( of America as additional defendant for allegedly allowing encashment and collection of the chec(s %y &erson or &ersons other than the &ayee named thereon" Ching Ly +eng did not fle his Answer to the com&laint" 'an( of America fled a third &arty com&laint against Associated 'an(" #n its answer to the third &arty com&laint, Associated 'an( admitted having received the four chec(s for de&osit in the Eoint account of Ching Ly +eng and Ly Chung Guan +eng, %ut alleged that Ching Ly +eng, %eing one of the cor&orate o<cers of $iller, was duly authori>ed to act for and on %ehalf of $iller" 3-C rendered Eudgment ordering 'an( of America to &ay 'A0Finance the value of the four chec(s" CA a<rmed the trial courtKs ruling with modifcation that Associated 'an( should reim%urse 'an( of America" 4ence this &etition" #ssues: 5hether or not 'an( of America is lia%le to &ay 'A0Finance and whether or not Associated 'an( should reim%urse 'an( of America the amount of the four chec(s" 4eld: Fes" -he %an( on which a chec( is drawn, (nown as the drawee %an(, is under strict lia%ility, %ased on the contract %etween the %an( and its customer 8drawer9, to &ay the chec( only to the &ayee or the &ayeeKs order" -he drawerKs instructions are reJected on the face and %y the terms of the chec(" 5hen the drawee %an( &ays a &erson other than the &ayee named on the chec(, it does not com&ly with the terms of the chec( and violates its duty to charge the drawerKs account only for &ro&erly &aya%le items" ;n the &art of Associated 'an(, the law im&oses a duty of diligence on the collecting %an( to scrutini>e chec(s de&osited with it for the &ur&ose of determining their genuineness and regularity" -he collecting %an( %eing &rimarily engaged in %an(ing holds itself out to the &u%lic as the e/&ert and the law holds it to a high standard of conduct" #n &resenting the chec(s for clearing and for &ayment, the defendant Tcollecting %an(U made an e/&ress guarantee on the validity of *all &rior endorsements"* -hus, stam&ed at the %ac( of the chec(s are the defendantKs clear warranty" As the warranty has &roven to %e false and inaccurate, Associated 'an( is lia%le for any damage arising out of the falsity of its re&resentation" Clos$re of Banks 1. Ra/os vs. Central Bank of the 'hilippines G.R. No. L-"9,+" 7&to%er 4 19.1 Facts: Petitioners are the maEority and controlling stoc(holders of ;verseas 'an( of $anila 8;'$9, a commercial %an(ing cor&oration" -he ;'$ had %een sus&ended %y res&ondent from clearing with the C' and from lending o&erations for various violations of the %an(ing laws and im&lementing regulations" Petitioners charged that the ;'$ %ecame fnancially distressed %ecause of this sus&ension and the de&rivation %y the C' of all the usual credit facilities and accommodations accorded to the other %an(s" 'ecause the fnancial situation of the ;'$ had caused mounting concern in the C', &etitioner 3amos and the ;'$ management met with res&ondent C' on the necessity and urgency of reha%ilitating the ;'$ through the e/tension of necessary fnancial assistance" #n lieu thereof, the $onetary 'oard issued a resolution demanding the stoc(holders to mortgage their &ro&erties or assign the same to the C' and to e/ecute a voting trust agreement where%y they will &ass the management to Phili&&ine 7ational 'an( in order Mto stave of liquidation," 4ence, the &etitioners e/ecuted the voting trust agreement &re&ared %y C' with &etitioners as cestuis que trust
and res&ondent C'Hs +u&erintendent of 'an(s as the -rustee" Petitioners li(ewise conveyed %y way of mortgage to the C' all their &rivate &ro&erties and holdings to secure the o%ligations of the ;'$ to the C'" Accordingly, new directors and o<cers were elected and installed and they too( over the management and control of the ;verseas %an(" 4owever, after D months, the Central 'an( did not ma(e any &ositive action to reorgani>e and resume ;'$Ks normal o&erations" #nstead, C' issued a resolution e/cluding ;'$ from clearing with it and authori>ing the nominee %oard of directors to sus&end o&erations" 5orse, C' $onetary 'oard issued a resolution ordering the liquidation the %an(" 4ence this &etition for certiorari, &rohi%ition and mandamus with &rayer for the issuance of a writ of &reliminary inEunction to restrain res&ondent Central 'an( of the Phili&&ines from enforcing and im&lementing the $onetary 'oard 3esolutions" #ssue: 5hether or not the C' had agreed to reha%ilitate, normali>e and sta%ili>e ;'$ and whether or not the C' resolutions were ado&ted in a%use of discretion" 4eld: Fes" Petition granted" C' did agree and commit itself to the continued o&eration of, and reha%ilitation of, the ;'$" C' made e/&ress re&resentations to &etitioners herein that it would su&&ort the ;'$, and avoid its liquidation if the &etitioners would e/ecute 8a9 the voting trust agreement turning over the management of ;'$ to the C' or its nominees, and 8%9 mortgage or assign their &ro&erties to the Central 'an( to cover the overdraft %alance of ;'$" -he &etitioners having com&lied with these conditions and &arted with value to the &roft of the C' 8which thus acquired additional security for its own advances9, the C' may not now renege on its re&resentations and liquidate the ;'$, to the detriment of its stoc(holders, de&ositors and other creditors, under the rule of &romissory esto&&els" -he conduct of the C' reveals a calculated attem&t to evade reha%ilitating ;'$ des&ite its &romises" 4ence, res&ondent Central 'an( of the Phili&&ines is directed to com&ly with it o%ligations under the voting trust agreement, and to desist from ta(ing action in violation thereof" ". Central Bank vs. Co$rt of !ppeals 1*6 (CR! 14, 19#1 Facts: Plainti)s #sidro Fernande> and Gesus Gayme are the maEority and controlling stoc(holders of Provident 'an(" 5hen Provident +avings 'an( e/&erienced %an(run, it was forced to %orrow funds from other %an(s and the Central 'an(" .es&ite the %orrowing, the funds remained insu<cient to satisfy the withdrawals" 4ence, the &lainti)s a&&ealed to Central 'an( for further assistance" 4owever, C' re&lied to them stating that they have to relinquish and turnover the management and control of the %an( to #glesia ni Sristo 8#7S9 in order for it to assist the distressed &rovident" 'ecause &lainti)s were left with no other choice, they agreed to the &ro&osal and e/ecuted a memorandum of agreement with =agle 'roadcasting Cor&oration 8='C9, a com&any identifed with #7S" 4owever, ='C did not com&ly with its o%ligation to organi>e the %an(" #nstead, it made several irregularities in managing the %an(" -hese acts were made des&ite the &resence of C' e/aminers" +u%sequently, C' $onetary 'oard issued a resolution declaring the closure of Provident +avings 'an( and ordering its liquidation" 4ence, Fernande> and Gayme fled with the Court of First #nstance a &etition for certiorari, &rohi%ition, and mandamus against Central 'an( to annul the resolution and restrain C' from &roceeding with the liquidation which the court granted" Court of A&&eals a<rmed lower courtKs decision" 4ence this a&&eal" #ssue: 5hether or not the closure of the %an( may %e su%Eect to Eudicial inquiry and whether or not the resolution was issued ar%itrarily and in %ad faith" 4eld: Fes" .ecision a<rmed" 5hile the closure and liquidation of a %an( may %e considered an e/ercise of &olice &ower, the validity of such e/ercise of &olice &ower is su%Eect to Eudicial inquiry and could %e set aside if it is either ca&ricious, discriminatory, whimsical, ar%itrary, unEust, or a denial of due &rocess and equal &rotection clauses of the Constitution" -he ar%itrariness and %ad faith of Central 'an( is evident from the fact that it &ressured Fernande> and Gayme into relinquishing the management and control of Provident +avings 'an( to #glesia 7i Sristo which did not have any intention of restoring the %an( into its former sound fnancial condition %ut whose interest was merely to recover its de&osits from the %an( and thereafter allowing #7S to mismanage the %an( until the %an(Ks fnancial deterioration and su%sequent closure" Central 'an( acted whimsically and withdrew its commitment to su&&ort the %an( to the detriment of the latter" ,. (al$d vs. Central Bank G.R. No. L-1.6"* !$g$st 19 19#6 Facts: -he $onetary 'oard ado&ted 2 resolutions for%idding the $untinlu&a 'an( to do %usiness, designating a statutory receiver, and ordering the liquidation of the same %an( after confrmation that it is insolvent" $untinlu&a %an( o&&osed the liquidation and alleged that the action of the $onetary 'oard was &remature and void since there was no &rior e)ort to reorgani>e the management of the %an( and restore its via%ility and that it was made ar%itrarily and in %ad faith" -he 3egional -rial Court, treating the o&&osition of the %an( as a motion to dismiss, ruled in favor of it and declared the action of the $onetary 'oard ar%itrary after fnding that the %an( had more assets than lia%ilities" -he #ntermediate A&&ellate Court reversed the decision and gave due course to the &etition for liquidation" 4ence this &etition #ssue: 5hether or not the action of the $onetary 'oard is within the Eurisdiction of the 3egional -rial Court and may rule on its validity %ased on ar%itrariness and %ad faith" 4eld: Fes" 3esolutions of the $onetary 'oard for%idding %an(ing institutions to do %usiness? or a&&ointing a receiver to ta(e charge of the %an(Hs assets and lia%ilities? or determining whether the %an(ing institutions may %e reha%ilitated, or should %e liquidated and a&&ointing a liquidator towards this end are %y law fnal and e/ecutory" 'ut they can %e set aside %y the court on one s&ecifc ground, and that is, if there is convincing &roof that the action is &lainly ar%itrary and made in %ad faith" -he Central 'an( concedes this &ower in the court, %ut insists that that setting aside cannot %e done in the same &roceeding for assistance in liquidation, %ut in a se&arate action instituted s&ecifcally for the &ur&ose" 4owever, there is no &rovision of law which e/&ressly or even %y im&lication im&oses the requirement for a se&arate &roceeding e/clusively occu&ied with adEudicating this issue" 4ence, such action may %e asserted as an a<rmative defense of a counterclaim in the &roceeding for assistance in liquidation that the Central 'an( has fled in the 3egional -rial Court" -he case is remanded %ac( to the 3-C for further &roceeding" 4. Lipana vs. Develop/ent Bank of the Philippines G.R. No. .,##4 (eptember 24, 1987 Facts: Petitioners o&ened and maintained %oth time and savings de&osits with the res&ondent .evelo&ment 'an( of 3i>al" 5hen some of the time de&osit certifcates matured, &etitioners were not a%le to cash them %ut instead were issued a managerHs chec( which was dishonored u&on &resentment" .emands for the &ayment of %oth time and savings de&osits have failed" 4ence, &etitioners fled with the 3-C a collection suit with &rayer for issuance of a writ of &reliminary attachment which was granted %y the court" -he 3-C rendered Eudgment in favor of &etitioners" $eanwhile, the $onetary 'oard &laced the res&ondent %an( under receivershi&" +u%sequently, the motion for e/ecution &ending a&&eal fled %y &etitioners was granted %y the court %ut was also stayed %y the trial Eudge" -he motion fled %y &etitioners to lift the stay order having %een denied, this &etition was fled" #ssue: 5hether or not res&ondent Eudge could legally stay e/ecution of Eudgment that has already %ecome fnal and e/ecutor 4eld: Fes" Petition dismissed" After the $onetary 'oard has declared that a %an( is insolvent and has ordered it to cease o&erations, the 'oard %ecomes the trustee of its assets for the equal %eneft of all the creditors, including de&ositors" -he assets of the insolvent %an(ing institution are held in trust for the equal %eneft of all creditors, and after its insolvency, one cannot o%tain an advantage or a &reference over another %y an attachment, e/ecution or otherwise" -o e/ecute the Eudgment would unduly de&lete the assets of res&ondent %an( to the o%vious &reEudice of other de&ositors and creditors, +. 7verseas Bank of Manila vs. Co$rt of !ppeals G.R. No. L-4+#66 !pril 19 19#9 Facts: #n relation to a contract of sale %etween 7A5A+A, as vendor and a certain 'onifacio 3egalado, as vendee, the amount corres&onding to the frst &ayment %y 3egalado was &laced on a time de&osit with the ;verseas 'an( %y the 7A5A+A -reasurer for a &eriod of B months" A second &ayment having %een made %y 3egalado, another time de&osit was made %y the 7A5A+A -reasurer with the ;verseas 'an(, this time in the amount res&resenting the %alance of the &urchase &rice due from 3egalado" -he &eriod of this second de&osit was f/ed C year" +u%sequently, 7A5A+AHs Acting General $anager wrote to the ;verseas 'an( advising that 8C9 as regards the frst time de&osit which had already matured, 7A5A+A wished to withdraw it immediately, and 829 with res&ect to the second time de&osit of, it intended to withdraw it B! days thereafter as authori>ed %y the &artiesH agreement set forth in the certifcate of the de&osit" .es&ite several letter request, nothing was heard from the ;verseas 'an(" #t did however &ay to 7A5A+A interest on its time de&osits" After maturity of the second time de&osit and ;verseas 'an( not res&onding to the letter request of 7A5A+A for the remittance of the time de&osits, 7A5A+A then wrote to the Central 'an( Governor a%out the matter" A&&arently, even the Central 'an( was ignored %y ;verseas 'an(" ;ne last letter was written %y 7A5A+A to the ;verseas 'an(, reiterating its demand for the return of its money" Again the letter went unheeded" 7A5A+A thus %rought suit to recover its de&osits and damages" CF# $anila rendered Eudgment in favor of 7A5A+A and ordered the %an( to &ay" CA a<rmed the trial courtKs ruling" 4ence this &etition" #ssue: 5hether or not ;verseas 'an( is lia%le to &ay" 4eld: Fes" Gudgment a<rmed" -he %an(Ks contention that the &unitive actions ta(en %y the Central 'an( &revented the %an( from conducting its %usiness is devoid of merit" -here is a%solutely no evidence of these facts in the record" $oreover, the sus&ension of o&erations in CABD could not &ossi%ly e/cuse non0com&liance with the o%ligations in question which matured in CABB" Again, the claim that the Central 'an(, %y sus&ending the ;verseas 'an(Hs %an(ing o&erations, had made it im&ossi%le for the ;verseas 'an( to &ay its de%ts, whatever validity might %e accorded thereto, or the further claim that it had fallen into a distressed fnancial situation, cannot in any sense e/cuse it from its o%ligation to the 7A5A+A, which had nothing whatever to do with the Central 'an(Hs actuations or the events leading to the %an(Hs distressed state" 6. Ban&o 5ilipino (avings and Mortgage Bank vs. Central Bank G.R. No. .**+4 De&e/%er 11 1911 Facts: Petitioners -o& $anagement Programs Cor&oration and Pilar .evelo&ment Cor&oration are cor&orations engaged in the %usiness of develo&ing residential su%divisions"-o& $anagement and Pilar .evelo&ment o%tained several loans from 'anco Fili&ino all secured %y real estate mortgage in their various &ro&erties in Cavite" -he $onetary 'oard issued a resolution fnding 'anco Fili&ino insolvent and &lacing it under receivershi&" +u%sequently, the $onetary 'oard issued another resolution &lacing the %an( under liquidation and designated a liquidator" 'y virtue of her authority as liquidator, Oalen>uela a&&ointed the law frm of +yci&, +ala>ar, et al" to re&resent 'anco Fili&ino in all litigations" 'anco Fili&ino fled the &etition for certiorari questioning the validity of the resolutions issued %y the $onetary 'oard authori>ing the receivershi& and liquidation of 'anco Fili&ino"A tem&orary restraining order was issued enEoining the res&ondents from e/ecuting further acts of liquidation of the %an(" 4owever, acts and other transactions &ertaining to normal o&erations of a %an( are not enEoined" +u%sequently, -o& $anagement and Pilar .evelo&ment failed to &ay their loans on the due date" 4ence, the law frm of +yci&, +ala>ar, et al" acting as counsel for 'anco Fili&ino under authority of the liquidator, a&&lied for e/tra0Eudicial foreclosure of the mortgage over -o& $anagement and Pilar .evelo&mentKs &ro&erties" -hus, the =/0;<cio +heri) of the 3egional -rial Court of Cavite issued a notice of e/tra0Eudicial foreclosure sale of the &ro&erties" -o& $anagement and Pilar .evelo&ment fled 2 se&arate &etitions for inEunction and &rohi%ition with the res&ondent a&&ellate court see(ing to enEoin the 3egional -rial Court of Cavite, the e/0o<cio sheri) of said court and +yci&, +ala>ar, et al" from &roceeding with foreclosure sale which were su%sequently dismissed %y the court" 4ence this &etition #ssue: 5hether or not the liquidator has the authority to &rosecute as well as to defend suits and to foreclose mortgages for and %ehalf of the %an( while the issue on the validity of the receivershi& and liquidation is still &ending resolution 4eld: Fes" +ection 2A of the 3e&u%lic Act 7o" 2B, as amended (nown as the Central 'an( Act, &rovides that when a %an( is for%idden to do %usiness in the Phili&&ines and &laced under receivershi&, the &erson designated as receiver shall immediately ta(e charge of the %an(Hs assets and lia%ilities, as e/&editiously as &ossi%le, collect and gather all the assets and administer the same for the %eneft of its creditors, and re&resent the %an( &ersonally or through counsel as he may retain in all actions or &roceedings for or against the institution, e/ercising all the &owers necessary for these &ur&oses including, %ut not limited to, %ringing and foreclosing mortgages in the name of the %an(" Pendency of the case did not diminish the &owers and authority of the designated liquidator to e)ectuate and carry on the administration of the %an(" 4owever, the assailed order of the $onetary 'oard liquidating the %an( was annulled and set aside" Central 'an( and the $onetary 'oard were ordered to reorgani>e &etitioner %an( and allow the latter to resume %usiness under their com&trollershi&" .. Central Bank of the 'hilippines vs. Co$rt of !ppeals G.R. No. ##,+, Ma) # 199" Facts: Central 'an( discovered that certain questiona%le loans e/tended %y ProducerKs 'an( of the Phili&&ines 8P'P9, totalling a&&ro/imately P:!! million 8the &aid0in ca&ital of P'P amounting only to P C@!"@@ million9, were fctitious as they were e/tended, without collateral, to certain interests related to P'P owners themselves" +u%sequently and during the same year, several %lind items a%out a family0 owned %an( in 'inondo which granted fctitious loans to its stoc(holders a&&eared in maEor news&a&ers which triggered a %an(0run in P'P and resulted in continuous over0drawings on the %an(Hs demand de&osit account with the Central 'an(? reaching to P C@:"A million" 4ence, on the %asis of the re&ort su%mitted %y the +u&ervision and =/amination +ector, the $onetary 'oard 8$'9, &laced P'P under conservatorshi&" P'P su%mitted a reha%ilitation &lan to the C' which &ro&osed the transfer to P'P of : %uildings owned %y Producers Pro&erties, #nc" 8PP#9, its &rinci&al stoc(holder and the su%sequent mortgage of said &ro&erties to the C' as collateral for the %an(Hs overdraft o%ligation %ut which was not a&&roved due to disagreements %etween the &arties" +ince no other reha%ilitation &rogram was su%mitted %y P'P for almost : years its overdrafts with the C' continued to accumulate and swelled to a staggering PC"!2: %illion" Consequently, the C' $onetary 'oard decided to a&&rove in &rinci&le what it considered a via%le reha%ilitation &rogram for P'P" -here %eing no res&onse from %oth P'P and PP# on the &ro&osed reha%ilitation &lan, the $' issued a resolution instructing Central 'an( management to advise the %an( that the conservatorshi& may %e lifted if P'P com&lies with certain conditions" 5ithout res&onding to the communications of the C', P'P fled a com&laint with the 3egional -rial Court of $a(ati against the C', the $' and C' Governor alleging that the resolutions issued were ar%itraty and made in %ad faith" 3es&ondent Gudge issued a tem&orary restraining order and su%sequently a writ of &reliminary inEunction" C' fled a motion to dismiss %ut was denied and ruled that the $' resolutions were ar%itrarily issued" C' fled a &etition for certiorari %efore the Court of A&&eals see(ing to annul the orders of the trial court %ut CA a<rmed the said orders" 4ence this &etition" #ssue: 5hether or not the trial court erred in not dismissing the case for lac( of cause of action and declaring the $' resolutions as ar%itrary" 4eld: Fes" Assailed decisions are annulled and set aside" -he following requisites must %e &resent %efore the order of conservatorshi& may %e set aside %y a court: 8C9 -he a&&ro&riate &leading must %e fled %y the stoc(holders of record re&resenting the maEority of the ca&ital stoc( of the %an( in the &ro&er court? 829 +aid &leading must %e fled within ten 8C!9 days from recei&t of notice %y said maEority stoc(holders of the order &lacing the %an( under conservatorshi&? and 8:9 -here must %e convincing &roof, after hearing, that the action is &lainly ar%itrary and made in %ad faith" #n the instant case, the original com&laint was fled more than : years after P'P was &laced under conservator, long after the e/&iration of the C!0day &eriod deferred to a%ove" #t is also %eyond question that the com&laint and the amended com&laint were not initiated %y the stoc(holders of record re&resenting the maEority of the ca&ital stoc(" #. 5irst 'hilippine National Bank vs. Co$rt of !ppeals 9. 7ng vs. Co$rt of !ppeals G.R. No. 11"#,* 5e%r$ar) 1 1996 Facts: Gerry ;ng fled with the 3egional -rial Court of Iue>on City a &etition for the surrender of 2 -C-s against 3ural 'an( of ;longa&o, #nc" 83';9, re&resented %y its liquidator Guillermo G" 3eyes, Gr" and de&uty liquidator A%el Allanigue" According to the &etition, said 2 &arcels of land were duly mortgaged %y 3'; in favor of &etitioner to guarantee the &ayment of ;mni%us Finance, #nc", which is li(ewise now undergoing liquidation &roceedings of its money mar(et o%ligations to &etitioner" ;mni%us Finance, #nc", not having seasona%ly settled its o%ligations to &etitioner, the latter &roceeded to e)ect the e/traEudicial foreclosure of said mortgages and the city sheri) of -agaytay City issued a certifcate of sale in favor of &etitioner which were duly registered" 3es&ondents failed to seasona%ly redeem said &arcels of land, for which reason, &etitioner has e/ecuted an a<davit of consolidation of ownershi& which has not %een su%mitted to the 3egistry of .eeds of -agaytay City, in view of the fact that &ossession of the aforesaid titles or ownerHs du&licate certifcates of title remains with the 3';" -o date, &etitioner has not %een a%le to e)ect the registration of said &arcels of land in his name in view of the &ersistent refusal of res&ondentsto surrender 3';Hs co&ies of its ownerHs certifcates of title for the &arcels of land covered %y the two -C-s" 3es&ondent 3'; fled a motion to dismiss on the ground of res judicata and that it was undergoing liquidation and it is the liquidation court which has e/clusive Eurisdiction to ta(e cogni>ance of &etitionerHs claim" -rial court denied the motion to dismiss %ecause it found that the causes of action in the &revious and &resent cases were di)erent although it was silent on the Eurisdictional issue" 3'; fled a motion for reconsideration %ut was similarly reEected" -he Court of A&&eals, through a certiorari fled %y 3';, annulled the challenged orders of the trial court which sustained the Eurisdiction of the trial court and denied reconsideration thereof" $oreover, the trial Eudge was ordered to dismiss the civil case without &reEudice to the right of &etitioner to fle his claim in the liquidation &roceedings &ending %efore the 3egional -rial Court of ;longa&o City" #ssue: 5hether or not the civil case against 3'; may &roceed inde&endently from the liquidation &roceedings" 4eld: 7o"Petition denied" All claims against the insolvent %an( should %e fled in the liquidation &roceeding" -he Eudicial liquidation is intended to &revent multi&licity of actions against the insolvent %an(" #t is a &ragmatic arrangement designed to esta%lish due &rocess and orderliness in the liquidation of the %an(, to o%viate the &roliferation of litigations and to avoid inEustice and ar%itrariness" #t is not necessary that a claim %e initially dis&uted in a court or agency %efore it is fled with the liquidation court" 1*. Manalo vs. Co$rt of !ppeals G.R. No. 141"9. 7&to%er # "**1 Facts: +" Oillanueva =nter&rises, re&resented %y its &resident, -herese Oillanueva Oargas, o%tained a loan of three million &esos and one million &esos from the res&ondent PA#C +avings and $ortgage 'an( and the Phili&&ine American #nvestments Cor&oration 8PA#C9, res&ectively" -o secure &ayment of %oth de%ts, Oargas e/ecuted in favor of the res&ondent and PA#C a Eoint frst mortgage
over two &arcels of land registered under her name" ;ne of the lots is the su%Eect of the &resent case" +" Oillanueva =nter&rises failed to settle its loan o%ligation" Accordingly, res&ondent instituted e/traEudicial foreclosure &roceedings over the mortgaged lots and acquired the same as the highest %idder" After the la&se of one year, title was consolidated in res&ondentHs name for failure of Oargas to redeem" +u%sequently, Central 'an( of the Phili&&ines fled a &etition for assistance in the liquidation of the res&ondent PA#C with the 3egional -rial Court" After a few years, res&ondent &etitioned the 3egional -rial Court of Pasay City for the issuance of a writ of &ossession for the su%Eect &ro&erty" 4owever, during the &endency of civil case for the issuance of a writ of &ossession, Oargas e/ecuted a deed of a%solute sale selling, transferring, and conveying ownershi& of the dis&uted lot in favor of a certain Armando Angsico" 7otwithstanding this sale, Oargas, still re&resenting herself to %e the lawful owner of the &ro&erty, leased the same to &etitioner .omingo 3" $analo" 2ater, Armando Angsico, as %uyer of the &ro&erty, assigned his rights therein to &etitioner" -he court su%sequently issued the writ of &ossession %ut Oillanueva =nter&rises and Oargas moved for its quashal" Petitioner, on the strength of the lease contract and deed of assignment made in his favor, su%mitted a &ermission to fle an e/0&arte motion to intervene" 'oth motions were denied %y the court" Court of A&&eals u&held the order of the lower court" 4ence this &etition" #ssue: 5hether or not the Eurisdiction for the issuance of the writ of &ossession fled %y the res&ondent %an( is vested solely on the liquidation court" 4eld: 7o" Petition dismissed" Although the law &rovides that all claims against the insolvent %an( should %e fled in the liquidation &roceeding, such legal &rovision only fnds o&eration in cases where there are claims against an insolvent %an(" #n fne, the e/clusive Eurisdiction of the liquidation court &ertains only to the adEudication of claims against the %an(" #t does not cover the reverse situation where it is the %an( which fles a claim against another &erson or legal entity" $oreover, a %an( which had %een ordered closed %y the monetary %oard retains its Euridical &ersonality which can sue and %e sued through its liquidator" -he only limitation %eing that the &rosecution or defense of the action must %e done through the liquidator" ;therwise, no suit for or against an insolvent entity would &ros&er" #n such situation, %an(s in liquidation would lose what Eustly %elongs to them through a mere technicality" 11. R$ral Bank of (ta. Catalina vs. Land Bank of the 'hilippines G.R. No. 14#*19 -$l) "6 "**4 Facts: 3es&ondent 2and 'an( of the Phili&&ines fled a com&laint against the &etitioner, +ta" Catalina 3ural 'an(, #nc", in the 3egional -rial Court for the collection of sum of money" For its failure to fle its answer to the com&laint, the trial court declared the &etitioner %an( in default" .es&ite its recei&t of the co&y of the said order, the &etitioner %an( failed to fle a motion to set aside the order of default" 3es&ondent %an( &resented 2 witnesses" -he frst witness, $r" $ervin +ison, the chief loans and creditor of the 2and 'an( of the Phili&&ines, testifed that he (nows of the rediscounting line agreements entered into %y and %etween the &lainti) and the defendant" +aid agreements were identifed %y him in court for P :,!!,!!!"!!" #n case of defendantHs default, the availments shall %e su%Eect to :Q &enalty &er month from due date of note as agreed u&on" .uring the e)ectivity of the frst and second rediscounting line agreement, defendant made several se&arate availments, each is su%Eect to a certain interest &er annum and with a term of CD! days" -he second witness, $s" =lenita del Castillo, corro%orated the testimony of $r" +ison" -he grand total of all the availments &lus corres&onding &enalties amounted more than P million" #n the meantime, the $onetary 'oard a&&roved the &lacement of the &etitioner %an(Hs assets under receivershi&" -he Phili&&ine .e&osit #nsurance Cor&oration 8P.#C9 was designated as receiver 8conservator9 of the &etitioner, and the latter was &rohi%ited from doing %usiness in the Phili&&ines" Lnaware of the action of the C', the trial court rendered Eudgment %y default against the &etitioner %an( ordering the %an( to &ay its o%ligation to res&ondent 2'P &lus interests and damages" -he &etitioner, through the P.#C, a&&ealed the decision to the Court of A&&eals" -he &etitioner %an( claim that since it was &laced under receivershi& and &rohi%ited from doing %usiness in the Phili&&ines it should no longer %e held lia%le for interests and &enalties on its account to the res&ondent %an(" 4owever, CA rendered Eudgment a<rming the decision of the 3-C" #ssue: 5hether or not an insolvent %an( &laced under receivershi& and &rohi%ited from doing %usiness in the Phili&&ines may %e held lia%le to &ay interests and &enalties after %eing declared in default" 4eld" Fes" Petition dismissed" Petitioner was served with a co&y of summons and the com&laint, %ut failed to fle its answer thereto" #t also failed to fle a verifed motion to set aside the order of default des&ite its recei&t of a co&y thereof" 5e note that the trial court rendered Eudgment only on A&ril 7, CAAD or more than a year after the issuance of the default order? yet, the &etitioner failed to fle any verifed motion to set aside the said order %efore the rendition of the Eudgment of default" -he P.#C was designated %y the Central 'an( of the Phili&&ines as receiver 8conservator9 as early as Ganuary C@, CAAD, and in the course of its management of the &etitioner %an(Hs a)airs, it should have (nown of the &endency of the case against the latter in the trial court" $oreover, the &etitioner, through the P.#C, received a co&y of the decision of the trial court %ut did not %other fling a motion for &artial reconsideration a&&ending thereto the orders of the $onetary 'oard or a motion to set aside the order of default" #nstead, the &etitioner a&&ealed the decision, and even failed to assign as an error the default order of the trial court" -he &etitioner is, thus, %arred from relying on the orders of the $onetary 'oard of the Central 'an( of the Phili&&ines &lacing its assets and a)airs under receivershi& and ordering its liquidation" 1". Miranda vs. Co$rt of !ppeals G.R. No. 169,,4 (epte/%er # "**6 Facts: Petitioner 2eticia G" $iranda was a de&ositor of Prime +avings 'an(" +he withdrew su%stantial amounts from her account, %ut instead of cash she o&ted to %e issued a crossed cashierHs chec( in the sum of P2,!!,!!! and cashierHs chec( in the amount of P:,!!2,!!!" Petitioner de&osited the two chec(s into her account in another %an( on the same day, however, 'ang(o +entral ng Pili&inas 8'+P9 sus&ended the clearing &rivileges of Prime +avings 'an( e)ective 2:!! &"m" of Gune :, CAAA" -he two chec(s of &etitioner were returned to her un&aid" ;n Gune @, CAAA, Prime +avings 'an( declared a %an( holiday" ;n Ganuary 7, 2!!!, the '+P &laced Prime +avings 'an( under the receivershi& of the Phili&&ine .e&osit #nsurance Cor&oration 8P.#C9" Petitioner fled a civil action for sum of money in the 3egional -rial Court to recover the funds from her un&aid chec(s against Prime +avings 'an(, P.#C and the '+P" -he court rendered Eudgment against defendants and ordered them to &ay the &lainti)" ;n a&&eal, the Court of A&&eals reversed the trial court and ruled in favor of the P.#C and '+P, dismissing the case against them, without &reEudice to the right of &etitioner to fle her claim %efore the court designated to adEudicate on claims against Prime +avings 'an(" PetitionerHs motion for reconsideration was denied" 4ence, this &etition" #ssue: 5hether or not the res&ondents are solidarily lia%le to &ay the &etitioner" 4eld: 7o" ;nly Prime +avings 'an( that is lia%le to &ay for the amount of the two cashierHs chec(s" +olidary lia%ility cannot attach to the '+P, in its ca&acity as government regulator of %an(s, and the P.#C as statutory receiver under 3"A" 7o" 7B:, %ecause they are the &rinci&al government agencies mandated %y law to determine the fnancial via%ility of %an(s and quasi0%an(s, and facilitate receivershi& and liquidation of closed fnancial institutions, u&on a factual determination of the latterHs insolvency" 4owever, in a situation involving the element of fraud, where a cashierHs chec( is &urchased from a %an( at a time when it is insolvent, as its o<cers (now or are %ound to (now %y the e/ercise of reasona%le diligence, it has %een held that the &urchase is entitled to a &reference in the assets of the %an( on its liquidation %efore the chec( is &aid" 4ence, the CA decision is a<rmed with modifcation that the claim of &etitioner $iranda is entitled to &reference in the assets of P+' in its liquidation"
A Short View of the Laws Now Subsisting with Respect to the Powers of the East India Company
To Borrow Money under their Seal, and to Incur Debts in
the Course of their Trade, by the Purchase of Goods on
Credit, and by Freighting Ships or other Mercantile
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