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Pendency of the case did not diminish the powers and authority of the designated liquidator to effectuate and
carry on the administration of the bank. In the instant case, the basic standards of substantial due process were
not observed.
Facts:
Top Management Programs Corporation and Pilar Development Corporation are corporations engaged in
the business of developing residential subdivisions.Top Management and Pilar Development obtained several loans
from Banco Filipino all secured by real estate mortgage in their various properties in Cavite.
The Monetary Board by Ramon Tiaoqui, Special Assistant to the Governor and Head, SES Department III submitted
a report finding that the bank is insolvent and recommending the appointment of a receiver.
based on the Tiaoqui report, issued a resolution finding Banco Filipino insolvent and placing it under receivership.
Subsequently, the Monetary Board issued another resolution placing the bank under liquidation and designated a
liquidator. By virtue of her authority as liquidator, Valenzuela appointed the law firm of Sycip, Salazar, et al. to
represent Banco Filipino in all litigations.
Banco Filipino filed the petition for certiorari questioning the validity of the resolutions issued by the Monetary
Board authorizing the receivership and liquidation of Banco Filipino.A temporary restraining order was issued
enjoining the respondents from executing further acts of liquidation of the bank. However, acts and other
transactions pertaining to normal operations of a bank are not enjoined. Subsequently, Top Management and Pilar
Development failed to pay their loans on the due date. Hence, the law firm of Sycip, Salazar, et al. acting as counsel
for Banco Filipino under authority of the liquidator, applied for extra-judicial foreclosure of the mortgage over Top
Management and Pilar Developments properties. Thus, the Ex-Officio Sheriff of the Regional Trial Court of Cavite
issued a notice of extra-judicial foreclosure sale of the properties. Top Management and Pilar Development filed 2
separate petitions for injunction and prohibition with the respondent appellate court seeking to enjoin the Regional
Trial Court of Cavite, the ex-officio sheriff of said court and Sycip, Salazar, et al. from proceeding with foreclosure
sale which were subsequently dismissed by the court. Hence this petition
Issue:
1) Whether or not the liquidator has the authority to prosecute as well as to defend suits and to foreclose
mortgages for and behalf of the bank while the issue on the validity of the receivership and liquidation is still
pending resolution.
2) Whether or not the closure of the bank based on the Tiaoqui report is correct.
Held:
1) Whether or not the liquidator has the authority to prosecute as well as to defend suits and to foreclose mortgages
for and behalf of the bank while the issue on the validity of the receivership and liquidation is still pending
resolution.
Section 29 of the Republic Act No. 265, as amended known as the Central Bank Act, provides that when a bank is
forbidden to do business in the Philippines and placed under receivership, the person designated as receiver shall
immediately take charge of the banks assets and liabilities, as expeditiously as possible, collect and gather all the
assets and administer the same for the benefit of its creditors, and represent the bank personally or through counsel
as he may retain in all actions or proceedings for or against the institution, exercising all the powers necessary for
these purposes including, but not limited to, bringing and foreclosing mortgages in the name of the bank. If the
Monetary Board shall later determine and confirm that banking institution is insolvent or cannot resume business
safety to depositors, creditors and the general public, it shall, public interest requires, order its liquidation and
appoint a liquidator who shall take over and continue the functions of receiver previously appointed by Monetary
Board. The liquid for may, in the name of the bank and with the assistance counsel as he may retain, institute such
actions as may necessary in the appropriate court to collect and recover a counts and assets of such institution or
defend any action ft against the institution.
Pendency of the case did not diminish the powers and authority of the designated liquidator to effectuate and carry
on the administration of the bank. The Court did not prohibit however acts a as receiving collectibles and receivables
or paying off credits claims and other transactions pertaining to normal operate of a bank. There is no doubt that
the prosecution of suits collection and the foreclosure of mortgages against debtors the bank by the liquidator are
among the usual and ordinary transactions pertaining to the administration of a bank.
2) Whether or not the closure of the bank based on the Tiaoqui report is correct.
Clearly, Tiaoqui based his report on an incomplete examination of petitioner bank and outrightly concluded therein
that the latters financial status was one of insolvency or illiquidity. In the instant case, the basic standards of
substantial due process were not observed. Time and again, We have held in several cases, that the procedure of
administrative tribunals must satisfy the fundamentals of fair play and that their judgment should express a wellsupported conclusion. The test of insolvency laid down in Section 29 of the Central Bank Act is measured by
determining whether the realizable assets of a bank are leas than its liabilities. Hence, a bank is solvent if the fair
cash value of all its assets, realizable within a reasonable time by a reasonable prudent person, would equal or
exceed its total liabilities exclusive of stock liability; but if such fair cash value so realizable is not sufficient to pay
such liabilities within a reasonable time, the bank is insolvent.
Examination appraises the soundness of the institutions assets, the quality and character of management and
determines the institutions compliance with laws, rules and regulations. Audit is a detailed inspection of the
institutions books, accounts, vouchers, ledgers, etc. to determine the recording of all assets and liabilities. Hence,
examination concerns itself with review and appraisal, while audit concerns itself with verification.
PNB v. Pike
G.R. No. 157845 September 20, 2005
Ponente: Phil. SC Justice Chico-Nazario
Facts: The petitioner PNB allowed a representative of Defendant (his talent manager) to withdraw
from his dollar account with the use of a pre-signed withrdawal slip.
Issue: Whether or not the bank is liable
HELD: Yes. PNB was held liable due to the negligence of its employees in allowing the unauthorized
withdrawal. This was shown by the lackadaisical attitude of its employees in treating Pike's US dollar
account, an act which resulted to the loss of $7,500. Such warrants for the award of damages. The
slips used were in breach of the standard operating procedure of the bank in the ordinary and usual
course of business.
Even if it is the employees who are negligent, the bank's liability as the obligor is not merely
vicarious but primary since banks are expected to exercise the degree of diligence in the selection
and supervision of their employees.
The independent nature of the letter of credit may be: (a) independence in toto where the credit is independent
from the justification aspect and is a separate obligation from the underlying agreement like for instance a
typical standby; or (b) independence may be only as to the justification aspect like in a commercial letter of credit
or repayment standby, which is identical with the same obligations under the underlying agreement. In both
cases the payment may be enjoined if in the light of the purpose of the credit the payment of the credit would
constitute fraudulent abuse of the credit.
Facts: Transfield Philippines (Transfield) entered into a turn-key contract with Luzon Hydro Corp. (LHC).Under the
contract, Transfield were to construct a hydro-electric plants in Benguet and Ilocos. Transfield was given the sole
responsibility for the design, construction, commissioning, testing and completion of the Project. The contract
provides for a period for which the project is to be completed and also allows for the extension of the period
provided that the extension is based on justifiable grounds such as fortuitous event. In order to guarantee
performance by Transfield, two stand-by letters of credit were required to be opened. During the construction of the
plant, Transfield requested for extension of time citing typhoon and various disputes delaying the construction. LHC
did not give due course to the extension of the period prayed for but referred the matter to arbitration committee.
Because of the delay in the construction of the plant, LHC called on the stand-by letters of credit because of default.
However, the demand was objected by Transfield on the ground that there is still pending arbitration on their request
for extension of time.
Issue: Whether or not LHC can collect from the letters of credit despite the pending arbitration case
Held: Transfields argument that any dispute must first be resolved by the parties, whether through negotiations or
arbitration, before the beneficiary is entitled to call on the letter of credit in essence would convert the letter of credit
into a mere guarantee.
The independent nature of the letter of credit may be: (a) independence in toto where the credit is independent from
the justification aspect and is a separate obligation from the underlying agreement like for instance a typical standby;
or (b) independence may be only as to the justification aspect like in a commercial letter of credit or repayment
standby, which is identical with the same obligations under the underlying agreement. In both cases the payment
may be enjoined if in the light of the purpose of the credit the payment of the credit would constitute fraudulent
abuse of the credit.
Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in that the settlement of a
dispute between the parties is not a pre-requisite for the release of funds under a letter of credit. In other words, the
argument is incompatible with the very nature of the letter of credit. If a letter of credit is drawable only after
settlement of the dispute on the contract entered into by the applicant and the beneficiary, there would be no
practical and beneficial use for letters of credit in commercial transactions.
The engagement of the issuing bank is to pay the seller or beneficiary of the credit once the draft and the required
documents are presented to it. The so-called independence principle assures the seller or the beneficiary of prompt
payment independent of any breach of the main contract and precludes the issuing bank from determining whether
the main contract is actually accomplished or not. Under this principle, banks assume no liability or responsibility
for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or for the general
and/or particular conditions stipulated in the documents or superimposed thereon, nor do they assume any liability or
responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the
goods represented by any documents, or for the good faith or acts and/or omissions, solvency, performance or
standing of the consignor, the carriers, or the insurers of the goods, or any other person whomsoever.
20. Ching V. Secretary of Justice, 481 SCRA 609 (2006)
FACTS:
-Ching was the Senior Vice President of Philippine Blooming Mills, Inc (PBMI).-PBMI, through Ching applied with the
Rizal Commercial Banking Corporation (RCBC) for the issuance of Commercial Letters of Credit to finance its
importation of assorted goods.-RCBC approved the application, and irrevocable Letters of Credit were issued in favor
of Ching (PBMI).-The goods were purchased and delivered in trust to PBMI.-Ching signed 13 trust receipt as
SURETY, acknowledging delivery of the goods.-When the trust receipt matured, Ching failed to return the goods to
RCBC or to return their value despite repeateddemands.-Thus, RCBC filed a criminal complaint for estafa against
Ching.-City Prosecutor found probable cause for estafa, thus 13 information were filed. Ching appealed to the
Minister of Justice which ordered the withdrawal of the information.-RCBC refilled the criminal complaint for estafa
before the office of the City Prosecutor. City Prosecutor ruled thatthere was no probable cause to charge Ching as his
liability was only civil and not criminal having signed the trustreceipts as surety.-RCBC appealed to the Secretary of
Justice which reversed the resolution of the City prosecutor, holding that Chingas senior Vice-President of PBMI,
executed the 13 trust receipts and as such, was one responsible for the offense.The execution of said receipts is
enough to indict Ching as the official responsible for the violation of PD 115.
CA:
-Affirmed the Decision of Secretary of Justice
ISSUE:
-Whether Ching can be held criminally liable for violation of the Trust Receipts Law when he signed the trustreceipts
merely as a surety and not as the entrustee.
HELD:
-An officer of a corporation who signed a trust receipt cannot hide behind the cloak of the separate
corporatepersonality of the corporation and cannot avoid criminal prosecution even though he had no physical
possession of the goods nor are benefitted by the delictual acts.-Though the entrustee is a corporation, nevertheless,
the law specifically makes the officers, employees and other officers or persons responsible for the offense, without
prejudice to the civil liabilities of such corporation and/or board of directors, officers, or other officials or employees
responsible for the offense.-The rationale is that such officers or employees are vested with authority and
responsibility to devise meansnecessary to ensure compliance with the law and, if they fail to do so, are held
criminally accountable.-A corporation cannot be arrested and imprisoned; hence, cannot be penalized for a crime
punishable byimprisonment. However a corporation may be charged and prosecuted for a crime if the imposable
penalty is FINE.
BANK
OF
COMMERCE, petitioner,
SERRANO, respondent.
vs. TERESITA
S.
DECISION
QUISUMBING, J.:
[2]
[3]
On March 15, 1994, BOC issued to Via Moda, Irrevocable Letter of Credit
No. BCZ-940051, in the amount of US$56,735, for the purchase and
importation of fabric and textile products from Tiger Ear Fabric Co. Ltd. of
Taiwan. To secure the release of the goods covered, respondent, in
representation of Via Moda, executed Trust Receipt No. 94-22221 dated April
21, 1994 with due date on July 20, 1994 for US$55,944.73 (P1,554,424.32).
[5]
Under the terms of the trust receipt, Via Moda agreed to hold the goods in
trust for petitioner as the latters property and to sell the same for the latters
account. In case of sale, the proceeds are to be remitted to the bank as soon
as it is received, but not later than the maturity date. Said proceeds are to be
applied to the relative acceptances, with interest at the rate of 26% per
annum, with a penalty of 36% per annum of the total amount due until fully
paid in case of non-payment of the trust receipt and relative acceptance at
maturity date or, in the alternative, to return the goods in case of non-sale.
[6]
The goods covered by the trust receipt were shipped by Via Moda to its
consignee in New Jersey, USA, who sent an Export Letter of Credit issued by
the Bank of New York, in favor of BOC. The Regional Operations Officer of
BOC signed the export declarations to show consent to the shipment. The
total value of the entrusted goods which were shipped per export declaration
was US$81,987 (P2,246,443.80). The proceeds of the entrusted goods sold
were not credited to the trust receipt but, were applied by the bank to the
principal, penalties and interest of the export packing loan. The
excessP472,114.85 was applied to the trust receipt, leaving a balance
of P1,444,802.28 as of November 15, 1994.
[7]
On March 8, 1998, respondent was charged with the crime of estafa under
Article 315 (b) of the Revised Penal Code in relation to Presidential Decree
No. 115.
[9]
On May 31, 2000, the trial court rendered judgment and the dispositive
portion of which reads:
WHEREFORE, in the light of the foregoing, the Court finds accused Teresita S.
Serrano GUILTY beyond reasonable doubt of the crime charged in the Information
filed in this case and sentences her to serve the indeterminate penalty of imprisonment
from EIGHT (8) YEARS AND ONE (1) DAY OF PRISION MAYOR, AS
MINIMUM, TO TWENTY (20) YEARS OF RECLUSION TEMPORAL, AS
MAXIMUM, including the accessory penalties. She is ordered to pay her civil
liability to Bank of Commerce in the amount of P4,783,487.15, with interest until
fully paid, and the costs of this suit.
SO ORDERED.
[10]
[11]
On the first issue, petitioner contends that the Court of Appeals made a
manifestly mistaken inference from its findings or a misapprehension of facts
and overlooked a vital piece of evidence on record, particularly, the Guarantee
Clause of the Letter of Credit secured by the Trust Receipt. Petitioner further
alleges that the said Guarantee Clause provides that the liability of respondent
is joint and solidary; hence, she should be held liable on the obligation.
A letter of credit is a separate document from a trust receipt. While the
trust receipt may have been executed as a security on the letter of credit, still
the two documents involve different undertakings and obligations. A letter of
credit is an engagement by a bank or other person made at the request of a
customer that the issuer will honor drafts or other demands for payment upon
compliance with the conditions specified in the credit. Through a letter of
credit, the bank merely substitutes its own promise to pay for the promise to
pay of one of its customers who in return promises to pay the bank the
amount of funds mentioned in the letter of credit plus credit or commitment
fees mutually agreed upon. By contrast, a trust receipt transaction is one
[14]
where the entruster, who holds an absolute title or security interests over
certain goods, documents or instruments, released the same to the entrustee,
who executes a trust receipt binding himself to hold the goods, documents or
instruments in trust for the entruster and to sell or otherwise dispose of the
goods, documents and instruments with the obligation to turn over to the
entruster the proceeds thereof to the extent of the amount owing to the
entruster, or as appears in the trust receipt, or return the goods, documents or
instruments themselves if they are unsold, or not otherwise disposed of, in
accordance with the terms and conditions specified in the trust receipt.
[15]
On the second issue, the Court of Appeals held that respondent Serrano
cannot be held civilly liable under the trust receipt since she was not made
personally liable nor was she a guarantor therein. The parties stipulated
during the pre-trial that respondent Serrano executed the trust receipt in
representation of Via Moda, Inc., which has a separate personality from
Serrano, and petitioner BOC failed to show sufficient reason to justify the
piercing of the veil of corporate fiction. It thus ruled that this was not
Serranos personal obligation but that of Via Moda and there was no basis of
finding her solidarily liable with Via Moda.
[17]
Worthy of mention at this point is the Court of Appeals finding that there
was no misappropriation or conversion by the respondent of the proceeds of
the sale in the goods, subject of the trust receipt since the proceeds were
actually received by petitioner but the latter applied the same to Via Modas
other obligations under the export packing loan. It further stated that such
application of payment to another obligation was done by petitioner on its own
and should not create a criminal liability on the part of respondent who did not
take part nor had any knowledge thereof. It is on this premise that the
respondent was acquitted of the crime charged.
[18]
Incidentally, petitioner urged this Court to review the factual findings of the
case due to contradictory findings of the trial court and the Court of Appeals
arising from misappreciation of facts by the Court of Appeals. Such plea must
[20]
At any rate, petitioner BOC is not precluded from filing a separate civil
action against the responsible party where the abovementioned issues could
be properly resolved or determined. The issues raised by herein petitioner
involve a determination of facts and require the admission and examination of
additional evidence for its resolution. That cannot be done in a petition for
review on certiorari by merely appealing the civil aspect of an acquittal in a
criminal case.
WHEREFORE, the petition is DENIED for lack of merit. The Decision
dated September 28, 2001 and the Resolution dated January 17, 2002, of the
Court of Appeals in CA-G.R. CR No. 24570, are AFFIRMED.
SO ORDERED.
G.R. No. 133877
Definition of Terms:
Trust Receipt - is a security transaction intended to aid in financing importers and retail detailers who do
not have sufficient funds or resources to finance the importation or purchase of merchandise, and who
may not be able to acquire credit except thru utilization, as collateral, of the merchandise imported or
purchased [Ching vs Court of Appeals, 331 SCRA 16 (2000), citing Samo vs People, 5 SCRA 354 (1962)]
Facts:
On March 12, 1982, Rizal Banking Corporation (RCBC) filed with the Regional Trial Court of Makati, a civil
case, for a sum of money against Alfa RTW Manufacturing Corporation, Johnny Teng, Ramon Lee,
Antonio Lacdao, Ramon Luy and Alfa Integrated Textile Mills.
The trial court rendered judgment on August 19, 1991, the dispositive portion, which reads:
Order the defendants to pay, jointly and severally, to plaintiff the amount of Eighteen Million Nine
Hundred Sixty-one Thousand Three Hundred Seventy-two Pesos and Forty-three Centavos
(P18,961,372.43), Philippine Currency, (inclusive of interest, service charges, litigation expenses and
attorneys fees), with interest thereon at the legal rate from February 15, 1988 until fully paid.
On appeal, the Court of Appeals affirmed with modification of the RTC decision, thus:
WHEREFORE, with the modification that instead of P18,961,372.43, all the defendants are hereby
ordered to pay, jointly and severally to plaintiff the amount of P3,060,406.25, Philippine Currency,
inclusive of stipulated interest, service charges, litigation expenses and attorneys fees, with interest
thereon at the legal rate from February 15, 1988, until fully paid.
Issue:
Whether or not the Court of Appeals can deviate from the provisions of the contract, which itself is the
law between the parties?
Held:
1.
The rule is well settled that the jurisdiction of the Court of Appeals via Rule 45 of the 1997 Rules of
Civil Procedure, as amended, is limited to reviewing errors of law. Findings of fact of the said Court are
conclusive, except in a number of instances. Where in the case at bar, exception n0. 6 stated in Siguan vs
Lim (318 SCRA 725) is present to wit:
(6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
to the admissions of both the appellant and appelle
Herein lies the reversible error on the part of the Court of Appeals. When it ruled that only
P3,060,406.25 should be awarded to petitioner RCBC, the Appellate Court disregarded the parties
stipulations in their contracts of loan, more specifically, those pertaining to the agreed (1) Interest rates,
(2) service charge and (3) penalties in case of any breach thereof. The CA failed to apply the honoured
doctrine
That which is agreed to in a contract is the law between the parties. Thus, obligations arising from
contracts have the force of law between the contracting parties and should be complied with in good
faith.
The court cannot vary the terms and conditions therein stipulated unless such stipulation is contrary to
law, morals, good customs, public order or public policy.
2.
In the determination and computation of interest of payment, this court, in Eastern Shipping Lines,
Inc. (234 SCRA 18, 1994) vs Court of Appeals, through Justice Jose C. Vitug, held:
2.1. When the obligation is breached and it consist in the payment of a sum of money (i.e., loan or
forbearance of money, the interest due should be that which may be have stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default i.e.,
from judicial or extrajudicial demand under and subject to the provisions of Article 169 of the Civil Code
2.2. When the obligation, not constituting a loan or forbearance of money, is breached, and interest on
the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until
the demand can be established with reasonable certainty.
WHEREFORE; the petition is hereby GRANTED. The assailed decision of the court of Appeals in
MODIFIED in the sense that the award to petitioner RCBC of P3,0606,406.25 is SET ASIDE and
substituted with an amount to be computed by the trial court, upon finality of this DeCISION
FACTS:
Defendants Emilio Gancayco and Florentino Flor, as special prosecutors of the Department
of Justice, required the plaintiff Philippine National Bank to produce at a hearing the records
of the bank deposits of Ernesto Jimenez, former administrator of the Agricultural Credit and
Cooperative Administration, who was then under investigation for unexplained wealth. In
declining to reveal its records, the plaintiff bank invoked Section 2 of Republic Act No. 1405.
On the other hand, the defendants cited Section 8 of the Anti-Graft and Corrupt Practices
Act (Republic Act No. 3019) in support of their claim of authority,which allegedly provides an
additional ground for the examination of bank deposits.
ISSUE:
Whether Section 8 of Republic Act No. 3019 provides an additional ground for the
examination of bank deposits.
HELD:
Yes. The truth is that these laws are so repugnant to each other than no reconciliation is
possible. x x x. The only conclusion possible is that section 8 of the Anti-Graft Law is
intended to amend section 2 of Republic Act No. 1405 by providing additional exception to
the rule against the disclosure of bank deposits.
x x x [W]hile section 2 of Republic Act 1405 declares bank deposits to be "absolutely
confidential," it nevertheless allows such disclosure in the following instances:
(1) Upon written permission of the depositor;
(2) In cases of impeachment;
(3) Upon order of a competent court in cases of bribery or dereliction of duty of public
officials;
(4) In cases where the money deposited is the subject matter of the litigation. Cases of
unexplained wealth are similar to cases of bribery or dereliction of duty x x x.
G.R. No. 71479 October 18, 1990 MELLON BANK, N.A vs. MAGSINO FACTS:
Dolores Ventosa requested the transfer of $1,000 from the First National Bank of Moundsville, West
Virginia, U.S.A. to Victoria Javier in Manila through the Prudential Bank. To effect the transfer, the First
National Bank requested the petitioner, Mellon Bank, which mistakenly indicated in its wire sent to
Manufacturers Hanover Bank, a correspondent of Prudential Bank the amount transferred as
"US$1,000,000.00" instead of US$1,000.00. Manufacturers Hanover Bank transferred one million dollars
less bank charges of $6.30 to the Prudential Bank for the account of Victoria Javier. Javier opened a new
dollar account (No. 343) in the Prudential Bank and deposited $999,943.70. Immediately, Victoria Javier
and her husband, Melchor Javier, Jr., made withdrawals from the account, deposited them in several
banks only to withdraw them later in an apparent plan to conceal, "launder" and dissipate the
erroneously sent amount. Melchor Javier, requested Jose Marquez, a realtor, to look for properties for
sale in the United States. Marquez offered a 160-acre lot in the Mojave Desert in California City which
was owned by Honorio Poblador. Without having seen the property, Javier agreed to buy said property.
Deeds were issued and one of it was sent to the Kern County Registrar in California for registration. The
payment of the purchased property was made through six cashier's checks withdrawn from dollar
account 434 while the balance of P236,000 was paid in cash by Javier who did not even ask for a receipt.
Inasmuch as Poblador had requested that the purchase price should not be paid directly to him, the
payment was coursed through six companies in which he is financially related with. Mellon Bank filed a
complaint in the Superior Court of California, County of Kern, against Javier
spouses
to impose constructive trust of the property
theyve purchased from the money mistakenly and
erroneously transferred to their account. Mellon Bank also filed in the Court of First Instance of Rizal,
Branch X, a complaint against the Javier spouses, Honorio Poblador, etc to recover the amount they
received for the sale of the 160-acre lot in California City. In due course, it was found out that the checks
originally issued by Javier spouses were already negotiated and now were deposited to Account 2825-1
of the Philippine Veterans Bank in the name of Cipriano Azada, Poblador's law partner and counsel to
the Javiers. Mellon Bank then subpoenaed Erlinda Baylosis of Veterans Bank to show that Azada
deposited HSBC checks No. 339736 and 339737 amounting to P874,490.75 in his personal current
account with said bank and Pilologo Red, Jr. of HSBC to prove that said amount was returned by Azada
to Hagedorn one of the companies connected with Poblador. The testimonies of these witnesses were
objected to by the defense on the grounds of
res inter alios acta
, immateriality, irrelevancy and confidentiality and then moved to strike off the testimonies from the
record of the case in violation of Republic Act No. 1405 the Secrecy of Bank Deposits.
ISSUE:
Whether or not disclosure of bank deposits in cases where the money is the subject matter of litigation
violates RA 1405.
HELD:
Private respondents' protestations that to allow the questioned testimonies to remain on record would
be in violation of the provisions of Republic Act No. 1405 on the secrecy of bank deposits, is unfounded.
Section 2 of said law allows the disclosure of bank deposits in cases where the money deposited is the
subject matter of the litigation.
Inasmuch as Civil Case is aimed at recovering the amount converted by the Javiers for their own benefit,
necessarily, an inquiry into the whereabouts of the illegally acquired amount extends to whatever is
concealed by being held or recorded in the name of persons other than the one responsible for the
illegal acquisition.
SECOND DIVISION
ISLANDS, INC.,
Petitioner,
Present:
Carpio, J., Chairperson,
Brion,
- versus -
Del Castillo,
Abad, and
Perez, JJ.
SPS. NORMAN AND ANGELINA YU
and TUANSON BUILDERS
CORPORATION represented by
Promulgated:
x ---------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
Despite the restructuring, however, the Yus still had difficulties paying their
loan. They asked BPI to release some of the mortgaged lands since their total
appraised value far exceeded the amount of the remaining debt. When BPI
ignored their request, the Yus withheld payments on their amortizations. Thus,
BPI extrajudicially foreclosed[6]the mortgaged properties in Legazpi City and in Pili,
Camarines Sur. But the Yus sought by court action against BPI and the winning
In the course of the proceedings, however, the Yus and Magnacraft entered
into a compromise agreement[7]that affirmed the latters ownership of three out
of the 10 parcels of land that were auctioned. By virtue of this agreement, the
court dismissed the complaint against Magnacraft,[8] without prejudice to the Yus
filing a new one against BPI.
On October 24, 2003 the Yus filed their new complaint before the Regional
Trial Court (RTC) of Legazpi City, Branch 1, in Civil Case 10286 against BPI for
recovery of alleged excessive penalty charges, attorneys fees, and foreclosure
expenses that the bank caused to be incorporated in the price of the auctioned
properties.[9]
BPI further admitted that its bid of P45,090,566.41 for all the auctioned
properties was broken down as follows:[14]
Principal
Interest
P 32,188,723.07
2,763,088.93
Penalty Charges
Sub-total
Add: 10% Attorneys Fees
5,568.649.09
P 40,520,461.09
4,052,046.11
446,726.74
71,332.47
TOTAL.
P 45,090,566.41
BPI also admitted that Magnacraft submitted the highest and winning
bid of P45,500,000.00.[15] The sheriff turned over this amount to
BPI.[16] According to BPI, it in turn remitted to the Clerk of Court
theP409,433.59 difference between its bid price and that of
Magnacrafts.[17] Although the proceeds of the sale exceeded
the P39,055,254.95 stated in the notice of sale by P6,035,311.46,[18] the bid
amount increased because it now included litigation expenses and attorneys
fees as well as interests and penalties as recomputed.[19]
BPI admitted that it also pushed through with the second auction for
the sale of a lot in Pili, Camarines Sur that secured a remaining debt
of P5,562,000.[20] BPI made the lone bid[21] of P1,701,934.09.[22]
First. The bank imposed excessive penalty charges and interests: over P5
million in penalty charges computed at 36% per annum compared to the 12% per
annum that the Court fixed in the cases of State Investment House, Inc. v. Court of
Appeals[23] and Ruiz v. Court of Appeals.[24] In addition, BPI collected a 14% yearly
interest on the principal, bringing the combined penalty charges and interest to
50% of the principal per annum.
Third. BPI did not provide documents to support its claim for foreclosure
expenses of P446,726.74 and cost of publication of P518,059.21.
As an alternative to their three causes of action, the Yus claimed that BPI
was in estoppel to claim more than the amount stated in its published
notices. Consequently, it must turn over the excess bid of P6,035,311.46.
After pre-trial, the Yus moved for summary judgment,[25] pointing out that
based on the answer,[26] the common exhibits of the parties,[27] and the answer to
the written interrogatories to the sheriff,[28] no genuine issues of fact exist in the
case. The Yus waived their claim for moral damages so the RTC can dispose of the
case through a summary judgment.[29]
Initially, the RTC granted only a partial summary judgment. It reduced the
penalty charge of 36% per annum[30] to 12% per annum until the debt would have
been fully paid but maintained the attorneys fees as reasonable considering that
BPI already waived the P1,761,511.36 that formed part of the attorneys fees and
reduced the rate of attorneys fees it collected from 25% to 10% of the amount
due. The RTC ruled that facts necessary to resolve the issues on penalties and
fees had been admitted by the parties thus dispensing with the need to receive
evidence.[31]
Still, the RTC held that it needed to receive evidence for the resolution of
the issues of (1) whether or not the foreclosure and publication expenses were
justified; (2) whether or not the foreclosure of the lot in Pili, Camarines Sur, was
valid given that the proceeds of the foreclosure of the properties in Legazpi City
sufficiently covered the debt; and (3) whether or not BPI was entitled to its
counterclaim for attorneys fees, moral damages, and exemplary damages.[32]
The Yus moved for partial reconsideration.[33] They argued that, since BPI
did not mark in evidence any document in support of the foreclosure expenses it
claimed, it may be assumed that the bank had no evidence to prove such
expenses. As regards their right to the pro-rating of their debt among the
mortgaged properties, the Yus pointed out that BPI did not dispute the fact that
the proceeds of the sale of the properties in Legazpi City fully satisfied the
debt. Thus, the court could already resolve without trial the issue of whether or
not the foreclosure of the Pili property was valid.
1.
Deleting the penalty charges imposed by BPI for noncompliance with the Truth in Lending Act;
2.
interest;
3.
Upholding the reasonableness of the foreclosure
expenses and cost of publication, both with interests;
4.
Reiterating the turnover by the Clerk of Court to the Yus
of the excess in the bid price;
5.
Deleting the Yus claim for moral damages they having
waived it;
6.
Denying the Yus claim for attorneys fees for lack of
basis; and
7.
Dismissing BPIs counterclaim for moral and exemplary
damages and for attorneys fees for lack of merit considering that
summary judgment has been rendered in favor of the Yus.
1.
Whether or not the case presented no genuine issues of
fact such as to warrant a summary judgment by the RTC; and
2.
Where summary judgment is proper, whether or not the
RTC and the CA a) correctly deleted the penalty charges because of
BPIs alleged failure to comply with the Truth in Lending Act; b)
correctly reduced the attorneys fees to 1% of the judgment debt;
One. A summary judgment is apt when the essential facts of the case are
uncontested or the parties do not raise any genuine issue of fact.[37] Here, to
resolve the issue of the excessive charges allegedly incorporated into the auction
bid price, the RTC simply had to look at a) the pleadings of the parties; b) the loan
agreements, the promissory note, and the real estate mortgages between them;
c) the foreclosure and bidding documents; and d) the admissions and other
disclosures between the parties during pre-trial. Since the parties admitted not
only the existence, authenticity, and genuine execution of these documents but
also what they stated, the trial court did not need to hold a trial for the reception
of the evidence of the parties.
BPI contends that a summary judgment was not proper given the following
issues that the parties raised: 1) whether or not the loan agreements between
them were valid and enforceable; 2) whether or not the Yus have a cause of
action against BPI; 3) whether or not the Yus are proper parties in interest; 4)
whether or not the Yus are estopped from questioning the foreclosure proceeding
after entering into a compromise agreement with Magnacraft; 5) whether or not
the penalty charges and fees and expenses of litigation and publication are
excessive; and 6) whether or not BPI violated the Truth in Lending Act.[38]
But these are issues that could be readily resolved based on the facts
established by the pleadings and the admissions of the parties.[39] Indeed, BPI has
failed to name any document or item of fact that it would have wanted to adduce
at the trial of the case. A trial would have been such a great waste of time and
resources.
Two. Both the RTC and CA decisions cited BPIs alleged violation of the
Truth in Lending Act and the ruling of the Court in New Sampaguita Builders
Construction, Inc. v. Philippine National Bank[40] to justify their deletion of the
penalty charges. Section 4 of the Truth in Lending Act states that:
SEC. 4. Any creditor shall furnish to each person to whom credit is extended,
prior to the consummation of the transaction, a clear statement in writing setting forth,
to the extent applicable and in accordance with rules and regulations prescribed by the
Board, the following information:
(1)
acquired;
(2)
(3)
the difference between the amounts set forth under clauses (1) and (2);
(4)
the charges, individually itemized, which are paid or to be paid by such
person in connection with the transaction but which are not incident to the extension of
credit;
(5)
(6)
(7)
the percentage that the finance bears to the total amount to be financed
expressed as a simple annual rate on the outstanding unpaid balance of the obligation.
In this case, although BPI failed to state the penalty charges in the disclosure
statement, the promissory note that the Yus signed, on the same date as the
disclosure statement, contained a penalty clause that said: I/We jointly and
severally, promise to further pay a late payment charge on any overdue amount
herein at the rate of 3% per month. The promissory note is an acknowledgment
of a debt and commitment to repay it on the date and under the conditions that
the parties agreed on.[43] It is a valid contract absent proof of acts which might
have vitiated consent.[44]
The question is whether or not the reference to the penalty charges in the
promissory note constitutes substantial compliance with the disclosure
requirement of the Truth in Lending Act.[45] The RTC and CA relied on the ruling
in New Sampaguita as authority that the non-disclosure of the penalty charge
renders its imposition illegal. But New Sampaguita is not attended by the same
circumstances. What New Sampaguita disallowed, because it was not mentioned
either in the disclosure statement or in the promissory note, was the unilateral
increase in the rates of penalty charges that the creditor imposed on the
borrower. Here, however, it is not shown that BPI increased the rate of penalty
charge that it collected from the Yus. [46]
The ruling that is more in point is that laid down in The Consolidated Bank
and Trust Corporation v. Court of Appeals,[47] a case cited in New
Sampaguita. The Consolidated Bank ruling declared valid the penalty charges that
were stipulated in the promissory notes.[48] What the Court disallowed in that
case was the collection of a handling charge that the promissory notes did not
contain.
The Court has affirmed that financial charges are amply disclosed if stated
in the promissory note in the case ofDevelopment Bank of the Philippines v.
Arcilla, Jr.[49] The Court there said, Under Circular 158 of the Central Bank, the
lender is required to include the information required by R.A. 3765 in the contract
covering the credit transaction or any other document to be acknowledged and
WHEREFORE, the Court DENIES the petition and AFFIRMS the Court of
Appeals Decision in CA-G.R. CV 86577 dated January 23, 2008 subject to
the RESTORATION of the penalty charge of 12% per annum or 1% per month of
the amount due computed from date of nonpayment or November 25, 2001.
SO ORDERED.
The rule is settled that the chattel mortgagor continues to be the owner of the property, and therefore, has the
power to alienate the same; however, he is obliged under pain of penal liability, to secure the written consent of
the mortgagee. Thus, the instruments of mortgage are binding, while they subsist, not only upon the parties
executing them but also upon those who later, by purchase or otherwise, acquire the properties referred to
therein
Facts: Galicano Siton purchased from Car Traders Philippines, Inc. a vehicle and paid a downpayment of the price.
The remaining balance includes not only the remaining principal obligation but also advance interests and premiums
for motor vehicle insurance policies. Siton executed a promissory note in favor of Car Traders Philippines, Inc.
expressly stipulating that the face value of the note shall be payable, without need of notice of demand, in
instalments. There are additional stipulations in the Promissory Note consisting of, among others, that if default is
made in the payment of any of the installments or interest thereon, the total principal sum then remaining unpaid,
together with accrued interest thereon shall at once become due and demandable. As further security, Siton
executed a Chattel Mortgage over the subject motor vehicle in favor of Car Traders Philippines, Inc. The credit
covered by the promissory note and chattel mortgage executed by respondent Galicano Siton was first assigned by
Car Traders Philippines, Inc. in favor of Filinvest Credit Corporation.
Subsequently, Filinvest Credit Corporation likewise reassigned said credit in favor of petitioner Servicewide
Specialists, Inc. Siton was advised of this second assignment. When Siton failed to pay, Servicewide Specialists
filed this action against Galicano Siton and John Doe. After the service of summons, Justiniano de Dumo,
identifying himself as the John Doe in the Complaint, inasmuch as he is in possession of the subject vehicle, filed
his Answer with Counterclaim and with Opposition to the prayer for a Writ of Replevin.
Siton alleged the fact that he has bought the motor vehicle from Galicano Siton; that de Dumo and Siton testified
that, before the projected sale, they went to a certain. Atty. Villa of Filinvest Credit Corporation advising the latter
of the intended sale and transfer. Siton and de Dumo were accordingly advised that the verbal information given to
the corporation would suffice, and that it would be tedious and impractical to effect a change of transfer of
ownership as that would require a new credit investigation as to the capacity and worthiness of Atty. De Dumo,
being the new debtor. The further suggestion given by Atty. Villa is that the account should be maintained in the
name of Galicano Siton.; that as such successor, he stepped into the rights and obligations of the seller; that he has
religiously paid the installments as stipulated upon in the promissory note. He also manifested that the Answer he
has filed in his behalf should likewise serve as a responsive pleading for his co-defendant Galicano Siton.
Issue: Whether or not the mortgagee is bound by the deed of sale by the mortgagor in favour of a third person, as
neither the mortgagee nor its predecessors has given written or verbal consent thereto pursuant to the deed of Chattel
Mortgage.
Held: The absence of the written consent of the mortgagee to the sale of the mortgaged property in favor of a third
person, therefore, affects not the validity of the sale but only the penal liability of the mortgagor under the Revised
Penal Code and the binding effect of such sale on the mortgagee under the Deed of Chattel Mortgage. The rule is
settled that the chattel mortgagor continues to be the owner of the property, and therefore, has the power to alienate
the same; however, he is obliged under pain of penal liability, to secure the written consent of the mortgagee. Thus,
the instruments of mortgage are binding, while they subsist, not only upon the parties executing them but also upon
those who later, by purchase or otherwise, acquire the properties referred to therein
There is no dispute that the Deed of Chattel Mortgage executed between Siton and the petitioner requires the written
consent of the latter as mortgagee in the sale or transfer of the mortgaged vehicle. We cannot ignore the findings,
however, that before the sale, prompt inquiries were made by private respondents with Filinvest Credit Corporation
regarding any possible future sale of the mortgaged property; and that it was upon the advice of the companys
credit lawyer that such a verbal notice is sufficient and that it would be convenient if the account would remain in
the name of the mortgagor Siton.
Even the personal checks of de Dumo were accepted by petitioner as payment of some of the installments under the
promissory note. If it is true that petitioner has not acquiesced in the sale, then, it should have inquired as to why de
Dumos checks were being used to pay Sitons obligations.
CONSERVATORSHIP: CONSERVATOR
With such powers as the Monetary Board shall deem necessary to take charge of the
assets, liabilities, and the management thereof, reorganize the management, collect all monies
and debts due said institution, and exercise all powers necessary to restore its viability.
The conservator shall report and be responsible to the
Monetary Board and shall have the power to overrule or revoke the actions of the previous
management and board of directors of the bank or quasi-bank.
HOW
The conservator shall receive remuneration to be fixed by the Monetary Board in an amount
not to exceed two-thirds (2/3) of the salary of the president of the institution in one (1) year,
payable in twelve (12) equal monthly payments
Provided, That, if at any time within one-year period, the
conservatorship is terminated on the ground that the
institution can operate on its own, the conservator shall
receive the balance of the remuneration which he would
have received up to the end of the year; but if the
conservatorship is terminated on other grounds, the
conservator shall not be entitled to such remaining balance.
The Monetary Board may appoint a conservator connected
with the Bangko Sentral, in which case he shall not be
RECEIVERSHIP: RECEIVER
1. Unable to pay its liabilities as they become due in the
ordinary course of business: Provided, That this shall not
include inability to pay caused by extraordinary demands induced by financial panic in the
banking community;
2. Has insufficient realizable assets, as determined by the Bangko Sentral, to meet its
liabilities; or
3. Cannot continue in business without involving probable losses to its depositors or
creditors; or
4. Has willfully violated a cease and desist order that has become final, involving acts or
transactions which amount to fraud or a dissipation of the assets of the institution. *PDIC IS
THE ONLY RECEIVER.
Failure on the part of the bank to pay means that they will pay
Upon payment, they will be subrogated to the rights of the debtor
DUTIES OF RECEIVER
1. Gather and take charge of all the assets and liabilities of the institution
2. Administer the same for the benefit of its creditors
3. Exercise the general powers of a receiver under the Revised Rules of Court but shall
not, with the exception of administrative expenditures, pay or commit any act that will
06
MAR
MYRNA RAMOS, petitioner,
FACTS:
Spouses Jonas Ramos and Myrna Ramos executed a contract over their conjugal house and lot in favor
of respondent for and in consideration of P1,310,430. Entitled DEED OF SALE UNDER PACTO DE
RETRO, the contract, inter alia, granted the Ramos spouses the option to repurchase the property
within six months plus an interest of 4.5 percent. Petitioner tendered to Sarao the amount of
P1,633,034.20 in the form of two managers checks, which the latter refused to accept for being
allegedly insufficient. Myrna filed a Complaint, and she deposited with the RTC two checks that Sarao
refused to accept. Sarao filed against the Ramos spouses a Petition for consolidation of ownership in
pacto de retro sale. Both RTC and CA dismissed petitioners complaint and appeal respectively in favor
of respondent Sarao.
ISSUE:
Whether or not the pacto de retro sale was in reality an equitable mortgage?
RULING:
YES. In order to judge the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered (Art.1371, NCC). The contract shall be presumed to be an equitable
mortgage, in any of the following cases:(1) When the price of a sale with right to repurchase is unusually
inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after
the expiration of the right to repurchase another instrument extending the period of redemption or
granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase
price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any other case where
it may be fairly inferred that the real intention of the parties is that the transaction shall secure the
payment of a debt or the performance of any other obligation. (Art. 1602, NCC)
A. Definition/concept
B. Governing laws
1. Doctrine of independence
2. Fraud exception principle
3. Doctrine of strict compliance
Cases:
1. Metropolitan Waterworks and Sewerage System v. Hon. Reynaldo B. Daway and Maynilad Water
Services, Inc., G.R. No. 160732, June 21, 2004
2. Mico Metals Corp. v. Court of Appeals and Philippine Bank of Communications, G.R. No. 117914, Feb.
1, 2002
3. Transfield Philippines, Inc. v. Luzon Hydro Corporation, Australia and New Zealand Banking Group
Limited and Security Bank Corporation, G.R. NO. 146717, Nov. 22, 2004
1. To whom delivered
2. Kinds
B. Duties of a warehouseman
Who is a warehouseman
Principal obligations of a warehouseman
Lawful excuses to deliver goods
In case of misdelivery
Altered receipts
Liability of warehouseman
C. Warehousemans lien
Extent
Loss and waiver of lien
Enforcement
Other topics:
E. Criminal offenses
1. Validity of the security interest as against the creditors of the entrustee/innocent purchasers for value
D. Remedies available
Cases:
1. Development Bank of the Philippines v. Prudential Bank, G.R. No. 143772, Nov. 22, 2005
2. Landl & Company (Phil.) Inc., et al v. Metropolitan Bank, G.R. No. 159622, July 30, 2004
3. Anthony L. Ng v. People of the Philippines, G.R. NO. 173905, April 23, 2010
IV. The Chattel Mortgage Law (Act 1508 in rel. to Arts. 1484, 1485, 2140 and 2141 of the Civil
Code)
Preliminaries:
Definition of Chattel Mortgage
Characteristics
Distinguished for Pledge
A. Essential requisites
B. Formal requisites
E. After-acquired property
F. After-incurred obligation
H. Foreclosure procedure
I. Redemption
1. General rule
2. Exception
3. Article 1484
Cases:
Preliminaries:
Arts. 2124-2131 Civil Code
Definition of Real Estate Mortgage
Characteristics of REM
Essential Requisites
Registration Requirement
A. Coverage
E. Procedure
1) Where to file
2) Where to sell
3) Posting requirement
4) Publication requirement
H. Redemption
I. Writ of possession
J. Annulment of sale
Cases:
1. Fortune Motors Phils. v. Metropolitan Bank and Trust Company, G.R. No. 115068, November 28, 1996
2. GC Dalton Industries Inc. v. Equitable PCI Bank, G.R. No. 171169, August 24, 2009
3. Development Bank of the Philippines v. Environmental Aquatics Inc., G.R. No. 174329, October 20, 2010
4. Sps. Victor and Grace Ong v. Court of Appeals, G.R. No. 121494, June 8, 2000
5. Sps. Basilio and Norma Hilaga v. Rural Bank of Isulan, G.R. No. 179781, April 7, 2010
Preliminaries:
A. Purpose
Cases:
1. Development Bank of the Philippines v. Felipe Arcilla, G.R. No. 161397, 161426, June 30, 2005
2. United Coconut Planters Bank v. Sps. Beluso, G.R. No. 159912, August 17, 2007
B. Covered institutions
D. Covered transactions
E. Suspicious transactions
I. Functions
Cases:
1. Republic of the Philippines v. Hon. Antonio Eugenio, Jr., G.R. No. 174629, February 14, 2008
2. Republic of the Philippines v. Glasgow Credit and Collection Services Inc., G.R. No. 170281, January 18,
2008
B. Definition of terms
a) Foreign investment
b) Doing business in the Philippines
c) Export enterprise
d) Domestic market enterprise
Cases:
1. Alfred Hahn v. Court of Appeals, G.R. No. 113704, January 22, 1997
2. Cargrill Inc. v. Intra Strata Assurance Corp., G.R. No. 168266, March 15, 2010
3. Agiagilent Technologies Singapore v. Integrated Silicon Technology, G.R. No. 154618, April 14, 2004
Case:
1. Abacus Securities Corp. v. Ruben U. Ampil, G.R. NO. 160016, February 27, 2006
1. Regulatory
2. Adjudicative
Case:
1. Exempt securities
2. Exempt transactions
Case:
1. Securities and Exchange Commission v. Prosperity.com, G.R. No. 164197, January 25, 2012
2. Power Homes Unlimited Corp. v. Securities and Exchange Commission, G.R. No. 164182,
February 26, 2008
F. Protection of investors
G. Civil liability