[G.R. No. 119858.

April 29, 2003]

EDWARD C. ONG, petitioner, vs. THE COURT OF APPEALS AND THE PEOPLE OF THE
PHILIPPINES, respondents.
Facts:
Assistant City Prosecutor Dina P. Teves of the City of Manila charged petitioner and Benito Ong with two
counts of estafa under separate Informations dated 11 October 1991.
In Criminal Case No. 92-101989, the Information indicts petitioner and Benito Ong of the crime of estafa
committed as follows:
That on or about July 23, 1990, in the City of Manila, Philippines, the said accused, representing
ARMAGRI International Corporation, conspiring and confederating together did then and there willfully,
unlawfully and feloniously defraud the SOLIDBANK Corporation represented by its Accountant,
DEMETRIO LAZARO, a corporation duly organized and existing under the laws of the Philippines located
at Juan Luna Street, Binondo, this City, in the following manner, to wit: the said accused received in trust
from said SOLIDBANK Corporation the following, to wit: 10,000 bags of urea valued at
P2,050,000.00 specified in a Trust Receipt Agreement and covered by a Letter of Credit No. DOM
GD 90-009 in favor of the Fertiphil Corporation.
In Criminal Case No. 92-101990, the Information likewise charges petitioner of the crime of estafa
committed as follows:
That on or about July 6, 1990, in the City of Manila, Philippines, the said accused, representing ARMAGRI
International Corporation, defraud the SOLIDBANK Corporation represented by its Accountant,
DEMETRIO LAZARO. The said accused received in trust from said SOLIDBANK Corporation the
following goods, to wit: 125 pcs. Rear diff. assy RNZO 49 50 pcs. Front & Rear diff assy. Isuzu Elof, 85
units 1-Beam assy. Isuzu Spz all valued at P2,532,500.00 specified in a Trust Receipt Agreement and
covered by a Domestic Letter of Credit No. DOM GD 90-006 in favor of the Metropole Industrial Sales
with address at P.O. Box AC 219, Quezon City.
Issue: WON PETITIONER WAS NECESSARILY THE ONE RESPONSIBLE FOR THE OFFENSE, BY
THE MERE CIRCUMSTANCE THAT PETITIONER ACTED AS AGENT AND SIGNED FOR THE
ENTRUSTEE CORPORATION.
Held: Section 13 of the Trust Receipts Law which provides: x x x. If the violation is committed by a
corporation, partnership, association or other juridical entities, the penalty provided for in this Decree shall
be imposed upon the directors, officers, employees or other officials or persons therein responsible for the
offense, without prejudice to the civil liabilities arising from the offense. We hold that petitioner is a
person responsible for violation of the Trust Receipts Law.
The Trust Receipts Law is violated whenever the entrustee fails to: (1) turn over the proceeds of the sale
of the goods, or (2) return the goods covered by the trust receipts if the goods are not sold.[18] The mere
failure to account or return gives rise to the crime which is malum prohibitum.[19] There is no
requirement to prove intent to defraud.[20]

The Trust Receipts Law recognizes the impossibility of imposing the penalty of imprisonment on a
corporation. Hence, if the entrustee is a corporation, the law makes the officers or employees or other
persons responsible for the offense liable to suffer the penalty of imprisonment. The reason is obvious:
corporations, partnerships, associations and other juridical entities cannot be put to jail. Hence, the
criminal liability falls on the human agent responsible for the violation of the Trust Receipts Law.
_________________________________________________________________________

[G.R. No. 122502. December 27, 2002]

LORENZO M. SARMIENTO, JR. and GREGORIO LIMPIN, JR., petitioners, vs. COURT OF APPEALS and
ASSOCIATED BANKING CORP., respondents.
Facts:
On September 6, 1978, defendant Gregorio Limpin, Jr. and Antonio Apostol, doing business under the
name and style of Davao Libra Industrial Sales, filed an application for an Irrevocable Domestic Letter
of Credit with the plaintiff Bank for the amount of P495,000.00 in favor of LS Parts Hardware and
Machine Shop (herein after referred to as LS Parts) for the purchase of assorted scrap irons. Said
application was signed by defendant Limpin and Apostol (Exh. A). The aforesaid application was
approved, and plaintiff Bank issued Domestic Letter of Credit No. DLC No. DVO-78-006 in favor of LS
Parts for P495,000.00 (Exh. B). Thereafter, a Trust Receipt dated September 6, 1978, was executed by
defendant Limpin and Antonio Apostol (Exh. C). The defendants acknowledged to have received in
trust from the plaintiff Bank the merchandise covered by the documents and agreed to hold said
merchandise in storage as the property of the Bank.
The defendants failed to comply with their undertaking under the Trust Receipt. Hence as early as
March, 1980, demands were made for them to comply with their undertaking. The defendants claim
that they cannot be held liable as the 825 tons of assorted scrap iron, subject of the trust receipt
agreement, were lost when the vessel transporting them sunk, and that said scrap iron were delivered
to Davao Libra Industrial Sales, a business concern over which they had no interest whatsoever.
Thereafter, the corresponding Information was filed against the defendants. Defendant Lorenzo
Sarmiento, Jr. was, however, dropped from the Information while defendant Gregorio Limpin, Jr. was
convicted.
Issue: WON private respondents have the right to institute a separate civil action against Sarmiento for
civil liability?
Held: Article 31 of the Civil Code provides that When the civil action is based on an obligation not
arising from the act or omission complained of as a felony, such civil action may proceed independently
of the criminal proceedings and regardless of the result of the latter.
In the present case, private respondents complaint against petitioners was based on the failure of the
latter to comply with their obligation as spelled out in the Trust Receipt executed by them.[20] This

breach of obligation is separate and distinct from any criminal liability for misuse and/or
misappropriation of goods or proceeds realized from the sale of goods, documents or instruments
released under trust receipts, punishable under Section 13 of the Trust Receipts Law (P.D. 115) in
relation to Article 315(1), (b) of the Revised Penal Code.
Being based on an obligation ex contractu and not ex delicto, the civil action may proceed
independently of the criminal proceedings instituted against petitioners regardless of the result of the
latter.
_________________________________________________

Republic v. Cabrini Green & Ramos, G.R. No. 154522, May 5, 2006
RESOLUTION

CORONA, J.:
In the exercise of its power under Section 10 of RA 9160, [1] the Anti-Money
Laundering Council (AMLC) issued freeze orders against various bank accounts of
respondents. The frozen bank accounts were previously found prima facie to be
related to the unlawful activities of respondents.
Under RA 9160, a freeze order issued by the AMLC is effective for a period not
exceeding 15 days unless extended upon order of the court. Accordingly, before the
lapse of the period of effectivity of its freeze orders, the AMLC[2] filed with the Court
of Appeals (CA)[3] various petitions for extension of effectivity of its freeze orders.
The AMLC invoked the jurisdiction of the CA in the belief that the power given to the
CA to issue a temporary restraining order (TRO) or writ of injunction against any
freeze order issued by the AMLC carried with it the power to extend the effectivity of
a freeze order. In other words, the AMLC interpreted the phrase upon order of the
court to refer to the CA.
However, the CA disagreed with the AMLC and dismissed the petitions. It uniformly
ruled that it was not vested by RA 9160 with the power to extend a freeze order
issued by the AMLC.[4]
Hence, these consolidated petitions[5] which present a common issue: which court
has jurisdiction to extend the effectivity of a freeze order?
During the pendency of these petitions, or on March 3, 2003, Congress enacted RA
9194 (An Act Amending Republic Act No. 9160, Otherwise Known as the Anti-Money
Laundering Act of 2001).[6] It amended Section 10 of RA 9160 as follows:
SEC. 7. Section 10 of [RA 9160] is hereby amended to read as follows:
SEC. 10. Freezing of Monetary Instrument or Property. The Court of Appeals, upon
application ex parte by the AMLC and after determination that probable cause exists that any

monetary instrument or property is in any way related to an unlawful activity as defined in Sec.
3(i) hereof, may issue a freeze order which shall be effective immediately. The freeze order shall
be for a period of twenty (20) days unless extended by the court.[7](emphasis supplied)
Section 12 of RA 9194 further provides:
SEC 12. Transitory Provision. Existing freeze orders issued by the AMLC shall remain in force
for a period of thirty (30) days after the effectivity of this Act, unless extended by the Court of
Appeals. (emphasis supplied)
On April 3, 2003, the Office of the Solicitor General (OSG) filed a Very Urgent Motion
to Remand Cases to the Honorable Court of Appeals (with Prayer for Issuance of
Temporary Restraining Order and/or Writ of Preliminary Injunction). [8] The OSG
prayed for the remand of these cases to the CA pursuant to RA 9194. It also asked
for the issuance of a TRO on the ground that the freeze orders would be
automatically lifted on April 22, 2003 by operation of law and the money or deposits
in the concerned bank accounts may be taken out of the reach of law enforcement
authorities. The OSG further manifested that pending in the CA were 29 other cases
involving the same issue. It requested that these cases be included in the coverage
of the TRO prayed for.
On April 21, 2003, the Court issued a TRO in these cases and in all other similar
cases pending before all courts in the Philippines. Respondents, the concerned
banks, and all persons acting in their behalf were directed to give full force
and effect to existing freeze orders until further orders from this Court.
On May 5, 2003, the OSG informed the Court that on April 22, 2003 the CA issued a
resolution in CA-G.R. SP No. 69371 (the subject of G.R. No. 154694) granting the
petition for extension of freeze orders. [9] Hence, the OSG prayed for the dismissal of
G.R. No. 154694 for being moot. It also reiterated its earlier prayer for the remand
of G.R. Nos. 154522, 155554 and 155711 to the CA.
The amendment by RA 9194 of RA 9160 erased any doubt on the jurisdiction of the
CA over the extension of freeze orders. As the law now stands, it is solely the CA
which has the authority to issue a freeze order as well as to extend its effectivity. It
also has the exclusive jurisdiction to extend existing freeze orders previously issued
by the AMLC vis--vis accounts and deposits related to money-laundering activities.
WHEREFORE, G.R. No. 154694 is hereby DISMISSED for being moot while G.R.
Nos. 154522, 155554 and 155711 are REMANDED to the Court of Appeals for
appropriate action. Pending resolution by the Court of Appeals of these cases, the
April 21, 2003 temporary restraining order is herebyMAINTAINED.
No costs.
LETICIA Y. MEDEL DR. RAFAEL MEDEL and SERVANDO FRANCO, petitioners,
vs. COURT OF APPEALS, SPOUSES VERONICA R. GONZALES and DANILO G.
GONZALES, JR., doing lending business under the trade name and style
"GONZALES CREDIT ENTERPRISES", respondents.
DECISION

PARDO, J.:
The case before the Court is a petition for review on certiorari, under Rule 45 of the Revised
Rules of Court, seeking to set aside the decision of the Court of Appeals, [1] and its resolution
denying reconsideration,[2] the dispositive portion of which decision reads as follows:
"WHEREFORE, the appealed judgment is hereby MODIFIED such that defendants are hereby
ordered to pay the plaintiff: the sum ofP500,000.00, plus 5.5% per month interest and 2%
service charge per annum effective July 23, 1986, plus 1% per month of the total amount
due and demandable as penalty charges effective August 23, 1986, until the entire amount
is fully paid.
"The award to the plaintiff of P50,000.00 as attorney's fees is affirmed. And so is the
imposition of costs against the defendants.
SO ORDERED."[3]
The Court required the respondents to comment on the petition, [4] which was filed on April 3,
1998,[5] and the petitioners to reply thereto, which was filed on May 29, 1998. [6] We now
resolve to give due course to the petition and decide the case.
The facts of the case, as found by the Court of Appeals in its decision, which are considered
binding and conclusive on the parties herein, as the appeal is limited to questions of law, are
as follows:
On November 7, 1985, Servando Franco and Leticia Medel (hereafter Servando and Leticia)
obtained a loan from Veronica R. Gonzales (hereafter Veronica), who was engaged in the
money lending business under the name "Gonzales Credit Enterprises", in the amount
of P50,000.00, payable in two months. Veronica gave only the amount of P47,000.00, to the
borrowers, as she retained P3,000.00, as advance interest for one month at 6% per
month. Servado and Leticia executed a promissory note for P50,000.00, to evidence the
loan, payable on January 7, 1986.
On November 19, 1985, Servando and Leticia obtained from Veronica another loan in the
amount of P90,000.00, payable in two months, at 6% interest per month. They executed a
promissory note to evidence the loan, maturing on January 19, 1986. They received
only P84,000.00, out of the proceeds of the loan.
On maturity of the two promissory notes, the borrowers failed to pay the indebtedness.
On June 11, 1986, Servando and Leticia secured from Veronica still another loan in the
amount of P300,000.00, maturing in one month, secured by a real estate mortgage over a
property belonging to Leticia Makalintal Yaptinchay, who issued a special power of attorney
in favor of Leticia Medel, authorizing her to execute the mortgage. Servando and Leticia
executed a promissory note in favor of Veronica to pay the sum of P300,000.00, after a
month, or on July 11, 1986.However, only the sum of P275,000.00, was given to them out of
the proceeds of the loan.
Like the previous loans, Servando and Medel failed to pay the third loan on maturity.
On July 23, 1986, Servando and Leticia with the latter's husband, Dr. Rafael Medel,
consolidated all their previous unpaid loans totaling P440,000.00, and sought from Veronica
another loan in the amount of P60,000.00, bringing their indebtedness to a total
of P500,000.00, payable on August 23, 1986. The executed a promissory note, reading as
follows:
"Baliwag, Bulacan July 23, 1986
"Maturity Date August 23, 1986
"P500,000.00
"FOR VALUE RECEIVED, I/WE jointly and severally promise to pay to the order of VERONICA
R. GONZALES doing business in the business style of GONZALES CREDIT ENTERPRISES,
Filipino, of legal age, married to Danilo G. Gonzales, Jr., of Baliwag Bulacan, the sum of
PESOS ........ FIVE HUNDRED THOUSAND ..... (P500,000.00) Philippine
Currency with interest thereon at the rate of 5.5 PER CENT per month plus 2% service charg
eper annum from date hereof until fully paid according to the amortization schedule
contained herein. (Underscoring supplied)

"Payment will be made in full at the maturity date.

"Should I/WE fail to pay any amortization or portion hereof when due, all the other
installments together with all interest accrued shall immediately be due and payable and
I/WE hereby agree to pay
an additional amount equivalent to one per cent (1%) per month of the amount due and de
mandable as penaltycharges in the form of liquidated damages until fully paid; and the
further sum of TWENTY FIVE PER CENT (25%) thereon in full, without
deductions asAttorney's Fee whether actually incurred or not, of the total amount due and
demandable, exclusive of costs and judicial or extra judicial expenses.(Underscoring
supplied)
"I, WE further agree that in the event the present rate of interest on loan is increased by law
or the Central Bank of the Philippines, the holder shall have the option to apply and collect
the increased interest charges without notice although the original interest have already
been collected wholly or partially unless the contrary is required by law.
"It is also a special condition of this contract that the parties herein agree that the amount of
peso-obligation under this agreement is based on the present value of peso, and if there be
any change in the value thereof, due to extraordinary inflation or deflation, or any other
cause or reason, then the peso-obligation herein contracted shall be adjusted in accordance
with the value of the peso then prevailing at the time of the complete fulfillment of
obligation.
"Demand and notice of dishonor waived. Holder may accept partial payments and grant
renewals of this note or extension of payments, reserving rights against each and all
indorsers and all parties to this note.
"IN CASE OF JUDICIAL Execution of this obligation, or any part of it, the debtors waive all
his/their rights under the provisions of Section 12, Rule 39, of the Revised Rules of Court."
On maturity of the loan, the borrowers failed to pay the indebtedness of P500,000.00, plus
interests and penalties, evidenced by the above-quoted promissory note.
On February 20, 1990, Veronica R. Gonzales, joined by her husband Danilo G. Gonzales, filed
with the Regional Trial Court of Bulacan, Branch 16, at Malolos, Bulacan, a complaint for
collection of the full amount of the loan including interests and other charges.
In his answer to the complaint filed with the trial court on April 5, 1990, defendant Servando
alleged that he did not obtain any loan from the plaintiffs; that it was defendants Leticia and
Dr. Rafael Medel who borrowed from the plaintiffs the sum of P500,000.00, and actually
received the amount and benefited therefrom; that the loan was secured by a real estate
mortgage executed in favor of the plaintiffs, and that he (Servando Franco) signed the
promissory note only as a witness.
In their separate answer filed on April 10,1990, defendants Leticia and Rafael Medel alleged
that the loan was the transaction of Leticia Yaptinchay, who executed a mortgage in favor of
the plaintiffs over a parcel of real estate situated in San Juan, Batangas; that the interest
rate is excessive at 5.5% per month with additional service charge of 2% per annum, and
penalty charge of 1% per month; that the stipulation for attorney's fees of 25% ofthe
amount due is unconscionable, illegal and excessive, and that substantial payments made
were applied to interest, penalties and other charges.
After due trial, the lower court declared that the due execution and genuineness of the four
promissory notes had been duly proved, and ruled that although the Usury Law had been
repealed, the interest charged by the plaintiffs on the loans was unconscionable and
"revolting to the conscience". Hence, the trial court applied "the provision of the New [Civil]
Code" that the "legal rate of interest for loan or forbearance of money, goods or credit is
12% per annum."[7]
Accordingly, on December 9, 1991, the trial court rendered judgment, the dispositive portion
of which reads as follows:
"WHEREFORE, premises considered, judgment is hereby rendered, as follows:

"1. Ordering the defendants Servando Franco and Leticia Medel, jointly and severally, to pay
plaintiffs the amount of P47,000.00 plus 12% interest per annum from November 7, 1985
and 1% per month as penalty, until the entire amount is paid in full.
"2. Ordering the defendants Servando Franco and Leticia Y. Medel to plaintiffs, jointly and
severally the amount of P84,000.00 with 12% interest per annum and 1% per cent per
month as penalty from November 19,1985 until the whole amount is fully paid;
"3. Ordering the defendants to pay the plaintiffs, jointly and severally, the amount
of P285,000.00 plus 12% interest per annum and 1% per month as penalty from July 11,
1986, until the whole amount is fully paid;
"4. Ordering the defendants to pay plaintiffs, jointly and severally, the amount of P50,000.00
as attorney's fees;
"5. All counterclaims are hereby dismissed.
"With costs against the defendants."[8]
In due time, both plaintiffs and defendants appealed to the Court of Appeals.
In their appeal, plaintiffs-appellants argued that the promissory note, which consolidated all
the unpaid loans of the defendants, is the law that governs the parties.They further argued
that Circular No. 416 of the Central Bank prescribing the rate of interest for loans or
forbearance of money, goods or credit at 12% per annum, applies only in the absence of a
stipulation on interest rate, but not when the parties agreed thereon.
The Court of Appeals sustained the plaintiffs-appellants' contention. It ruled that "the Usury
Law having become 'legally inexistent' with the promulgation by the Central Bank in 1982 of
Circular No. 905, the lender and borrower could agree on any interest that may be charged
on the loan".[9] The Court of Appeals further held that "the imposition of 'an additional
amount equivalent to 1% per month of the amount due and demandable as penalty charges
in the form of liquidated damages until fully paid' was allowed by law". [10]
Accordingly, on March 21, 1997, the Court of Appeals promulgated it decision reversing that
of the Regional Trial Court, disposing as follows:
"WHEREFORE, the appealed judgment is hereby MODIFIED such that defendants are hereby
ordered to pay the plaintiffs the sum ofP500,000.00, plus 5.5% per month interest and 2%
service charge per annum effective July 23, 1986, plus 1% per month of the total amount
due and demandable as penalty charges effective August 24, 1986, until the entire amount
is fully paid.
"The award to the plaintiffs of P50,000.00 as attorney's fees is affirmed. And so is the
imposition of costs against the defendants.
"SO OREDERED."[11]
On April 15, 1997, defendants-appellants filed a motion for reconsideration of the said
decision. By resolution dated November 25, 1997, the Court of Appeals denied the motion. [12]
Hence, defendants interposed the present recourse via petition for review on certiorari.[13]
We find the petition meritorious.
Basically, the issue revolves on the validity of the interest rate stipulated upon. Thus, the
question presented is whether or not the stipulated rate of interest at 5.5% per month on
the loan in the sum of P500,000.00, that plaintiffs extended to the defendants is usurious. In
other words, is the Usury Law still effective, or has it been repealed by Central Bank Circular
No. 905, adopted on December 22, 1982, pursuant to its powers under P.D. No. 116, as
amended by P.D. No. 1684?
We agree with petitioners that the stipulated rate of interest at 5.5% per month on
the P500,000.00 loan is excessive, iniquitous, unconscionable and exorbitant. 13 However, we
can not consider the rate "usurious" because this Court has consistently held that Circulr No.
905 of the Central Bank, adopted on December 22, 1982, has expressly removed the
interest ceilings prescribed by the Usury Law[14] and that the Usury Law is now "legally
inexistent".[15]
In Security Bank and Trust Company vs. Regional Trial Court of Makati, Branch 61[16] the
Court held that CB Circular No. 905 "did not repeal nor in anyway amend the Usury Law but
simply suspended the latter's effectivity." Indeed, we have held that "a Central Bank Circular

can not repeal a law. Only a law can repeal another law."[17] In the recent case of Florendo vs.
Court of Appeals[18], the Court reiterated the ruling that "by virtue of CB Circular 905, the
Usury Law has been rendered ineffective". "Usury has been legally non-existent in our
jurisdiction. Interest can now be charged as lender and borrower may agree upon." [19]
Nevertheless, we find the interest at 5.5% per month, or 66% per annum, stipulated upon by
the parties in the promissory note iniquitous or unconscionable, and, hence, contrary to
morals ("contra bonos mores"), if not against the law.[20] The stipulation is void.[21] The courts
shall reduce equitably liquidated damages, whether intended as an indemnity or a penalty if
they are iniquitous or unconscionable.[22]
Consequently, the Court of Appeals erred in upholding the stipulation of the parties. Rather,
we agree with the trial court that, under the circumstances, interest at 12% per annum, and
an additional 1% a month penalty charge as liquidated damages may be more reasonable.
WHEREFORE, the Court hereby REVERSES and SETS ASIDE the decision of the Court of
Appeals promulgated on March 21, 1997, and its resolution dated November 25,
1997. Instead, we render judgment REVIVING and AFFIRMING the decision dated December
9, 1991, of the Regional Trial Court of Bulacan, Branch 16, Malolos, Bulacan, in Civil Case No.
134-M-90, involving the same parties.
No pronouncement as to costs in this instance
SO ORDERED.