Republic v Judge Eugenio

545 SCRA 384, February 14, 2008

Sec. 2 of the Bank Secrecy Act itself prescribes exceptions whereby these bank
accounts may be examined by any person, government official, bureau or offial;
namely when: (1) upon written permission of the depositor; (2) in cases of
impeachment; (3) the examination of bank accounts is upon order of a competent
court in cases of bribery or dereliction of duty of public officials; and (4) the money
deposited or invested is the subject matter of the litigation. Section 8 of R.A. Act No.
3019, the Anti-Graft and Corrupt Practices Act, has been recognized by this Court
as constituting an additional exception to the rule of absolute confidentiality, and
there have been other similar recognitions as well.

FACTS: Under the authority granted by the Resolution, the AMLC filed an
application to inquire into or examine the deposits or investments of Alvarez,
Trinidad, Liongson and Cheng Yong before the RTC of Makati, Branch 138, presided
by Judge (now Court of Appeals Justice) Sixto Marella, Jr. The application was
docketed as AMLC No. 05-005. The Makati RTC heard the testimony of the Deputy
Director of the AMLC, Richard David C. Funk II, and received the documentary
evidence of the AMLC.[14] Thereafter, on 4 July 2005, the Makati RTC rendered an
Order (Makati RTC bank inquiry order) granting the AMLC the authority to inquire
and examine the subject bank accounts of Alvarez, Trinidad, Liongson and Cheng
Yong, the trial court being satisfied that there existed p]robable cause [to] believe
that the deposits in various bank accounts, details of which appear in paragraph 1
of the Application, are related to the offense of violation of Anti-Graft and Corrupt
Practices Act now the subject of criminal prosecution before the Sandiganbayan as
attested to by the Informations, Exhibits C, D, E, F, and G Pursuant to the Makati RTC
bank inquiry order, the CIS proceeded to inquire and examine the deposits,
investments and related web accounts of the four.

Meanwhile, the Special Prosecutor of the Office of the Ombudsman, Dennis

Villa-Ignacio, wrote a letter dated 2 November 2005, requesting the AMLC to
investigate the accounts of Alvarez, PIATCO, and several other entities involved in
the nullified contract. The letter adverted to probable cause to believe that the
bank accounts were used in the commission of unlawful activities that were
committed a in relation to the criminal cases then pending before the
Sandiganbayan. Attached to the letter was a memorandum on why the
investigation of the [accounts] is necessary in the prosecution of the above criminal
cases before the Sandiganbayan. In response to the letter of the Special
Prosecutor, the AMLC promulgated on 9 December 2005 Resolution No. 121 Series
of 2005,[19] which authorized the executive director of the AMLC to inquire into and
examine the accounts named in the letter, including one maintained by Alvarez
with DBS Bank and two other accounts in the name of Cheng Yong with
Metrobank. The Resolution characterized the memorandum attached to the
Special Prosecutors letter as extensively justif[ying] the existence of probable cause
that the bank accounts of the persons and entities mentioned in the letter are
related to the unlawful activity of violation of Sections 3(g) and 3(e) of Rep. Act No.
3019, as amended.

ISSUE: Whether or not the bank accounts of respondents can be examined.

HELD: Any exception to the rule of absolute confidentiality must be specifically
legislated. Section 2 of the Bank Secrecy Act itself prescribes exceptions whereby
these bank accounts may be examined by any person, government official,
bureau or official; namely when: (1) upon written permission of the depositor; (2) in
cases of impeachment; (3) the examination of bank accounts is upon order of a
competent court in cases of bribery or dereliction of duty of public officials; and (4)
the money deposited or invested is the subject matter of the litigation. Section 8 of
R.A. Act No. 3019, the Anti-Graft and Corrupt Practices Act, has been recognized
by this Court as constituting an additional exception to the rule of absolute
confidentiality, and there have been other similar recognitions as well.

The AMLA also provides exceptions to the Bank Secrecy Act. Under Section
11, the AMLC may inquire into a bank account upon order of any competent court
in cases of violation of the AMLA, it having been established that there is probable
cause that the deposits or investments are related to unlawful activities as defined
in Section 3(i) of the law, or a money laundering offense under Section 4 thereof.
Further, in instances where there is probable cause that the deposits or investments
are related to kidnapping for ransom,[certain violations of the Comprehensive
Dangerous Drugs Act of 2002,hijacking and other violations under R.A. No. 6235,
destructive arson and murder, then there is no need for the AMLC to obtain a court
order before it could inquire into such accounts. It cannot be successfully argued
the proceedings relating to the bank inquiry order under Section 11 of the AMLA is a
litigation encompassed in one of the exceptions to the Bank Secrecy Act which is
when money deposited or invested is the subject matter of the litigation. The
orientation of the bank inquiry order is simply to serve as a provisional relief or
remedy. As earlier stated, the application for such does not entail a full-blown trial.

Nevertheless, just because the AMLA establishes additional exceptions to the

Bank Secrecy Act it does not mean that the later law has dispensed with the
general principle established in the older law that all deposits of whatever nature
with banks or banking institutions in the Philippines x x x are hereby considered as of
an absolutely confidential nature. Indeed, by force of statute, all bank deposits are
absolutely confidential, and that nature is unaltered even by the legislated
exceptions referred to above.
NEW SAMPAGUITA BUILDERS Construction, et al vs. PNB

GR No. 148753, July 30, 2004

FACTS:

Sampaguita secured a loan from PNB in an aggregate amount of Php 8 Million,

mortgaging the properties of Sampaguita’s President and Chairman of the board.

Sampaguita also executed several promissory notes due on different dates

(payment dates). The first promissory note had 19.5%interest rate. The 2 and 3 had
nd rd

21.5%. A uniform clause therein permitted PNB to increase the rate “within the limits
allowed by law at any time depending on whatever policy it may adopt in the future x
x x,” without even giving prior notice to petitioners. There was also a clause in the
promissory note that stated that if the same is not paid 2 years after release then it shall
be converted to a medium term loan – and the interest rate for such loan would apply.
Later on, Sampaguita defaulted on its payments and failed to comply withobligations
on promissory notes.

Sampaguita thus requested for a 90-day extension to pay the loan. Again they
defaulted, so they asked for loan restructuring. It partly paid the loan and promised to
pay the balance lateron. AGAIN they failed to pay so PNB extrajudicially foreclosed the
mortgaged properties. It was sold for 10M. PNB claimed that Sampaguita owed it 12M
so they filed a case in court asking Sampaguita to pay for deficiency. The RTC
found that Sampaguita was automatically entitled to the debt relief package of PNB
and ruled that the latter had no cause of action against the former. CA reversed,
saying Sampaguita was not entitled, thus ordered them to pay the deficiency.
Sampaguita claims the loan was bloated so they don’t really owe PNB anymore, but
it overcharged them.

ISSUES:

WON the loan accounts are bloated; and

Whether PNB could unilaterally increase interest rates.

RULING:

There is no deficiency; there is actually an overpayment of more than 3M based

on the computation of the SC. Sampaguita’s accessory duty to pay interest did not
give PNB unrestrained freedom to charge any rate other than that which was agreed
upon. No interest shall be due, unless expressly stipulated in writing. It would be the
zenith of farcicality to specify and agree upon rates that could be subsequently
upgraded at whim by only one party to the agreement.

The “unilateral determination and imposition” of increased rates is“violative of

the principle of mutuality of contracts ordained in Article 1308of the Civil Code.” One-
sided impositions do not have the force of law between the parties, because such
impositions are not based on the parties’ essential equality. Although
escalation clauses are valid in maintaining fiscal stability and retaining the value of
money on long-term contracts, giving respondent an unbridled right to adjust the
interest independently and upwardly would completely take away from petitioners the
“right to assent to an important modification in their agreement” and would also
negate the element of mutuality in their contracts. The clause cited earlier made the
fulfillment of the contracts “dependent exclusively upon the uncontrolled will”
of respondent and was therefore void. Besides, the pro forma promissory notes have
the character of a contract d’ adhésion, “where the parties do
not bargain on equal footing, the weaker party’s [the debtor’s]participation being
reduced to the alternative ‘to take it or leave it.” Circular that lifted
the ceiling of interest rates of usury law did not authorize either party to unilaterally raise
the interest rate without the other’s consent. The interest ranging from 26 percent to 35
percent in the statements of account -- “must be equitably reduced for being
iniquitous, unconscionable and exorbitant.” Rates found to be iniquitous or
unconscionable are void, as if it there were no express contract thereon. Above all, it is
undoubtedly against public policy to charge excessively for the use of money. It cannot
be argued that assent to the increases can be implied either from the June 18, 1991
request of petitioners for loan restructuring or from their lack of response to the
statements of account sent by respondent. Such request does not indicate any
agreement to an interest increase; there can be no implied waiver of a right when
there is no clear, unequivocal and decisive act showing such purpose. Besides,
the statements were not letters of information sent to secure their conformity; and even
if we were to presume these as an offer, there was no acceptance. No one
receivinga p r o p o s a l t o m o d i f y a l o a n c o n t r a c t , e s p e c i a l l y i n t e r e s t - -
a v i t a l component -- is “obliged to answer the proposal. ”Besides, PNB did not
comply with its own stipulation that should the loan not be paid 2 years after release of
money then it shall be converted to a medium term loan.*Court applied 12% interest
rate instead for being a forbearance of money(there were some pieces of
evidence presented by PNB in court that sampaguita objected to. Lower courts
overruled the objections but SC said t h e o b j e c t i o n s w e r e c o r r e c t a n d
t h e e v i d e n c e s h o u l d n o t h a v e b e e n admitted. i.e. contract wasn’t signed by
the parties, a part of the contract wasn’t properly annexed/no reference was made in
the main contract.)In addition to the preceding discussion, it is then useless to labor the
pointt h a t t h e i n c r e a s e i n r a t e s v i o l a t e s t h e i m p a i r m e n t c l a u s e
o f t h e Constitution, because the sole purpose of this provision is to safeguard the
integrity of valid contractual agreements against unwarranted interference by the
State in the form of laws. Private individuals’ intrusions on interest rates is governed by
statutory enactments like the Civil Code.
PRUDENTIAL BANK AND TRUST COMPANY vs. ABASOLO

631 SCRA 367

FACTS:

Valenzuela-Rosales inherited two parcels of land situated in Laguna. After she

passed away, her heirs executed a special power of attorney in favor of Abasolo herein
respondent empowering her to sell the properties. Sometime in 1995, one Corazon
Marasigan (Corazon) wanted to buy the properties, but having no available cash, she
broached the idea of first mortgaging the properties to Petitioner Prudential bank and
trust company and that the proceeds of which would be paid directly to respondent.

Respondent in response agreed to the proposal. To guarantee the payment of

the property, Corazon executed a Promissory note for 1,448,960 in favor of respondent
to cover the amount of the real property. On the other hand, Mendiola, an employee
of PBTC, advised respondent to transfer the properties first to Corazon for immediate
processing of Corazon's loan application with assurance that the proceeds thereof
would be paid directly to her (respondent), and the obligation would be refelcted in a
bank guarantee. Heeding Mendiola's advice, respondent executed a Deed of
Absolute Sale in favor of Corazon. Corazon then after applied for a loan with PBTC and
executed a real estate mortgage covering the properties to secure the payment of the
loan.

Such loan was granted. Unfortunately, despite repeated demands, Corazon

failed to pay the purchase price of the properties. What she received from Corazon
was a partial payment in kind consisting 5 vehicles totaled P665, 000. Respondent then
filed a complaint for collection of sum of money and annulment of sale and mortgage
with damages against Corazon and the Petitioner before the RTC.

ISSUE:

Whether or not the petitioner is subsidiarily liable to respondent abasolo?

Held:

No. To a banking institution, well-defined lending policies and sound lending

practices are essential to perform its lending function effectively and minimize the risk
inherent in any extension. However, in the absence of lender-borrower relationship
between petitioner and Abasolo, there is no inherent obligation of petitioner to release
the proceeds of the loan to her.
Banco de Oro vs. JAPRL Development Corporation

G.R. No. 179901, April 14, 2008

Under Sec. 40 of the General Banking Law, should such statements (financial) prove to
be false or incorrect in any material detail, the bank may terminate any loan or credit
accommodation granted on the basis of said statements and shall have the right to
demand immediate repayment or liquidation of the obligation.

FACTS:

Banco de Oro extended financial facilities to JAPRL Development

Corporation (JAPRL) amounting to P230,000,000 with co-respondents Rapid Forming
Corporation (RFC) and Jose Arollado acting as sureties. JAPRL defaulted in the
payment of four trust receipts.

Petitioner bank subsequently found out that JAPRL altered and falsified its
financial statements to project itself as a viable investment. Because the demand for
payment was unheeded, petitioner bank sued JAPRL and the sureties for payment of
the balance due on the trust receipts in RTC Makati.

Respondents then hastily filed a petition for rehabilitation and stay order in
Calamba of RTC which were granted. As a result, the complaint was dismissed with
respect to JAPRL and RFC. Arollado remained as defendant. Respondents filed a
petition for certiorari before the CA, contending that the trial court did not acquire
jurisdiction over them as the summons were served on a mere administrative assistant.
CA granted the petition and dismissed petitioner’s motion for reconsideration.

ISSUES:

1) Whether or not jurisdiction over the defendants was acquired; and

2) Whether or not JAPRL are liable to pay their obligations

HELD:

1) Whether or not jurisdiction over the defendants was acquired

When respondents moved for the suspension of proceedings of the civil case
before the Makati RTC, on the basis of the stay order of the Calamba RTC, they waived
whatever defect there was in the service of summons and were deemed to have
submitted themselves voluntarily to the jurisdiction of the Makati RTC.

2) Whether or not JAPRL are liable to pay their obligations.

Considering the amount of petitioner’s exposure in JAPRL, justice and fairness

dictate that the Makati RTC hear whether or not respondents indeed committed fraud
in securing the credit accomodation. In this event, petitioner can use the finding of
fraud to move for the dismissal of the rehabilitation case in the Calamba RTC.
Moreover, under Sec. 40 of the General Banking Law, should such statements
(financial) prove to be false or incorrect in any material detail, the bank may terminate
any loan or credit accommodation granted on the basis of said statements and shall
have the right to demand immediate repayment or liquidation of the obligation.
RESTITUTA IMPERIAL V. ALEX A. JAUCIAN

GR NO. 149004, April 14, 2004

FACTS:

Petitioner obtained six (6) separate loans amounting to P 320,000.00 from the
respondent. In the written agreement, they agreed upon the 16% interest per month
plus penalty charge of 5% per month and the 25% attorney’s fee, failure to pay the said
loans on the stipulated date.

Petitioner executed six (6) separate promissory notes and issued several checks
as guarantee for payment. When the said loans become overdue and unpaid,
especially when the petitioner’s checks issued were dishonored, respondent made
repeated oral and written demands for payment.

The petitioner was able to pay only P 116,540.00 as found by the RTC. Although
she alleged that she had already paid the amount of P 441,780.00 and the excess of P
121,780.00 is more than the interest that could be legally charged, the Court affirms the
findings of RTC that petitioner is still indebted to the respondent.

ISSUE:

Whether or not the stipulated interest of 16% per month, 5% per month for
penalty charge and 25% attorney’s fee are usurious.

HELD:

YES. The rate must be equitably reduced for being iniquitous, unconscionable
and exorbitant. While the Usury Law ceiling on interest rates was lifted by C.B. Circular
No. 905, nothing in the said circular grants lenders carte blanche authority to raise
interests rates to levels which will either enslave their borrowers or lead to a
hemorrhaging of their assets.

When the agreed rate is iniquitous or unconscionable, it considered contrary to

morals, if not against the law. Such stipulation is void. Since the stipulation is void, it is as
if there was no express contract thereon. Hence, courts may reduce the interest rate as
reason and equity demand.

The interest rate of 16% per month was reduced to 1.167% per month or 14% per
annum and the penalty charge of 5% per month was also reduced to 1.167% per
month or 14% per annum.

The attorney’s fees here are in the nature of liquidated damages and the
stipulation therefor is aptly called a penal clause. So long as the stipulation does not
contravene the law, morals, public order or public policy, it is binding upon the obligor.
Nevertheless, in the case at bar, petitioner’s failure to comply fully with her obligation
was not motivated by ill will or malice. The partial payments she made were
manifestations of her good faith. Hence the attorney’s fees were reduced to 10% of the
total due and payable.
GLORIA OCAMPO AND TERESITA TAN VS. LANDBANKOF THE PHILIPPINES
GR No. 164968, July 3, 2009

FACTS:

This is an instant petition for review on Certiorari assailing the decision of CA

(favoring Landbank).In 1991, Ocampo and her daughter, Tan obtained from the
Landbank a PhP10M quedan loan upon issuance of promissory notes (PNs) which was
released to them. Quedan Rural Credit Guarantee Corporation
(Quedancor)guaranteed to pay Landbank their loan but only up to 80% of the
outstanding loan plus interests at the time of maturity.Pursuant thereto, Ocampo and
Tan delivered to Landbank quedans and executed a Deed of Assignment covering
41,690cavans of palay (equivalent to PhP9.996M-100% of the loan) in favor of
Quedancor. Ocampo and Tan constituted a Real Estate Mortgage (REM) over 2
parcels of unregistered land owned by Ocampo tosecure the remaining 20%. Such
encumbrance was annotated in the land title when Ocampo filed for the lands’
registration.
When Ocampo failed to pay the 3 remaining PNs on Oct. 2, 1991, Lanbank filed
the following:
 Claim for guarantee payment with Quedancor;
 Criminal case of estafa against Ocampo for disposing stocks of
palay covered by the quedans;
 Extrajudicial foreclosure of REM (re: 20% of loan)

The Ex-Officio Provincial Sheriff issued a notice of ExtrajudicialSale (Public

Auction).RTC issued TRO on the public auction and favored Ocampoand Tan when
they filed a Complaint for Declaration of Nullityand Damages with Application of a Writ
of PreliminaryInjunction against Landbank and the Sheriff on the basis onforgery
regarding the REM on the 20% of the loan. Upon Landbank’s appeal, the CA granted its
petition andreversed the RTC’s decision.

ISSUES:
1. WON the Deed of Real Estate Mortgage was void?
2. Assuming it was valid, WON the loan was already extinguished?

HELD:

1. NO. The Deed of REM was valid. There is no forgery. Ocampo and Tan failed
to present any evidence to disprove the genuineness or authenticity of their
signatures. In fact, Ocampo admitted in her direct examination that such signature was
hers, although she claimed that she was made to sign a blank form (printed form with
blanks yet to be filled up). Moreover, the bank personnel who were also signatories to
the deed confirmed their appearances despite her testimony that she cannot say for
certain if she appeared before the notary public. It is well-settled that a document
acknowledged before a notary public is a public document that enjoys the
presumption of regularity. It is a prima facie evidence of the truth of the facts stated
therein and a conclusive presumption of its existence and due execution. The real issue
is fraud and not forgery. Ocampo claimed that she was led to believe by Landbank
that the form she signed was to process her PhP5M loan application and not to secure
the subject 20% of the loan. However, Ocampo was unable to establish clearly and
precisely how Landbank committed the alleged fraud. She failed to lay down the
deception through insidious words or machinations or misrepresentations made by
Landbank so that she signed the blank form. Granting for the sake of argument that
there was fraud, such contract was merely voidable where an action should have
been instituted within 4 years from discovery, i.e. when the REM was registered with the
Register of Deeds.
2. NO. The loan was not yet extinguished. Ocampo claimed that she already paid the
quedan loan when she executed the Deed of Assignment in favor of Quedancor. The
loan was between Ocampo and Landbank. Yet, she did not include Landbank as party
to the Deed of Assignment despite evidence on record showing her indebtedness to
Landbank (e.g. registration/annotation of REM).

Ocampo hastily executed the Deed of Assignment and conveyed some of her
properties to Quedancor without prior notice to Landbank. Dacion en pago is the
delivery and transmission of ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of an
obligation. As properly ruled by the CA, the required consent is absent in this case.
Landbank had no participation much less consented to the execution of the
Deed of Assignment. Hence, no extinguishment of loan can be had. Even if the Deed
of Assignment has the effect of valid payment, the extinguishment is only up to the
extent of 80% of the quedan loan. Thus, it leaves a balance of 20%which can be fully
satisfied by the foreclosure of the REM. Petition denied.
REPUBLIC OF THE PHILIPPINES, Petitioner, vs. SANDIGANBAYAN (FIRST DIVISION),
EDUARDO M. COJUANGCO, JR.,

G.R. No. 166859, April 12, 2011

FACTS:

For over two decades, the issue of whether the sequestered sizable block of
shares representing 20% of the outstanding capital stock of San Miguel Corporation
(SMC) at the time of acquisition belonged to their registered owners or to the coconut
farmers has remained unresolved.

On July 31, 1987, the Republic commenced Civil Case No. 0033 in the
Sandiganbayan by complaint, impleading as defendants respondent Eduardo M.
Cojuangco, Jr. and 59 individual defendants.

The Republic avers that defendant Eduardo Cojuangco, Jr. taking undue
advantage of his association, influence and connection, acting in unlawful concert
with Defendants Ferdinand E. Marcos and Imelda R. Marcos, and
other individuals closely associated with the Marcoses, embarked upon devices,
schemes and stratagems, including the use of various corporations as fronts, to unjustly
enrich themselves at the expense of Plaintiff and the Filipino people, such as when he –
misused coconut levy funds to buy out majority of the outstanding shares of stock of
San Miguel Corporation in order to control the largest agri-business, foods and
beverage company in the Philippines.

These so called front companies, which ACCRA Law Offices organized for
Defendant Cojuangco to be able to control more than 60% of SMC shares, were
funded by institutions which depended upon the coconut levy such as the UCPB,
UNICOM, United Coconut Planters Assurance Corp. (COCOLIFE), among others.
Cojuangco and his ACCRA lawyers used the funds from 6 large coconut oil mills and 10
copra trading companies to borrow money from the UCPB and purchase these holding
companies and the SMC stocks. Cojuangco used $150 million from the coconut levy.

Herein defendant specifically denies the allegations including any insinuation

that whatever association he may have had with the late Ferdinand Marcos or Imelda
Marcos has been in connection with any of the acts or transactions alleged in the
complaint or for any unlawful purpose.

During the pre-trial Sandiganbayan advised the plaintiff to present more factual
evidence to substantiate its allegations. The Republic nonetheless choosing not to
adduce evidence proving the factual allegations, particularly the matters specifically
asked by the Court, instead plaintiff opted to pursue its claims by Motion for Summary
Judgment.

On November 28, 2007, the Sandiganbayan dismissed the case for failure of
plaintiff to prove by preponderance of evidence its causes of action against
defendants.

ISSUES:

1) What are the "various sources" of funds, which the defendant Cojuangco and his
companies claim they utilized to acquire the disputed SMC shares?

2) Whether or not such funds acquired from alleged "various sources" can be
considered coconut levy funds;
3) Whether or not defendant Cojuangco had indeed served in the governing bodies of
PC, UCPB and/or CIIF Oil Mills at the time the funds used to purchase the SMC shares
were obtained such that he owed a fiduciary duty to render an account to these
entities as well as to the coconut farmers;

HELD:

The Supreme Court affirm the decision of November 28, 2007, because the
Republic did not discharge its burden as the plaintiff to establish by preponderance of
evidence that the respondents’ SMC shares were illegally acquired with coconut-levy
funds.

The Republic mainly relied on the statement made by Mr. Conjuangco on his
Pre-trial brief and hastily derived conclusions from the defendants’ statements in their
previous pleadings although such conclusions were not supported by categorical facts
but only mere inferences.

"According to Cojuangco’s own Pre-Trial Brief, these so-called ‘various sources’,

i.e., the sources from which he obtained the funds he claimed to have used in buying
the 20% SMC shares are not in fact ‘various’ as he claims them to be. He says he
obtained ‘loans’ from UCPB and ‘advances’ from the CIIF Oil Mills. He even goes as far
as to admit that his only evidence in this case would have been ‘records of UCPB’ and
a ‘representative of the CIIF Oil Mills’ obviously the ‘records of UCPB’ relate to the
‘loans’ that Cojuangco claims to have obtained from UCPB – of which he was President
and CEO – while the ‘representative of the CIIF Oil Mills’ will obviously testify on the
‘advances’ Cojuangco obtained from CIIF Oil Mills – of which he was also the President
and CEO."

From the foregoing premises, plaintiff went on to conclude that:

"These admissions of defendant Cojuangco are outright admissions that he (1)

took money from the bank entrusted by law with the administration of coconut levy
funds and (2) took more money from the very corporations/oil mills in which part of
those coconut levy funds (the CIIF) was placed – treating the funds of UCPB and the
CIIF as his own personal capital to buy ‘his’ SMC shares."

Plaintiff’s contention that the defendant’s statements in his Pre-Trial Brief

regarding the presentation of a possible CIIF witness as well as UCPB records, can
already be considered as admissions of the defendant’s exclusive use and misuse of
coconut levy funds to acquire the subject SMC shares and defendant Cojuangco’s
alleged taking advantage of his positions to acquire the subject SMC shares is
unacceptable.. Moreover, in ruling on a motion for summary judgment, the court
"should take that view of the evidence most favorable to the party against whom it is
directed, giving such party the benefit of all inferences." Inasmuch as this issue cannot
be resolved merely from an interpretation of the defendant’s statements in his brief, the
UCPB records must be produced and the CIIF witness must be heard to ensure that that
the conclusions that will be derived have factual basis and are thus, valid.

The Court is given a very clear impression that the plaintiff does not know what
documents will be or whether they are even available to prove the causes of action in
the complaint. The Court has pursued and has exerted every form of inquiry to see if
there is a way by which the plaintiff could explain in any significant particularity the acts
and the evidence which will support its claim of wrong-doing by the defendants. The
plaintiff has failed to do so.

1) What are the "various sources" of funds, which the defendant Cojuangco and his
companies claim they utilized to acquire the disputed SMC shares?
Mr. Cojuangco claimed that it came from various sources, a loan from UCPB and
advances from CIIF. How? He is not obliged to explain because the Republic failed to
present preponderance of evidence the burden of proof has not shifted on Mr.
Cojuangco.

2) Whether or not such funds acquired from alleged "various sources" can be
considered coconut levy funds?

No, since in a contract of loan the money borrowed becomes the property of the
debtor. Mr. Cojuangco’s liability at most will be the collection of sum of money. Besides
the Republic failed to present its evidence to prove this allegation.

3) Whether or not defendant Cojuangco had indeed served in the governing bodies
of PC, UCPB and/or CIIF Oil Mills at the time the funds used to purchase the SMC
shares were obtained such that he owed a fiduciary duty to render an account to
these entities as well as to the coconut farmers?

Although the trust relationship supposedly arose from Cojuangco’s being an

officer and member of the Board of Directors of the UCPB, the link between this alleged
fact and the borrowings or advances was not established. Nor was there evidence on
the loans or borrowings, their amounts, the approving authority, etc. As trial court, the
Sandiganbayan could not presume his breach of fiduciary duties without evidence
showing so, for fraud or breach of trust is never presumed, but must be alleged and
proved.
Zulueta vs. Asia Brewery

GR No. 138137, March 8, 2001

FACTS:

Respondent Asia Brewery, Inc., is engaged in the manufacture, the distribution

and sale of beer; while Petitioner Perla Zulueta is a dealer and an operator of an outlet
selling the former's beer products. A Dealership Agreement governed their contractual
relations. On March 30, 1992, petitioner filed before the Regional Trial Court (RTC) of
Iloilo, Branch 22, a Complaint against respondent for Breach of Contract, Specific
Performance and Damages. The Complaint, docketed as Civil Case No. 20341
(hereafter referred to as the "Iloilo case"), was grounded on the alleged violation of the
Dealership Agreement.

On July 7, 1994, during the pendency of the Iloilo case, respondent filed with the
Makati Regional Trial Court, Branch 66, a Complaint docketed as Civil Case No. 94-2110
(hereafter referred to as the "Makati case"). The Complaint was for the collection of a
sum of money in the amount of P463,107.75 representing the value of beer products,
which respondent had delivered to petitioner. In view of the pendency of the Iloilo
case, petitioner moved to dismiss the Makati case on the ground that it had split the
cause of action and violated the rule against the multiplicity of suits. The Motion was
denied by the Makati RTC through Judge Eriberto U. Rosario. Upon petitioner's Motion,
however, Judge Rosario inhibited himself. The case was raffled again and thereafter
assigned to Branch 142 of the Makati RTC, presided by Judge Jose Parentala Jr.

On January 3, 1997, petitioner moved for the consolidation of the Makati case
with the Iloilo case. Granting the Motion, Judge Parentala ordered on February 13,
1997, the consolidation of the two cases. Respondent filed a Motion for
Reconsideration, which was denied in an Order dated May 19, 1997. On August 18,
1997, respondent filed before the Court of Appeals a Petition for Certiorari assailing
Judge Parentala's February 13, 1997 and May 19, 1997 Orders.

ISSUES:

 Were the Orders of February 13, 1997 and May 19, 1997 of the Regional Trial
Court, Branch 142 in Makati City (ordering consolidation of Makati Civil Case No.
94-2110 with the Iloilo Civil Case No. 20341) already final and executory when
respondent filed its petition for certiorari with the Hon. Court of Appeals such that
said Court could no longer acquire jurisdiction over the case and should have
dismissed it outright (as it originally did) instead of due giving course to the
petition?; and
 Independent of the first issue, did the Makati RTC, Branch 142, correctly order the
consolidation of the Makati case (which was filed later) with the Iloilo Case
(which was filed earlier) for the reason that the obligation sought to be collected
in the Makati case is the same obligation that is also one of the subject matters
of the Iloilo case?

HELD:

The Petition was GRANTED and the assailed Decision REVERSED and SET
ASIDE. Petitioner avers that the Makati RTC's February 13, 1997 and May 19, 1997 Orders
consolidating the two cases could no longer be assailed. Allegedly, respondent's
Petition for Certiorari was filed with the CA beyond the reglementary sixty-day period
prescribed in the 1997 Revised Rules of Civil Procedure, which took effect on July 1,
1997. Hence, the CA should have dismissed it outright. The records show that
respondent received on May 23, 1997, the Order denying its Motion for
Reconsideration. It had, according to petitioner, only sixty days or until July 22, 1997,
within which to file the Petition for Certiorari. It did so, however, only on August 21, 1997.
On the other hand, respondent insists that its Petition was filed on time, because the
reglementary period before the effectivity of the 1997 Rules was ninety days. It theorizes
that the sixty-day period under the 1997 Rules does not apply. As a general rule, laws
have no retroactive effect. But there are certain recognized exceptions, such as when
they are remedial or procedural in nature. This Court explained this exception in the
following language:

"It is true that under the Civil Code of the Philippines, "(l)aws shall have no
retroactive effect, unless the contrary is provided.' But there are settled exceptions to
this general rule, such as when the statute is CURATIVE or REMEDIAL in nature or when it
CREATES NEW RIGHTS
GOLDENWAY MERCHANDISING CORPORATION vs. EQUITABLE PCI BANK,

G.R. NO. 195540 : March 13, 2013

FACTS:

Goldenway Merchandising Corporation (petitioner) executed a Real Estate

Mortgage in favor of Equitable PCI Bank (respondent) over its real properties situated in
Valenzuela, Bulacan (now Valenzuela City) to secure the Two Million Pesos
(P2,000,000.00) loan granted by respondent to petitioner. As petitioner failed to settle its
loan obligation, respondent extrajudicially foreclosed the mortgage on December 13,
2000. During the public auction, the mortgaged properties were sold for P3,500,000.00
to respondent. Accordingly, a Certificate of Sale was issued to respondent on January
26, 2001. On February 16, 2001, the Certificate of Sale was registered and inscribed on
TCT Nos. T-152630, T-151655 and T-214528.5chanroblesvirtualawlibrary In a letter dated
March 8, 2001, petitioner's counsel offered to redeem the foreclosed properties by
tendering a check in the amount of P3,500,000.00. However, petitioner was told that
such redemption is no longer possible because the certificate of sale had already been
registered, consolidated and named before the respondent. Petitioner ( Golden
Merchandising Corp.) filed a complaint for specific performance and damages before
the RTC-Venezuela City against the respondent asserting that it has been deprived to
exercise its right of redemption prior to the registration of the certificate of sale and it is
the one-year period of redemption under Act No. 3135 which should apply and not the
shorter redemption period provided in Republic Act (R.A.) No. 8791 In its Answer with
Counterclaim, respondent pointed out that petitioner cannot claim that it was unaware
of the redemption price which is clearly provided in Section 47 of R.A. No. 8791, and
that petitioner had all the opportune time to redeem the foreclosed properties from the
time it received the letter of demand and the notice of sale before the registration of
the certificate of sale. The trial court rendered its decision dismissing the complaint as
well as the counterclaim. Aggrieved, petitioner appealed to the CA which affirmed the
trial court's decision. According to the CA, petitioner failed to justify why Section 47 of
R.A. No. 8791 should be declared unconstitutional. Furthermore, the appellate court
concluded that a reading of Section 47 plainly reveals the intention to shorten the
period of redemption for juridical persons and that the foreclosure of the mortgaged
properties in this case when R.A. No. 8791 was already in effect clearly falls within the
purview of the said provision. Petitioner's motion for reconsideration was likewise denied
by the CA. Thus the present petition.

ISSUE:

Whether or not the right of redemption of a juridical person in an extrajudicial

foreclosure of mortgage is governed by R.A. 8791 otherwise known as "The General
Banking Law of 2000"

HELD:

In the present petition, it is contended that: 1.) Section 47 of R.A. No. 8791 is
inapplicable considering that the contracting parties expressly and categorically
agreed that the foreclosure of the real estate mortgage shall be in accordance with
Act No. 3135 2.) Petitioner then argues that applying Section 47 of R.A. No. 8791 to the
present case would be a substantial impairment of its vested right of redemption under
the real estate mortgage contract. 3.) Petitioner further argues that since R.A. No. 8791
does not provide for its retroactive application, courts therefore cannot retroactively
apply its provisions to contracts executed and consummated before its effectivity.
 RULING OF THE COURT: 1. The law governing cases of extrajudicial foreclosure of
mortgage is Act No. 3135, as amended by Act No. 4118. Section 6 thereof provides:
SEC. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors-in-interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one year from and after the date of
the sale; and such redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil
Procedure,15Â in so far as these are not inconsistent with the provisions of this Act. The
one-year period of redemption is counted from the date of the registration of the
certificate of sale. In this case, the parties provided in their real estate mortgage
contract that upon petitioner's default and the latter's entire loan obligation becoming
due, respondent may immediately foreclose the mortgage judicially in accordance
with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as
amended. However, Section 47 of R.A. No. 8791 otherwise known as "The General
Banking Law of 2000" which took effect on June 13, 2000, amended Act No. 3135. Said
provision reads:

“SECTION 47. Foreclosure of Real Estate Mortgage. XXX Notwithstanding Act

3135, juridical persons whose property is being sold pursuant to an extrajudicial
foreclosure, shall have the right to redeem the property in accordance with this
provision until, but not after, the registration of the certificate of foreclosure sale with the
applicable Register of Deeds which in no case shall be more than three (3) months
after foreclosure, whichever is earlier. “

Owners of property that has been sold in a foreclosure sale prior to the effectivity
of this Act shall retain their redemption rights until their expiration. (Emphasis supplied.)
Under the new law, an exception is thus made in the case of juridical persons which are
allowed to exercise the right of redemption only "until, but not after, the registration of
the certificate of foreclosure sale" and in no case more than three (3) months after
foreclosure, whichever comes first.

2. Petitioner's contention that Section 47 of R.A. 8791 violates the constitutional

proscription against impairment of the obligation of contract has no basis. Impairment is
anything that diminishes the efficacy of the contract. There is impairment if a
subsequent law changes the terms of a contract between the parties, imposes new
conditions, dispenses with those agreed upon or withdraws remedies for the
enforcement of the rights of the parties. Section 47 did not divest juridical persons of the
right to redeem their foreclosed properties but only modified the time for the exercise of
such right by reducing the one-year period originally provided in Act No. 3135. The new
redemption period commences from the date of foreclosure sale, and expires upon
registration of the certificate of sale or three months after foreclosure, whichever is
earlier. There is likewise no retroactive application of the new redemption period
because Section 47 exempts from its operation those properties foreclosed prior to its
effectivity and whose owners shall retain their redemption rights under Act No. 3135.
Petitioner's claim that Section 47 infringes the equal protection clause as it discriminates
mortgagors/property owners who are juridical persons is equally bereft of merit. We
agree with the CA that the legislature clearly intended to shorten the period of
redemption for juridical persons whose properties were foreclosed and sold in
accordance with the provisions of Act No. 3135.27chanroblesvirtualawlibrary The
difference in the treatment of juridical persons and natural persons was based on the
nature of the properties foreclosed whether these are used as residence, for which the
more liberal one-year redemption period is retained, or used for industrial or
commercial purposes, in which case a shorter term is deemed necessary to reduce the
period of uncertainty in the ownership of property and enable mortgagee-banks to
dispose sooner of these acquired assets. It must be underscored that the General
Banking Law of 2000, crafted in the aftermath of the 1997 Southeast Asian financial
crisis, sought to reform the General Banking Act of 1949 by fashioning a legal framework
for maintaining a safe and sound banking system.28Â In this context, the amendment
introduced by Section 47 embodied one of such safe and sound practices aimed at
ensuring the solvency and liquidity of our banks. It cannot therefore be disputed that
the said provision amending the redemption period in Act 3135 was based on a
reasonable classification and germane to the purpose of the law. Having ruled that the
assailed Section 47 of R.A. No. 8791 is constitutional, we find no reversible error
committed by the CA in holding that petitioner can no longer exercise the right of
redemption over its foreclosed properties after the certificate of sale in favor of
respondent had been registered.

WHEREFORE, the petition for review on certiorari is DENIED for lack of merit. The
Decision dated November 19, 2010 and Resolution dated January 31, 2011 of the Court
of Appeals in CA-G.R. CV No. 91120 are hereby AFFIRMED. With costs against the
petitioner.
BPI EMPLOYEES UNION-DAVAO CITY-FUBU (BPIEU-DAVAO CITY-FUBU),Petitioner,v. BANK
OF THE PHILIPPINE ISLANDS (BPI), and BPI OFFICERS CLARO M. REYES, CECIL CONANAN
and GEMMA VELEZ,Respondents.

G.R. No. 174912: July 24, 2013

FACTS:

BPI Operations Management Corporation (BOMC), which was created pursuant

to Central Bank Circular No. 1388, Series of 1993 (CBP Circular No. 1388, 1993), and
primarily engaged in providing and/or handling support services for banks and other
financial institutions, is a subsidiary of the Bank of Philippine Islands (BPI) operating and
functioning as an entirely separate and distinct entity.

A service agreement between BPI and BOMC was initially implemented in BPIs
Metro Manila branches. In this agreement, BOMC undertook to provide services such as
check clearing, delivery of bank statements, fund transfers, card production, operations
accounting and control, and cash servicing, conformably with BSP Circular No. 1388.
Not a single BPI employee was displaced and those performing the functions, which
were transferred to BOMC, were given other assignments.

The Manila chapter of BPI Employees Union (BPIEU-Metro ManilaFUBU) then filed
a complaint for unfair labor practice (ULP). The Labor Arbiter (LA) decided the case in
favor of the union. The decision was, however, reversed on appeal by the NLRC. BPIEU-
Metro Manila-FUBU filed a petition for certiorari before the CA which denied it, holding
that BPI transferred the employees in the affected departments in the pursuit of its
legitimate business.

The service agreement was likewise implemented in Davao City. Later, a merger
between BPI and Far East Bank and Trust Company (FEBTC) took effect on April 10, 2000
with BPI as the surviving corporation. Thereafter, BPIs cashiering function and FEBTCs
cashiering, distribution and bookkeeping functions were handled by BOMC.
Consequently, twelve (12) former FEBTC employees were transferred to BOMC to
complete the latters service complement.

BPI Davao’s rank and file collective bargaining agent, BPI Employees Union-
Davao City-FUBU (Union), objected to the transfer of the functions and the twelve (12)
personnel to BOMC contending that the functions rightfully belonged to the BPI
employees and that the Union was deprived of membership of former FEBTC personnel
who, by virtue of the merger, would have formed part of the bargaining unit
represented by the Union pursuant to its union shop provision in the CBA.

ISSUE:

Whether or not the act of BPI to outsource the cashiering, distribution and bookkeeping
functions to BOMC is in conformity with the law and the existing CBA.

HELD: Yes.

Labor Law- only gross violations of the economic provisions of the CBA are treated as
ULP. Otherwise, they are mere grievances.

In the present case, the alleged violation of the union shop agreement in the
CBA, even assuming it was malicious and flagrant, is not a violation of an economic
provision in the agreement. The provisions relied upon by the Union were those articles
referring to the recognition of the union as the sole and exclusive bargaining
representative of all rank-and-file employees, as well as the articles on union security,
specifically, the maintenance of membership in good standing as a condition for
continued employment and the union shop clause. It failed to take into consideration
its recognition of the banks exclusive rights and prerogatives, likewise provided in the
CBA, which included the hiring of employees, promotion, transfers, and dismissals for just
cause and the maintenance of order, discipline and efficiency in its operations.

The Union, however, insists that jobs being outsourced to BOMC were included in
the existing bargaining unit, thus, resulting in a reduction of a number of positions in
such unit. The reduction interfered with the employees right to self-organization
because the power of a union primarily depends on its strength in number.

It is incomprehensible how the "reduction of positions in the collective bargaining

unit" interferes with the employees right to self-organization because the employees
themselves were neither transferred nor dismissed from the service. In the case at hand,
the union has not presented even an iota of evidence that petitioner bank has started
to terminate certain employees, members of the union. In fact, what appears is that the
Bank has exerted utmost diligence, care and effort to see to it that no union member
has been terminated. In the process of the consolidation or merger of the two banks
which resulted in increased diversification of functions, some of these non-banking
functions were merely transferred to the BOMC without affecting the union
membership.

It is to be emphasized that contracting out of services is not illegal per se. It is an

exercise of business judgment or management prerogative. Absent proof that the
management acted in a malicious or arbitrary manner, the Court will not interfere with
the exercise of judgment by an employer. In this case, bad faith cannot be attributed
to BPI because its actions were authorized by CBP Circular No. 1388, Series of 1993
issued by the Monetary Board of the then Central Bank of the Philippines (now Bangko
Sentral ng Pilipinas).