REPUBLIC OF THE PHILIPPINES vs.

EUGENIO
G.R. No. 174629
February 14, 2008
TINGA, J.:
FACTS:

In connection with the series of investigations concerning the award of the NAIA 3 contracts to PIATCO
undertaken by the Ombudsman and the Compliance and Investigation Staff (CIS) of petitioner Anti-Money Laundering
Council (AMLC), Pantaleon Alvarez had been charged by the Ombudsman with violation of Section 3(j) of R.A. No. 3019.
The search revealed that Alvarez maintained eight (8) bank accounts with six (6) different banks.

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, presided by Judge
Sixto Marella, Jr.

On 4 July 2005, the Makati RTC rendered a bank inquiry order granting the AMLC the authority to inquire and
examine the subject bank accounts of Alvarez, Trinidad, Liongson and Cheng Yong, the RTC being satisfied that there
existed probable cause to believe that the deposits in various bank accounts, are related to the offense of violation of Anti-
Graft and Corrupt Practices Act now the subject of criminal prosecution before the Sandiganbayan.

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,
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" in relation to the criminal cases then pending before the Sandiganbayan.

In response to the letter of the Special Prosecutor, the AMLC promulgated a Resolution 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.

Following the AMLC Resolution, the Republic, through the AMLC, filed an application before the Manila RTC to
inquire into and/or examine thirteen (13) accounts and two (2) related web of accounts alleged as having been used to
facilitate corruption in the NAIA 3 Project.

Alvarez, through counsel, filed an Urgent Motion to Stay Enforcement of Order. Alvarez alleged that he
fortuitously learned of the bank inquiry order, which was issued following an ex parte application, and he argued that
nothing in R.A. No. 9160 authorized the AMLC to seek the authority to inquire into bank accounts ex parte. The Manila
RTC issued an Order staying the enforcement of its bank inquiry order and giving the Republic five (5) days to respond to
Alvarez’ motion.

The Republic filed an Omnibus Motion for Reconsideration which was granted by the Manila RTC denying
Alvarez’s motion to dismiss and reinstating in full force and effect the stayed order.

Acting on Alvarez’s latest motion, the Manila RTC issued an Order directing the AMLC to refrain from enforcing
the order until the expiration of the period to appeal, without any appeal having been filed. On the same day, Alvarez filed
a Notice of Appeal. The Republic filed an Urgent Omnibus Motion for Reconsideration urging that it be allowed to
immediately enforce the bank inquiry order against Alvarez and that Alvarezs notice of appeal be expunged from the
records since appeal from an order of inquiry is disallowed under the Anti money Laundering Act (AMLA).

Meanwhile, respondent Lilia Cheng filed with the Court of Appeals a Petition for Certiorari, Prohibition and
Mandamus with Application for TRO and/or Writ of Preliminary Injunction directed against the Republic of the Philippines
through the AMLC, Manila RTC Judge Eugenio, Jr. and Makati RTC Judge Marella, Jr. imputing grave abuse of discretion
on the part of the Makati and Manila RTCs in granting AMLCs ex parte applications for a bank inquiry order, arguing
among others that the ex parte applications violated her constitutional right to due process, that the bank inquiry order
under the AMLA can only be granted in connection with violations of the AMLA and that the AMLA cannot apply to bank
accounts opened and transactions entered into prior to the effectivity of the AMLA or to bank accounts located outside the
Philippines.

The Court of Appeals, acting on Lilia Chengs petition, issued a Temporary Restraining Order. On even date, the
Manila RTC issued an Order resolving to hold in abeyance the resolution of the urgent omnibus motion for reconsideration
then pending before it until the resolution of Lilia Cheng’s petition for certiorari with the Court of Appeals.

ISSUE:

Whether or not the bank inquiry orders issued are valid and enforceable

RULING:

Because of the Bank Secrecy Act, the confidentiality of bank deposits remains a basic state policy in the
Philippines. Subsequent laws, including the AMLA, may have added exceptions to the Bank Secrecy Act, yet the secrecy
of bank deposits still lies as the general rule. It falls within the zones of privacy recognized by our laws. The framers of
the 1987 Constitution likewise recognized that bank accounts are not covered by either the right to information or under
the requirement of full public disclosure. Unless the Bank Secrecy Act is repealed or amended, the legal order is obliged
to conserve the absolutely confidential nature of Philippine bank deposits.

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 office; 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.

While petitioner would premise that the inquiry into Lilia Chengs accounts finds root in Section 11 of the AMLA, it
cannot be denied that the authority to inquire under Section 11 is only exceptional in character, contrary as it is to the
general rule preserving the secrecy of bank deposits. Even though she may not have been the subject of the inquiry
orders, her bank accounts nevertheless were, and she thus has the standing to vindicate the right to secrecy that attaches
to said accounts and their owners. This statutory right to privacy will not prevent the courts from authorizing the inquiry
anyway upon the fulfillment of the requirements set forth under Section 11 of the AMLA or Section 2 of the Bank Secrecy
Act; at the same time, the owner of the accounts have the right to challenge whether the requirements were indeed
complied with.

Petition is dismissed.

NEW SAMPAGUITA BUILDERS CONSTRUCTION vs. PNB

G.R. No. 148753
July 30, 2004
PANGANIBAN, J.:

FACTS:

Sampaguita secured a loan with the PNB in an aggregate amount of P8.0M, under such terms agreed by the
Bank and the NSBCI, using or mortgaging the real estate properties registered in the name of its President and Chairman
of the Board Eduardo R. Dee as collateral; and 2) authorizing petitioner-spouses to secure the loan and to sign any and
all documents which may be required by PNB, and that petitioner-spouses shall act as sureties or co-obligors who shall
be jointly and severally liable with NSBCI for the payment of any and all obligations.

The loan was further secured by the joint and several signatures of Eduardo Dee and Arcelita Marquez Dee, who
signed as accommodation-mortgagors since all the collaterals were owned by them and registered in their names.

Sampaguita executed promissory notes due on different dates. The Promissory Notes specified the interest rate
to be charged: 19.5 percent in the first, and 21.5 percent in the second and again in the third. A uniform clause therein
permitted respondent 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.
 Later on, Sampaguita failed to comply with its obligations under the 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 later on. Again, they failed to pay so PNB extrajudicially foreclosed the mortgaged
properties. PNB being declared the highest bidder for the amount of P10,334,000.00. PNB claimed that Sampaguita owed
it 12M so they filed a case in court asking sampaguita to pay for deficiency.

PNB informed NSBCI that the proceeds of the sale conducted on February 26, 1992 were not sufficient to cover
its total claim amounting to P12,506,476.43, and thus demanded from the latter the deficiency of P2,172,476.43 plus
interest and other charges, until the amount was fully paid.

Sampaguita refused to pay the above deficiency claim which compelled PNB to institute the instant Complaint for
the collection of its deficiency claim.

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.

ISSUE:

Whether or not the loan account was bloated

RULING:

YES. Petitioner NSBCIs loan accounts with PNB appear to be bloated with some iniquitous imposition of
interests, penalties, other charges and attorneys fees.

The Court holds that petitioners accessory duty to pay interest did not give respondent 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.

In the three Promissory Notes, evidently, no complaint for collection was filed with the courts. Moreover,
respondent did not supply the interest rate to be charged on medium-term loans granted by automatic
conversion. Because of this deficiency, we shall use the legal rate of 12 percent per annum on loans and forbearance 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 receiving
a proposal to modify a loan contract, especially interest -- a vital 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.

In addition to the preceding discussion, it is then useless to labor the point that the increase in rates violates the
impairment clause of the 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.

WHEREFORE, this Petition is hereby PARTLY GRANTED. The Decision of the Court of Appeals
is AFFIRMED, with the MODIFICATION that PNB is ORDERED to refund the sum of P3,686,101.52 representing the
overcollection computed above, plus interest thereon at the legal rate of six percent (6%) per annum from the filing of the
Complaint until the finality of this Decision. After this Decision becomes final and executory, the applicable rate shall be
twelve percent (12%) per annum until its satisfaction. No costs.

PRUDENTIAL BANK and TUST COMPANY (now BPI) vs. ABASOLO

G.R. No. 186738
September 27, 2010
 CARPIO MORALES, J.:

FACTS:

After Leonor Valenzuela-Rosales passed away, her heirs executed a SPA in favor of Liwayway Abasolo
empowering her to sell two parcels of land (properties) situated in Laguna.

Corazon Marasigan wanted to buy the properties which were being sold for P2,448,960, but as she had no
available cash, she broached the idea of first mortgaging the properties to PBTC, the proceeds of which would be paid
directly to respondent. Respondent agreed to the proposal.

Norberto Mendiola, a PBTC employee, allegedly advised respondent to issue an authorization for Corazon to
mortgage the properties, and for Abasolo to act as one of the co-makers so that the proceeds could be released to both of
them. To guarantee the payment of the property, Corazon executed a Promissory Note for P2,448,960 in favor of
respondent.

Respondents claim that Mendiola advised her to transfer the properties first to Corazon for the immediate
processing of Corazons loan application with assurance that the proceeds thereof would be paid directly to her
(respondent), and the obligation would be reflected in a bank guarantee.

Heeding Mendiola’s advice, respondent executed a Deed of Absolute Sale over the properties in favor of Corazon
following which TCT Nos. 164159 and 164160 were issued in the name of Corazon.

In the absence of a written request for a bank guarantee, the PBTC released the proceeds of the loan to Corazon.
Respondent later got wind of the approval of Corazons loan application and the release of its proceeds to Corazon who,
despite repeated demands, failed to pay the purchase price of the properties.

Respondent eventually accepted from Corazon partial payment in kind consisting of one owner type jeepney and
four passenger jeepneys, plus installment payments, which, by the trial courts computation, totaled P665,000.

In view of Corazons failure to fully pay the purchase price, respondent filed a complaint for collection of sum of
money and annulment of sale and mortgage with damages, against Corazon and PBTC, before the RTC of Sta. Cruz,
Laguna.

In her Answer, Corazon denied that there was an agreement that the proceeds of the loan would be paid directly
to respondent. And she claimed that the vehicles represented full payment of the properties, and had in fact
overpaid P76,040.

Petitioner also denied that there was any arrangement between it and respondent that the proceeds of the loan
would be released to her. It claimed that it may process a loan application of the registered owner of the real property who
requests that proceeds of the loan or part thereof be payable directly to a third party [but] the applicant must submit a
letter request to the Bank.

On pre-trial, the parties stipulated that petitioner was not a party to the contract of sale between respondent and
Corazon; that there was no written request that the proceeds of the loan should be paid to respondent; and that
respondent received five vehicles as partial payment of the properties. Despite notice, Corazon failed to appear during the
trial to substantiate her claims.

Laguna RTC rendered judgment in favor of respondent and against Corazon who was made directly liable to
respondent, and against petitioner who was made subsidiarily liable in the event that Corazon fails to pay.

On appeal, the CA affirmed the RTC decision with modification on the amount of the balance of the purchase
price which was reduced from P1,783,960 to P1,753,960. Petitioners MR having been denied by the CA, thus, this petition
for review.

ISSUE:

Whether petitioner PBTC is subsidiarily liable

RULING:

NO. In the absence of a lender-borrower relationship between petitioner and Liwayway, there is no inherent
obligation of petitioner to release the proceeds of the loan to her.
 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 of credit.

In order to identify and monitor loans that a bank has extended, a system of documentation is necessary. Under
this fold falls the issuance by a bank of a guarantee which is essentially a promise to repay the liabilities of a debtor, in
this case Corazon. It would be contrary to established banking practice if Mendiola issued a bank guarantee, even if no
request to that effect was made.

Since it has not been established that petitioner had an obligation to Liwayway, there is no breach to speak
of. Liwayways claim should only be directed against Corazon.Petitioner cannot thus be held subisidiarily liable.

WHEREFORE, the Decision of January 14, 2008 of the Court of Appeals, in so far as it holds petitioner, Prudential Bank
and Trust Company (now Bank of the Philippine Islands), subsidiary liable in case its co-defendant Corazon Marasigan,
who did not appeal the trial courts decision, fails to pay the judgment debt, is REVERSED and SET ASIDE. The complaint
against petitioner is accordingly DISMISSED.

BANCO DE ORO-EPCI, INC. vs. JAPRL DEVELOPMENT CORPORATION, RAPID FORMING CORPORATION and
JOSE U. AROLLADO
G.R. No. 179901
April 14, 2008

FACTS:

Banco de Oro-EPCI, Inc. extended credit facilities to it amounting to P230,000,000 on March 28,
2003. Respondents Rapid Forming Corporation (RFC) and Jose U. Arollado acted as JAPRLs sureties.

JAPRL defaulted in the payment of four trust receipts soon after the approval of its loan. Petitioner later learned
from MRM Management, JAPRLs financial adviser, that JAPRL had altered and falsified its financial statements. It
allegedly bloated its sales revenues to post a big income from operations for the concerned fiscal years to project itself as
a viable investment.

The information alarmed petitioner. Citing relevant provisions of the Trust Receipt Agreement, it demanded
immediate payment of JAPRLs outstanding obligations amounting to P194,493,388.98.

JAPRL (and its subsidiary, RFC) filed a petition for rehabilitation in the Regional Trial Court (RTC) of Quezon City.
However, the proposed rehabilitation plan for JAPRL and RFC was eventually rejected by the Quezon City RTC

Because JAPRL ignored its demand for payment, petitioner filed a complaint for sum of money with an application
for the issuance of a writ of preliminary attachment against respondents in the RTC of Makati City. Petitioner essentially
asserted that JAPRL was guilty of fraud because it altered and falsified its financial statements.

Makati RTC denied the application (for the issuance of a writ of preliminary attachment) for lack of merit as
petitioner was unable to substantiate its allegations. Nevertheless, it ordered the service of summons on respondents.

Respondents moved to dismiss the complaint due to an allegedly invalid service of summons. Makati RTC denied
the motion for lack of merit. Respondents moved for reconsideration but withdrew it before the Makati RTC could resolve
the matter.

JAPRL (and its subsidiary, RFC) filed a petition for rehabilitation in the RTC of Calamba, Laguna. Finding JAPRLs
petition sufficient in form and in substance, the Calamba RTC issued a stay order. Respondents hastily moved to suspend
the proceedings in Civil Case No. 03-991 pending in the Makati RTC. Makati RTC granted the motion with regard to
JAPRL and RFC but ordered Arollado to file an answer. Respondents moved for reconsideration but it was denied.

Respondents filed a petition for certiorari in the CA. CA granted the petition.

Petitioner moved for reconsideration but it was denied. Hence, this petition.

ISSUE:

Whether or not petitioner may demand immediate payment from the respondent
RULING:

YES. Section 40 of the General Banking Law states:

Section 40. Requirement for Grant of Loans or Other Credit Accommodations. Before granting a loan
or other credit accommodation, a bank must ascertain that the debtor is capable of fulfilling his
commitments to the bank.

Towards this end, a bank may demand from its credit applicants a statement of their assets and
liabilities and of their income and expenditures and such information as may be prescribed by law or
by rules and regulations of the Monetary Board to enable the bank to properly evaluate the credit
application which includes the corresponding financial statements submitted for taxation purposes to
the Bureau of Internal Revenue. Should such statements 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.

In formulating the rules and regulations under this Section, the Monetary Board shall recognize the
peculiar characteristics of microfinancing, such as cash flow-based lending to the basic sectors that
are not covered by traditional collateral.

Under this provision, banks have the right to annul any credit accommodation or loan, and demand the immediate
payment thereof, from borrowers proven to be guilty of fraud. Petitioner would then be entitled to the immediate payment
of P194,493,388.98 and other appropriate damages.

PETITION IS GRANTED.

PREMIERE DEVELOPMENT BANK vs. COURT OF APPEALS, PANACOR MARKETING CORPORATION And
ARIZONA TRANSPORT CORPORATION
G.R. No. 159352
April 14, 2004
YNARES-SANTIAGO, J.:

FACTS:

Panacor Marketing Corporation, a newly formed corporation, acquired an exclusive distributorship of products
manufactured by Colgate Palmolive Philippines, Inc. To meet the capital requirements of the exclusive distributorship,
which required an initial inventory level of P7.5 million, Panacor applied for a loan of P4.1 million with Premiere
Development Bank.

Premiere Bank rejected the loan application and suggested that its affiliate company, Arizona Transport
Corporation (Arizona for short), should instead apply for the loan on condition that the proceeds thereof shall be made
available to Panacor.

Eventually, Panacor was granted a P4.1 million credit line. As suggested, Arizona, which was an existing loan
client, applied for and was granted a loan of P6.1 million, P3.4 million of which would be used to pay-off its existing loan
accounts and the remaining P2.7 million as credit line of Panacor. As security for the P6.1 million loan, Arizona,
represented by its Chief Executive Officer Pedro Panaligan and spouses Pedro and Marietta Panaligan in their personal
capacities, executed a Real Estate Mortgage.

Since the P2.7 million released by Premiere Bank fell short of the P4.1 million credit line which was previously
approved, Panacor negotiated for a take-out loan with Iba Finance Corporation (hereinafter referred to as Iba-Finance) in
the sum of P10 million, P7.5 million of which will be released outright in order to take-out the loan from Premiere Bank and
the balance of P2.5 million (to complete the needed capital of P4.1 million with Colgate) to be released after the
cancellation by Premiere of the collateral mortgage on the property covered by TCT No. T-3475. Pursuant to the said
take-out agreement, Iba-Finance was authorized to pay Premiere Bank the prior existing loan obligations of Arizona in an
amount not to exceed P6 million.

On October 5, 1995, Iba-Finance sent a letter to Ms. Arlene R. Martillano, officer-in-charge of Premiere Banks
San Juan Branch, informing her of the approved loan in favor of Panacor and Arizona, and requesting for the release of
TCT No. T-3475. Martillano, after reading the letter, affixed her signature of conformity thereto and sent the original copy
to Premiere Banks legal office.

Premiere Bank sent a letter-reply to Iba-Finance, informing the latter of its refusal to turn over the requested
documents on the ground that Arizona had existing unpaid loan obligations and that it was the banks policy to require full
payment of all outstanding loan obligations prior to the release of mortgage documents.

Panacor and Arizona executed in favor of Iba-Finance a promissory note in the amount of 7.5 million. Thereafter,
Iba-Finance paid to Premiere Bank the amount of P6,235,754.79 representing the full outstanding loan account
of Arizona. Despite such payment, Premiere Bank still refused to release the requested mortgage documents specifically,
the owners duplicate copy of TCT No. T-3475.

ISSUE:

Whether or not the decision of the CA exceeded and went beyond the facts, the issues and evidence presented in the
appeal taking into consideration the argument of petitioner bank and advent of the duly approved compromise agreement
between petitioner bank and Iba-Finance

RULING:

NO. Premiere Bank argues that considering the compromise agreement it entered with Iba-Finance, the Court of
Appeals should have ruled only on the issue of its alleged bad faith in downgrading Panacors credit line. It further
contends that the Court of Appeals should have refrained from making any adverse pronouncement on the refusal of
Premiere Bank to recognize the take-out and its subsequent failure to release the cancellation of the mortgage because
they were rendered fait accompli by the compromise agreement.
Undeniably, the not-so-forthright conduct of Premiere Bank in its dealings with respondent corporations caused
damage to Panacor and Iba-Finance. It is error for Premiere Bank to assume that the compromise agreement it entered
with Iba-Finance extinguished all direct and collateral incidents to the aborted take-out such that it also cancelled its
obligations to Panacor. The unjustified refusal by Premiere Bank to release the mortgage document prompted Iba-
Finance to withhold the release of the P2.5 million earmarked for Panacor which eventually terminated the distributorship
agreement. Both Iba-Finance and Panacor, which are two separate and distinct juridical entities, suffered damages due to
the fault of Premiere Bank. Hence, it should be held liable to each of them.
While the compromise agreement may have resulted in the satisfaction of Iba-Finances legal claims, Premiere
Banks liability to Panacor remains. We agree with the Court of Appeals that the present appeal is only with respect to the
liability of appellant Premiere Bank to the plaintiffs-appellees (Panacor and Arizona) taking into account the compromise
agreement.
For the foregoing reasons, we find that the Court of Appeals did not err in discussing in the assailed decision the
abortive take-out and the refusal by Premiere Bank to release the cancellation of the mortgage document.

WHEREFORE, the petition is DENIED. The Decision dated June 18, 2003 of the Court of Appeals in CA-G.R. CV No.
60750, ordering Premiere Bank to pay Panacor Marketing Corporation P500,000.00 as exemplary damages, P100,000.00
as attorneys fees, and costs, is AFFIRMED, with the MODIFICATION that the award of P4,520,000.00 as actual damages
is DELETED for lack of factual basis. In lieu thereof, Premiere Bank is ordered to pay Panacor P200,000.00 as temperate
damages.

RESTITUTA M. IMPERIAL, petitioner, vs. ALEX A. JAUCIAN, respondent.

G.R. No. 149004
April 14, 2004
PANGANIBAN, J.:

FACTS:

Panacor Marketing Corporation, a newly formed corporation, acquired an exclusive distributorship of products
manufactured by Colgate Palmolive Philippines, Inc. To meet the capital requirements of the exclusive distributorship,
which required an initial inventory level of P7.5 million, Panacor applied for a loan of P4.1 million with Premiere
Development Bank.

Premiere Bank rejected the loan application and suggested that its affiliate company, Arizona Transport
Corporation (Arizona for short), should instead apply for the loan on condition that the proceeds thereof shall be made
available to Panacor.
 Eventually, Panacor was granted a P4.1 million credit line. As suggested, Arizona, which was an existing loan
client, applied for and was granted a loan of P6.1 million, P3.4 million of which would be used to pay-off its existing loan
accounts and the remaining P2.7 million as credit line of Panacor. As security for the P6.1 million loan, Arizona,
represented by its Chief Executive Officer Pedro Panaligan and spouses Pedro and Marietta Panaligan in their personal
capacities, executed a Real Estate Mortgage.

Since the P2.7 million released by Premiere Bank fell short of the P4.1 million credit line which was previously
approved, Panacor negotiated for a take-out loan with Iba Finance Corporation (hereinafter referred to as Iba-Finance) in
the sum of P10 million, P7.5 million of which will be released outright in order to take-out the loan from Premiere Bank and
the balance of P2.5 million (to complete the needed capital of P4.1 million with Colgate) to be released after the
cancellation by Premiere of the collateral mortgage on the property covered by TCT No. T-3475. Pursuant to the said
take-out agreement, Iba-Finance was authorized to pay Premiere Bank the prior existing loan obligations of Arizona in an
amount not to exceed P6 million.

On October 5, 1995, Iba-Finance sent a letter to Ms. Arlene R. Martillano, officer-in-charge of Premiere Banks
San Juan Branch, informing her of the approved loan in favor of Panacor and Arizona, and requesting for the release of
TCT No. T-3475. Martillano, after reading the letter, affixed her signature of conformity thereto and sent the original copy
to Premiere Banks legal office.

Premiere Bank sent a letter-reply to Iba-Finance, informing the latter of its refusal to turn over the requested
documents on the ground that Arizona had existing unpaid loan obligations and that it was the banks policy to require full
payment of all outstanding loan obligations prior to the release of mortgage documents.

Panacor and Arizona executed in favor of Iba-Finance a promissory note in the amount of 7.5 million. Thereafter,
Iba-Finance paid to Premiere Bank the amount of P6,235,754.79 representing the full outstanding loan account
of Arizona. Despite such payment, Premiere Bank still refused to release the requested mortgage documents specifically,
the owners duplicate copy of TCT No. T-3475.

ISSUE:

Whether or not the decision of the CA exceeded and went beyond the facts, the issues and evidence presented in the
appeal taking into consideration the argument of petitioner bank and advent of the duly approved compromise agreement
between petitioner bank and Iba-Finance

RULING:

NO. Premiere Bank argues that considering the compromise agreement it entered with Iba-Finance, the Court of
Appeals should have ruled only on the issue of its alleged bad faith in downgrading Panacors credit line. It further
contends that the Court of Appeals should have refrained from making any adverse pronouncement on the refusal of
Premiere Bank to recognize the take-out and its subsequent failure to release the cancellation of the mortgage because
they were rendered fait accompli by the compromise agreement.
Undeniably, the not-so-forthright conduct of Premiere Bank in its dealings with respondent corporations caused
damage to Panacor and Iba-Finance. It is error for Premiere Bank to assume that the compromise agreement it entered
with Iba-Finance extinguished all direct and collateral incidents to the aborted take-out such that it also cancelled its
obligations to Panacor. The unjustified refusal by Premiere Bank to release the mortgage document prompted Iba-
Finance to withhold the release of the P2.5 million earmarked for Panacor which eventually terminated the distributorship
agreement. Both Iba-Finance and Panacor, which are two separate and distinct juridical entities, suffered damages due to
the fault of Premiere Bank. Hence, it should be held liable to each of them.
While the compromise agreement may have resulted in the satisfaction of Iba-Finances legal claims, Premiere
Banks liability to Panacor remains. We agree with the Court of Appeals that the present appeal is only with respect to the
liability of appellant Premiere Bank to the plaintiffs-appellees (Panacor and Arizona) taking into account the compromise
agreement.
For the foregoing reasons, we find that the Court of Appeals did not err in discussing in the assailed decision the
abortive take-out and the refusal by Premiere Bank to release the cancellation of the mortgage document.

WHEREFORE, the petition is DENIED. The Decision dated June 18, 2003 of the Court of Appeals in CA-G.R. CV No.
60750, ordering Premiere Bank to pay Panacor Marketing Corporation P500,000.00 as exemplary damages, P100,000.00
as attorneys fees, and costs, is AFFIRMED, with the MODIFICATION that the award of P4,520,000.00 as actual damages
is DELETED for lack of factual basis. In lieu thereof, Premiere Bank is ordered to pay Panacor P200,000.00 as temperate
damages.

GLORIA OCAMPO and TERESITA TAN vs. LAND BANK OF THE PHILIPPINES, et al
 G.R. No. 149004
April 14, 2004
PANGANIBAN, J.:

FACTS:

On October 26, 1989, Alex A. Jaucian filed a case for collection of money against Restituta Imperial. The
complaint alleges, inter alia, that defendant obtained from plaintiff six (6) separate loans for which the former executed in
favor of the latter six (6) separate promissory notes and issued several checks as guarantee for payment. When the said
loans became overdue and unpaid, especially when the defendants checks were dishonored, plaintiff made repeated oral
and written demands for payment.

The loans were covered by six (6) separate promissory notes executed by defendant. The face value of each
promissory notes is bigger than the amount released to defendant because said face value already included the interest
from date of note to date of maturity. Said promissory notes indicate the interest of 16% per month, date of issue, due
date, the corresponding guarantee checks issued by defendant, penalties and attorneys fees.
The arrangement between plaintiff and defendant regarding these guarantee checks was that each time a check
matures the defendant would exchange it with cash.

Although, admittedly, defendant made several payments, the same were not enough and she always defaulted
whenever her loans matured. As of August 16, 1991, the total unpaid amount, including accrued interest, penalties and
attorneys fees, was P2,807,784.20.

Defendant claims that she was extended loans by the plaintiff on several occasions, i.e., from November 13, 1987
to January 13, 1988, in the total sum of P320,000.00 at the rate of sixteen percent (16%) per month. The notes matured
every four (4) months with unearned interest compounding every four (4) months if the loan was not fully paid.

The loan on November 13, 1987 and January 6, 1988 had been fully paid including the usurious interests of 16%
per month, this is the reason why these were not included in the complaint.

Defendant contends that from all perspectives the above excess payment of P121,780.00 is more than the interest
that could be legally charged, and in fact as of January 25, 1989, the total releases have been fully paid.

On appeal, the CA held that without judicial inquiry, it was improper for the RTC to rule on the constitutionality of
Section 1, Central Bank Circular No. 905, Series of 1982. Nonetheless, the appellate court affirmed the judgment of the
trial court, holding that the latters clear and detailed computation of petitioners outstanding obligation to respondent was
convincing and satisfactory.
Hence, this petition.
ISSUE:

Whether or not the charging of interest of twenty-eight (28%) per centum per annum without any writing is illegal

RULING:
YES. The trial court, as affirmed by the CA, reduced the interest rate from 16 percent to 1.167 percent per month
or 14 percent per annum; and the stipulated penalty charge, from 5 percent to 1.167 percent per month or 14 percent per
annum.
Petitioner alleges that absent any written stipulation between the parties, the lower courts should have imposed
the rate of 12 percent per annum only.
The records show that there was a written agreement between the parties for the payment of interest on the
subject loans at the rate of 16 percent per month. As decreed by the lower courts, this 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 interest rates to levels which will either
enslave their borrowers or lead to a hemorrhaging of their assets
In Medel v. CA, the Court found the stipulated interest rate of 5.5 percent per month, or 66 percent per annum,
unconscionable. In the present case, the rate is even more iniquitous and unconscionable, as it amounts to 192 percent
per annum. When the agreed rate is iniquitous or unconscionable, it is considered contrary to morals, if not against the
law. Such stipulation is void.
 Since the stipulation on the interest rate is void, it is as if there were no express contract thereon. Hence, courts
may reduce the interest rate as reason and equity demand. We find no justification to reverse or modify the rate imposed
by the two lower courts.
WHEREFORE, the Petition is DENIED.

REPUBLIC OF THE PHILIPPINES vs. SANDIGANBAYAN, et al.

G.R. No. 166859
April 12, 2011
BERSAMIN, J.:

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. Through this decision, the Court aims to finally resolve the issue and
terminate the uncertainty that has plagued that sizable block of shares since then.

The Republic commenced Civil Case No. 0033 in the Sandiganbayan by complaint, impleading as defendants
respondent Eduardo M. Cojuangco, Jr. (Cojuangco) and 59 individual defendants. Several amendments followed.

Allegedly, Cojuangco purchased a block of 33,000,000 shares of SMC stock through the 14 holding companies
owned by the CIIF Oil Mills. For this reason, the block of 33,133,266 shares of SMC stock shall be referred to as the CIIF
block of shares.

The Republic averred that Cojuancgco, the undisputed coconut king, took undue advantage of his association,
influence and connection, acting in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos, and the
individual defendants, embarked upon devices, schemes and stratagems, including the use of defendant 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; that Defendants Eduardo Cojuangco, Jr., Edgardo J.
Angara, Jose C. Concepcion, Teodoro Regala, Avelino Cruz, Rogelio Vinluan, Eduardo U. Escueta and Paraja G.
Hayudini of the Angara Concepcion Cruz Regala and Abello law offices (ACCRA) plotted, devised, schemed, conspired
and confederated with each other in setting up, through the use of coconut levy funds, the financial and corporate
framework and structures that led to the establishment of UCPB, UNICOM, COCOLIFE, COCOMARK. CIC, and more
than twenty other coconut levy-funded corporations, including the acquisition of San Miguel Corporation shares and its
institutionalization through presidential directives of the coconut monopoly.

ISSUE:

Whether or not Cojuangco breached his fiduciary duties as a public officer in using the coconut levy funds to acquire SMC
shares

RULING:

NO. The conditions for the application of Articles 1455 and 1456 of the Civil Code (like the trustee using trust
funds to purchase, or a person acquiring property through mistake or fraud), and Section 31 of the Corporation Code (like
a director or trustee willfully and knowingly voting for or assenting to patently unlawful acts of the corporation, among
others) require factual foundations to be first laid out in appropriate judicial proceedings. Hence, concluding that
Cojuangco breached fiduciary duties as an officer and member of the Board of Directors of the UCPB without competent
evidence thereon would be unwarranted and unreasonable.

Thus, the Sandiganbayan could not fairly find that Cojuangco had committed breach of any fiduciary duties as an
officer and member of the Board of Directors of the UCPB. For one, the Amended Complaint contained no clear factual
allegation on which to predicate the application of Articles 1455 and 1456 of the Civil Code, and Section 31 of
the Corporation Code. Although the trust relationship supposedly arose from Cojuangcos being an officer and member of
the Board of Directors of the UCPB, the linkbetween 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.
 WHEREFORE, the Court dismisses the petitions for certiorari in G.R. Nos. 166859 and 169023; denies the
petition for review on certiorari in G.R. No. 180702; and, accordingly, affirms the decision promulgated by the
Sandiganbayan on November 28, 2007 in Civil Case No. 0033-F.

The Court declares that the block of shares in San Miguel Corporation in the names of respondents Cojuangco, et
al. subject of Civil Case No. 0033-F is the exclusive property of Cojuangco, et al. as registered owners.

JOSE C. GO vs. BANGKO SENTRAL NG PILIPINAS

G.R. No. 178429
October 23, 2009
BRION, J.:

FACTS:

On August 20, 1999, an Information for violation of Section 83 of Republic Act No. 337 (RA 337) or the General
Banking Act, as amended by Presidential Decree No. 1795, was filed against Jose C. Go before the RTC. It alleges that
Go, being then the Director and the President and Chief Executive Officer of the Orient Commercial Banking Corporation
(Orient Bank), a commercial banking institution created, organized and existing under Philippines laws, with its main
branch located at C.M. Recto Avenue, this City, and taking advantage of his position as such officer/director of the said
bank, did then and there wilfully, unlawfully and knowingly borrow, either directly or indirectly, for himself or as the
representative of his other related companies, the deposits or funds of the said banking institution and/or become a
guarantor, indorser or obligor for loans from the said bank to others, by then and there using said borrowed deposits/funds
of the said bank in facilitating and granting and/or caused the facilitating and granting of credit lines/loans and, among
others, to the New Zealand Accounts loans in the total amount of TWO BILLION AND SEVEN HUNDRED FIFTY-FOUR
MILLION NINE HUNDRED FIVE THOUSAND AND EIGHT HUNDRED FIFTY-SEVEN AND 0/100 PESOS, Philippine
Currency, said accused knowing fully well that the same has been done by him without the written approval of the majority
of the Board of Directors of said Orient Bank and which approval the said accused deliberately failed to obtain and enter
the same upon the records of said banking institution and to transmit a copy of which to the supervising department of the
said bank, as required by the General Banking Act.

Go pleaded not guilty to the offense charged. Before the trial could commence, however, Go filed a motion to
quash the Information claiming that the Information was defective, as the facts charged therein do not constitute an
offense under Section 83 of RA 337.

Go averred that based on the facts alleged in the Information, he was being prosecuted for borrowing the deposits
or funds of the Orient Bank and/or acting as a guarantor, indorser or obligor for the banks loans to other persons. The use
of the word and/or meant that he was charged for being either a borrower or a guarantor, or for being both a borrower and
guarantor. Go claimed that the charge was not only vague, but also did not constitute an offense. He posited that Section
83 of RA 337 penalized only directors and officers of banking institutions who acted either as borrower or as guarantor,
but not as both.

RTC granted Go’s motion to quash the Information. The prosecution did not accept the RTC ruling and filed a
petition for certiorari to question it before the CA.

The CA annulled and set aside the RTCs orders and ordered the reinstatement of the criminal charge against
Go. After the CAs denial of his motion for reconsideration, Go filed the present appeal by certiorari.

ISSUE:

Whether or not the Information failed to allege the acts or omissions complained of with sufficient particularity to enable
him to know the offense being charged; to allow him to properly prepare his defense; and likewise to allow the court to
render proper judgment

RULING:

The Court does not find the petition meritorious and accordingly denies it.

The facts and circumstances necessary to be included in the Information are determined by reference to the
definition and elements of the specific crimes. The Information must allege clearly and accurately the elements of the
crime charged.

Under Section 83, RA 337, the following elements must be present to constitute a violation of its first paragraph:
 1. the offender is a director or officer of any banking institution;
2. the offender, either directly or indirectly, for himself or as representative or agent of another, performs any of
the following acts:
a. he borrows any of the deposits or funds of such bank; or
b. he becomes a guarantor, indorser, or surety for loans from such bank to others, or
c. he becomes in any manner an obligor for money borrowed from bank or loaned by it;
3. the offender has performed any of such acts without the written approval of the majority of the directors of
the bank, excluding the offender, as the director concerned.

A simple reading of the above elements easily rejects Go’s contention that the law penalizes a bank director or
officer only either for borrowing the banks deposits or funds or for guarantying loans by the bank, but not for acting in both
capacities. The essence of the crime is becoming an obligor of the bank without securing the necessary written approval
of the majority of the banks directors.

WHEREFORE, we DENY the petitioners petition for review on certiorari and AFFIRM the decision of the Court of
Appeals in CA-G.R. SP No. 79149, promulgated on October 26, 2006, as well as its resolution of June 4, 2007. The
Regional Trial Court, Branch 26, Manila is directed to PROCEED with the hearing of Criminal Case No. 99-178551. Costs
against the petitioner.

PERLA S. ZULUETA, petitioner, vs. ASIA BREWERY, Inc., respondent.

G.R. No. 138137
March 8, 2001
PANGANIBAN, J.:

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 formers beer products. A Dealership Agreement
governed their contractual relations.

On March 30, 1992, petitioner filed before the RTC of Iloilo, a Complaint against respondent for Breach of
Contract, Specific Performance and Damages. The Complaint, docketed as Civil Case No. 20341 (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 RTC, a Complaint
docketed as Civil Case No. 94-2110 (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.

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
Parentalas February 13, 1997 and May 19, 1997 Orders.

ISSUE:

Whether or not the consolidation of the Iloilo and Makati case is correctly ordered

RULING:

YES. The SC disagrees with the CA ruling that there was no common issue in law or in fact between the Makati
case and the Iloilo case. The former involved petitioners indebtedness to respondent for unpaid beer products, while the
latter pertained to an alleged breach of the Dealership Agreement between the parties.

The issues in both civil cases pertain to the respective obligations of the same parties under the Dealership
Agreement. Thus, every transaction as well as liability arising from it must be resolved in the judicial forum where it is put
in issue. The consolidation of the two cases then becomes imperative to a complete, comprehensive and consistent
determination of all these related issues.

Two cases involving the same parties and affecting closely related subject matters must be ordered consolidated
and jointly tried in court, where the earlier case was filed. The consolidation of cases is proper when they involve the
resolution of common questions of law or facts.

Indeed, upon the consolidation of the cases, the interests of both parties in the two civil cases will best be served
and the issues involved therein expeditiously settled. After all, there is no question on the propriety of the venue in the
Iloilo case.

WHEREFORE, the Petition is hereby GRANTED and the assailed Decision REVERSED and SET ASIDE. The
Orders of the Makati RTC (Br. 142) dated February 13, 1997 and May 19, 1997 are hereby REINSTATED. No costs.

METRO CONCAST STEEL CORPORATION, et al. vs. ALLIED BANK CORPORATION

G.R. No. 177921
December 4, 2013
PERLAS-BERNABE, J.:

FACTS:

On various dates and for different amounts, Metro Concast, a corporation duly organized and existing under and
by virtue of Philippine laws and engaged in the business of manufacturing steel, through its officers, herein individual
petitioners, obtained several loans from Allied Bank. These loan transactions were covered by a promissory note and
separate letters of credit/trust receipts.

Petitioners failed to settle their obligations under the aforementioned promissory note and trust receipts, hence,
Allied Bank, through counsel, sent them demand letters but to no avail. Thus, Allied Bank was prompted to file a complaint
for collection of sum of money against petitioners before the RTC. Petitioners admitted their indebtedness to Allied Bank
but denied liability for the interests and penalties charged, claiming to have paid the total sum of ₱65,073,055.73 by way
of interest charges for the period covering 1992 to 1997.

They also alleged that the economic reverses suffered by the Philippine economy in 1998 as well as the
devaluation of the peso against the US dollar contributed greatly to the downfall of the steel industry, directly affecting the
business of Metro Concast and eventually leading to its cessation. Hence, in order to settle their debts with Allied Bank,
petitioners offered the sale of Metro Concast’s remaining assets, consisting of machineries and equipment, to Allied Bank,
which the latter, however, refused. Instead, Allied Bank advised them to sell the equipment and apply the proceeds of the
sale to their outstanding obligations. Accordingly, petitioners offered the equipment for sale, but since there were no
takers, the equipment was reduced into ferro scrap or scrap metal over the years. In 2002, Peakstar Oil Corporation,
represented by one Crisanta Camiling, expressed interest in buying the scrap metal. During the negotiations with
Peakstar, petitioners claimed that Atty. Peter Saw, a member of Allied Bank’s legal department, acted as the latter’s
agent. Eventually, with the alleged conformity of Allied Bank, through Atty. Saw, a Memorandum of Agreement dated
November 8, 2002 (MoA) was drawn between Metro Concast, represented by petitioner Jose Dychiao, and Peakstar,
through Camiling, under which Peakstar obligated itself to purchase the scrap metal for a total consideration of
₱34,000,000.00.

Unfortunately, Peakstar reneged on all its obligations under the MoA. In this regard, petitioners asseverated that
their failure to pay their outstanding loan obligations to Allied Bank must be considered as force majeure.

ISSUE:

Whether or not the loan obligations incurred by the petitioners under the subject promissory note and various trust
receipts have already been extinguished

RULING:

Article 1231 of the Civil Code states that obligations are extinguished either by payment or performance, the loss
of the thing due, the condonation or remission of the debt, the confusion or merger of the rights of creditor and debtor,
compensation or novation.
 Fortuitous events by definition are extraordinary events not foreseeable or avoidable.1âwphi1 It is therefore, not
enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one
impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same. To
constitute a fortuitous event, the following elements must concur: (a) the cause of the unforeseen and unexpected
occurrence or of the failure of the debtor to comply with obligations must be independent of human will; (b) it must be
impossible to foresee the event that constitutes the caso fortuito or, if it can be foreseen, it must be impossible to avoid;
(c) the occurrence must be such as to render it impossible for the debtor to fulfill obligations in a normal manner; and (d)
the obligor must be free from any participation in the aggravation of the injury or loss.

In the present case, petitioners essentially argue that their loan obligations to Allied Bank had already been
extinguished due to Peakstar’s failure to perform its own obligations to Metro Concast pursuant to the MoA. Petitioners
classify Peakstar’s default as a form of force majeure in the sense that they have, beyond their control, lost the funds they
expected to have received from the Peakstar (due to the MoA) which they would, in turn, use to pay their own loan
obligations to Allied Bank.

While it may be argued that Peakstar’s breach of the MoA was unforseen by petitioners, the same us clearly not
"impossible"to foresee or even an event which is independent of human will." Neither has it been shown that said
occurrence rendered it impossible for petitioners to pay their loan obligations to Allied Bank and thus, negates the
former’s force majeure theory altogether. In any case, as earlier stated, the performance or breach of the MoA bears no
relation to the performance or breach of the subject loan transactions, they being separate and distinct sources of
obligations.

Petitioners’ loan obligations to Allied Bank remain subsisting for the basic reason that the former has not been
able to prove that the same had already been paid or, in any way, extinguished.

WHEREFORE, the petition is DENIED. The Decision dated February 12, 2007 and Resolution dated May 10,
2007 of the Court of Appeals in CA-G.R. CV No. 86896 are hereby AFFIRMED with MODIFICATION reckoning the
applicable interests and penalty charges from the date of the extrajudicial demand or on December 10, 1998. The rest of
the appellate court’s dispositions stand.

GOLDENWAY MERCHANDISING CORPORATION vs. EQUITABLE PCI BANK

G.R. No. 195540
March 13, 2013
VILLARAMA, JR., J.:

FACTS:

Goldenway Merchandising Corporation (petitioner) loaned 2 million pesos from Equitable PCI Bank (respondent)
and was secured by a Real Estate Mortgage over its real properties situated in Valenzuela, Bulacan.

As the petitioner defaulted in its obligation, the extrajudicially foreclosed mortgaged properties were sold for
₱3,500,000.00 to respondent during the public auction.

Petitioner’s counsel met with respondent’s counsel reiterating petitioner’s intention to exercise the right of
redemption by tendering a check in the amount of ₱3,500,000.00. However, petitioner was told that such redemption is no
longer possible because the certificate of sale had already been registered.

Petitioner filed a complaint for specific performance and damages against the respondent, asserting that 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. Petitioner argued that applying Section 47 of R.A. 8791 to the real estate mortgage
executed in 1985 would result in the impairment of obligation of contracts and violation of the equal protection clause
under the Constitution.

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. As to the check payment tendered by petitioner, respondent said that even assuming
arguendo such redemption was timely made, it was not for the amount as required by law.

RTC rendered its decision dismissing the complaint as well as the counterclaim. It noted that the issue of
constitutionality of Sec. 47 of R.A. No. 8791 was never raised by the petitioner during the pre-trial and the trial.
 Petitioner appealed to the CA which affirmed the trial court’s decision. The CA 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.

In the present petition, it is contended that 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.

ISSUE:

Whether or not the 3 month redemption period be validly applied in this case when the real estate mortgage contract was
executed in 1985 and the mortgage foreclosed when R.A. No. 8791 was already in effect

RULING:

YES. Petitioner’s contention that Section 47 of R.A. 8791 violates the constitutional proscription against
impairment of the obligation of contract has no basis.

The purpose of the non-impairment clause of the Constitution is to safeguard the integrity of contracts against
unwarranted interference by the State. As a rule, contracts should not be tampered with by subsequent laws that would
change or modify the rights and obligations of the parties. Impairment is anything that diminishes the efficacy of the
contract. There is an 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.

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.

GATEWAY ELECTRONICS CORPORATION, petitioner, vs.

LAND BANK OF THE PHILIPPINES, respondent.
G.R. Nos. 155217 & 156393
July 30, 2003
YNARES-SANTIAGO, J.:

FACTS:

In 1995, petitioner Gateway Electronics Corporation applied for a loan in the amount of one billion pesos with
respondent Landbank to finance the construction and acquisition of machineries and equipment for a semi-conductor
plant at Gateway Business Park in Javalera, General Trias, Cavite. However, Landbank was only able to extend petitioner
a loan in the amount of six hundred million pesos (P600,000,000.00). Hence, it offered to assist petitioner in securing
additional funding through its investment banking services, which offer petitioner accepted. Thereafter, Landbank released
to petitioner the initial amount of P250,000,000.00, with the balance of P350,000,000.00 to be released in June 1996. As
security for the said loans, petitioner mortgaged in favor of Landbank two parcels of land located in Barangay Jalavera,
General Trias, Cavite, the movable properties as well as the machineries to be installed therein.

After petitioners acceptance of Landbanks financial banking services, the latter prepared an Information
Memorandum which it disseminated to various banks to attract them into providing additional funding for petitioner. The
Information Memorandum stated that the security for the proposed loan syndication will be the Mortgage Trust Indenture
(MTI) on the project assets including land, building and equipment. [5] In a letter dated July 30, 1996, Landbank informed
petitioner of its willingness to share the loan collateral which the latter constituted in its favor as part of the collateral for
the syndicated loan from the other banks.[6] On August 20, 1996, Landbank confirmed its undertaking to share the said
collateral with the other creditor banks, to wit:

In case of failure of syndication of the loan, allow the banks that have granted loans to GEC [Gateway Electronics
Corporation] in anticipation of the loan syndication to have a registered pari passu mortgage with you over the
property, the intention being that all banks, including Landbank, shall be on equal footing where the aforesaid
collateral is concerned.

Consequently, Philippine Commercial International Bank (PCIB), Union Bank of the Philippines, (UBP), Rizal
Commercial Banking Corporation-Trust Investment Division (RCBC), and Asia Trust Bank (Asia Trust) joined the loan
syndication and released various loans to petitioner. On October 10, 1996, a Memorandum of Understanding (MOU) was
executed by Landbank, PCIB, UBP, RCBC, Asiatrust and the petitioner, with RCBC as the trustee of the loan
syndication. Under the Memorandum of Understanding, the said signatories agreed to enter into a Mortgage Trust
Indenture (herein, the MTI), under which GEC will constitute a mortgage over the land, building, other land improvements,
machinery and equipment of GEC located within Gateway Business Park, Crisanto de Los Reyes Avenue, Javalera,
General Trias, Cavite as well as the assets to be acquired by GEC under the Project (as hereinafter defined) in favor of
RCBC-TID as trustee, for the benefit of the Creditors (as defined in the MTI), to secure the payment by GEC of its loan
obligations.

ISSUE:

Whether or not Landbank is bound to share the properties mortgaged to it by respondent with the other creditor banks in
the loan syndication

RULING:

YES. The Court finds that Landbank is bound by a perfected contract to share petitioners collateral with the
participating banks in the loan syndication. Pursuant to Article 1305 of the Civil Code, the last stage is the consummation
of the contract wherein the parties fulfill or perform the terms agreed upon in the contract, culminating in the
extinguishment thereof. Article 1315 of the Civil Code, on the other hand, provides that a contract is perfected by mere
consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract.

In the case at bar, a perfected contract for the sharing of collaterals is evident from the exchange of
communications between Landbank and petitioner and the participating banks, as well as in the Memorandum of
Understanding executed by petitioner and the participating banks, including Landbank. In its July 31, 1996 letter to
petitioner, Landbank stated that it is willing to submit the properties covered by the real estate mortgage (REM) in its favor
as part of [petitioners] assets that will be covered by a Mortgage Trust Indenture (MTI). Thus, the Information
Memorandum distributed by Landbank to entice other banks to participate in the loan syndication, expressly stated that
the security for the syndicated loan will be the MTI on project assets including land, building and equipment. Finally, on
October 10, 1996, petitioner, Landbank, PCIB, RCBC, UBP, and Asiatrust executed a Memorandum of Understanding
confirming the said collateral sharing agreement. To effect said sharing, they decided to enter into a Mortgage Trust
Indenture (MTI) which will be secured by the same properties previously mortgaged by petitioner to Landbank.

Clearly, there was an acceptance by petitioner and by PCIB, RCBC, UBP, and Asiatrust of Lanbanks offer to
share collaterals, culminating in the execution of the Memorandum of Understanding. We agree with petitioner that the
MTI and/or the JREM belong to the realm of consummation of said Memorandum of Understanding, being the proposed
vehicles or modes to effect the sharing agreement. Thus, in the JREM which was approved by Landbank, except for its
loan security coverage, the participating banks expressly acknowledged that the Joint Real Estate Mortgage is pursued by
them as a new mode to secure their respective loans vis--vis GECs collateral. Verily, the perfection of the collateral
sharing agreement is not dependent upon the execution of the MTI or the JREM. The failure to execute said schemes did
not affect the perfected and binding collateral sharing contract.

WHEREFORE, in view of all the foregoing, the petition in G.R. No. 155217 is GRANTED. The decision of the
Court of Appeals dated April 12, 2002 in CA-G.R. SP. No. 62658 is SET ASIDE. The assailed Order dated October 18,
2000 of the Regional Trial Court of Makati City, Branch 133, in Civil Case No. 98-782 is MODIFIED as follows: respondent
Landbank is directed to implement its agreement under the Memorandum of Understanding dated October 10, 1996 to
share with Philippine Commercial International Bank (PCIB), Union Bank of the Philippines, (UBP), Rizal Commercial
Banking Corporation-Trust Investment Division (RCBC), and Asia Trust Bank (Asia Trust) the properties mortgaged to it
by petitioner Gateway Electronics Corporation, as collaterals for the syndicated loan.
 In G.R. No. 156393, the petition to cite Landbank President Margarito Teves and Landbanks lawyer in contempt
of Court is DENIED for lack of merit.

UNITED COCONUT PLANTERS BANK vs. SPOUSES BELUSO

G.R. No. 159912
August 17, 2007
CHICO-NAZARIO, J.:

FACTS:

UCPB granted the spouses Beluso a Promissory Notes Line under a Credit Agreement whereby the latter could
avail from the former credit of up to a maximum amount of P1.2 Million pesos for a term ending on 30 April 1997. The
spouses Beluso constituted, other than their promissory notes, a real estate mortgage over parcels of land in Roxas City.
The Credit Agreement was amended increasing the Promissory Notes Line to a maximum of P2.35 Million pesos and to
extend the term thereof.

The three promissory notes were renewed several times. On 30 April 1997, the payment of the principal and
interest of the latter two promissory notes were debited from the spouses Belusos account with UCPB; yet, a consolidated
loan for P1.3 Million was again released to the spouses Beluso under one promissory note with a due date of 28 February
1998.

To completely avail themselves of the P2.35 Million credit line extended to them by UCPB, the spouses Beluso
executed two more promissory notes for a total of P350,000.00

However, the spouses Beluso alleged that the amounts covered by these last two promissory notes were never
released or credited to their account and, thus, claimed that the principal indebtedness was only P2 Million.

In any case, UCPB applied interest rates on the different promissory notes ranging from 18% to 34%. From 1996
to February 1998 the spouses Beluso were able to pay the total sum of P763,692.03.

From 28 February 1998 to 10 June 1998, UCPB continued to charge interest and penalty on the obligations of the
spouses Beluso.

The spouses Beluso, however, failed to make any payment of the foregoing amounts.

On 2 September 1998, UCPB demanded that the spouses Beluso pay their total obligation of P2,932,543.00 plus
25% attorneys fees, but the spouses Beluso failed to comply therewith. On 28 December 1998, UCPB foreclosed the
properties mortgaged by the spouses Beluso to secure their credit line, which, by that time, already ballooned
to P3,784,603.00.

On 9 February 1999, the spouses Beluso filed a Petition for Annulment, Accounting and Damages against UCPB
with the RTC of Makati City.

On 23 March 2000, the RTC ruled in favor of the spouses Beluso.

RTC denied UCPBs Motion for Reconsideration, prompting UCPB to appeal the RTC Decision with the Court of
Appeals. The Court of Appeals affirmed the RTC Decision.

ISSUE:

Whether or not the imposition of interest in the provision found in the promissory notes of the spouses Beluso is void

RULING:

YES. The SC agrees with the Court of Appeals, and finds no merit in the contentions of UCPB.

Article 1308 of the Civil Code provides:

Art. 1308. The contract must bind both contracting parties; its validity or compliance cannot be left
to the will of one of them.

In Philippine National Bank v. Court of Appeals, the Court held:

 In order that obligations arising from contracts may have the force of law between the parties,
there must be mutuality between the parties based on their essential equality. A contract containing a
condition which makes its fulfillment dependent exclusively upon the uncontrolled will of one of the
contracting parties, is void (Garcia vs. Rita Legarda, Inc., 21 SCRA 555). Hence, even assuming that the
P1.8 million loan agreement between the PNB and the private respondent gave the PNB a license
(although in fact there was none) to increase the interest rate at will during the term of the loan, that
license would have been null and void for being violative of the principle of mutuality essential in contracts.
It would have invested the loan agreement with the character of a contract of adhesion, where the parties
do not bargain on equal footing, the weaker party's (the debtor) participation being reduced to the
alternative "to take it or leave it" (Qua vs. Law Union & Rock Insurance Co., 95 Phil. 85). Such a contract
is a veritable trap for the weaker party whom the courts of justice must protect against abuse and
imposition.

The stipulation in the promissory notes subjecting the interest rate to review does not render the imposition by
UCPB of interest rates on the obligations of the spouses Beluso valid.

WHEREFORE, the Decision of the Court of Appeals is hereby AFFIRMED with the MODIFICATIONS.

BPI EMPLOYEES UNION-DAVAO CITY-FUBU vs.

BANK OF THE PHILIPPINE ISLANDS, et al.
G.R. No. 174912
July 24, 2013
MENDOZA, J.:

FACTS:

BPI Operations Management Corporation (BOMC) is 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 BPI’s Metro Manila branches. 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 employees were
neither demoted nor were their salaries, benefits and other privileges diminished.

The service agreement was likewise implemented in Davao City. After a merger between BPI and Far East Bank
and Trust Company (FEBTC), BPI’s cashiering function and FEBTC’s cashiering, distribution and bookkeeping functions
were handled by BOMC. Consequently, twelve (12) former FEBTC employees were transferred to BOMC to complete the
latter’s 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 outsourcing functions to BOMC is in violation of the CBA

RULING:
 NO. In essence, the primordial issue in this case is 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. Particularly in dispute
is the validity of the transfer of twelve (12) former FEBTC employees to BOMC, instead of being absorbed in BPI after the
corporate merger. The Union claims that a union shop agreement is stipulated in the existing CBA. It is unfair labor
practice for employer to outsource the positions in the existing bargaining unit, citing the case of Shell Oil Workers’ Union
v. Shell Company of the Philippines, Ltd.
The Union’s reliance on the Shell Case is misplaced. The rule now is covered by Article 261 of the Labor Code,
which took effect on November 1, 1974. Article 261 provides:

ART. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. – x x x Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of
this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement.

Clearly, 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 bank’s 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.

WHEREFORE, the petition is DENIED.