Central Bank Act #1 BSP v Antonio-Valenzuela FACTS: In September of 2007, the Supervision and Examination Department (SED) of the Bangko Sentral ng Allipinas (BSP) conducted examinations of the books of several banks. After the examinations, exit conferences were held with the officers or representatives of the banks wherein the SED examiners provided them with copies of Lists of Findings/Exceptions contairing the deficiencies discovered during the exarrinations and were required to comment and to undertake the remedial measures stated in these lists within 30 days from their receipt of the lists, which remedial ‘measures induded the infusion of additional capital. Contrary to the banks' daims, however, the SED found that the banks to carry out the required remedial measures. In response, the banks requested that they be given time to obtain BSP approval to amend their Articles of Incorporation, that they have an opportunity to seek investors. They requested as well that the basis for the capital infusion figures be disclosed, and noted that none of them had received the Report of Examination (ROE) which finalizes the audit findings. They also requested meetings with the BSP audit teams to Feconcile audit figures. In response, the OIC of SED reiterated the banks’ failure to comply with the Girective for additional capital infusions. Ultimately, the banks fled a complaint for nullification of the BSP ROE with application for a TRO and writ of preliminary injunction before the RTC, alleging that the failure to furnish the bank with a copy of the ROE violated its right to due process. Petitioners filed an Urgent Motion to Lift/Dissolve the TRO and a Motion to Dismiss against all the complaints (except 1 bank). RTC Ruling: TROs GRANTED. The banks were entitled to the writs of preliminary injunction prayed for 1. it had been the practice of the SED to provide the ROEs to the banks before submission to the MB. 2. as the banks are the subjects of exarrinations, they are entitled to copies of the ROEs. The denial by petitioners of the banks’ requests for copies of the ROEs was held to be a denial of the banks’ right to due process. Petitioners then brought the matter to the CA via a petition for certiorari under Rule 65 daiming grave abuse of discretion on the part of Judge Valenzuela CA Ruling: PETITION DENIED. RTC committed no grave abuse of discretion. The CA held that the principles of fairness and transparency dictate that the respondent banks are entitled to copies of the ROE. On November 24, 2008, a TRO was issued by the SC, restraining the CA, RTC, and respondents from implementing and enforcing the CA Decision. Thus, the SED was able to subrrit their ROES to the MB, The MB then prohibited the respondent banks from transacting business and placed them under receivership. Issue: WON the issuance of the subject injunctive writs by the RTC Judge Valenzuela was proper. ‘SC RULING: PETITION GRANTED. CA RULING REVERSED AND SET ASIDE. 1, The respondent banks have failed to show that they are entitled to copies of the ROEs. They ‘an point tp no provision of law, no section in the procedures of the BSP that shows that the BSP is required to give them copies of the ROEs. Sec. 28 of RA 7653, or the New Central Bank Act, which govems exarrinations of banking institutions, provides that the ROE shall besubmitted to the MB; the bank exarrined is not mentioned as @ recipient of the ROE, The respondent banks cannot aim a violation of their right to due process if they are not Provided with copies of the ROEs, The same ROEs are based on the lists of findings/exceptions containing the deficiencies found by the SED examiners when they examined the books of the respondent banks. As found by the RTC, these lists of findings/exceptions were furnished to the officers or representatives of the respondent banks, and the respondent banks were required to comment and to undertake remedial measures stated in said lists. Despite these instructions, respondent banks failed to comply with the SED's directive. Respondent banks are already aware of what is required of them by the BSP, and cannot claim violation of their right to due process simply because they are not furnished with copies of the ROEs. If the banks are already aware of the contents of the ROEs, they cannot say that fairness and transparency are not present. The issuance by the RTC of writs of prelirinary injunction is an unwarranted interference with the powers of the MB. Secs. 29 and 30 of RA 7653 refer to the appointment of a conservator or a receiver for a bank, which is a power of the MB for which they need the ROEs done by the supervising or exarrining department. The writs of preliminary injunction issued by the tral court hinder the MB from fulfilling its function under the law, The actions of the MB under Secs. 29 and 30 of RA 7653 "may not be restrained or set aside by the court except on petition for certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction.” The writs of preliminary injunction order are precisely what cannot be done under the law by preventing the MB from taking action under either Sec. 29 or Sec. 30 of RA 7653, As to the third requirement, the respondent banks have shown no necessity for the writ of prelirrinary injunction to prevent serious damage. The serious damage contemplated by the trial court was the possiblity of the imposition of sanctions upon respondent banks, even the sanction of closure. Under the law, the sanction of closure could be imposed upon a bank by the BSP even without notice and hearing. The apparent lack of procedural due process would not result in the invalidity of action by the MB. This “close now, hear later” scheme is grounded on practical and legal considerations to prevent unwarranted dissipation of the bankS assets and as a valid exercise of police power to protect the depositors, creditors, stockholders, and the general public. The writ of preliminary injunction cannot, thus, prevent the MB from taking action, by preventing the subrission of the ROEs and worse, by preventing the MB from acting on such ROES, The trial court required the MB to respect the respondent banks’ right to due process by allowing the respondent banks to view the ROEs and act upon them to forestall any sanctions the MB rright impose. Such procedure has no basis in law and does in fact violate the "close now, hear later” doctrine. We held in Rural Bank of San Miguel, Inc. v. Monetary Board, Bangko Sentral ng Plipinas: It is well-settled that the closure of a bank may be considered as an exercise of police power. The action of the MB on this matters final and executory. Such exercise may nonetheless be subject to judicial inquiry and can be set aside if found to be in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction.NCBA- Phil G.R.No. 150886 February 16, 2007 RURAL BANK OF SAN MIGUEL, INC. and HILARIO P. SORIANO, in his capacity as majority stockholder in the Rural Bank of San Miguel, Inc., Petitioners, MONETARY BOARD, BANGKO SENTRAL NG PILIPINAS and PHILIPPINE DEPOSIT INSURANCE ‘CORPORATION, Respondents. FACTS Rural Bank of San Miguel, inc. (RBSM) was a domestic corporation engaged in banking. It started operations in 1962 and by year 2000 had 15 branches in BulacanPetitioner Hilario P. Soriano is the majority stockholder ofits outstanding shares of stock. (On January 21, 2000, the Monetary Board (MB) issued Resolution No.” 105. prohibiting RBSM from doing business in the Philippines, placing it under receivership and designating PDIC as receiver on the basis of the monitoring report by Mr. Wilfredo B. Domo- ‘ong, Director of the Department of Rural Banks. Said report showed that RBSM (2) is unable to pay its liablities as they become due in the ordnary course of business and (b) cannot continue in business without involving probable losses to its depositors and creditors. The management of the bank had been accordingly informed of the need to infuse additional capital to place the bank in a solvent financial condition and was given adequate time within which to make the required infusion, But no infusion of adequate fresh capital was made. RBSM filed a petition for certiorari and prohibition in the RTC of Malolos nullify and set aside Resolution No. 4105. On February 7, 2000, it fled 2 notice of withdrawal in the RTC and filed a special civil action for certiorari and prohibition in the CA. On February 8, 2000, the RTC dismissed the case. In their petiion before the CA, RBSM claimed that respondents MB and BSP committed grave abuse of discretion in issuing Resolution No. 105. Tho petition was dismissed by the CA on March 28, 2000. It held thatthe decision ofthe MB to issue Resolution No. 105 ‘was based on the findings and recommendations of the Department of Rural Banks Supervision and Examination Sector, the compiroler reports as of October 31, 1989 and December 31, 1899 and RBSM's declaration of a bank holiday on January 4, 2000, Such could be considered as substantial evidence. On June 9, 2000, on the basis of reports prepared by PDIC stating that RBSM could not resume business With sufficient assurance of protecting the itorest of its depositors, credtors and the general public, the MB passed Resolution No. 968 diracting PDIC to proceed withthe iquidation of RSM. ISSUE Petitioners argue that Resolution No. 105 was bereft of any basis considering that no complete examination had bean conducted before it was issued. RULING ‘The petition was denied In RA 7653, only a report of the head of the supervising of examining department is necessary. It is an established rule in statutory construction that where the words of a statute are clear, plain and free from ambiguity, it must be given its’ Iteral meaning and applied without attempted interpretation. The word ‘report’ has a definite and unambiguous meaning which is clearly different from "exarrination.” A report, asa noun, may be defined as something that gives information or a usually detailed account or statement. On the other hand, an examination is a search, investigation or scrutiny. ‘The Court cannot look for or impose another meaning ‘on the term “report” or to construe it as synonymous. with “examination.” From the words used in Section 30, it is clear that RA 7653 no longer requires that an exarrination be made before the MB can issue a closure order. in short, MB and BSP complied with all the requirements of RA 7653, By relying on a report before placing a bank under receivership, the MB and BSP did not only follow the letter of the law, they were also faithful to its. spirit, which was to act expeditiously Accordingly, the issuance of Resolution No. 105 was untainted with arbitrariness,Petre fled a civ action fer cllection ‘of money agaist BSP, FIC, end FSB, BICBuling SP, PIC, ard PSB are lable. Thus, an peal was fled wih the CA, cABuling (CA roversad the RTC Ruling without prejusoe to NMranda’ right to fle er clan agahet PSB In the lgudaten cat where claims agalret PSS. are bebwheard, movies of PSE, Fer claim ves not a “dputed lai” as defined under the New Cenval Bak Act, ard thus che should not be placed in the same footing with ordinary credo of PSB; and (3) that besed on the foregoing, she is’ enti Immectete payment Tsu WOV Mardis claim is a “deputed cain Urder the New Certral srk Act. SCRULING: Yes, Mrande’s dlaim falls wahin the ambit of a ‘depute cla” under the New Cental Bank Act, yet the poculr circumstances of this case entitle fer to preference in the assets of PSB, Under the New Certral Bank Act, “Disptd Caime" Fert ALL CLAIMS, wether they be agaist the assets of the insolvent. bank, for. specific Performance, carnages, breach of contact, cr WHATEVER. In the case akbar, Mrandas claim which FwoWed the peymert of two casters checks that were not hancred by PSB due to its cose falls within the realm of claim agsest the ascets of he reohent bark, The Isuence of the cashier's chacks by PSB tb Mrords created a cealter-ckbter relationship Dbetween them. Herce, the dlqputed claim shoud be ledoed the ligation proceedings by the petitoner as creditor of PB, Gereraly then, the purchase of cachi’s check cetes a elaten of ceo end debtor which, as 8 general rule, does not entitle the debtor to Preference over general creditors nthe asoals of the creditor bark burg the check. However, there Is. @n EXCEPTION, as. when FRALD 's Irvoted. Whereat the. time. the, Inthe present case, PSB dino colapse overight but vas hemethading end in frarcial extrams for ite seme tie, fact which could rot have gore Lurnoticed by the berk officers. Thus, they cold ‘at have issued, Fy good faith the checks fer the total sum of P5,502,00000, knowng that PSB could not meet this. Clearly, there was fraud or tent to decelie when the subject checks deted “Une 3, 1998 were sued by PSE to patton. ‘Therefore, che & ented to a preference ih the soa of PSS hits hades,NCBA- Micko. FACTS The RBFI was a duly registered rural banking institution whose corporate life of expired on May 31, 2005. Notwithstanding, petitioner Vivas and his principals acquired the controlling interest in RBFI_ sometime in January 2006. In December 2006, the BSP extended the corporate life of RBFI for another 50 years, The BSP also approved the change of its corporate name to EuroCredit Community Bank, Incorporated (ECBI). Pursuant to Section 28 The New Central Bank ‘Act (NCBA), the Integrated Supervision Department II (ISD II) of the BSP conducted a general examination on ECBI with the cut- off date of December 31, 2007; thereafter, an ‘exit conference was held. The Monetary Board (MB) issued Resolution No. 1255, dated September 25, 2008, pladng ECBI under Prompt Corrective Action (PCA) framework because of the following serious findings and supervisory concems noted during the general examination: 1] negative capital of Php 14.674 million and capital adequacy ratio of negative 18.42%; 2] CAMEL (Capital Asset Management Earnings Liquidity) composite rating of "2" with a Management component rating of "1"; and 3] serious supervisory concems particularly on activities deemed unsafe or unsound. Through a letter, the BSP furnished ECBI with a copy of the Report of Examination (ROE) as of December 31, 2007. Vivas moved for a reconsideration of Resolution No, 1255 on the grounds of non- observance of due process and arbitrariness. The ISD TI, on several instances, had invited the BOD of ECBI to dscuss matters; the proposed meeting, however, did not materialize due to postponements sought by Vivas. Also, a scheduled March 31, 2009 general examination of the books, records and general condition of ECBI with the cut-off date of December 31, 2008, did not push through, According to Vivas, ECBI asked for the deferment of the exarrination pending resolution of its appeal before the MB. The MB, on the other hand, posited that ECBI unjustly refused to allow the BSP examiners from examining and inspecting its books and records, in violation of Sections 25 and 34 of R.A. No, 7653. In its letter, the BSP informed ECBI that it was already due for another annual examination and that the pendency of its appeal before the MB would not prevent the BSP from conducting another one. Ih view of ECBI's refusal to comply with the required exarrination, the MB issued Resolution No, 726, imposing monetary penalty /ine on ECBI The BSP also wrote a letter, adhising ECBI to comply with MB Resolution No. 771, which essentially required the bank to follow its directives; ECBI asked for another deferment of the exarrination due to the pendency of certain unresolved issues subject of its appeal before the MB, Thereafter, the MB issued Resolution No, 823 approving the issuance of a cease and desist order against ECBI. Meanwhile, the MB issued Resolution No. 1164, denying the appeal of ECBI from Resolution No, 1255 which placed it under PCA framework. On November 18, 2009, the general examination of the books and records of ECBI with the cutoff date of September 30, 2009, was commenced and ended in December 2009. On March 4, 2010, the MB issued Resolution No. 276 pladng ECBI under receivership. Assailing MB Resolution No, 276, \Vivas filed this petition for probibition before this Court, ascribing grave abuse of discretion to the MB for prohibiting ECBI from continuing its banking business and for placing it under receivership, ISSUES 1. Whether ECBI was deprived of its Tight to the due process of law in issuing Resolution No. 276; and 2. Whether the MB gravely abused its discretion in applying the general law (i.e. New Central Bank Act) as ‘opposed to the specific law (i.e. Rural Banks Act). HOLDING 1. MO. Vivas argues that implementation of the questioned resolution wes tainted with arbitrariness and bad faith, stressing that ECBI was placed under receivership without due and prior hearing. It appears, however, from all over the records’ that ECBINCBA- Micko was given every opportunity to be heard and improve on its finandal standing. The records disclose that BSP officials and exarriners met with the representatives of ECBI, induding Vivas, and discussed their findings. There were also reminders that ECBI submit its financal audit reports for the years 2007 and 2008 with a waming that failure to submit them and a written explénation of such omission shall result in the imposition of a monetary penalty. More importantly, ECB was heard on its motion for reconsideration. At any rate, if Gireurrstances warrant it, the MB may forbid a bank from doing business and Place it under receivership without prior notice and hearing. The "dose now, hear later" doctrine has already been justified as a measure for the protection of the public interest. Due process does not necessarily require a prior hearing; a hearing or an ‘opportunity to be heard may be subsequent to the dosure. One can just imagine the dire consequences of a prior hearing: bank runs would be the order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped out and disillusionment will run the gamut of the entire banking community. The doctrine is founded on practical and legal considerations to obviate unwarranted dissipation of the bank's assets and as a valid exercise of police power to protect the depositors, creditors, stockholders, and the general public. Swift, adequate and determined actions must be taken against financially distressed and mismanaged banks by govemment agencies lest the public faith in the banking system deteriorate to the prejudice of the national economy. In the case at bench, the ISD II subrritted its memorandum, dated February 17, 2010, containing the findings noted during the general examination conducted on ECBI with the cutoff date of September 30, 2009, The memorandum underscored the inability of ECBI to pay its liabilities as they would fall due in the usual course of its business, its liabilities being in excess of the assets held. Also, it was noted that ECBI's continued’ banking operation would most probably result in the incurrence of additional losses to the prejudice of its depositors and creditors. On top of these, it was found that ECBI had willfuly violated the cease-and-desist order of the MB issued in its June 24, 2009 Resolution, and had disregarded the BSP rules and directives, For said reasons, the MB was forced to issue the assailed Resolution No. 276 Placing ECBI under receivership. In addition, the MB stressed that it accorded ECBI ample time and opportunity to address its monetary proHlem and to restore and improve its financial health and viability but it failed to do so. In light of the Grcumstances obtaining in this case, the application of the corrective measures enundated in Section 30 of R.A. No. 7653 was proper and justified. Management take-over under Section 11 of R.A. No. 7353 was no longer feasible considering the financial quagmire that engulfed ECBI showing serious conditions of insolvency and liquidity. Besides, placing ECBI under receivership would effectively put a stop to the further draining ofits assets. NO. There is no conflict which would call for the application of the doctrine that a special law should prevail over a general law. It must be emphasized that the NCBA js a later law and under said act, the power of the MB over banks, including rural banks, was increased and expanded.SeHLY cheney Joseph Victor Ejercito vs. Sandiganbayan GAR, Nos. 157294-95 - 30 November 2006 Carpio-Morales, 3.: FACTS: The Office of the Ombudsman requested the Sandigenbayan to issue subpoena duces tecum against the Urban Bank relative to the case against President Joseph Estrada. Ms. Dela Paz, receiver of the Urban Bank, furnished the Office of the Ombudsman certified copies of manager checks detailed in the subpoena duces tecum. The Sandiganbayan granted the same. However, Ejercito claims that the subpoenas issued by the Sandiganbayan are invalid and may not be enforced because the information found therein, given their extremely detailed character and could only have been obtained by the Special Prosecution Panel through an illegal disclosure by the bank officials. Ejercito thus contended that, following the fruit of the poisonous tree doctrine, the subpoenas must be quashed. Moreover, the extremely-detailed information obtained by the Ombudsman from the bank officials concerned during a previous investigation of the charges ‘against him, such inquiry into his bank accounts would itself be legal. ISSUE: Whether or not subpoena duces tecum/ ad testificandum may be issued to order the production of statement of bank accounts even before a case for plunder i filed in court HELD: The Supreme Court held that plunder is analogous to bribery, and therefore, the exception to R.A, 1405 must also apply to cases of plunder, The court also reiterated the ruling in Marquez . Desierto that before an in camera inspection may be allowed there must be a pending case before a court of competent Jurisdiction, Further, the account must be clearly identified, the inspection limited to the subject matter of pending case before the court of competent jurisdiction, ‘As_no plunder case against then President Estrada had yet been filed before a court of competent jurisdiction at the time the Ombudsman conducted an investigation, he concludes that the information about his bank accounts were acquired illegally, hence, it may not be lavifully used to facilitate a subsequent inquiry into the same bank accounts. Thus, his atternpt to make the exclusionary rule applicable to the instant case fails. The high Court, however, rejected the arguments of the petitioner Ejercito that the bank accounts which where demanded from certain banks even before the case was filed before the proper court is inadmissible in evidence being fruits of poisonous tree. This is because the Ombudsman issued the subpoenas bearing on the bank accounts of Ejercito about four months before Marquez was promulgated ‘on June 27, 2001. While judicial interpretations of statutes, such as that made in Marquez with respect to R.A. No, 6770 or the Ombudsman Act of 1989, are deemed part of the statute as of the date it was originally passed, the rule is not absolute. Thus, the Court referred to the teaching of Columbia Pictures Tne, v. Court of Appeals, that: It is consequently clear that 2 judkial interpretation becomes a part of the lai as of the date that law was originally passed, subject only to the qualification that when a doctrine of this Court is overruled and a different view is adopted, and more so. when there is 9 reversal thereof, the new doctrine should be applied prospectively and should not apply to parties who relied on the old doctrine and acted in good faith,SECRECY- AYA RCBCvs, HiT Development Corporation and Luz R. Bakunawa FACTS: Luz Bakunawa and her husband Manuel, now are registered owners of six (6) parcels of land These lots were sequestered by the Presidential Commission on Good Government. Sometime in 1990, a certain Teresita Millan offered to buy said lots for 26,724,085.71, with the promise that she will take care of clearing whatever preliminary obstacles there may be to effect a completion ofthe sale, The Spouses Bakunawa gave to Millan the Owner's Copies of said TCTs and in tum, Millan made 2 down payment of ®1,019,514,29 for the intended purchase, However, for one reason or another, Millan was not able to clear said obstacles. As a result, the Spouses Bakunawa rescinded the sale and offered to return to Millan her down payment, However, Millan refused to accept it. Consequenty, the Spouses Bakunawa, through their company, the His Development Corporation took out on October 26, 1991, 3 Manager's Check from RCBC-Ermita in the amount of €1,019,514,29, payable to Millan's company Rosmil Realty and Development Corporation c/o Teresita Millan and used this as one of their basis for @ complaint against Millan, Upon advice of their counsel, the Spouses cetained custody of RCBC Manager's Check and refrained from canceling or negotiating it ‘On January 31, 2003, during the pendency of the abovementioned case and without the knowledge of the parties, RCBC reported the “#1,019,514,29-credit existing in favor of Rosmil" to the Bureau of Treasury as among its “unclaimed balances", On December 14, 2006, the Republic fled with the RTC the action for Escheat. On Apa 30, 2008, the Spouses settled amicably their dispute with Rosmil and Millan. The Spouses inquired from RCBC- Ermita the availabilty of the Manager's Check: They were however dismayed when they were informed that the amount was already subject of the escheat proceedings before the RTC. Respondents filed an Omnibus Motion dated 11 June 2008, seeking the partial reconsideration of the RTC Decision insofar as it escheated the fund allocated for the payment of the Manager's Check. The RTC denied the motion, The CA reversed the order ISSUE: WON the allocated fund may be escheated in favor of the Republic RULING: NO, Escheat proceedings refer to the judicial process in which the state, by virtue ofits sovereignty, steps in and claims abandoned, left vacant, or unclaimed property, without there being an interested person having 2 legal claim thereto, ttis a proceeding whereby the state compels the surrender to tof unclaimed deposit balances ‘when there is substantial ground for a belief that they have been abandoned, forgotten, or without an owner, Act No, 3936 or the Unclaimed Balances Law outlines the procedure to be followed ina filing @ swom statement with the Treasurer concerning dormant accounts. Section 2 of which states in part that “immediately before filing the above sworn statement, the bank, building and loan association, and trust corporation shall communicate with the person in whose favor the unclaimed balance stands at his last known place of residence or post office address.” ‘No notification was however received by the respondents, Moreover, the mere issuance of a manager's check does not ipso facto work as an automatic transfer of funds to the account of the payee. Since there was no delivery, presentment of the check to the bank for payment did not occur An order to debit the account of respondents was never made. In fact, petitioner confirms that the Manager's Check was never negotiated or presented for payment to its Ermita Branch, and that the allocated fund is stil held by the bank, As 9 result, the assigned fund is deemed to remain part of the account of Hi-Th, which procured the Manager's Check. The doctrine that the deposit represented by a manager's check automatically passes to the payee is inapplicable, because the instrument ~ although accepted in advance ~ remains undelivered.IPC- Copyright - Candice FILIPINO SOCIETY OF COMPOSERS, AUTHORS ‘AND PUBLISHERS, INC,,plaintiffappellant, BENJAMIN TAN, defendant-appellee, Facts Aaintiffappellant is a non-profit association of authors, composers and publishers duly organized under the Corporation Law of the Philippines and registered with the Securities and Exchange Commission. Said association is the owner of certain musical compositions among which are the songs entitled: "Dahil Sa Iyo", "“Sapagkat Ikaw ‘Ay Akin," “Sapagkat Kami Ay Tao Lamang" and “The Nearness Of You." On the other hand, defendant-appellee is the operator of a restaurant known as “Alex Soda Foundation and Restaurant” where a combo with professional singers, hired to Play and sing musical compositions to entertain and amuse customers therein, were playing and singing the above-mentioned compositions without any license or permission from the appellant to play or sing the same. Accordingly, appellant demanded from the appellee payment of the necessary license fee for the playing and singing of aforesaid compositions but the demand was ignored. Hence, on November 7, 1967, appellant fled complaint with the lower court for infiingement of copyright against defendant- appellee for allowing the playing in defendant- appellee's restaurant of said songs copyrighted in the name of the former. Defendantappellee, in his answer, countered that the complaint states no cause of action. While not denying the playing of said copyrighted compositions in his establishment, appellee maintains that the mere singing and playing of songs and popular tunes even if they are copyrighted do not constitute an infringement The lower court, finding for the defendant, dismissed the complaint Plaintiff appealed to the Court of Appeals which as already stated certified the case to the 102 Supreme Court for adjudication on the legal question involved, Issue The principal issues in this case are whether or not the playing and signing of musical compositions which have been copyrighted under the provisions of the Copyright Law (Act 3134) inside the establishment of the defendant- appellee constitute a public performance for profit within the meaning and contemplation of the Copyright Law of the Philippines; and assuming that there were indeed public performances for profit, whether or not appellee can be held liable therefor: Ruling We concede that indeed there were “public performances for profit." In relation thereto, it has been held that "The Haaying of music in dine and dance establishment which was paid for by the public in purchases of food and drink constituted "performance for profit" within a Copyright Law." The defendant conducts his place of business for profit, and itis public; and the music is performed for profit The defendants’ performances are not ‘eleemosynary. They are part of a total for which the public pays, and the fact that the price of the whole is attributed to a particular item which those present are expected to order is not important, Itis true that the music is not the sole object, but neither is the food, which probably could be got cheaper elsewhere. It will be noted that for the playing and singing the musical compositions involved, the combo wes paid as independent contractors by the appellant is therefore obvious that the expenses entailedIPC- Copyright - Candice thereby are added to the overhead of the restaurant which are either eventually charged the price of the food and drinks or to the overall total of additional income produced by the bigger volume of business which the entertainment was programmed to attract. Consequently, it is beyond question that the playing and singing of the combo in defendant appellee's restaurant constituted performance for profit contemplated by the Copyright Law. Nevertheless, appellee cannot be said to have infringed upon the Copyright Law. Appellee's allegation that the composers of the contested musical compositions waived their right in favor of the general public when they allowed their intellectual creations to become property of the public domain before applying for the corresponding copyrights for the same A careful study of the records reveals that the song “Dahil Sa Tyo" which was registered on Aptil 1956 became popular in radios, juke boxes, etc. long before registration while the song "The Neamess Of You" registered on January had become popular twenty five (25) years prior to 1968, and the songs "Sapagkat Ikaw Ay Akin" and “Sapagkat Kami Ay Tao Lamang" both registered ‘on July 10, 1966, appear to have been known and sang by the witnesses as early as 1965 or three years before the heating in 1968. The testimonies of the witnesses at the hearing of this case on this subject were unrebutted by appellant. Under the circumstances, it is dear that the musical compositions in question had long become public property, and are therefore beyond the protection of the Copyright Law. 2082CORPO- Candice Eric Livesey vs Binswanger Philippines Inc., and Keith Elliot Facts 1of2 In December 2001, Livesey filed a complaint for illegal dismissal with money claims against CBB and Paul Dwyer. CBB is a domestic corporation engaged in real estate brokerage and Dwyer was its president Livesey alleged that CBB hired him as Director and Head of Business Space Development and thereafter was promoted to Managing Director, Livesey was the compelled to resign on December 18, 2001 and claims that CBB owes him unpaid salaries in the amount of $23,000.00 CBB denied liability and that the Labor Arbiter had no jurisdiction as the complaint was an intra-corporate dispute In its decision LA Reyno found that Livesey had been illegally dismissed and ordered CBB to reinstate Livesey Thereafter the parties entered into a compromise agreement which LA Reyno approved. Under the agreement, Livesey was to receive an initial payment and then two cother subsequent installments in order to fully satisfy the award to Livesey. Further, the agreement provided that unless ‘and until the agreement is fully satisfied CBB shall not see, alienate or otherwise dispose of all or substantially al its assets or business; it shall not suspend, discontinue or cease its entire or a substantial portion of it business operations or shall not substantially change the nature ofits business nor shall it declare bankruptoy or insolvency CBB paid Livesey the initial amount but id not pay the next two installments as the company ceased its operations, Issue Ruling Livesey then moved for the issuance of a write of execution which was granted but not enforced. Livesey then filed for the issueance of a write of alias writ of execution alleging that in the process of serving respondents he learned that the respondents in a clear and wilful attempt to avoid their lilabilities have ‘organized another corporation Binswanger Phils. Livesey claims that there is evidence to show that CBB and Binswanger are one and the Invoking the doctrine of piercing the veil of corporate fiction, Livesey prayed that an alias, writ of execution be issued against Binswanger and Keith Eliot, CBBs former president and now Binswanger’ president and CEO. WON the CA erred in not applying the doctrine of piercing the veil of corporate fiction to the case ‘After executing the compromise agreement with him, through Elliot, CBB ceased operations following a transaction where a substantial amount of CBB shares changed hands. Almost simultaneously with CBB'S losing (in July 2003), Binswanger was established with its headquarters set up beside CBB office at Unit 501, 5/F Peninsula Court Building in Makati City.27 c. Key CBB officers and employees moved to Binswanger led by Elliot, former CBB President who became Binswanger’s President and CEO; Ferdie Catral, former CBB Director and Head of Operations; Evangeline Agcaoili and Janet Pei. d. Summons served on Binswanger in an ‘earlier labor case was received by Binswanger using CBB'S receiving stamp28 e, A Leslie Young received on August 23, 2003 an online query on whether CBB was the same as Blumanewver Binswanger (BB). Signing as Web Editor, Binswanger/CBB, Young repliedCORPO- Candice 20t2 via e-mail: 29 We are known as either CBB (Chesterton Blumenauer Binswanger) or as Chesterton Petty Lt. Piercing the veil of corporate fiction is an equitable doctrine developed to address situations where the separate corporate personality of a corporation is abused or used for wrongful purposes.44 Under the doctrine, the corporate existence may be disregarded where the entity is formed or used for non= legitimate purposes, such as to evade a just ‘and due obligation, or to justify a wrong, to shield or perpetrate fraud or to carry out similar or inequitable considerations, other Lnjustfiable aims or intentions,45_ in. which ase, the fiction will be disregarded and the individuals composing it and the two ‘comporations will be treated as identical.46 In the present case, we see an indubitable link between CBBS closure and Binswanger’s incorporation. CBB ceased to exist only in name; it re-emerged in the person of Binswanger for an urgent purpose — to avoid payment by CBB of the last two installments of its monetary obligation to Livesey, as well as its other financial liabilities. Freed of CBB’ liabilities, especially that owing to Livesey, Binswanger can continue, as it did continue, (CBBS real estate brokerage business Binswanger is engaged in the same line of business CBB embarked on: (1) it even holds office in the very same building and on the very same floor where CBB once stood; (2) CBBS key officers, Blot, no less, and Catral moved over to Binswanger, performing the tasks they were doing at CBB; (3) notwithstanding CBB'S closure, Binswanger's Web Editor (Young), in an e-mail correspondence, supplied the information that Binswanger is “now known” as either CBB (Chesterton Blumenauer Binswanger or as Chesterton Petty, Ltd, in the Philippines; (4) the use of Binswanger of CBB paraphernalia (receiving stamp) in connection with a lator case where Binswanger was summoned by the authorities, although Elliot claimed that he bought the item with his own money; and (5) Binswanger’s takeover of CBB's project with the PNB, While the ostensible reason for Binswanger establishment is to continue BBS business operations in the Philippines, which by itself is not illegal, the close Proximity between CBBS disestablishment and Binswanger’s coming into existence points to fan unstated but urgent consideration which, as we earlier noted, was to evade CBBS unfulfilled financial obligation to Livesey under the agreement. WHEREFORE, premises considered, ve hereby GRANT the petition. The decision dated ‘August 18, 2006 and the Resolution dated March 23, 2007 of the Court of Appeals are SET ASIDE. Binswanger Philippines, Inc. and Keith Elliot (its President and CEO) are declared jointly and severally liable for the second and third installments of CBB's liability to Eric Godfrey Stanley Livesey under the ‘compromise agreement dated October 14, 2002.GBL- Jafsah cpt a5 CABAMONGAN CITIBANK vs FACTS: Spouses Luis and Carmelita Cabamongan opened 3 jpint "and/or" foreign currency time deposit in trust for their sons Luis, Jr. and Lito at the Citibank Makati Branch, Prior to maturity, or on November 10, 1993, a person claiming to be Carmelita went to the Makati branch and pre-terminated the said foreign currency time deposit by presenting a passport, a Bank of ‘America Versatele Card, an ATM card and a Mabuhay Credit Card with the assistance of Account Officer Yeye San Pedro, While the transaction was being processed, she was casually interviewed by San Pedro about her personal circumstances and investment plans. Since the said person failed to surrender the original Certificate of Deposit, she had to execute a notarized release and waiver document in favor of Citibank, pursuant to Citibank’s internal procedure, before the money was released io her. The release and waiver document was not notarized on that same day but the money was nonetheless given to the person withdrawing Alter said person left San Pedro realized that she left behind an identification card, Thus, San Pedro called up Carmeli's listed address at No. 48 Ranger Street, Moonwalk Village, Las Finas, Metro Marila on the same day to have the card picked up Marites, the wife of Lito, received San Pedro's call and was stunned by the news that Carmelita preterminated her foreign currency time deposit because Carmelita was in the United States at that time. seems that sometime between June 10 and 16, 1993, an unidentified person broke in atthe couple's residence at No. 3268 Baldwin Park Boulevard, Baldwin Park, California, San Pedro told the spouses to submit the necessary documents to support their claim but Citibank concluded nonetheless that Carmelita indeed preterminated her deposit. In a letter dated September 16, 1994, the Cabamongan spouses, through counsel, made a formal demand upon Citibank for payment oftheir preterminated deposit in the amount of $55,216.69 with legal interests. In 2 letter dated November 28, 1994, Citibank, through counsel, reused the Cabamongan spouses" demand for payment, asserting that the subject deposit was released to Carmelita upon proper identification and verification (On January 27, 1995, the Cabamongen spouses filed 2 complaint against Citibank before the Regional Tal Court of Makati for Specific Performance with Damages. RIC decided in favor of the Cabamongan spouses and against Citibank The CA, however, disagreed with the damages awarded by the RTC. it held that, insofar as the date from which legal interest of 1256 isto run, it should be: counted from September 16, 1994 when extrajudicial demand was made. Dissatisfied, both parties filed separate petitions for review on certiorari with this Court ISSUES: WON Citibank is liable. RULING: Es. The banking business is impressed with public interest, of paremount importance thereto is the trust and confidence of the public in general Consequently, the highest degree of diligence is expected, and high standards of integrity and performance are even required, of it By the nature of 's functions, a bank is “under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship." In this case, it has been suificiently shown that the signatures of Carmelita in the forms for pretermination of deposits are forgeries. Citibank, with its signature verification procedure, failed to detect the forgery. Its negligence consisted in the omission of that degree of diligence required of banks, The Court has held that a bank is "bound to know the signatures of its customers; and if it pays a forged check, it must be considered as making the payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of the depositor whose name was forged.” Such principle equally applies here. Banks are expected to exercise the highest degree of diligence in the selection and supenision of their employees,