UNION BANK OF THE PHILIPPINES,

Petitioner,

versus

SPOUSES RODOLFO T. TIU AND VICTORIA N. TIU,

Respondents
G.R. Nos. 173090-91
Promulgated: September 7, 2011

FACTS:

* Union Bank and Sps. Tiu entered into a credit line Agreement (CLA) whereby Union Bank agreed to make available to the Sps. Tiu
in the amounts as may be approved.
* The Sps. Tiu took out various loans pursuant to the CLA in the amount of US$ 3,632,000.000 evidence by promissory note
*Upon the information from the Bank, Sps. Tiu authorize the Bank to redenominated the loan at the rate of US$ 1= Php 41.406 with
interesr of 19% for one year.

* Sps. Tiu undertook to pay the total restructured amount (Php 104,668,741.00 via three loan facilities.
* Sps. claim that they were merely forced to sign the Restructuring Agreement.
* On the other hand, the Bank claims that the Restructuring Agreement was voluntary and validly entered into by both parties.
* The Court of Appeals ruled against the Union Bank .

ISSUE

Is the Restructuring Agreement valid?

RULING:
- YES, Although the Sps. Tiu received peso equivalent of the borrowed amounts, the loan documents presented as evidence, the
promissory notes expressed the amount of the loan in US Dollars and not in any other currency.

- This Clearly indicates that the Sps. Tiu received the peso equivalent of their dollars loan proves the intention of the parties that such
loan should be paid in peso.
- If such had been the intention of the parties, the promissory notes could have indicated the same.

- The law states that parties may agree that the obligation or transaction shall be settled in a currency other than Philippine currency at
the time of payment

- The Restructuring Agreement being notarized is a public document enjoying a prima facie presumption of authenticity and due
execution clear and convincing evidence must be presented to overcome such legal presumption.

PNB VS.REBLANDO
GR NO. 194014
SEPTEMBER 12, 2012
 The Facts
Spouses Alejandro and Myrna Reblando, obtained a P150,000 loan from PNB secured by a real estate mortgage (REM) over two
parcels of land.
 TD No. 38950, formerly in the name of the Ministry of Human Settlements, was cancelled and replaced with TD No.
59006 in Alejandro Reblando’s name on September 12, 1990. Improvements on the lot consisted of a residential house and a
store shed.
 TCT No. T-40839 was then registered in the name of Letecia Reblando-Bartolome, who earlier executed a Special Power of
Attorney, authorizing Alejandro, her brother, to utilize the lot covered by the title as collateral to secure a loan.
 Years later, the parties agreed to up the loan value from PhP 150,000 to PhP 260,000. They then executed an "Amendment to
Real Estate Mortgage" reflecting the increase in the loan accommodation
 Barely two weeks after, the parties again agreed to another increase, this time to PhP 312,000 and executed for the purpose a
second "Amendment to Real Estate Mortgage."8
 Later, the Reblandos defaulting in the payment of their loan obligation, prompting the PNB to commence extra-judicial
foreclosure of the mortgage. The PNB was awarded the lots for its bid of and was issued a Certificate of Extra-Judicial Sale
covering both collaterals.
 After the lapse of the redemption period PNB consolidated its ownership over the parcels of land and secured a new title over
the property.
 The Reblando’s filed a complaint before the RTC, seeking the declaration of nullity of the mortgage over Lot No. 10.
According to them, they could not have validly created a mortgage over Lot No. 10, not being the owner when the mortgage
was constituted. 
 As an affirmative defense, PNB raised the issue of estoppel.
 THE ISSUES
 WHETHER OR NOT THE MORTGAGEE BANK ACQUIRED VALID TITLE OVER THE LAND IN DISPUTE
BECAUSE IT WAS PUBLIC LAND WHEN MORTGAGED.
 DOES THE PRINCIPLE OF ESTOPPEL BY DEED APPLY AGAINST THE RESPONDENTS?
 The Court’s Ruling
 The petition is impressed with merit.
 Both parcels of land were mortgaged simultaneously
 The REM contract specifically covered, as collaterals, two parcels of land, albeit the second collateral was reflected in the
supplemental page of the contract, which page respondents neglected or indeed omitted to attach to their basic complaint,
whether purposely or not. That respondents did not include said supplemental page is buttressed by a simple annotation at the
bottom of the last page of their Annex "A", reading: "- ADDITIONAL COLLATERAL AT THE SUPPLEMENTAL PAGE
-."To be sure, respondents have not offered any explanation for what this annotation referred to. They cannot plausibly deny,
however, that it referred to Lot No. 10.
 When the terms of an agreement have been reduced into writing, as in this case, it is, under the rules on evidence, considered
as containing all the terms agreed upon. Respondents have not presented evidence, other than their bare denial, to contradict
the stipulations in the contract and to show that the REM or the amendment to it, as couched, does not reflect their real
agreement with petitioner PNB.
 The REM having been notarized, is a public document. The due execution of this above annotation by the City Assessor
stands undisputed. Its correctness must, perforce, stand.
 Respondents parlayed that they were mere applicants out to buy the lot. The records, however, are bereft of evidence, other
than respondents’ bare and self-serving assertion TD No. 38950 over Lot No. 10––in the name of the Ministry of Human
Settlements, which should otherwise lend proof to the Ministry ownership of the lot––had, as of 1990, already been
cancelled; and in lieu of it, TD No. 59006 was issued in Alejandro’s name, two years prior to the constitution of the REM.
Well-settled is the rule that "bare and unsubstantiated allegations do not constitute substantial evidence and have no probative
value."
 The Contract to Sell of Unit No. 10 presented by respondents has nothing to do with this case, as it is not in any way related
to the mortgage contract. In this case, not only was the tax declaration in Alejandro’s name, but also, respondents admittedly
possessed the property mortgaged, their residence being constructed on it. It is for this very reason that they prayed for
injunction before the RTC when the writ of possession was issued against them. There is, therefore, a prima facie proof of
ownership in this case which respondents failed to rebut. Consequently, the power of Alejandro to subject Lot No. 10 as
collateral to the loan stands.
 On estoppel by deed
 Petitioner faults the RTC and the CA for not applying the principle that a mortgagor is estopped from claiming that he is not
bound by the ancillary mortgage agreement after he has benefited from the principal contract of loan.
 Rule 131, Section 2(a) of the Rules of Court, enunciating the principle of estoppel, states, "Whenever a party has, by his own
declaration, act or omission, intentionally and deliberately led another to believe a particular thing to be true, and to act upon
such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it." Where the
Court held that "a party to a contract cannot deny the validity thereof after enjoying its benefits without outrage to one’s
sense of justice and fairness."
 Respondents’ act of entering into the mortgage contract with petitioner, benefiting through the receipt of the loaned amount,
defaulting in payment of the loan, letting the property be foreclosed, failing to redeem the property within the redemption
period, and thereafter insisting that the mortgage is void, cannot be countenanced. The SC agreed with PNB that respondents
are estopped from contesting the validity of the mortgage, absent any proof that PNB coerced or fraudulently induced
respondents into posting Lot No. 10 as collateral.
 The practice of obtaining loans, defaulting in payment, and thereafter contesting the validity of the mortgage after the
collateral has been foreclosed without any meritorious ground should be deterred. Actions of this kind, bearing a hint of fraud
on the part of mortgagors, should not be tolerated, for they go against the basic principle that no person shall unjustly enrich
himself or herself at the expense of another and that parties in a juridical relation must act with justice, honesty, and good
faith in dealing with one another.
Philippine Bank of Communications
vs.
Commissioner of Internal Revenue
G.R. No. 112024 January 28, 1999

Doctrine:
• Any excess of the total quarterly payments over the actual income tax computed in the adjustment or final corporate income
tax return, shall either (a) be refunded to the corporation, or (b) may be credited against the estimated quarterly income tax
liabilities for the quarters of the succeeding taxable year.
• The corporation must signify in its annual corporate adjustment return (by marking the option box provided in the BIR form)
its intention, whether to request for a refund or claim for an automatic tax credit for the succeeding taxable year. To ease the
administration of tax collection, these remedies are in the alternative, and the choice of one precludes the other.
• Basic is the principle that “taxes are the lifeblood of the nation.” Due process of law under the Constitution does not require
judicial proceedings in tax cases. This must necessarily be so because it is upon taxation that the government chiefly relies to
obtain the means to carry on its operations and it is of utmost importance that the modes adopted to enforce the collection of
taxes levied should be summary and interfered with as little as possible.
• A memorandum-circular of a bureau head could not operate to vest a taxpayer with shield against judicial action for there
are no vested rights to speak of respecting a wrong construction of the law.

FACTS:

PBCom filed its quarterly income tax returns for the first and second quarters of 1985, reported profits and paid the total income tax of
P5,016,954. But, PBCom suffered net losses at the end of the year 1985 in the amount of P25,317,288 and P14,129,602 at the end of
1986.

But during these two years, PBCom earned rental income from leased properties. The lessees withheld and remitted to the BIR
withholding creditable taxes in 1985 and 1986.
 
On August 7, 1987, petitioner requested the CIR for a tax credit of P5,016,954 representing overpayment of taxes. Thereafter,
petitioner filed a claim for refund of creditable taxes.
CTA denied the request of petitioner for a tax refund or credit for 1985 on the ground that it was filed beyond the two-year
reglementary period provided for by law. The petitioner’s claim for refund in 1986 was likewise denied on the assumption that it was
automatically credited by PBCom against its tax payment in the succeeding year. MR was denied
CA affirmed the decision in toto hence this petition.

ISSUE:

Whether or not the petition for tax refund had already prescribed.

Yes. The claim for refund had already prescribed. The rule states that the taxpayer may file a claim for refund or credit with the
Commissioner of Internal Revenue, within two (2) years after payment of tax, before any suit in CTA is commenced. The two-year
prescriptive period provided, should be computed from the time of filing the Adjustment Return and final payment of the tax for the
year.

Claims for refund or tax credit should be exercised within the time fixed by law because the BIR being an administrative body
enforced to collect taxes, its functions should not be unduly delayed or hampered by incidental matters.

Any excess of the total quarterly payments over the actual income tax computed in the adjustment or final corporate income tax return,
shall either (a) be refunded to the corporation, or (b) may be credited against the estimated quarterly income tax liabilities for the
quarters of the succeeding taxable year.

The corporation must signify in its annual corporate adjustment return (by marking the option box provided in the BIR form) its
intention, whether to request for a refund or claim for an automatic tax credit for the succeeding taxable year. To ease the
administration of tax collection, these remedies are in the alternative, and the choice of one precludes the other.

A memorandum-circular of a bureau head could not operate to vest a taxpayer with shield against judicial action. For there are no
vested rights to speak of respecting a wrong construction of the law by the administrative officials and such wrong interpretation could
not place the Government in estoppel to correct or overrule the same [Tan Guan vs. Court of Tax Appeals, 19 SCRA 903 (1967)].
 • CARODAN V. CHINA BANK
• G.R. 210542, FEB. 24, 2016
• A CASE DIGEST ON BANKING LAWS
• BY: WINSTONEY MARIE SALCEDA-MAZO
• UNC LAW 3-B

• ISSUE:
WHETHER OR NOT IN A LOAN TRANSACTION, A SURETY IS SOLIDARILY LIABLE WITH THE PRINCIPAL DEBTORS
FOR THE PAYMENT OF THE CREDITOR’S CLAIM.
• FACTS:
LOAN of P 2.8M secured by real property mortgages
Principal Debtors : Barbara & Rebecca
Surety : Rosalina & Madeline
Creditor : China Bank
Mortgages : Barbara & Rebecca – 8 real properties
Rosalina – 1 real property
• Barbara & Rebecca made partial payments
• China Bank released the mortgages by Barbara & Rebecca
• China Bank demanded the balance payment
• Barbara & Rebecca did not pay
• China Bank foreclosed the mortgage by Rosalina
• Mortgage proceed was insuffient to pay off full loaned amount
• China Bank filed with the RTC a complaint for the collection of the deficiency
• RTC ruling
- In favor of China Bank
- Rosalina, as a surety, is jointly and severally liable with Barbara and Rebecca
- The foreclosure of Rosalina’s property is valid
- That China Bank has “the right to proceed against any one of the solidary debtor,
or some or all of them simultaneously; and theat the creditor’s right to
proceed against the surety existx independently of the creditor’s right
to proceed against the principal.”
• Ca ruling
- affirmed the RTC Decision

• Sc decision
• Petition for review on certiorari
- Affirmed the RTC and CA decisions with modifications as to the interest rate
- It found Rosalina as a surety as evidenced by the Surety Agreement which she has signed
- That as a surety she is solidarily liable to pay the debt in case the principal debtors did not
Art. 2047. “By guaranty a person, called the guarantor, binds himself to the
creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.”

- That in the Surety Agreement, Rosalina has:

- waived her rights to demand payment,
- receive notice of non-payment and protest
- as well as agreed that the securities may be substituted, withdrawn or surrendered
at anytime without her consent or notice to her.
Therefore, the release of the mortgages of the principal debtors is valid as well as the foreclosure and extrajudicial sale of the
mortgage property of Rosalina
Hence, the SC ordered Barbara, Rebecca and Rosalina to pay the deficiency claim of China Bank including the interests at a rate
of 6% and for Barbara and Rebecca to reimburse Rosalina for the amount charged against her and the interests thereon.
Banco Filipino, Petitioner
vs
Monetary Board et, al, Respondents
G.R Number 70054 July 8, 1986

Facts
November 4, 1985, Petitioner Bank filed a motion to “Pay Back Salaries to All BF Officers and Employees from February to August
29, 1985.
January 22, 1986 , RTC, issued an order directing the respondents to pay all officers and employees of petitioner their back salaries
and wages corresponding to the period from February 1985 to August 29, 1985 after considering the petitioner’s motion and reply of
respondents.
February 4, 1986, respondents filed an appeal of the January 22, 1986 order of the RTC.
On February 26, 1986’s answer to the appeal of the respondents, there was stated that receiver/liquidator Carlota Valenzuela had paid
Union employees of petitioner bank back salaries for no work from January 25 up to June 1985, therefore, the June 1985 to August
1985 remain unpaid which the respondent contended that the payment of which will prejudice its various creditors.
Issue
Whether or not a directive to pay back a minimal salaries after closure of the bank would be dissipation of the bank’s assets to the
prejudice of its various creditors?
Decision
As the remaining period from June, 1985 to August, 1985, involves but a minimal period only of two months, and considering the
unfortunate plight of the numerous employees who now invoke the sympathetic concern of this Court and inasmuch as the appealed
order for the payment of back salaries is only for limited period or up to August, 1985, there is substantial prejudice for the payment of
the distressed employees of the bank for only a specified limited period until the other issues in the consolidated consideration.

• PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC), Petitioner

VS.
CITIBANK, N.A. AND BANK OF AMERICA, S.T. & N.A., Respondent

• FACTS:
Petitioner: Philippine Deposit Insurance Corporation (PDIC) is a government instrumentality created by virtue of Republic Act RA.
No. 3591, as amanede by RA. No. 9302
Respondent: Citibank, N.A. is a banking corporation while respondent Bank of America, S.T. & N.A. (BA) is a national banking
association, both of which are duly organized and existing under the laws of the United States of America and duly licensed to do
business in the Philippines, with offices in Makati City.
In 1977, PDIC conducted an examination of the books of account of Citibank. It is discovered that Citibank, in the
course of its banking business, received from its head office and other foreign branches a money placement in dollars, covered by
Certificate of Dollar Time Deposit that were interest-bearing with corresponding maturity date. These funds, were lodged in the books
of Citibank under the account of their Account-Head Office/ Branches-Foreign Currency, were not allegedly reported to PDIC as
deposit liabilities that were subject to assessment for insurance.
•
ISSUE:
Whether the funds placed in the Philippine branch by the head office and foreign branches of Citibank and BA are
insurable deposits under the PDIC Charter and, as such, are subject to assessment for insurance premiums?
•
RULING:
• The Court rules in the negative.
A. A branch has no separate legal personality; purpose of the PDIC
• Respondents respective head offices and their branches form only a single legal entity, there is no creditor-debtor
relationship and the funds placed in the Philippine branch belong to one and the same bank. A bank cannot have a deposit
with itself.
• US jurisprudence and Philippine statutes established that the head office shall answer for the liabilities of its branch.
• It is unreasonable for PDIC to require the respondents, Citibank and BA, to insure the money placements made by their home
office and other branches. Deposit insurance is superfluous and entirely unnecessary when, as in this case, the institution
holding the funds and the one which made the placements are one and the same legal entity.
• B. Funds not a deposit under the definition of the PDIC charter; excluded from assessment
• Transfer of funds, which result from the inter-branch transactions, took place in the books of account of the respective
branches in their head office located in the United State. Hence, payable outside the Philippines, not considered a deposit
pursuant to section 3(f) of the PDIC Charter
• Section 3 (f) Provided, that any obligation of a bank which is payable at the office of the bank located outside the Philippines
shall not be a deposit for any of the purpose of this act or included as part of the total deposits or of the insure deposits.
 • Funds are not deposits. Therefore, excluded from assessment.

• Tala Realty Services Corp.

vs
Bangko Filipino Savings and Mortgage Bank
Gr. 181369
• Submitted by:
• Joshua Andrew T. Tan
• Issue:
• Wether or not Bangko Filipino can recover its Sta. Cruz property from Tala Realty Corp?
• Facts:
• Bangko Filipino filed a complaint against Tala Realty regarding reconveyance cases covering properties located in different
parts of the Philippines
• The said properties, including a Sta. Cruz property were covered by a trust agreement
• Facts:
• Such agreement says that Bangko Filipino will sell properties to Tala Realty then Tala will lease said properties to Bangko
Filipino for 20 years
• Purpose of said agreement was in order for Bangko Filipino to be able to open more branches without going over the 50%
capital asset threshold for banks under the General Banking Act.
• Facts:
• Tala Realty did not comply with the said trust agreement and claimed said properties for itself
• Decision/Resolution:
• Trust agreement was void for in the eyes of the law, implied trust is inexistent for being contrary to law
• Implied trust cannot be formed for where the purchase is made in violation of an existing statute, no trust can result in favor
of the party who is guilty of fraud

• China Banking Corporation vs. QBRO Fishing Enterprises, Inc., 

G.R. No. 184556, February 22, 2012.
• Monique Alanis
• Banking Laws - Block3A
• ISSUE
Whether or not third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own
property.
• FACTS
• In 1994, Trans-Filipinas Realty Corporation (TFRC) obtained a loan from petitioner China Banking Corporation in the
amount of Seven Million Pesos (P7,000,000).  The loan was secured by a real estate mortgage over two parcels of land
covered by Transfer Certificate of Title (TCT) Nos. T-34226 and T-34227.  The credit line of TFRC was later increased
to P14,000,000.
• On May 10, 1996, the Board of Directors of respondent QBRO Fishing Enterprises, Inc. issued a resolution authorizing the
mortgage of its properties to secure “the obligations incurred or which may [t]hereafter be incurred by [TFRC] with
[petitioner] irrespective of the amount including any renewals, extensions and/or roll-overs thereof.”
• On June 3, 1996, respondent, represented by Armando Cesar A. Reyes and Concepcion R. Quintana, its president and
treasurer, respectively, executed a real estate mortgage over nine parcels of land, covered by TCT Nos. T-38759 to T-38767,
inclusive, as collateral for TFRC’s additional loan in the amount of P34,500,000. The mortgage was annotated in the Registry
of Deeds of General Santos City.
• TFRC, however, defaulted on the payment of its obligation and failed to settle its account despite having received several
demand letters from petitioner. Thus, petitioner filed a petition for extrajudicial foreclosure of the real properties respondent
and TFRC had mortgaged.   During the public auction, petitioner emerged as the highest bidder and was issued a Certificate of
Sale.
• RULING
Mortgage; Third party mortgagor. Third persons who are not parties to the principal obligation may secure the latter by pledging or
mortgaging their own property. The fact that the loans were solely for the benefit of TFRC would not invalidate the mortgage with
respect to respondent’s property as long as valid consent was given.  Thus, when respondent executed the real estate mortgage over its
properties, such properties thereby secured the performance of the principal obligation notwithstanding the fact that respondent itself
had not assumed any liability for the debt of TFRC. 
G.R. No. 214567 april 4, 2016
DRA. MERCEDES OLIVER, Petitioner,
vs.
PHILIPPINE SAVINGS BANK and LILIA CASTRO, Respondents.
Earl Francis b. texon block a
Issue:
Whether or not PS Bank failed to exercise the highest degree of diligence required of banking institution when one of its employees
has effected an unauthorized withdrawal from a bank deposit of one of its depositors.
Facts:
 An arrangement between Oliver, herein petitioner and depositor of the respondent bank, and Castro, herein respondent and a
former assistant branch manager, to lend out Oliver’s deposited money to borrowers with interest, provided that Oliver
would screen them (borrowers).
 Their arrangement went on smoothly for months. Due to the frequency of bank transaction, Oliver even entrusted her
passbook to Castro.
 When Castro stop rendering an accounting for Oliver, she (Oliver) demanded the return of her passbook. Oliver noticed
several erasures and superimpositions therein upon the return of her passbook.
 Oliver requested a copy of her transaction history. It revealed that an estimated 4.5 million pesos was entered to her account
and a total of 7 million pesos was withdrawn from her account on the same instance. Oliver also discovered another loan
acquired.
 Castro disclosed that she made some alterations and erasures in Oliver’s passbook so as to reconcile the passbook with the
computer printout of the bank.
 Castro denied the allegations of effecting an unauthorized withdrawal from the account of Oliver by alleging that it was upon
Oliver’s instruction that a total of P7 million was to be withdrawn from the latter’s account.
Ruling:
In the case of banks, the degree of diligence required is more than that of a good father of a family. Considering the fiduciary nature of
their relationship with their depositors, banks are duty bound to treat the accounts of their clients with the highest degree of care. The
point is that as a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat
the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship.
n the case at bench, it must be determined whether the P7 million was withdrawn from the bank with the authority of Oliver. As
testified to by Castro, every withdrawal from the bank was duly evidenced by a cash withdrawal slip, a copy of which is given both to
the bank and to its client. Contrary to the position of the CA and that of the respondents, Oliver cannot be required to produce the cash
withdrawal slip for the said transaction because, precisely, she consistently denied giving authority to withdraw such amount from her
account.
Necessarily, the party that must have access to such crucial document would either be PSBank or Castro. They must present the said
cash withdrawal slip, duly signed by Oliver, to prove that the withdrawal of P7 million was indeed sanctioned. Unfortunately, both
PSBank and Castro failed to present the cash withdrawal slip.
As a banking institution, PSBank was expected to ensure that such substantial amount should only be transacted with the consent and
authority of Oliver. PSBank, however, reneged on its fiduciary duty by allowing an encroachment upon its depositor’s account
without the latter’s permission. Hence, PSBank must be held liable for such improper transaction.

• Onofre Andres, substituted by his heirs, namely: Ferdinand et al., all surnamed Andres vs. Philippine National Bank
• G.R. No. 173548 October 15, 2014
• Ponente: LEONEN, J.:
• Submitted by:
• Johanna O. Malang, REB
• ISSUE:
May a bank which accepted a mortgage based upon a title that appears valid on its face but later was found void be deemed a
mortgagee in good faith when it exercised the requisite care, prudence, and diligence appropriate to the public interest character of its
business?
• FACTS:
• Reynaldo Andres and his wife, Janette de Leon mortgaged a 4,634-square-meter parcel of land in Nueva Ecija to Philippine
National Bank (PNB). PNB later foreclosed the property and consolidated title in its name.
• Onofre Andres, uncle of the mortgagors, filed a complaint for cancellation of title and reconveyance of the property alleging
that title in mortgagor's name was based on a falsified document denominated as “Self-adjudication of Sole Heir.”
• The trial court ruled in favor of Onofre Andres by voiding all derivative titles from TCT No. NT-7267.
• The Court of Appeals modified this decision by declaring as valid and existing TCT No. N-24660 in PNB’s name.
• Hence, Onofre Andres filed the instant petition assailing the Court of Appeals’ decision and resolution.
• Decision
• The Court ruled that PNB is a mortgagee in good faith and the title resulting from the foreclosure sale, therefore, is to be
protected since the bank is an innocent purchaser for value.
 • The high diligence required to the banks was complied by PNB by sending its appraiser and credit investigator Gerardo
Pestaño to conduct an ocular inspection of the property and to the relevant government offices to verify the ownership status
of the property.
• There was an on-going construction of a residential building during his inspection, so he appraised this building as well, in
case the land proved insufficient to cover the applied loan. These acts complied with the standard operating practice expected
of banks when dealing with real property.
• Second, the two-year period under Rule 74, Section 4 of the Rules of Court had lapsed and petitioner heirs did not allege if
any heir or creditor of Roman Andres and his wife had invoked their right under this provision. Rule 74, Section 4 of the
Rules of Court provides:
SEC 4. Liability of distributees and estate. – If it shall appear at any time within two (2) years after the settlement and
distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person
has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the
estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. And if within the same
time of two (2) years, it shall appear that there are debts outstanding against the estate which have not been paid, or that an heir or
other person has been unduly deprived of his lawful participation payable in money, the court having jurisdiction of the estate may, by
order for that purpose, after hearing, settle the amount of such debts or lawful participation and order how much and in what manner
each distributee shall contribute in the payment thereof, and may issue execution, if circumstances require, against the bond provided
in the preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain
charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such distribution, notwithstanding
any transfers of real estate that may have been made.

Vicente D. Cabanting and Lalaine V. Cabanting

v.
BPI Family Savings Bank
• GR No. 201927, Feb. 17, 2016
• FACTS
• Petition for Review on Certiorari under Rule 45
• Petitioners (V.D. Cabanting/L.V. Cabanting) bought on installment basis from Diamond Motors Corp. a 2002 Mitsubishi
Adventure SS MT.
• Petitioners signed, executed, delivered to Diamond Motors Corp. a Promissory Note with Chattel Mortgage
• FACTS
• Diamond Motors, with notice to petitioners, executed a Deed of Assignment, thereby assigning to BPI Family Savings Bank
Inc. all its rights, title, and interest to the Promissory Note with Chattel Mortgage
• Petitioners were in default; failed to pay 3 consecutive installments.
• BPI Family filed a complaint against petitioners for Replevin and damages before RTC Manila
• FACTS
• During trial petitioners failed to present evidence despite due notice.
• RTC ruled in favor of BPI Family. Petitioners ordered to pay unpaid balance, with interest rate, and attorney’s fees.
• The Court of Appeals affirmed with modification, the judgment of RTC.
• ISSUE
• Is BPI Family entitled to the possession of the motor vehicle (replevin) or the payment of its value and damages, without
proof of prior notice?
• RULING
• YES. BPI Family is entitled to the possession of the motor vehicle and payment of its value and damages without proof of
prior notice.
• A contract of adhesion, wherein one party imposes a ready made form of contract on the other, is not strictly against the law.
• A contract of adhesion is as binding as ordinary contracts, the reason being that the party who adheres to the contract is free
to reject it.

• SPOUSES GODFREY and GERARDINA SERFINO, vs. FAR EAST BANK AND TRUST COMPANY, INC., now BANK
OF THE PHILIPPINE ISLANDS
G.R. No. 171845
October 10, 2012
• Shane Beriña – Imperial
• III – Block A
• Facts
 • Civil Case No. 95-9880 was an action for collection of sum of money instituted by the petitioner spouses Godfrey and
Gerardina Serfino (collectively, spouses Serfino) against the spouses Domingo and Magdalena Cortez (collectively, spouses
Cortez).
• By way of settlement, the spouses Serfino and the spouses Cortez executed a compromise agreement on October 20, 1995, in
which the spouses Cortez acknowledged their indebtedness to the spouses Serfino in the amount of P108,245.71.
• Facts
• No payment was made as promised. Instead, Godfrey discovered that Magdalena deposited her retirement benefits in the
savings account of her daughter-in-law, Grace Cortez, with the respondent, Far East Bank and Trust Company, Inc.
(FEBTC).
• The spouses Serfino’s counsel sent two letters to FEBTC informing the bank that the deposit in Grace’s name was owned by
the spouses Serfino by virtue of an assignment made in their favor by the spouses Cortez. The letter requested FEBTC to
prevent the delivery of the deposit to either Grace or the spouses Cortez until its actual ownership has been resolved in court.
• Facts
• On April 25, 1996, the spouses Serfino instituted Civil Case No. 95-9344 against the spouses Cortez, Grace and her husband,
Dante Cortez, and FEBTC for the recovery of money on deposit and the payment of damages, with a prayer for preliminary
attachment.
• On April 26, 1996, Grace withdrew P150,000.00 from her savings account with FEBTC. On the same day, the spouses
Serfino sent another letter to FEBTC informing it of the pending action; attached to the letter was a copy of the complaint
filed as Civil Case No. 95-9344.
• During the pendency of Civil Case No. 95-9344, the spouses Cortez manifested that they were turning over the balance of the
deposit in FEBTC (amounting to P54,534.00) to the spouses Serfino as partial payment of their obligation under the
compromise judgment. The RTC issued an order dated July 30, 1997, authorizing FEBTC to turn over the balance of the
deposit to the spouses Serfino.
• Facts
• On February 23, 2006, the RTC issued the assailed decision
• (a) finding the spouses Cortez, Grace and Dante liable for fraudulently diverting the amount due the spouses Serfino,
but
• (b) absolving FEBTC from any liability for allowing Grace to withdraw the deposit. The RTC declared that FEBTC
was not a party to the compromise judgment; FEBTC was thus not chargeable with notice of the parties’ agreement,
as there was no valid court order or processes requiring it to withhold payment of the deposit.
• Issue
Did the FEBTC commit an actionable wrong by allowing Grace to withdraw the deposit that is due the spouses Serfino under the
compromise judgment, and therefore, entitles them to the payment of actual and moral damages?
• Ruling
• Claim for actual damages not meritorious because there could be no pecuniary loss that should be compensated if there was
no assignment of credit
• The spouses Serfino’s claim for damages against FEBTC is premised on their claim of ownership of the deposit with FEBTC.
The deposit consists of Magdalena’s retirement benefits, which the spouses Serfino claim to have been assigned to them
under the compromise judgment. That the retirement benefits were deposited in Grace’s savings account with FEBTC
supposedly did not divest them of ownership of the amount, as “the money already belongs to the [spouses Serfino] having
been absolutely assigned to them and constructively delivered by virtue of the x x x public instrument[.]”
• Ruling
• The terms of the compromise judgment did not convey an intent to equate the assignment of Magdalena’s retirement benefits
(the credit) as the equivalent of the payment of the debt due the spouses Serfino (the obligation). There was actually no
assignment of credit; if at all, the compromise judgment merely identified the fund from which payment for the judgment
debt would be sourced.
• In the present case, the judgment debt was not extinguished by the mere designation in the compromise judgment of
Magdalena’s retirement benefits as the fund from which payment shall be sourced. That the compromise agreement
authorizes recourse in case of default on other executable properties of the spouses Cortez, to satisfy the judgment debt,
further supports our conclusion that there was no assignment of Magdalena’s credit with the GSIS that would have
extinguished the obligation.
• Ruling
• An assignment of credit not only entitles the assignee to the credit itself, but also gives him the power to enforce it as against
the debtor of the assignor.
• Since no valid assignment of credit took place, the spouses Serfino cannot validly claim ownership of the retirement benefits
that were deposited with FEBTC. Without ownership rights over the amount, they suffered no pecuniary loss that has to be
compensated by actual damages. The grant of actual damages presupposes that the claimant suffered a duly proven pecuniary
loss.
• Ruling
• Claim for moral damages not meritorious because no duty exists on the part of the bank to protect interest of third person
claiming deposit in the name of another.
 • As current laws provide, the bank’s contractual relations are with its depositor, not with the third party; “a bank is under
obligation to treat the accounts of its depositors with meticulous care and always to have in mind the fiduciary nature of its
relationship with them.” In the absence of any positive duty of the bank to an adverse claimant, there could be no breach that
entitles the latter to moral damages.

 Banking Laws
 DEUTSCHE BANK AG, Petitioner, 
vs.
COURT OF APPEALS and STEEL CORPORATION OF THE PHILIPPINES, Respondents.
G.R. No. 193065               February 27, 2012
 Facts:
 SteelCorp, as borrower, entered into a loan agreement with Rizal Commercial Banking Corporation (RCBC).
 SteelCorp failed to pay its loan obligations as they fell due.
 Equitable PCI Bank, Inc. (now Banco de Oro) filed a creditor-initiated petition to place SteelCorp under corporate
rehabilitation before the Regional Trial Court of Batangas.
 RTC-Batangas approved the proposed Rehabilitation Plan and ordered the parties to comply strictly with the provisions of
the approved Rehabilitation Plan.
 During the pendency of the proceedings before the RTC-Batangas, RCBC and petitioner Deutsche Bank AG entered into a
deed of assignment.
 The RTC-Batangas, upon the motion of SteelCorp, issued its Order, directing the assignees, including Deutsche Bank AG, to
disclose the actual price or consideration paid by them for the SteelCorp debts assigned and transferred to them.
 In another case where DEUTSCHE BANK AG is also the assignee of debts of Vitarich.
 The RTC-Bulacan in its Decision approved the Vitarich rehabilitation plan and upheld the rights of the assignees as
subrogees to all the rights and obligations of the original creditors.
 Vitarich sought a partial reversal of the said decision.
 Vitarich filed a motion to direct the assignees to disclose the amounts paid by them to their assignors.
 ISSUE:
 Whether the CA gravely abused its discretion amounting to lack or excess of jurisdiction when it ordered the consolidation of
the Deutsche Bank AG petition and the Vitarich petition.
 Ruling:
 Yes. The CA gravely abused its discretion amounting to lack or excess of jurisdiction when it ordered the consolidation of
the Deutsche Bank AG petition and the Vitarich petition.
 The court ruled that consolidation is proper wherever the subject matter involved and relief demanded in the different suits
make it expedient for the court to determine all of the issues involved and adjudicate the rights of the parties by hearing the
suits together.
 The court also ruled that there is no sufficient justification to order the consolidation inasmuch as the Deutsche Bank AG
Petition has no relation whatsoever to the Vitarich Petition.
 The court also ruled that there is no sufficient justification to order the consolidation inasmuch as the Deutsche Bank AG
Petition has no relation whatsoever to the Vitarich Petition.
 Dispositive portion
 WHEREFORE, the petition is GRANTED. The March 12, 2010 and the July 19, 2010 Resolutions of the Court of Appeals in
CA-G.R. SP No. 111556 are REVERSED and SET ASIDE.
 SO ORDERED.
 As to the issue whether a court may compel an assignee to disclose the amounts paid by them to their assignors.
 This was not passed upon by the Court in this case.

DRA. MERCEDES OLIVER v.

PHILIPPINE SAVINGS BANK and LILIA CASTRO
G.R. No. 214567
April 4, 2016
Jose Epifanio A. San Jose Block 3B

 ISSUES:
) Did a bank fail to exercise extraordinary diligence when a bank manager, who was entrusted by one of the depositors a passbook,
withdraws money from the said depositor’s account without any authority or permission?
2) Should a bank be solidarily liable with its employee for the damages the latter committed to the depositor?

FACTS:
 Oliver had a business agreement with Castro, a bank manager of one of PSBank’s branches.
 Because of said agreement, Oliver left her passbook with Castro.
 Because of the business agreement’s success, Oliver was convinced by Castro to avail of an additional credit line which was
secured by a real estate mortgage.
 Castro, without Oliver’s permission, took several loans in Oliver’s name and withdrew P7,000,000.00 from the latter’s
account.

 Because the loans were unpaid, her property was foreclosed.

Yes. “There was a clear showing of PSBank’s failure to exercise the degree of diligence that it ought to have exercised in dealing with
its clients. It could not prove that the withdrawal of P7 million was duly authorized by Oliver. As a banking institution, PSBank was
expected to ensure that such substantial amount should only be transacted with the consent and authority of Oliver. PSBank, however,
reneged on its fiduciary duty by allowing an encroachment upon its depositor’s account without the latter’s permission. Hence,
PSBank must be held liable for such improper transaction.”

2) Yes. “Castro, as acting branch manager of PSBank ,was able to facilitate the questionable transaction as she was also entrusted with
Oliver’s passbook. In other words, Castro was the representative of PSBank, and, at the same time, the agent of Oliver, earning
commissions from their transactions. Oddly, PSBank, either consciously or through sheer negligence, allowed the double dealings of
its employee with its client. Such carelessness and lack of protection of the depositors from its own employees led to the unlawful
withdrawal of the P7 million from Oliver’s account. Although Castro was eventually terminated by PSBank because of certain
problems regarding client accommodation and loss of confidence, the damage to Oliver had already been done. Thus, both Castro and
PSBank must be held solidarily liable.”

• Banking Laws Requirement

• Submitted by Ghiel G. Rosales
• Block A
• Issue: Whether or not a bank which has subrogated the right to collect payments from it’s debtor’s buyer in satisfaction of a
loan has also acquired the debtor’s unfinished obligation from its own buyers.
• FACTS
• Liam purchased a condominium unit from PPGI, delivery of 35 months after start of construction.
• PPGI obtained a loan from UCPB to finance the construction.
• Subrogation of rights to collect all receivables from condominium buyers, including the Liam's.
• Payments were then received by UCPB.
• Liam stopped making payments to UCPB due to the default in delivery by PPGI.
• UCPB denies obligation of the completion of the project to Liam alleging it was PPGI’s obligation.
• PPGI averred that Liam is already estopped from making claims because she agreed to the UCPB-PPGI agreement.
• Conclusion:
UCPB has only acquired PPGI’s right to collect payments from it’s buyers and not the obligation to fulfill the agreement or contracts
entered into by PPGI and it’s buyers.
UCPB and PPGI has only subrogated its right to collect from the latter’s buyers for the settlement of its loans.

O JOE A. ROS and ESTRELLA AGUETE

v.
PHILIPPINE NATIONAL BANK
O G.R. No. 170166
O April 6, 2011
O FACTS
• Joe A. Ros obtained a loan of P115,000.00 from PNB Laoag Branch on October 14, 1974 and as security for the loan, Ros
executed a real estate mortgage involving a parcel of land – Lot No. 9161 of the Cadastral Survey of Laoag, with all the
improvements thereon described under Transfer Certificate of Title No. T-9646.
O PNB instituted extrajudicial foreclosure proceedings on the mortgaged property when the loan remained outstanding upon
maturity.
O After the extrajudicial sale thereof, a Certificate of Sale was issued in favor of PNB, Laoag. After the lapse of one (1) year
without the property being redeemed, the property was registered in the name of PNB, Laoag Branch on August 10, 1978.
O Claiming that she, Estrella Aguete, has no knowledge of the loan obtained by her husband nor she consented to the mortgage
instituted on the conjugal property – a complaint was filed to annul the proceedings pertaining to the mortgage, sale and
consolidation of the property – interposing the defense that her signatures affixed on the documents were forged and that the
loan did not redound to the benefit of the family.
O The complaint was later amended and was raffled to the Regional Trial Court, Branch 15, Laoag City.
O In its decision, the RTC declared the Deed of Real Estate Mortgage and the subsequent foreclosure proceedings conducted
thereon NULL and VOID, ordered the Register of Deeds of the City of Laoag to cancel TCT No. T-15276 in the name of
PNB and revert the same in the name of plaintiffs spouses Joe Ros and Estrella Aguete, ordered PNB to vacate and turnover
the possession of the premises of the property in suit to the spouses Ros; and to pay attorney’s fee and litigation expenses.
O PNB filed its Notice of Appeal7 of the trial court’s decision on 13 September 2001. Ros filed a motion for execution pending
appeal,8 which PNB opposed.9 In an Order12 dated 8 May 2002, the trial court found petitioners’ motion for execution
pending appeal improper because petitioners have made it clear that they were willing to wait for the appellate court’s
decision.
O The appellate court reversed the trial court’s decision, and dismissed Ros’ complaint.
O Ros filed the present petition for review before the Supreme Court on 9 December 2005.
O ISSUE
O Will the Loan and Real Estate Mortgage executed by Ros and Aguete be disproved by the denial of one of the alleged signer,
Aguete?
O RULING
O The husband cannot alienate or encumber any conjugal real property without the consent, express or implied, of the wife.
Should the husband do so, then the contract is voidable.17 Article 173 of the Civil Code allows Aguete to question Ros’
encumbrance of the subject property. However, the same article does not guarantee that the courts will declare the annulment
of the contract. Annulment will be declared only upon a finding that the wife did not give her consent. In the present case, we
follow the conclusion of the appellate court and rule that Aguete gave her consent to Ros’ encumbrance of the subject
property.
O Aguete denies ever having consented to the loan and also denies affixing her signature to the mortgage and loan documents.
O The documents disavowed by Aguete are acknowledged before a notary public, hence they are public documents. Every
instrument duly acknowledged and certified as provided by law may be presented in evidence without further proof, the
certificate of acknowledgment being prima facie evidence of the execution of the instrument or document involved.18 The
execution of a document that has been ratified before a notary public cannot be disproved by the mere denial of the alleged
signer.19 PNB was correct when it stated that petitioners’ omission to present other positive evidence to substantiate their
claim of forgery was fatal to petitioners’ cause.20 Petitioners did not present any corroborating witness, such as a handwriting
expert, who could authoritatively declare that Aguete’s signatures were really forged
O A notarized document carries the evidentiary weight conferred upon it with respect to its due execution, and it has in its favor
the presumption of regularity which may only be rebutted by evidence so clear, strong and convincing as to exclude all
controversy as to the falsity of the certificate. Absent such, the presumption must be upheld. The burden of proof to
overcome the presumption of due execution of a notarial document lies on the one contesting the same. Furthermore, an
allegation of forgery must be proved by clear and convincing evidence, and whoever alleges it has the burden of proving the
same.
O DISPOSITIVE PORTION
O WHEREFORE, we DENY the petition. The Decision of the Court of Appeals in CA-G.R. CV No. 76845 promulgated on 17
October 2005 is AFFIRMED. Costs against petitioners.

 PHILTRUST BANK VS. COURT OF APPEALS

G.R. No. 150318
 Prepared by:
 Monica A. Luna
 Block A
 FACTS:
 The property was in fact owned by Forfom Corporation and titles to the property were acquired through series of fraudulent
acts
 The property was assessed only at 2M but the loan granted was 8M
 ISSUE: Whether or not the rule that persons dealing with registered lands can rely solely on the certificate of title applies to
banks

 Ruling:
 The rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks.
 Banking business being impressed with public interest are expected to exercise more care and prudence than private
individuals in their dealings, even those involving registered lands.
 Consequently, Philtrust should prove that it exercised extraordinary diligence required of it in approving the mortgage
contract in favor of the spouses Claveria.

 LIMSO vs. PNB

 G.R. NO. 158622
 JANUARY 27, 2016
 ISSUE
IF THE REAL ESTATE MORTGAGE WAS EXECUTED BY BOTH NATURAL AND JURIDICAL PERSON BUT ONLY
THE LATTER OWNS THE PROPERTIES, WILL THE APPLICABLE REDEMPTION PERIOD BE ONE YEAR UNDER
ACT NO. 3135 OR THREE MONTHS UNDER R.A. NO. 8791 (THE GENERAL BANKING LAW OF 2000)?
 FACTS
 Spouses Robert and Nancy Limso (Spouses Limso) and Davao Sunrise Investment and Development Corporation (Davao
Sunrise) loaned from Philippine National Bank (PNB) a total amount of ₱700 million secured by real estate mortgage.
 FACTS
 Four (4) parcels of land were the object of the mortgage.
 Three parcels were owned by Davao Sunrise while one was owned by the Spouses.
 Spouses Limso then sold their parcel of land to Davao Sunrise.
 FACTS
 The debtors/mortgagors had difficulty in paying their loan.
 They requested that the loan be restructured.
 The parties then executed a Conversion, Restructuring and Extension Agreement.
 FACTS
 Despite restructuring, they still failed to pay even after demand letters were sent by PNB.
 PNB filed a Petition for Extrajudicial Foreclosure of Real Estate Mortgage before the Sheriff’s Office.
 The auction sale was conducted and PNB was the highest bidder.
 FACTS
 The Sheriff’s Provisional Certificate of Sale was issued but it did not state the applicable redemption period.
 FACTS
 Spouses Limso filed a Petition for Declaratory Relief before the Regional Trial Court.
 They alleged that the provisions of R.A. No. 8791 on Foreclosure of Real Estate Mortgage did not mention a situation where
the Mortgage is executed by both Natural and Juridical Persons.
 They prayed for the declaration of their right as principal mortgagor/owner jointly with a juridical person to redeem within a
period of one year as provided under Act No. 3135.
 FACTS
 The Trial Court ruled in favor of the Spouses.
 PNB filed a petition before the Court of Appeals.
 The appellate court granted.
 Hence, the instant petition.
 RESOLUTION
 Section 47 of R.A. No. 8791 clearly states that the right to redeem belongs to the owner of the property mortgaged.
 The mortgaged properties are all owned by Davao Sunrise, a juridical person.
 Hence, the shorter period of three (3) months is the applicable redemption period.
 RESOLUTION
 The different treatment of natural and juridical persons was based on the nature of the foreclosed properties.
 If used as residence (by natural person), the more liberal one-year redemption period is retained.
 If used for industrial or commercial purposes (by juridical person), a shorter term is deemed necessary to reduce the period of
uncertainty in the ownership of properties and enable the mortgagee-bank to dispose them sooner.
 RESOLUTION
 The Petition was PARTIALLY GRANTED. The Sheriff’s Provisional Certificate of Sale is deemed to have been registered. In
view of the facts, the applicable period of redemption shall be three (3) months as provided under R.A. No. 8791.

 Philippine Amanah Bank (now Al- Amanah Islamic Investment Bank of the Philippines, also known as Islamic Bank ,
petitioner

versus

Evangelista Contreras, respondent

 G.R. No. 173168; September 29, 2014

Joseph Paolo S. Rima

Block B
 Issue:
 Are banks like the Philippine Amanah required to exercise more care and prudence than private individuals in their dealings,
involving registered land since they are impressed with public interest?
 Facts:
 Respondent, Evangelista Contreras, owns a Cadastral Lot and he wants to obtain a loan from the petitioner Bank, Amanah.
So Evangelista went to the house of his brother-in-law, Calinico Ilogon, to seek the assistance in obtaining the said loan since
Calinico and the bank’s Chief of the Loan Division are acquaintances. According to Calinico, the petitioner bank could grant
the loan provided the subject property would be titled.
 As a result, Calinico and the herein respondent executed an agreement stating that the deed of sale they executed was for the
purpose of securing a loan with the petitioner bank.
 Evangelista directed the bank not to release the loan to Calinico, but was informed that the loaned amount had already given
to Calinico and additional loan was also granted and subsequently released.
 Because of the failure of the mortgagor (Calinico) to redeem the property within the period prescribed by law, the title of the
property was consolidated in the bank’s name.
 Evangelista filed a complaint for annulment of the real estate mortgage, cancellation of the title, reconveyance and recovery
but was dismissed for lack of merit. However, the CA upon appeal of respondent set aside the order and declared the real
estate mortgage null and void.
 Ruling:
 The Supreme Court held that banks are expected to exercise more care and prudence than private individuals in their
dealings, even those involving registered lands, since their business is impressed with public interest. The rule that persons
dealing with registered lands can rely solely on the certificate of title does not apply to banks. The ascertainment of the status
or condition of a property offered to it as security for a loan must be a standard and indispensable part of a bank’s operations.
[Cruz v. Bancom Finance Corporation, (2002)]
 In the case at bar, nothing in the document presented by Calinico that would arouse suspicion in order for the bank to prompt
a more extensive inquiry. When the Ilogon spouses applied for a loan, they presented the OCT as collateral issued by the
Office of the Register of Cagayan de Oro and registered in the name of Calinico. The said document does not contain any
inscription or annotation indicating that the Evangelista was the owner or that he has any interest in the subject land. As a
matter of fact, Evangelista admitted that there no encumbrance annotated on Calinico’s title at the time of the Calinico’s loan
application.
 Any private arrangement between Calinico and the respondent regarding the proceeds of the loan was not the concern of the
petitioner bank, as it was not a privy to this agreement. If Calinico violated the terms of his agreement with the respondent on
the turn-over of the proceeds of the loan, then the latter's proper recourse was to file the appropriate criminal action in court.
 Therefore, being free from any encumbrances and not privy to whatever arrangements, the mortgagee-bank is considered as
mortgagee in good faith and the mortgage is valid.
 The RTC’s decision which dismissed the respondents complaint had already become final and executory due to the failure of
the respondent’s counsel to file a timely motion for reconsideration. Respondent’s counsel received the September 13,1993
decision on September 15, 1993. However, records showed that the petition was filed only on December 15, 1993 or 91 days
later.
 Both law and jurisprudence hold that the perfection of an appeal in the manner and period prescribed by law is mandatory.
Failure to conform to the said period renders the judgment final, executory and unappealable. Finality means that the
decision can no longer be disturbed or reopened no matter how erroneous the ruling might have been. The decision full binds
and should be complied with by the parties and their successors in interest. Hence, the decision of Court of Appeals is set
aside and the decision of RTC is reinstated.

YULIM INTERNATIONAL COMPANY VS. INTERNATIONAL EXCHANGE BANK (NOW UNION BANK OF THE
PHILIPPINES)
G.R. No. 203133 February 18, 2015 Reyes, J.:
ISSUES:
1. Whether or not loans are extinguished upon execution of a Deed of Assignment. 2. Whether or not solidarily liability
arises on the basis of a continuing surety agreement.
FACTS:
iBank, a commercial bank, granted Yulim, a domestic partnership, a credit facility in the form of an Omnibus Loan Line for
P5,000,000.00, which was secured by a Chattel Mortgage4 over Yulim’s inventories in its merchandise warehouse. As further
guarantee, the partners, namely, James, Jonathan and Almerick, executed a Continuing Surety Agreement in favor of iBank.
Yulim defaulted on the said note. iBank sent demand letters to Yulim but without success. iBank then filed a Complaint for Sum
of Money with Replevin9 against Yulim and its sureties.
FACTS:
The Court granted the application for a writ of replevin and the items seized from Yulim’s warehouse were worth only
P140,000.00, not P500,000.00 as the petitioners have insisted. Petitioners moved to dismiss the complaint insisting that their loan
had been fully paid after they assigned to iBank their Condominium Unit No. 141 and claimed that while the pre-selling value of
the condominium unit was P3.3 Million, its market value has since risen to P5.5 Million. The RTC, however, did not entertain the
motion to dismiss for non-compliance with Rule 15 of the Rules of Court.
FACTS:
Petitioners filed their Answer reiterating that they have paid their loan by way of assignment of a condominium unit to iBank. The
RTC ordered Yulim alone to pay iBank the amount of P4,246,310.00 and dismissed the complaint against petitioners James,
Jonathan and Almerick, stating that there was no iota of evidence that the loan proceeds benefited their families. Both parties filed
their Notice of Appeal. The factual issue on appeal to the CA, raised by petitioners was whether Yulim’s loans have in fact been
extinguished with the execution of a Deed of Assignment of their condominium unit in favor of iBank, while for iBank, was
whether they should be held solidarily liable with Yulim for its loans and other obligations to iBank. The CA granted the appeal
of iBank, and denied that of the petitioners.
RULING:
1. No. Nowhere can it be remotely construed that the Deed of Assignment would serve to extinguish the petitioners’ loan.
In fact, Section 2.01 of the Deed of Assignment expressly acknowledges that it is a mere “interim security for the repayment of
any loan granted and those that may be granted in the future by the BANK to the ASSIGNOR and/or the BORROWER, for
compliance with the terms and conditions of the relevant credit and/or loan documents thereof.” The condominium unit, then, is a
mere temporary security, not a payment to settle their promissory notes. Section 2.02 of the Deed of Assignment provides
that as soon as title to the condominium unit is issued in its name, Yulim shall “immediately execute the necessary Deed of Real
Estate Mortgage in favor of the BANK to secure the loan obligations of the ASSIGNOR and/or the BORROWER.” This is a plain
and direct acknowledgement that the parties really intended to merely constitute a real estate mortgage over the property. The
assignment being in its essence a mortgage, it was but a security and not a satisfaction of the petitioners’ indebtedness.
RULING:
2. YES. In a contract of suretyship, one lends his credit by joining in the principal debtor’s obligation so as to render himself
directly and primarily responsible with him without reference to the solvency of the principal. In this case, Article I of
the Continuing Surety Agreement executed by the individual petitioners states that they bind themselves “jointly and severally”
with Yulim to “unconditionally and irrevocably guarantee full and complete payment” of any and all credit accommodations that
have been granted to Yulim, the petitioners further warrant that their liability as sureties “shall be direct, immediate and not
contingent upon the pursuit [by] the BANK of whatever remedies it may have against the PRINCIPAL of other securities.” There
can thus be no doubt that the individual petitioners have bound themselves to be solidarily liable with Yulim for the payment of
its loan with iBank.

■ ANCHOR SAVINGS BANK

vs.
PINZMAN REALTY AND DEVELOPMENT CORPORATION
■ G.R. No. 192304       August 13, 2014
■ Prepared By: Sarena P. Noblefranca
■ Issue
Will the imposition of usurious interest rates on a loan obligation secured by a real estate mortgage result in the invalidity of the
subsequent foreclosure sale of the mortgage?
■ Facts
The private respondents obtained a loan from the petitioner in the amount of P3,000,000 secured by a real estate mortgage
over parcels of land located in Cubao, Quezon City. The loan documents provided for payment on an installment basis with three
installment payments.
■ Facts
The loan document also imposed a monthly 5% late payment charge, 25% attorney’s fees, and 25% liquidated damages.
However, among the three checks issued by the private respondent as payment, only the first one was cleared for payment,
leaving an outstanding loan balance of P3,012,252.32. A foreclosure sale was later held where the petitioner emerged as the
highest bidder, and a Certificate of Sale was issued in favour of the petitioner.
■ Facts
Private respondent allegedly tried to settle the loan but was surprised when petitioner issued a Statement of Account stating that
Pinzman Realty now owed the petitioner P12,525,673.44. Private respondent failed to redeem the properties and ownership of
the foreclosed properties was eventually consolidated in petitioner’s name. Petitioner later succeeded in acquiring certificates of
title over the disputed properties.
■ Facts
Private respondents then filed a Complaint for the Annulment of Extrajudicial Foreclosure of Mortgaged Properties, Auction Sale,
Certificate of Sale and Damages against the petitioner before the RTC alleging that the amount demanded in the Notice of
Extrajudicial Sale was exorbitant and excessive.
■ Facts
The RTC dismissed the complaint.
On appeal, the CA reversed and set aside the court a quo. The CA declared that the loan agreement failed to stipulate a rate of
interest and there was no written agreement to prove that the parties agreed to the interest rate of 30.33% per annum on the loan.
The CA held that said rate was excessive, iniquitous, unconscionable and blatantly contrary to law and morals. Further, the CA
ruled that the imposition of such unlawful interest rate will nullify the foreclosure sale arising therefrom.
■ Decision/ Resolution
According to the Supreme Court, “It is jurisprudential axiom that a foreclosure sale arising from a usurious mortgage cannot be
given legal effect.” Citing the cases of Heirs of Zoilo Espiritu v. Sps. Landrito and Castro v. Tan where it ruled that a mortgagor
cannot be legally compelled to pay for a grossly inflated loan and that a foreclosure proceeding where the amount demanded as
outstanding loan was clearly overstated due to exorbitant interest rates is null.
■ Decision/ Resolution
A judgment ordering a foreclosure sale is conditioned upon a finding on the correct amount of the unpaid obligation and the
failure of the debtor to pay the said amount. In the case at bar, the unlawful interest charge which led to the demand for
P4,577,269.42 as stated in the Notice of Extrajudicial Sale resulted in the invalidity of the subsequent foreclosure sale. The
private respondents cannot be obliged to pay an inflated or overstated mortgage indebtedness on account of excessive interest
charges without offending the basic tenets of due process and equity.
However, the nullity of the foreclosure sale is without prejudice to the lender’s right to recover the principal of the loan and the
validity of the terms of the real estate mortgage.

BANK OF THE PHILIPPINE ISLANDS and FGU INSURANCE CORPORATION

VS.
YOLANDA LAINGO
G.R.NO. 205206
March 16, 2016
By: Llorente, Adrienne D.
Block B
 Issue:
 WHETHER OR NOT THE BANK, as an agent of the FGU HAS THE DUTY TO INFORM THE RESPONDENT OF
EXISTENCE OF THE INSURANCE CONTRACT.
 FACTS
 In 1999, Rheozel Laingo, son of the respondent, opened a “Platinum 2-in-1 Savings and Insurance” account with the BPI.
 Platinum 2-in-1 Savings and Insurance account automatically covers an insurance policy against disability or death by the
FGU Insurance Corp.
 An insuance certificate was issued to Rheozel with Laingo (respondent) as the beneficiary.
 Rheozel died in 2000 due to vehicular accident. It was headlined in a newspaper.
 Laingo’s personal secretary went to BPI to withdraw some amount of money from Rheozel’s account to cover for the
burial/funeral expenses. It was affirmed by the Branch manager.
 Cabico, an employee of BPI, went to the burial to verify some information and brought documents to be signed by Laingo.
 2 years later, Rheozel’s sister found the Insurance certificate.
 Laingo sent 2 letters to BPI and FGU requesting them to process her claim as beneficiary. FGU denied her claim.
 FGU contented that it should have been filed within 3 months from the death under Par. 15 of the certificate.
 Laingo filed a Complaint for Specific Performance with Damages and Attorney’s fee with the RTC, and it decided in favor of
the BPI-FGU, denying the claim of Laingo.
 An appeal was filed with the CA, in its decision it reversed the ruling of the trial court. “Laingo could not be expected to do
an obligation which she did not know existed.”
 RULING:
 YES. As the main proponent of the 2-in-1 deposit account, it tied up with the FGU Insurance, as its partner. The BPI acted as
agent of FGU Insurance with respect to the insurance feature of its own marketed product.
 An Agent is one who binds himself to render some service or to do something in representation of another.
 BPI had the primary responsibility o ensure that the 2-in-1 account be reasonably carried out with full disclosure to the
parties concerned, particularly the beneficiaries.

G.R. No. 183794

• Spouses Jaime and Matilde Poon ,
Petitioners,
-versus-
Prime Savings Bank represented by Philippine Deposit Insurance Corporation as Statutory Liquidator,
Respondent.
• G.R. No. 183794
• A petition for review on certiorari assailing CA decision.
• CA affirmed the decision of RTC Naga City
• RTC Decision:
• Ordered partial rescission of penal clause in the contract of lease
• Petitioners to pay P1, 740 000
• one-half of the unused portion of advance rentals
• due to closure of respondent’s business.
•
G.R. No. 183794
FACTS
• Petitioners owned commercial building
• used for bakery business
• location: No. 38 General Luna St. ,Naga City
• G.R. No. 183794
• November 3, 1996
• Matilde Poon and respondent executed a contract of lease over the building
• The building be used by respondent as branch office
• The contract:
• 10 – year contract
• Monthly rental = P 60 000
• Advance payment
• For the first 100 months
• Worth P 6 000 0 00
• For immediate application
• G.R. No. 183794
• In addition, paragraph 24 of the Contract provides:
• Should the lease[ d] premises be closed, deserted or vacated by the LESSEE…The LESSOR shall thereupon have
the right to enter into a new contract with another party. All advanced rentals shall be forfeited in favor of the
LESSOR
• G.R. No. 183794
FACTS
• BSP placed respondent under receivership of PDIC 3 years later
• by virtue of BSP Monetary Board Resolution No. 22
• Provides that PSB (respondent) :
• Is insolvent
• Has insufficient assets as determined by BSP to meet liabilities
• Cannot continue in business
• has willfully violated cease and desist orders under Section 37 that has become final, involving acts or
transactions which amount to fraud or a dissipation of the assets of the institution
• G.R. No. 183794
FACTS
• BSP ordered respondent’s liquidation
• under MB Resolution No. 664
• Respondent vacated and surrendered the leased premises
• PDIC issued petitioners demand letter:
• Ask to return the unused advance rental equivalent to P 3, 480, 000
• On the ground: par.24 of the contract is inoperative
• Business closure constitutes force majeure
• Invoked Art. 1267 of RA 384 (Civil Code)
• Alternative basis of refund
• G.R. No. 183794
FACTS
• Petitioners refused PDIC’s demand
• Reason:
• par. 24 of the contract
• petitioners entitled to retain remainder of advance rental
• Respondent sued petitioners before RTC Naga City
• Prayed for partial rescission of contract; and/or
• Recovery of a sum of money
•
G.R. No. 183794

FACTS
RTC Ruling
• partial rescission of the Contract of Lease dated November 3, 1996 (Par. 24)
• penal in nature
• the clause was a valid contractual agreement
• premature termination of the lease due to the BSP's closure of respondent's business was involuntary
(Provident Savings Bank v. CA)
• defendants to refund to plaintiff Pl 740 000, one-half of the unused portion of the advance rentals
• Invokes equity jurisdiction (Article 1229 of Civil Code) to answer for:
• respondent's unpaid utility bills and E-V AT
• petitioner's lost business opportunity from its former bakery business
•
G.R. No. 183794

FACTS
CA Ruling
• CA affirmed the RTC Decision
• Rationale
• the closure of business was not a fortuitous event
• respondent committed fraudulent acts and transactions
• first requisite of a fortuitous event is lacking
• the cause of the breach of obligation must be independent of the will of the debtor
•
G.R. No. 183794
Issues
• Whether or Not
• ( 1) respondent may be released from its contractual obligations to petitioners on grounds of fortuitous event
• under Article 1174 of the Civil Code; and
• under Article 1267 of the Civil Code;
• (2) the proviso in the parties' Contract allowing the forfeiture of advance rentals was a penal clause; and
• (3) the penalty agreed upon by the parties may be equitably reduced under Article 1229 of the Civil Code.
•
G.R. No. 183794
Court Ruling
• Denied the petition
• (1) The closure of respondent's business was neither fortuitous nor unforeseen event
• Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or
when the nature of the obligation requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which, though foreseen, were inevitable. 
• Bank’s insolvency is not a fortuitous event
• BSP's action was not tainted with arbitrariness or bad faith
• receivership and liquidation proceedings was pursuant to Section 30 of RA 7653
• respondent was partly accountable for the closure of its banking business
• G.R. No. 183794
Court Ruling
• Art. 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor
may also be released therefrom, in whole or in part.
• Not an absolute application of the principle of rebus sic stantibus
• To apply, must follow:
• (1)event or change in circumstance could not have been foreseen at the time of the execution of
the contract.
• (2)It makes the performance of the contract extremely difficult but not impossible.
• (3)It must not be due to the act of any of the parties.
• (4)The contract is for a future prestation
• G.R. No. 183794
Court Ruling
• Inconvenience, unexpected impediments, increase expenses, or pecuniary inability to fulfill engagement, will not
relieve obligor from undertaking what has contracted.
• Prestation means object of the contract
• The conduct required of the parties
• In the case at hand, the lessee was to pay the agreed rents for the whole contract period
• 2nd and 4th requisites are present.
• 1st and the 3rd requisites are lacking.
• Possibility of deterioration or loss of respondent's business within 10 years was foreseen/considered by parties
• G.R. No. 183794
Court Ruling
• (2) The forfeiture clause in the Contract is penal in nature.
• A penal clause calls for the forfeiture of any remaining deposit
• in the event of the termination or cancellation of the agreement
• by reason of the lessee's violation of any of the terms and conditions
• the forfeiture of advance rentals under paragraph 24 is a penal clause
• It provides for liquidated damages, and
• to strengthen the coercive force of the obligation by the threat of greater responsibility in case of breach.
• paragraph 5 of the Contract also provides:
• It is hereby stipulated that should the leased property be foreclosed by PCI Bank or any other banking or financial
institution, all unused rentals shall be returned by the LESSOR to the LESSEE;
• (3)A reduction of the penalty agreed upon by the parties is warranted under Article 1129 of the Civil Code.
• Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly
complied with by the debtor. Even •· · if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.
• Under the circumstances, it is unfair to deprive depositors and creditors of whatever bank assets/receivables the
PDIC can recover.
• PDIC is mandated to recover and conserve assets of the foreclosed bank on behalf of the respondent's depositors and
creditors.
• 50% reduction of the penalty is justified in consideration of:
• the interest of innocent debtors and creditors of a delinquent bank establishment

Commissioner of Internal Revenue vs. Philippine National Bank

G.R. No. 195147 July 11, 2016
Bersamin, J.,

Facts:
• On March 23, 2000, the petitioner issued Letter of Authority No. 00058992, which PNB received on March 28,
2000. The letter of authority authorized the examination of PNB’s book of accounts and other accounting records in
relation to its internal revenue taxes for taxable year 1997.
• On May 12, 2003, PNB received the preliminary assessment notice with details of discrepancies dated March 31,
2003, which indicated that PNB had deficiency payments of documentary stamp taxes (DST), withholding taxes on
compensation, and expanded withholding taxes for taxable year 1997.
• On May 26, 2003, the petitioner issued a formal assessment notice, together with a formal letter of demand and
details of discrepancies, requiring PNB to pay. PNB immediately paid Assessment No. 97-000067 on May 30, 2003,
but filed a protest against Assessment No. 97-000064.
• The petitioner denied PNB's protest. The petitioner claims that while interbank call loans were not considered as
deposit substitute debt instruments, PNB' s interbank call loans, which had a maturity of more than five days, were
included in the concept of loan agreements; hence, the interbank call loans were subject to DST.

Issue:
Whether or not an interbank call loan is included in the concept of loan agreements hence subject to documentary stamp taxes.
Ruling:
No. An interbank call loan refers to the cost of borrowings from other resident banks and non-bank financial institutions with
quasi-banking authority that is payable on call or demand. It is transacted primarily to correct a bank's reserve requirements.
Under the Manual of Regulation for Banks (MORB) issued by the Bangko Sentral ng Pilipinas (BSP), interbank borrowings,
which include interbank call loans, shall be evidenced by deposit substitute instruments containing the minimum features
prescribed under Section X235.3 of the MORB, except those that are settled through the banks' respective demand deposit
accounts with the BSP via Philpass.
 An interbank call loan is considered as a deposit substitute transaction by a bank performing quasi-banking functions to cover
reserve deficiencies. It does not fall under the definition of a loan agreement. Even if it does, the DST liability under Section 180,
supra, will only attach if the loan agreement was signed abroad but the object of the contract is located or used in the Philippines,
which was not the case in regard to PNB' s interbank call loans.

 Situs Development Corporation et. al.

vs
Asiatrust Bank et. al.
GR. No. 180036, July 25, 2012
 Jesamine B. Lorenzo
 Block A
 Issues:
1. Whether the dismissal of the Petition for Rehabilitation of SITUS is in order
2. Whether the Stay Order affects foreclosure proceedings involving properties mortgaged by stockholders to secure corporate
debts
3. Whether petitioners can redeem the credit transferred by Metrobank to Cameron by paying only the price paid by the
transferee.
 Facts:
 The Chua Family headed by Tony Chua ventured into a real estate development/leasing by organizing Situs Development
Corporation (Situs) in order to build a shopping mall complex. To finance the construction of the complex, Situs, Color and
Tony Chua and his wife obtained loans from Allied, Asiatrust and Metrobank secured by real estate mortgages of parcels of
land, all of which are registered in the names of Tony Chua and his wife. Additional loans from the same banks were
obtained and the real estate mortgages were amended. Spouses Chua likewise executed 5 Continuing
Guarantee/Comprehensive Surety in favour of Allied to guarantee the payments of the loans of Situs and Daily.
 Situs, Color and Daily and the spouses Chua failed to pay their obligations as they fell due, prompting Allied and Metrobank
to apply for the foreclosure of the real estate mortgages, which were approved and Asiatrust to send a demand letter for the
payment of their obligations.
 Petitioners filed for a petition for the declaration of state of suspension of payments with approval of proposed rehabilitation
plan. In view of the petition, the court a quo issued a Stay Order which was opposed by Allied and Asiatrust.
 Petitioners likewise filed a motion for the cancellation of the certificate of sale relating to the foreclosed parcels of land in
violation of the Stay Order which was vehemently opposed by Allied arguing that the foreclosure proceedings cannot be
considered as a claim as understood under Section 1, Rule 2 of the Interim Rules of Procedure on Corporate Rehabilitation.
 Asiatrust filed an urgent manifestation praying for the outright dismissal of the petition inasmuch as Metrobank and Allied
has already foreclosed the mortgages on the properties that stood as securities for petitioners’ obligations, as well as the
lifting of the Stay Order.
 Petitioners filed a Second Amended Rehabilitation Program upon the lapse of 180 days required by Section 11 of the Interim
Rules of Procedure on Corporate Rehabilitation which was approved by the court a quo.
 Also, the court a quo declared that the motion to dismiss filed by Allied was moot, prompting Allied, Asiatrust and
Metrobank to file their separate notices of appeal.
 The appeals were granted by the appellate court, hence, the instant Rule 45 Petition.
 During appeal, Metrobank had sold, transferred and conveyed all its rights, title and interest over the loans of petitioners to
Cameron.
 Ruling:
Issue No. 1
 The dismissal of the Petition for Rehabilitation is in order.
 Rules provide that “the petition shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of one
hundred eighty (180) days from the date of the initial hearing.”
 The court’s justification that “the creditor banks are fully aware that the real property on which the building structure of Situs
Development (sits) is more than sufficient to answer for all the outstanding obligations of the petitioners” is irrelevant
because the assets of the stockholders may not be considered as assets of the corporation and vice versa.
Issue No. 2
 The Stay Order does not suspend the foreclosure of a mortgage constituted over the property of a third-party mortgagor.
 The Stay Order can only cover those claims directed against petitioner corporations or their properties, against petitioners’
guarantors, or against petitioners’ sureties who are not solidarily liable with them.
Issue No. 2 (cont..)
 The undertaking of spouses Chua with respect to the loans of petitioner corporations is the sale at public auction of certain
real properties belonging to them satisfy the indebtedness of petitioner corporations in case of a default by the latter. This
undertaking is properly that of a third-party mortgagor or an accommodation mortgagor, whereby one mortgages one’s
property to stand as security for the indebtedness of another.
Issue No. 3
 Petitioners cannot redeem the credit transferred by Metrobank to Cameron by reimbursing the transferee.
 The credit owed by petitioner corporations to Metrobank had already been extinguished when the bank foreclosed upon the
parcel of land mortgaged to it by the spouses Chua as security for petitioners’ debts, in full satisfaction of the loan the bank
has extended. Therefore, during the pendency of these proceedings, what was transferred by Metrobank to Cameron was
ownership over the foreclosed property, subject only to the right of redemption by the proper party within one year reckoned
from the date of registration of the Certificate of Sale.

• Mervic Realty Inc. & Viccy Realty Inc.

vs.
China Banking Corporation

• G.R. No. 193748

• February 3, 2016
• Issue:
• Whether or not the petitioners, separate corporations having a common president and majority of the stockholders and its
officers belonging to one family, can jointly file a petition for rehabilitation.
• Facts:
• Petitioners, Mervic Realty, Inc. and Viccy Realty, Inc. jointly filed a petition for the declaration of state suspension of
payments with a proposed rehabilitation plan (Petition for rehabilitation).
• They disclosed that their common president is Mario Siochi and that majority of their stockholders and officers are members
of the Siochi family.
• Petitioners averred that they were financially stable until they were hit by the Asian financial crisis in 1997. As a result of the
financial crisis, they foresaw the impossibility of meeting their obligations when they fall due.
• The petitioners thus prayed that the rehabilitation court issue a stay order to suspend the enforcement of claims against them.
• The respondent China Banking Corporation, a creditor of the petitioners, opposed the petition for rehabilitation. It alleged
that it had acquired tittle to and initiated extrajudicial foreclosure proceedings over some of Mervic Realty, Inc.’s real
properties.
• It argued that the petitioners are separate entities and should have filed separate petitions.
• Ruling:
• NO. The court held that the consolidation of petitions involving two separate entities is not proper.
• Although the corporations had interlocking directors, owners, officers, as well as intertwined loans, the two corporations
were separate, each one with its own distinct personality.
• In determining the feasibility of rehabilitation, the court evaluates the assets and liabilities of each of these corporations
separately and not jointly with other corporations.

• Bank of the phil. Islands vs. Eduardo hong

• G. R. No. 161771February 15, 2012
• Facts:
• On September 16, 1997, the EYCO Group of companies filed a petition for suspension of payments and rehabilitation before
the SEC ( SEC Case No. 09-97-5764).
• On December 18, 1998, the hearing panel approved the proposed rehabilitation prepared by the EYCO
• Sometime in November 2000 while the case was still pending with the CA, petitioner BPI filed a petition for extra-judicial
foreclosure of real properties mortaged by the EYCO Properties in the RTC of Valenzuela City and these were subject to
public auction on December 19, 2000
• Eduardo Hong, the respondent, claiming that the foreclosure was illegal, filed an action for damages against the petitioner in
the same court
• After the hearing, the court issued a TRO
• Petitioner filed a motion to dismiss claiming that the jurisdiction over the reliefs prayed for belongs to the SEC
• On January 17, 2001, the trial court denied the motion to dismiss
• Petitioner challenged the validity of the trial court’s ruling before the CA
• The CA affirmed the trial court’s denial of the petitioners motion to dismiss
• issue
• Whether or not the RTC can take cognizance of the injunction suit despite the pendency of SEC Case No. 09-97-5764
• ruling
• The petition has no merit
• Jurisdiction is defined as the power and authority of a court to hear and decide a case. A court’s jurisdiction over the subject
natter of the action is conferred only by the Constitution or by statute
• An action for injunction is a suit which has for its purpose the enjoinment of the defendant, perpetually or for a particular
time.
• R. A. 8799 took effect on August 8, 2000 transferred to the appropriate RTC the SEC’s jurisdiction over those cases
enumerated in Sec. 5 PD No. 902-A
Section 52. The Commission’s jurisdiction over all cases enumerated under Section 5 of PD No. 902-A is hereby transferred
to the courts of general jurisdiction on the appropriate RTC. Provided that the SC in the exercise of its authority may designate the
RTC branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over pending suspension
of payments/ rehab cases filed as of June 30. 2000until finally disposed
• However, upon the effectivity of R.A 8799 SEC case 09-97-5764 was no longer pending, and the RTC branch was
designated by the SC to exercise over cases formerly cognizable by the SEC.
• The petition for review on certiorari is denied. Affirming the decision dated September 27, 2002 and Resolution dated
January 12, 2004 of the CA in CA-GR SP No. 64166

 CASTILLO
vs.
SECURITY BANK CORPORATION
 (G.R. No. 196118,July 30, 2014)
 FACTS
 Spouses Leon and Teresita Castillo, engaged in poultry farming, obtained a loan from respondent SBC in the amount of
P47.5M.
 To secure said loan, they executed a real estate mortgage over 11 parcels of land belonging to different members of the
Castillo family
 They failed to settle the loan.
 SBC foreclosed the properties.
 SBC was adjudged as the winning bidder.
 The spouses were able to redeem the foreclosed properties, except the lots covered by TCT Nos. 28302 and 28297.
 Leonardo, Leon’s sibling, filed a complaint for the partial annulment of the real estate mortgage.
 He alleged that he owns the property covered by TCT No. 28297 and that the Spouses Castillo used it as one of the collaterals
for a loan without his consent.
 He contested his supposed SPA in Leon’s favor, claiming that it is falsified.
 He also assailed the foreclosure of the lots under TCT Nos.20030 and 10073 which were still registered in the name of their
deceased father.
 Leonardo attacked SBC’s imposition of penalty and interest on the loans as being arbitrary and unconscionable.
 The RTC ruled in Leonardo’s favor.
 CA reversed and set aside the RTC Decision, essentially ruling that the real estate mortgage is valid.
 ISSUES
 Is the real estate mortgage constituted over Leonardo’s property valid, despite his contention that the SPA authorizing his
brother, Leon, to mortgage his property was falsified?
 2.Is the imposition of penalty and interest of 16% unconscionable?
 RULING
1.Yes.
 The legal requisites for a valid mortgage are:
(1) It must be constituted to secure the fulfillment of a principal obligation;
(2) The mortgagor must be the absolute owner of the thing mortgaged;
(3) The persons constituting the mortgage must have the free disposal of their property, and in the absence thereof, they should
be legally authorized for the purpose.
 It is a settled rule that allegations of forgery, like all other allegations, must be proved by clear, positive, and convincing
evidence by the party alleging it. It should not be presumed, but must be established by comparing the alleged forged
signature with the genuine signatures.
 Leonardo simply relied on his self-serving declarations that the SPA was falsified as he was in America at the time of its
execution. He refused to present further corroborative evidence, saying that the falsified document itself is the best evidence.
2.No.
The General Banking Laws, particularly Sec 47 (Foreclosure of Real Estate Mortgage) par.2 says:
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial foreclosure, shall have the
right to redeem the property in accordance with this provision until, but not after, the registration of the certificate of foreclosure
sale with the applicable Register of Deeds which in no case shall be more than three (3) months after foreclosure, whichever is
earlier. Owners of property that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain their redemption
rights until their expiration. Verily, the redemption price comprises not only the total amount due under the mortgage deed, but
also with interest at the rate specified in the mortgage, and all the foreclosure expenses incurred by the mortgagee bank.
 To sustain Leonardo's claim that their payment of P45M had already extinguished their entire obligation with SBC would
mean that no interest ever accrued from 1994, when the loan was availed, up to the time the payment of P45,000,000.00 was
made in 2000-2001.
 SBC's 16% rate of interest is not computed per month, but rather per annum or only 1.33% per month.
 Spouses Bacolor v. Banco Filipino Savings and Mortgage Bank, Dagupan City Branch:
the interest rate of 24% per annum on a loan of P244,000.00 is not considered as unconscionable and excessive. As such, the
Court ruled that the debtors cannot renege on their obligation to comply with what is incumbent upon them under the contract of
loan as they are bound by its stipulations. Also, the 24% per annum rate or 2% per month for the penalty charges imposed on
account of default, cannot be considered as skyrocketing.
 The enforcement of penalty can be demanded by the creditor in case of non-performance due to the debtor's fault or fraud.
The nonperformance gives rise to the presumption of fault and in order to avoid the penalty, the debtor has the burden of
proving that the failure of the performance was due to either force majeure or the creditor's own acts. In the instant case,
petitioner failed to discharge said burden and thus cannot avoid the payment of the penalty charge agreed upon.

WONDER BOOK CORPORATION

VS.
PHILIPPINE BANK OF COMMUNICATIONS
 GR. No. 187316
 July 16, 2012
FACTS:
 Petitioner is a corporation duly organized and existing under Philippine laws engaged in the business of retailing books,
school and office supplies, greeting cards and other related items.
 The petitioner in the course of its business acquired a loan from the respondent.
 Then, petitioner filed a petition for rehabilitation with the RTC.
 The respondent filed an opposition on the ground that the corporation is insolvent and can no longer be rehabilitated.
 ISSUE:
Whether or not Wonder Book’s petition for rehabilitation is impressed with merit.
RULING:
 Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation
to its former position of successful operation and solvency.
 The purpose of rehabilitation proceedings is to enable the company to gain new lease on life and thereby allow creditors to be
paid their claims from its earnings.
 The rehabilitation of a financially distressed corporation benefits its employees, creditors, stockholders and, in a larger sense,
the general public.
 Under Sec. 23, Rule 4 of the Interim Rules, a rehabilitation plan may be approved if there is a showing that rehabilitation is
feasible and the opposition entered by the creditors holding a majority of the total liabilities is unreasonable.
 In determining whether the objections to the approval of a rehabilitation plan are reasonable or otherwise, the court has the
following to consider: (a) that the opposing creditors would receive greater compensation under the plan than if the corporate
assets would be sold; (b) that the shareholders would lose their controlling interest as a result of the plan; and (c) that the
receiver has recommended approval.
 Rehabilitation is therefore available to a corporation who, while illiquid, has assets that can generate more cash if used in its
daily operations than sold.
 The figures appearing on Wonder’s Book financial documents and the nature and value of its assets are indeed discouraging.
 In other words, rehabilitation is not the proper remedy for Wonder Book’s dire financial condition.
 Given that it is actually insolvent and not just suffering from temporary liquidity problems, rehabilitation is not a viable
option.
 Another reason for this Court’s denial of Wonder Book’s petition is its failure to comply with Sec. 5 of the Interim Rules.

• BANK OF THE PHILIPPINE ISLANDS, petitioner

-vs-
VICENTE VICTOR SANCHEZ, HEIRS OF KENNETH NEREO SANCHEZ and HEIRS OF IMELDA C. VDA. DE
SANCHEZ, respondents
• GR No. 179518 November 19, 2014
• Issue
Whether or not BPI, through FEBTC, acted in good faith when it entered into a loan agreement with TSEI secured by a Real
Estate Mortgage over the property, registered in the name of the Sanchezes, and thus can intervene in the rescission of the
contract to sell said property between TSEI and the Sanchezes.
• Facts
• Felisa Yap agreed to sell the parcel of land registered in the name of Vicente Sanchez, Imelda C. Vda. De Sanchez and
Kenneth Sanchez, the late husband of Yap to Jesus Garcia.
• Garcia was given the owner’s copy of TCT 156254 and immediately took possession of the lot.
• The parties executed an Agreement which provides that in case one of the checks is dishonored by the bank Vicente and Yap
may opt to rescind the contract.
• Later, 2 checks were dishonored and Garcia failed to replace such checks.
• Yap and Vicente filed before the RTC a Complaint for the rescission of contract against Garcia and TSEI.
• Meanwhile, Garcia managed to cause the cancellation of TCT 156254 and its replacement with TCT 383697 in the name of
TSEI, with date of issuance prior to the date the sale was agreed upon.
• Before the Complaint, Far East Bank and Trust Company (FEBTC), which later merged with BPI, entered into a Loan
Agreement with TSEI secured by a Real Estate Mortgage over TCT 156254.
• Afterwards, Garcia submitted a copy of TCT 383697 to FEBTC.
• Upon default, FEBTC foreclosed the subject lot and had the Foreclosure Certificate of Sale annotated on TCT 383697.
• The RTC ruled that the Sanchezes have the right to rescind the contract and declared the intervention of BPI without merit.
• The CA affirmed the decision of the RTC
• Ruling
• No. FEBTC (BPI) was negligent and cannot be considered a mortgagee in good faith.
• Subsequent transfer of the subject property to third persons can not bar rescission if such persons acted in bad faith. (Art.
1385 of the Civil Code)
• Issue
• Whether or not BPI, through FEBTC, acted in good faith when it entered into a loan agreement with TSEI secured by a Real
Estate Mortgage over the property, registered in the name of the Sanchezes, and thus can intervene in the rescission of the
contract to sell said property between TSEI and the Sanchezes.
• Ruling
• The general rule that a mortgagee need look beyond the title does not apply to banks.
• FEBTC should have exercised due diligence and examined the subject property which was offered to secure the loan applied
for.
• FEBTC failed to require Garcia/TSEI to submit a Special Power of Attorney authorizing them to mortgage the subject
property.
• The SC declared the intervention of the BPI was without merit.

 BPI Express Card Corporation v. Ma. Antonia R. Armovit

 G.R. No. 163654, October 8, 2014
 ISSUE
 Whether or not Armovit is entitled to moral and exemplary damages due to her supposed failure to reapply for reactivation
despite the absence of bad faith on the part of BPI by pointing out that Armovit had been duly notified of the suspension ?
 FACTS
 Ma. Antonia R. Armovit treated her British friends to lunch at a restaurant.
 She handed to the waiter her BPI Express Credit Card to settle the bill but the waiter returned and informed that her card had
been cancelled upon verification with the BPI Express Credit.
 FACTS
 Armovit called BPI and the latter told her that her credit card had been summarily cancelled for failure to pay her outstanding
obligations.
 She denied having defaulted on her payments and demanded for compensation for the shame and embarrassment she
suffered.
 FACTS
 BPI further claimed that Armovit failed to submit the required application form in order to reactivate her credit card
privileges.
 Later on, Armovit received a telegraphic message from BPI apologizing for its error of inadvertently including her credit card
in Caution List sent to its affiliated merchants.
 FACTS
 BPI claimed that it sent Armovit a telegraphic message requesting her to pay her arrears for three consecutive months.
 As she did not comply with the request, it temporarily suspended her credit card with due notice to her.
 FACTS
 Armovit sued BPI for damages insisting that she had been a credit card holder in good standing, and that she did not have any
unpaid bills at the time of the incident.
 RTC ordered BPI to pay Armovit moral damages of P100,000; exemplary damages and attorney’s fees each in the amount of
P10,000.00 which the Court of Appeals affirmed.
 FACTS
 Hence, this petition, BPI appealed the award of moral and exemplary damages alleging that it is not negligent in dealing with
Armovit.
  DECISION/RESOLUTION
 Yes, Armovit is entitled to moral and exemplary damages despite the absence of bad faith on the part of BPI.
 DECISION/RESOLUTION
 The relationship between the credit card issuer and the credit card holder is a contractual one that is governed by the terms
and conditions found in the card membership agreement.
 DECISION/RESOLUTION
 Such terms and conditions constitute the law between the parties. In case of their breach, moral damages may be recovered
where the defendant is shown to have acted fraudulently or in bad faith.
 DECISION/RESOLUTION
 Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity.
 DECISION/RESOLUTION
 However, a conscious or intentional design need not always be present because negligence may occasionally be so gross as to
amount to malice or bad faith. Hence, bad faith in the context of Article 2220 of the Civil Code includes gross negligence.
 CONCLUSION
 The Terms and Conditions Governing the Issuance and Use of the BPI Express Credit Card between BPI Express Credit and
its card holders, including Armovit, determined the rights and obligations of the parties.
 CONCLUSION
 Yet, a review of such terms and conditions did not reveal that Armovit needed to submit her new application as the
antecedent condition for her credit card to be taken out of the list of suspended cards.
 CONCLUSION
 The letter of BPI Express Credit did not clearly and categorically inform Armovit that the submission of the new application
form was the pre-condition for the reactivation of her credit card.
 CONCLUSION
 BPI acted in wanton disregard of its contractual obligations with her.
 BPI Express Credit’s negligence was even confirmed by the telegraphic message it had addressed and sent to Armovit
apologizing for the inconvenience caused inadvertently including her credit card in the caution list.
 CONCLUSION
 It was of no consequence that the telegraphic message could have been intended for another client, as BPI Express Credit
apparently sought to convey subsequently, because the tenor of the apology included its admission of negligence in dealing
with its clients, Armovit included.
 DOCTRINE
 In case of breach of contracts, moral damages may be recovered on the ground of bad faith.
 It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.
 That design, however, need not always be present because negligence may occasionally be so gross as to amount to malice or
bad faith.
 Hence, bad faith in the context of Article 2220 of the Civil Code includes gross negligence.

PHILIPPINE ASSET GROWTH TWO, INC. AND PLANTERS DEVELOPMENT BANK

VS. FASTECH
SYNERGY
PHILIPPINES,
INC.

 G.R. No. 206528

 JUN 2 8, 2016
Issue:
Whether or not the Rehabilitation Plan is feasible.
Facts of the Case:
 Respondents filed a verified Joint Petitions for corporate rehabilitation, with prayer for the issuance of a Stay or Suspension
Order.
 The RTC-Makati issued a Commencement Order with Stay Order, and appointed Atty. Rosario S. Bemaldo as Rehabilitation
Receiver, which she accepted.
 RTC-Makati gave due course to the petition.
  RTC-Makati dismissed rehabilitation despite favorable recommendation from rehabilitation receiver.
 Aggrieved, respondents appealed to the CA, with prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction.
 Court-appointed rehabilitation receiver submitted manifestation to the CA maintaining that rehabilitation is viable and
attainable.
 Court of appeals reversed and set aside the ruling of RTC-Makati,
 It ruled that RTC-Makati grievously erred in disregarding the report/opinion of the Rehabilitation Receiver that respondents
may be successfully rehabilitated, despite being highly qualified to make an opinion on accounting in relation to
rehabilitation matters.
 CA reinstated the rehabilitation petition, approved respondents' Rehabilitation Plan, and remanded the case to the RTC-
Makati to supervise its implementation.
 PDB filed a motion for reconsideration which was, however, denied in a Resolution.
Held:
 No. In the present case, the Rehabilitation Plan failed to comply with the minimum requirements, (a) material financial
commitments to support the rehabilitation plan; and ( b) a proper liquidation analysis, under Rules of Procedure on Corporate
Rehabilitation.
 The Court also notes that while respondents have substantial total assets, a large portion of the assets of Fastech Synergy and
Fastech Properties is comprised of noncurrent assets, such as advances to affiliates.
 Moreover, while there is a claim that unnamed customers have made investments, this can hardly be construed as a material
financial commitment which would inspire confidence that the rehabilitation would turn out to be successful. Case law holds
that nothing short of legally binding investment commitment/s from third parties is required to qualify as a material financial
commitment. Here, no such binding investment was presented.

• Robinson’s Bank Corporation vs Gaerlan

• GR No. 195289
• 24 September 2014
• @ Del Castillo, J.
Is a Motion for Intervention by originally impleaded creditors in a rehabilitation proceeding proper in a Petition for Review?
FACTS:
• WGC filed a Petition for Rehabilitation with Prayer for Suspension of Payments, Actions and Proceedings
• June 6, 2008: RTC approved the Rehabilitation Plan which includes a pari passu sharing between the secured and unsecured
creditors, thereby disregarding the Order of Preference of Credit

• TIDCORP, a secured creditor of WGC, filed an Petition for Review

Contention: Order of Preference must be observed in Rehabilitation Proceedings
• RBC, a secured and unsecured creditor of WGC, filed an Urgent Motion for Intervention
Contention: During rehabilitation proceedings, Secured and Unsecured Creditors stand on equal footing.
• TIDCORP opposed RBC’s intervention
Citing Rule 3, Section 1 of the Interim Rules Procedure on Corporation Rehabilitation
- Motion for Intervention is a prohibited pleading.

• July 19, 2010: Court of Appeals denied RBC’s motion to intervene,

• RBC filed a Motion for Reconsideration
Contention: Interim Rules apply only during rehabilitation proceedings before the court decides the case, and after a
decision is rendered, the Rules of Court apply.
• December 6, 2010: CA denied the MR

• Hence, RBC filed this Petition for Certiorari before the Supreme Court
• WHEREFORE, the Petition is partially GRANTED. The assailed July 19, 2010 and December 6, 2010 Resolutions of the
Court of Appeals in CA – GR no 104141 are SET ASIDE. The Court of Appeals is hereby directed to allow petitioner
Robinson’s Bank Corporation to file its comment and to participate in CA - GR no 10414.

• SO ORDERED.
• The Supreme Court applied Rule 3, Section 5 of the Rules of Procedure on Corporate Rehabilitation
• The review of any order or decision of the rehabilitation court or on appeal therefrom shall be in accordance with the Rules of
Court, unless otherwise provided.
• However, the Court noted that Intervention, under the Rules of Court, can only be availed by third parties, not originally
impleaded in the proceeding.
• Hence, intervention is not the proper mode for RBC coming to the CA since it is already a party to the rehabilitation
proceedings.
• The Court considered RBC standing that may be injured or benefited by the outcome of TIDCORP’s Petition for Review
• Downgraded standing or status
• Manner of recovery of credits will be altered
• Danger of being held liable on TIDCORP’s accusations relative to its Indemnity Agreement with WGC
• While RBC chose the wrong mode for interposing its comments and objections, this does not necessarily warrant the outright
denial of its chosen remedy; the CA should have allowed RBC to comment and participate in the proceedings.

PHILIPPINE ASSET GROWTH TWO, INC. (Successor-In-Interest

of Planters Development Bank) and PLANTERS DEVELOPMENT BANK, Petitioners.

VERSUS

FASTECH SYNERGY PHILIPPINES, INC. (Formerly First Asia System Technology, Inc.), FASTECH
MICROASSEMBLY & TEST, INC., FASTECH ELECTRONIQUE, INC., and FASTECH PROPERTIES, INC., Respondents.

G.R. No. 206528 june 28, 2016

Facts:

• Respondents filed a verified Joint Petitions for corporate rehabilitation (rehabilitation petition) before the RTC-Makati, with
prayer for the issuance of a Stay or Suspension Order they claimed that:

(a) their business operations and daily affairs are being managed by the same individuals;

(b) they share a majority of their common assets; and

(c) they have common creditors and common liabilities.

Among the common creditors listed in the rehabilitation petition was PDB, which had earlier filed a petition for extra judicial
foreclosure of mortgage over the two (2) parcels of land. The foreclosure sale was held on April 13, 2011, with PDB emerging as
the highest bidder.

Respondents claimed that this situation has impacted on their chance to recover from the losses they have suffered over the years,
since the said properties are being used by Fastech Microassembly and Fastech Electronique in their business operations, and a
source of significant revenue for their owner-lessor, Fastech Properties.

Hence, respondents submitted for the court's approval their proposed Rehabilitation Plan, which sought:

(a) a waiver of all accrued interests and penalties;

(b) a grace period of two (2) years to pay the principal amount of respondents' outstanding loans, with the interests accruing
during the said period capitalized as part of the principal, to be paid over a twelve (12)-year period after the grace period; and

(c) an interest rate of four percent ( 4%) and two percent (2%) per annum (p.a.) for creditors whose credits are secured by real
estate and chattel mortgages, respectively.

• the RTC-Makati Ruling

RTC-Makati dismissed the rehabilitation petition despite the favorable recommendation of its appointed Rehabilitation
Receiver. It found the facts and figures submitted by respondents to be unreliable in view of the disclaimer of opinion of the
independent auditors who reviewed respondents' 2009 financial statements, which it considered as amounting to a
"straightforward unqualified adverse opinion."

• The Proceedings Before the CA

The CA rendered a Decision reversing and setting aside the RTC-Makati ruling. It ruled that the RTC-Makati grievously
erred in disregarding the report/opinion of the Rehabilitation Receiver that respondents may be successfully rehabilitated,
despite being highly qualified to make an opinion on accounting in relation to rehabilitation matters the CA declared that the
Rehabilitation Plan is feasible and should be approved, finding that respondents would be able to meet their obligations to their
creditors within their operating cash profits and other assets without disrupting their business operations, which will be beneficial
to their creditors, employees, stockholders, and the economy.

• ISSUE:

Whether or not that the Rehabilitation Plan is feasible and should be approved.

Rehabilitation is statutorily defined under Republic Act No. 10142, otherwise known as the "Financial Rehabilitation and
Insolvency Act of 2010" (FRIA), as follows:

Section 4. Definition of Terms. - As used in this Act, the term:

xx xx

(gg) Rehabilitation shall refer to the restoration of the debtor to a condition of successful operation and solvency, if it is shown
that its continuance of operation is economically feasible and its creditors can recover by way of the present value of payments
projected in the plan, more if the debtor continues as a going concern than if it is immediately liquidated. (Emphasis supplied)

In the present case, however, the Rehabilitation Plan failed to comply with the minimum requirements, i.e.: (a) material financial
commitments to support the rehabilitation plan; and ( b) a proper liquidation analysis, under Section 18, Rule 3 of the 2008
Rules of Procedure on Corporate Rehabilitation (Rules), which Rules were in force at the time respondents' rehabilitation petition
was filed on April 8, 2011.

• a. Lack of Material Financial Commitment

to Support the Rehabilitation Plan

Respondents' Chief Operating executed in his Affidavit of General Financial Condition averred that respondents will not require
the infusion of additional capital as he, instead, proposed to have all accrued penalties, charges, and interests waived, and a
reduced interest rate prospectively applied to all respondents' obligations, in addition to the implementation of a two (2)-year
grace period. Thus, there appears to be no concrete plan to build on respondents' beleaguered financial position through
substantial investments as the plan for rehabilitation appears to be pegged merely on financial reprieves.

• Lack of Material Financial Commitment

to Support the Rehabilitation Plan

The Court also notes that while respondents have substantial total assets, a large portion of the assets of Fastech Synergy and
Fastech Properties is comprised of noncurrent assets, such as advances to affiliates which include Fastech Microassembly, and
investment properties which form part of the common assets of Fastech Properties, Fastech Electronique, and Fastech
Microassembly.

Moreover, while there is a claim that unnamed customers have made investments by way of consigning production equipment,
and advancing money to fund procurement of various equipment intended to increase production capacity, this can hardly be
construed as a material financial commitment which would inspire confidence that the rehabilitation would turn out to be
successful.

• B. Lack of Liquidation Analysis.

Respondents likewise failed to include any liquidation analysis in their Rehabilitation Plan. The total liquidation assets and the
estimated liquidation return to the creditors, as well as the fair market value vis-a-vis the forced liquidation value of the fixed
assets were not shown. As such, the Court could not ascertain if the petitioning debtor's creditors can recover by way of the
present value of payments projected in the plan, more if the debtor continues as a going concern than if it is immediately
liquidated.

• C. Effect of Non-Compliance.

The failure of the Rehabilitation Plan to state any material financial commitment to support rehabilitation, as well as to include a
liquidation analysis, renders the CA's considerations for approving the same, i.e., that: (a) respondents would be able to meet their
obligations to their creditors within their operating cash profits and other assets without disrupting their business operations; ( b)
the Rehabilitation Receiver's opinion carries great weight; and ( c) rehabilitation will be beneficial for respondents' creditors,
employees, stockholders, and the economy, as actually unsubstantiated, and hence, insufficient to decree the feasibility of
respondents' rehabilitation. It is well to emphasize that the remedy of rehabilitation should be denied to corporations that do not
qualify under the Rules. Neither should it be allowed to corporations whose sole purpose is to delay the enforcement of any of
the rights of the creditors.
In view of all the foregoing, the Court is therefore constrained to grant the instant petition, notwithstanding the preliminary
technical error as above-discussed. A distressed corporation should not be rehabilitated when the results of the financial
examination and analysis clearly indicate that there lies no reasonable probability that it may be revived, to the detriment of its
numerous stakeholders which include not only the corporation's creditors but also the public at large.

• Jiao, et. al. vs. National Labor Relations Commission

G.R. No. 182331. April 18, 2012

• Prepared by : Diño, Mervin R. Block - A

• Facts:

• The petitioners were regular employees of the Philippine Banking Corporation (Philbank).

• Philbank established a Gratuity Pay Plan (Old Plan) for its employees.

• Philbank merged with Global Business Bank, Inc. (Globalbank).

• As a result of the merger, complainants’ respective positions became redundant.

• A Special Separation Program (SSP) was implemented and the petitioners were granted a separation package.

• Respondent Metropolitan Bank and Trust Company (Metrobank) acquired the assets and liabilities of Global bank through a
Deed of Assignment of Assets and Assumption of Liabilities.

• the petitioners filed separate complaints for non-payment of separation pay with prayer for damages and attorney’s fees
before the National Labor Relations Commission (NLRC).

• Issue:

• Whether or not Metrobank should be held liable for the claims of the petitioners.

• Ruling:

• No, considering that the petitioners have already waived their right to file an action for any of their claims in relation to their
employment with Global bank, the question of whether Metrobank can be held liable for these claims is now academic.
However, in order to put to rest any doubt in the petitioners’ minds as to Metrobank’s liabilities, we shall proceed to discuss
this issue. We hold that Metrobank cannot be held liable for the petitioners’ claims. As a rule, a corporation that purchases
the assets of another will not be liable for the debts of the selling corporation, provided the former acted in good faith and
paid adequate consideration for such assets, except when any of the following circumstances is present: (1) where the
purchaser expressly or impliedly agrees to assume the debts; (2) where the transaction amounts to a consolidation or merger
of the corporations; (3) where the purchasing corporation is merely a continuation of the selling corporation; and (4) where
the selling corporation fraudulently enters into the transaction to escape liability for those debts.

• Land Bank of the Philippines vs. Alfredo Ong

GR 190755 - Nov. 24, 2010

• ISSUE:

• Is the bank under obligation to notify and communicate the findings of the credit investigation conducted by a separate entity
in connection to the approval of its client’s application for Assumption of Mortgage?

• FACTS:

• Spouses Evangeline and Johnson Sy secured a loan from Land Bank Legazpi City in the amount of P16M which was secured
by, among others, mortgages of residential lots.

• The spouses, finding difficulty paying the loan, sold the mortgages to Angelina Ong, wife of respondent, for P150,000 via a
Deed of Sale with Assumption of Mortgage.

• FACTS:
• Alfredo Ong notified Land Bank of said transaction and thereafter complied with the requirements for the Assumption of
Mortgage, one of which, is the partial payment of the principal loan of P750,000 so that said application will be processed.

• After payment, Alfredo was given a receipt therefor with notice from the bank that the properties will later on be transferred
in their name.

• FACTS:

• However, by virtue of the findings from the credit investigation conducted by the Bank’s Lending Center, Alfredo’s
application was denied and the subject mortgages were foreclosed by the bank notifying Alfredo only after such foreclosure.

• Aggrieved, he then demanded the return of the P750,000 which the bank refused and insisted that the same has been applied
to the loan which was due and demandable.

• RULING:

• The bank is still under obligation to inform Alfredo as to the outcome of the investigation even if the same was conducted by
a different department or entity.

• The payment of P750,000 made by Alfredo was for the purpose of having complied with the requisites so that his application
for Assumption of Mortgage be approved and not for the payment of the loan notwithstanding being due.

• The denial of his application amounted to the loss of right by the bank to retain said payment and likewise apply the same to
the loan hence return thereof is but just and proper.

• BANK OF THE PHILIPPINE ISLANDS

VS.
AMADOR DOMINGO

• G.R. No. 169407, March 25, 2015

• ISSUE

• Whether or not the furnish to the bank the Deed of Sale with Assumption of Mortgage by a third person assuming the debtor's
obligation without any objection from the bank and the acceptance of payment made by the third person to the bank qualify
as consent to give rise to a novation

• FACTS

• Spouses executed promissory note for Makati Auto Center, Inc. with Deed of Chattel Mortgage over a vehicle to secure
payment of note

• Rights and interest over note transferred to Far Eastern bank (now petitioner BPI)

• Spouses defaulted, BPI demanded (1)balance plus interest and charges or (2) return of vehicle

• Complaint for collection of sum of money filed against spouses for further default

• FACTS

• Spouses, in their answer, raised novation as defense due to the subsequent sale of the vehicle to third person Carmelita
Gonzales

• Deed of Sale with Assumption of Mortgage furnished to BPI and Carmelita made payments accepted by BPI

• Amador further testified that BPI had no objections over the Deed

• The MeTC ruled in favor of BPI; the RTC reversed the said decision; CA affirmed the RTC's ruling

• RULING

• NO:

• Novation implies waiver of right, hence must be express

 • Absence of objection on BPI's part not presumed to be consent. Jurisprudence requires presentation of proof

• Acceptance of payment from a third person not consent absent proof of clear and unmistakable consent to release
spouses

• Acceptance of payment merely results to addition of debtors

• OLIVER vs PSB
GR No 214567
April 4, 2016

• DERECHO, CLAIRE B.

• BLOCK 3B

• ISSUE:

• Whether or not banks should be held solidarily liable with its employee for the damages committed against its depositor.

• FACTS:

• Petitioner Mercedes Oliver (Oliver) was a depositor of PSBank. Respondent Lilia Castro (Castro) was the Assistant Vice
President of PSBank and the Acting Branch Manager of PSBank.

• Oliver and Castro had a business agreement wherein Oliver would obtain loans from the bank, andafter acquiring the loan
proceeds, Castro would lend the acquired amount to prospective borrowers.

• For months, the agency between Oliver and Castro benefited both parties. Oliver, through Castro's representations, was able
to obtain loans, relend them to borrowers, and earn interests; while Castro acquired commissions from the transactions.
Oliver even gave Castro her passbook to facilitate the transactions.

• Loans were acquired with Oliver's authority.

• Oliver received two collection letters from PSBank referring to the non-payment of unpaid loans.

• However there was nothing in the records which proved that she also allowed the withdrawal of P7 million from her bank
account.

• When Castro showed her the passbook she noticed several erasures and superimpositions therein.

• As a result, Oliver filed the subject complaint against PSBank and Castro.

• Resolution

• PSBank failed to exercise utmost diligence in safekeeping Oliver's deposit. Had it not been for the unauthorized, withdrawal
which was attributable to the bank and Castro, loans would not have remained outstanding, considering that the improperly
withdrawn P7 million was more than sufficient to discharge those liabilities.

• Castro, as acting branch manager of PSBank was able to facilitate the questionable transaction as she was also entrusted with
Oliver's passbook. In other words, Castro was the representative of PSBank, and, at the same time, the agent of Oliver,
earning commissions from their transactions. Oddly, PSBank, either consciously or through sheer negligence, allowed the
double dealings of its employee with its client. Such carelessness and lack of protection of the depositors from its own
employees led to the unlawful withdrawal of the P7 million from Oliver's account. Thus, both Castro and PSBank must be
held solidarily liable.

RURAL BANK OF CABADBARAN, INC., Petitioner, 

vs.
JORGITA A. MELECIO-YAP
G.R. No. 178451              
July 30, 2014

ISSUE: Is the doctrine of mortgagee in good faith applicable to banking institutions. 

 Erna Melecio-Mantala and other respondents ,children of the late spouses Isaac and Trinidad Melecio inherited a residential
lot, together with the ancestral house and two (2) other structures erected thereon (subject properties).

 On August 24, 1990, the Melecio Heirs purportedly executed a notarized Special Power of Attorney (SPA)7authorizing
Erna to apply for a loan with petitioner Rural Bank of Cabadbaran, Inc. (RBCI) and mortgage the subject properties.

 Armed with the said SPA, Erna applied for and was granted a commercial loan by RBCI.

 The loan was secured by a Real Estate Mortgage9 over the subject properties which was registered with the Registry of Deeds
.

 Erna, however, defaulted in the payment of her loan obligation when it fell due, causing RBCI to extra-judicially foreclose
the mortgaged properties. RBCI emerged as the highest bidder in the public auction sale.

 Respondents, through counsel, informed RBCI that they were unaware of the loan obtained by Erna and did not authorize the
mortgage transaction over the subject properties which they co-owned. They claimed that the SPA submitted by Erna in was
spurious, and that their signatures appearing thereon were falsified.

 RTC ruled in favor of RBCI, declaring the real estate mortgage and the consequential foreclosure proceedings to be valid and
binding against respondents, notwithstanding the allegation of forgery in the questioned documents.

 CA reversed the RTC Decision, finding that Erna had no authority to mortgage the subject properties to RBCI since the SPA
was actually a forgery hence, null and void

 HELD:

 In the present case, RBCI failed to show that the subject SPA which it relied upon as proof of Erna’s ostensible authority
to mortgage the entirety of the subject properties was regularly notarized.As for RBCI’s claim that it should be deemed a
mortgagee in good faith for having conducted exhaustive investigations on the history of the mortgagor’s title, 70 the Court
finds the same untenable.

 Two reasons impel this conclusion: first, the doctrine of mortgagee in good faith applies only to lands registered under the
Torrens system and not to unregistered lands, as the properties in this suit;and second, the principle is inapplicable to banking
institutions which are behooved to exercise greater care and prudence before entering into a mortgage contract.

 Hence, the ascertainment of the status or condition of properties offered as security for loans must be a standard and an
indispensable part of its operations. In this case, RBCI failed to observe the required level of caution in ascertaining the
genuineness of the SPA considering that Erna owns only an aliquot part of the properties offered as security for the loan.

 It should not have simply relied on the face of the documents submitted since its undertaking to lend a considerable
amount of money as a banking institution requires a greater degree of diligence.

 Hence, its rights as mortgagee and, now, as co-owner, should only be limited to Erna’s share to the subject properties
and not, absent the other co-owners’ consent, to its entirety.

• Banking Laws
Case Brief

• by

• BADAGUAS, Fatima R.

• Block B

• Facts:

• Spouses Jaime & Matilde Poon owned a commercial building in Naga City

• Prime Savings Bank and Spouses Poon executed a 10-year lease contract with a monthly rental of P60, 000.00

• The parties agreed for an advance payment of P6 million which represented the 100 months rental

•Barely 3 years later, PSB was placed under receivership

•The leased property was vacated and surrendered to the owners

• PDIC demanded for the return of the unused advance rental on the ground of force majeure and rebus sic stantibus

• Spouses Poon refused and claimed that they were entitled to retain the advance payment as provided in the proviso of the
Contract of Lease

• Issue:

May the lessor forfeit the whole amount of the unused advance rentals?

• Sc ruling:

No. The closure of respondent's business was neither a fortuitous nor an unforeseen event that rendered the lease agreement
functus officio, unless it is shown that the government's action to place a bank under receivership or liquidation proceedings is
tainted with arbitrariness, or that the regulatory body has acted without jurisdiction.

A reduction of the penalty agreed upon by the parties is warranted under Article 1229 of the Civil Code.

The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the
debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

"Under the circumstances, it is neither fair nor reasonable to deprive depositors and creditors of what could be their last
chance to recoup whatever bank assets or receivables the PDIC can still legally recover. Strict adherence to the doctrine of
freedom of contracts, at the expense of the rights of innocent creditors and investors, will only work injustice rather than promote
justice in this case."

 LIAM vs. UCPB

G.R. No. 194664
June 15, 2016

 BALCUEVA, EISEL MAE V.

 BLOCK B

 ISSUE

 May a bank, acting as a mere assignee of a condominium developer to its receivables, be held solidarily liable with said
developer in case of failure to deliver the condo units to the buyers upon the stipulated time?

 FACTS

 Liam entered into a contract to sell with developer Primetown Property Group, Inc. (PPGI) for the purchase of Condominium
Unit wherein it was stipulated that the unit will be delivered not later than 35 months from the start of actual construction.

 To finance the construction of the condominium project, PPGI obtained a loan from UCPB. PPGI thereafter partially settled
its loan by transferring to UCPB its right to collect all receivables from condominium buyers, including Liam.

 PPGI notified Liam of the sale of its receivables to UCPB and directed her to remit any remaining balance of the
condominium unit's purchase price to UCPB. PPGI further stated that "[the] payment arrangement shall in no way cause any
amendment of [the] terms and conditions, nor the cancellation of the Contract to Sell [she] executed with PPGI.

 Liam heeded the notice and forthwith remitted her payments to UCPB. However, after a year, Liam wrote UCPB asking for
the deferment of her amortization payments until such time that the unit is ready for delivery. At that point, Liam stopped
making payments.

 Since her requests were left unanswered, she demanded for the refund of all the payments she made for PPGI's failure to
deliver the unit on the stipulated date. UCPB, on the otherhand, proposed to Liam a financing package for the full settlement
of the balance of the purchase price.

 Liam requested UCPB to suspend the restructuring of her loan and instead asked for the downgrading of her unit to one that
is equivalent in value to the payments she has already made.
 Her requests remained unheeded, urging her to file a Complaint  for specific performance before the HLURB against PPGI
and UCPB.

 UCPB averred that it had no legal obligation to deliver the unit to Liam because it is not the developer of the condominium
project. UCPB maintained that it is merely a creditor of PPGI and that it only acquired PPGI's right to collect its receivables
from Liam and other condominium buyers. UCPB denied giving a specific date for the completion of Liam's unit because
such matter was beyond its control but rather devolved upon PPGI as the developer.

 RULING

 The CA is correct when it concluded that as a mere assignee, UCPB cannot be impleaded in Liam's complaint for specific
performance. It is clear that the intention of the parties was merely to assign the receivables; and therefore, there is no ground
to hold UCPB solidarily liable with PPGI.

 UCPB should not be held liable for the obligations and liabilities of PPGI under its contract to sell with Liam, considering
that the bank is a mere assignee of the rights and receivables under the Agreement it executed with PPGI. There being no
other grounds to hold UCPB solidarity liable with PPGI, the instant petition must be denied for lack of merit.


BANGKO SENTRAL NG PILIPINAS v. FELICIANO P. LEGASPI

 G.R. No. 205966, March 02, 2016

 ISSUE

 Can BSP, being a GOCC, be represented by a private counsel in its suits?

 FACTS

 BSP filed for annulment of title, revocation of certificate and damages against respondents

 Respondent Legaspi filed a motion to dismiss

 Ground: BSP’s counsel is not authorized

 FACTS

 RTC ruled in favor of BSP

 RTC adjudged that in suits involving the BSP, the Monetary Board may authorize the Governor to represent it
personally or through counsel, even a private counsel, and the authority to represent the BSP may be delegated to
any other officer thereof.

 CA reversed RTC’s ruling

 CA ruled that BSP, being a GOCC, should be represented by the OSG (Office of the Solicitor General) or the
OGCC (Office of the Government Corporate Counsel)

 RULING

 New Central Bank Act (R.A. 7653):

 the BSP Governor is authorized to represent the Bangko Sentral, either personally or through counsel, including
private counsel, as may be authorized by the Monetary Board, in any legal proceedings, action or specialized legal
studies.16 Under the same law, the BSP Governor may also delegate his power to represent the BSP to other officers
upon his own responsibility

 RULING

 Monetary Board Resolution No. 900:

 The Board approved the recommendation of the Asset Management Department (AMD) to engage the services of
Ongkiko Kalaw Manhit and Acorda Law Offices (OKMA Law)…to act as counsel of BSP

 YES, BSP can be represented by a private counsel in its suits.

 Land Bank of the Philippines vs. Perez

 G.R. 166884 June 18, 2012

 Issue:

Can the mere issuance of trust receipt by Asian Construction Development Corporation in favor of the Land Bank of the
Philippines be deemed a trust receipt transaction?

 Facts:

 Asian Construction Development Corporation (ACDC) is a corporation engaged in construction business.

 Facts:

 Land Bank of the Phil. (LBP) extended a credit accommodation to ACDC through a credit line.

 Facts:

 ACDC used letters of credit/trust receipts Facility of Agreement to buy construction materials.

 Facts:

 The officers of ACDC executed trust receipts in favor of LBP.

 Facts:

 The trust receipts matured but ACDC was not able to return the proceeds.

 Facts:

 LBP filed a complaint before the city prosecutor.

 Facts:

 The city prosecutor dismissed the complaint because the subject trust receipts’ release and maturity dates were missing.

 Facts:

 On appeal, the Secretary of Justice reversed the city prosecutor’s ruling.

 Facts:

 ACDC filed a petition with the Court of Appeals.

 Facts:

 The CA ruled in favor of ACDC.

 Facts:

 The case was elevated to the Supreme Court.

 Ruling:

 No, the mere issuance of trust receipt by Asian Construction Development Corporation to Land Bank of the Philippines
cannot be deemed a trust receipt transaction.

 Ruling:
 There are two obligations in a trust receipt transaction. The first is covered by the provision that refers to money under the
obligation to deliver it to the owner of the merchandise sold. The second is covered by the provision referring to merchandise
received under the obligation to return it to the owner.

 Ruling:

 In all trust receipt transactions, both obligations on the part of the trustee exist in the alternative the return of the proceeds of
the sale or the return or recovery of the goods, whether raw or processed.

 Ruling:

 When both parties enter into an agreement knowing that the return of the goods subject of the trust receipt is not possible
even without any fault on the part of the trustee, it is not a trust receipt transaction.

 Ruling:

 This transaction becomes a mere loan,where the borrower is obligated to pay the bank the amount spent for the purchase of
the goods.

 Ruling:

 In the case at bar,  LBP knew that ACDC was in the construction business and that the materials that it sought to buy under
the letters of credit were to be used for the following projects: the Metro Rail Transit Project and the Clark Centennial
Exposition Project.

 Ruling:

 Clearly, LBP was aware of the fact that there was no way they could recover the buildings or constructions for which the
materials subject of the alleged trust receipts had been used.

 Ruling:

 Thus the transaction between LBP and ACDC was noy a genuine trust receipt transaction.

 BPI FAMILY SAVINGS BANK, INC.

vs.
MA. ARLYN T. AVENIDO & PACIFICO A. AVENIDO

 Issue:

 May a mortgagee bank be entitled to collect a deficiency claim following an extrajudicial foreclosure of property given by
the latter as security for their loan?

Facts:

 Spouses Avenido obtained a loan from BPI secured by a real estate mortgage.

 BPI instituted an extrajudicial foreclosure over the mortgaged property after the spouses failed to pay the loan.

 BPI was the highest bidder at the auction and applied the bid of P2,142,616.00 as a partial payment of the mortgage
obligation of the spouses Avenido, which had amounted to P2,917,381.43 on the date of the public auction sale, thus, still
leaving an unpaid amount of P794,765.43.

 BPI prayed that the RTC order the spouses Avenido to pay the deficiency of their mortgage obligation amounting
to P794,765.43.

 RTC denied the claim for deficiency stating that the actual market value of the property is more than the amount of the loan.

 The CA affirmed the RTC’s ruling.

 Ruling:

 YES. The court held that the BPI Family is still entitled to collect the deficiency mortgage obligation from the spouses
Avenido in the amount of P455,836.80, plus interest.

 It is settled that if "the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of mortgage, the
mortgagee is entitled to claim the deficiency from the debtor.

 While Act No. 3135 (Mortgage Law), as amended, does not discuss the mortgagee’s right to recover the deficiency, neither
does it contain any provision expressly or impliedly prohibiting recovery.

 If the legislature had intended to deny the creditor the right to sue for any deficiency resulting from the foreclosure of a
security given to guarantee an obligation, the law would expressly so provide.

 Absent such a provision in Act No. 3135, as amended, the creditor is not precluded from taking action to recover any unpaid
balance on the principal obligation simply because he chose to extrajudicially foreclose the real estate mortgage."

Vicente D. Cabanting

and

Lalaine V. Cabanting

vs.

BPI FAMILY SAVINGS BANK, INC.

G.R. No. 201927, February 17, 2016

• Whether or not a stipulation in a promissory note with chattel mortgage contract that waives a notice of demand requirement
before an obligation becomes due and demandable is valid and binding?

• Vicente D. Cabanting and Lalaine V. Cabanting (petitioners) bought on monthly installment basis from Diamond Motors
Corporation (DMC) a 2002 Mitsubishi Adventure SS MT. Petitioners executed, signed and delivered a promissory note with
chattel mortgage to DMC. The contract contains a stipulation that waives notice of demand requirement.

• A deed of assignment was executed by DMC in favor of BPI Family Savings Bank (respondent) wherein DMC assigned all
its rights, title and interest over the promissory note with chattel mortgage to respondent.

• Petitioner failed to pay for three consecutive months over the remaining unpaid purchase price of the vehicle. Respondent
filed a complaint before the Regional Trial Court of Manila for damages and for the issuance of writ of replevin.

• Petitioner in their Answer, alleged that they already sold the vehicle to Victor S. Abalos (Abalos) and agreed that the latter
will assume the obligations over the said vehicle. However, Abalos also defaulted from paying his obligations.

• During the trial, petitioner failed to present their evidence despite their several opportunities even at the time that the court
issued a subpoena duces tecum , ad testificandum over their witness. Respondent moved that the right to present evidence by
the petitioner be deemed waived. RTC and CA ruled in favor of the petitioner.

• The Supreme Court ruled that the CA is correct that no prior demand was necessary to make petitioners' obligation due and
payable. The Promissory Note with Chattel Mortgage clearly stipulated that "[i]n case of my/our [petitioners'] failure to pay
when due and payable, any sum which I/We x x x or any of us may now or in the future owe to the holder of this note x x x
then the entire sum outstanding under this note shall immediately become due and payable without the necessity of notice or
demand which I/We hereby waive.“

• A contract of adhesion, wherein one party imposes a ready-made form of contract on the other, is not strictly against the
law. A contract of adhesion is as binding as ordinary contracts, the reason being that the party who adheres to the contract is
free to reject it entirely. Contrary to petitioner's contention, not every contract of adhesion is an invalid agreement.
   - Dio vs. St. Ferdinand Memorial Park

• A provision on waiver of notice or demand has been recognized as legal and valid in Bank of the Philippine Islands v. Court
of Appeals,

wherein We held:

• The Civil Code in Article 1169 provides that one incurs in delay or is in default from the time the obligor demands the
fulfillment of the obligation from the obligee. However, the law expressly provides that demand is not necessary under
certain circumstances, and one of these circumstances is when the parties expressly waive demand. Hence, since the co-
signors expressly waived demand in the promissory notes, demand was unnecessary for them to be in default.

– Equitable Savings Bank (BDO)

v.
Palces

– GR No. 214752
March 9, 2016

– Issue: Did a mortgagee bank waived its right to recover any unpaid installments when it sought the recovery of subject
vehicle?

Facts:

– Respondent Palces purchased a car through a loan granted by petitioner Equitable Savings Bank

– Promissory Note with Chattel Mortgage was executed wherein it is stated that, among others,:

1.) respondent will pay in 36-monthly installment

2.) in respondent’s default, the remaining balance will be due and demandable.
3.) respondent’s failure to pay would give petitioner the right to declare the obligation due and demandable and will have
option to either foreclose the mortgage or file an ordinary civil action for collection

– Respondent defaulted in payment

– Petitioner filed for a writ of replevin which was granted by RTC

– Respondent admitted that she indeed defaulted but she insisted that she called petitioner regarding the delay in payments and
in order to update her installment she paid a total amount of P103,000. She claimed that a certain Rodrigo Dumagpi, a bank
officer consented thereto.

– RTC ruled in favor of petitioner

– CA affirmed RTC ruling with modification ordering the petitioner to return the amount of P103,000 to respondent

– It declared that petitioner should not have accepted respondent’s late partial payments since petitioner waived the right to
recover any unpaid installment when it opted to recover the subject vehicle.

– Issue: Did a mortgagee bank waived its right to recover any unpaid installments when it sought the recovery of subject
vehicle?

Ruling:

– SC ruled that petitioner did not waive its right to recover the unpaid installments. Article 1484 of the Civil Code which
governs the sale of personal properties in installments is inapplicable.

– Article 1484 is inapplicable.

– There was nothing in the Promissory Note with Chattel Mortgage that bars petitioner from receiving any late partial
payments.
– The amount P103,000 would only operate to reduce her outstanding balance.

 Bangayan vs. RCBC

GR No. 149193
April 4, 2011

 Maleniza, Rosauro Angelo B.

 3 -A

 Issue:

 Whether or Not respondent RCBC was justified in dishonoring the checks issued by Bangayan when it acts as surety to
different companies?, and, consequently, whether petitioner Bangayan is entitled to damages arising from the dishonor?

 Facts:

 * Petitioner Ricardo Bangayan had a savings account and a current account with one of the branches of respondent Rizal
Commercial Banking Corporation (RCBC).

 * Bangayan purportedly signed a Comprehensive Surety Agreement (the Surety Agreement) with respondent RCBC in favor
of nine corporations. 

 * Bangayan contests the veracity and due authenticity of the Surety Agreement on the ground that his signature thereon was
not genuine, and that the agreement was not notarized.

 * Respondent RCBC refutes this claim, although it admitted that it was exceptional for a perfected Surety Agreement of the
bank to be without a signature of the witness and to remain unnotarized.

 * Then occurred different transaction between RCBC and Other entities.

 * Two of the seven checks that were drawn against petitioner Bangayan’s Current Account were presented for payment to
respondent RCBC were returned by respondent RCBC with the notation" REFER TO DRAWER.

 * Five other checks of petitioner Bangayan were presented for payment to respondent RCBC. These five checks were
dishonored by respondent RCBC on the ground that they had been drawn against insufficient funds ("DAIF") and were
likewise returned.

 * Bangayan, demanded that respondent bank restore all the funds to his account and indemnify him for damages. Bangayan
filed a complaint for damages against respondent RCBC.

 * In its defense, RCBC claims that Bangayan signed a Surety Agreement in favor of several companies that defaulted in their
payment of customs duties that resulted in the imposition of a lien over the accounts.

 Decision/Resolution:

 Yes. RCBC was justified in dishonoring the checks when it acts surety to different companies. Bangayan is not entitled to
damages resulting from such dishonor.

◦ * Whatever damage to petitioner Bangayan’s interest or reputation from the dishonor of the seven checks was a
consequence of his agreement to act as surety for the corporations and their failure to pay their loan obligations,
advances and other expenses.

◦ * First, there was no malice or bad faith on the part of respondent RCBC in the dishonor of the checks, since its
actions were justified by petitioner Bangayan’s obligations under the Surety Agreement. 

◦ * Both the trial and the appellate courts gave credence to the Surety Agreement, which categorically guaranteed the
four corporations’ obligations to respondent RCBC under the letters of credit.

◦ * Petitioner Bangayan did not provide sufficient reason for the Court to reverse these findings. The evidence on
record supports the conclusion arrived at by the lower court and the Court of Appeals.
 ◦ * Petitioner Bangayan failed to establish how his signature in the Surety Agreement was forged and therefore, not
genuine.

 FRANCIS P. PERILLO
BLOCK A

 JORGE B. NAVARRA

 VS PEOPLE OF THE PHILIPPINES, ET AL

 G.R. NO. 203750

 JUNE 6, 2016

 Issue of the Case

1) Whether or not the loan extended by the bank to the petitioner was purely a clean loan meaning they were not secured by any
kind of collateral?

2) Whether or not Navarra can be held personally or civilly liable under the penal statute?

 Facts of the Case

 Petitioner Navarra is the Chief Finance Officer of Reynolds Phil. Corporation (Reynolds), long time client of HSBC.

 HSBC granted a loan of P82M and a foreign exchange line of P900,000.

 Thereafter, Reynolds executed several promissory notes and issued seven (7) checks amounting to P45.2M in favor of HSBC.

 The checks were dishonored by the bank for being “Drawn against Insufficient Funds.”

 Cont. (Facts of the Case)

 Despite of several demands, Reynolds, however, failed to pay.

 HSBC filed Informations against the petitioner for violations of BP 22. The MeTC of Makati found the accused guilty of the
crime charged which affirmed by the RTC Br 57 of Makati.

 Petitioner argued that the first element of BP 22 does not exist because the checks were not issued to apply for account or for
value.

 Cont. (Facts of the Case)

 Petitioner asserts that the loans which the HSBC had extended were clean loans, meaning they were not secured by any kind
of collateral.

 Further, petitioner insists that he cannot be held civilly liable since he is merely a corporate officer who signed checks for the
corporation.

 Ruling of the Case

 The Court affirmed the lower court’s ruling that the checks were, in fact, in payment of the company’s outstanding
obligation, and not as a mere condition. Navarra failed to substantiate his claim with any concrete agreement between
Reynolds and HSBC that the issuance of the post-dated checks was indeed just a condition for the restructuring of the loan.

 Cont. (Ruling of the Case)

 Moreover, the petitioner’s argument has no legal basis, for what BP 22 punishes is the mere issuance of a bouncing check
and not the purpose for which it was issued nor the terms and conditions relating to its issuance.

 Anent the second issue, the law under Section 1 of BP 22 declares that when a check was withdrawn by a corporation,
company or entity, the person who actually signed the check in behalf of such drawer shall be liable under the said Act.
 Cont. (Ruling of the Case)

 The State criminalized such practice it was deemed injurious to the public interests and was found to be pernicious and
inimical to public welfare.

G.R. No. 164693 : March 23, 2011

• DBP Ozamis Branch granted a P31,000.00 loan to spouses Lomantong Darapa and Sinab Dimakuta who executed a real and
chattel mortgage contract covering a warehouse for the rice and corn mill, constructed on a 357 square meter lot situated at
Poblacion, Linamon, Lanao Del Norte.

• REGISTRATION OF THE LAND

• The aforesaid equity rights, participation and interest of the mortgagors in the said parcel of land are not registered under the
Spanish Mortgage Law nor under Act 496 and the parties hereby agree that this instrument shall be registered under Act
3344, as amended.

• REGISTRATION OF THE LAND

• The assignment of the spouses’ equity rights over the land covered by Tax Declaration No. A-148 in DBP's favor was
embedded in the Deed of Assignment of Rights and Interests which the spouses executed simultaneous with the real and
chattel mortgage contract.

• The spouses applied for the renewal and increase of their loan using Sinab Dimakuta’s Transfer Certificate of Title No. 1997
as additional collateral. DBP disapproved the loan application without returning, however, Dimakuta’s TCT.

• The spouses failed to pay their loan. DBP extrajudicially foreclosed the mortgages, which, unknown to the spouses, included
the TCT No. T- 1997. The spouses failed to redeem the land under TCT NO. T-1997, which led to its cancellation, and the
eventual issuance of TCT no. T-7746 in DBP’s name.

• The spouses discovered all these and they immediately consulted a lawyer who forthwith sent a demand letter to the bank for
the reconveyance of the land.  The bank assured them of the return of the land.

• A bank officer told them that the return of the land is no longer possible as the land has already been bought by Abalos,
daughter of the then provincial governor.

 Issue: May a mortgagee bank foreclose a mortgage where the bank did not fully release the loan secured by the mortgage?

 Prepared by

 Nonabel Bermejo

 Ruling:

 NO, a mortgagee bank may not foreclose a mortgage where the bank did not fully release the loan secured by the mortgage.

 DBP’s former property examiner and appraiser, Mamongcarao Blo testified that he was the one who examined and appraised
the lands which the spouses mortgaged with the DBP. He admitted that TCT No. T-1997’s is not included in the 1962
mortgage, and that he never examined any land in Barrio Buru-an, Linamon, as described in TCT No. T-1,997.

 Ruling:

 Even the bank’s own witness, Marie Magsangcay (Magsangcay), the DBP’s Executive Officer, claimed during the direct
examination that the questioned TCT is an entirely different land from the one which was properly mortgaged.

 Magsangcay’s testimony contradicted the bank’s consistent claim that the land was included in the mortgage in 1962
evidenced by Tax Declaration A-148.

 Ruling:
 Other than the questionable annotation at the back of Dimakuta’s TCT No. T-1,997, claiming that this TCT originated from
Tax Declaration No. A-148, DBP submitted nothing more to substantiate its claim that these two documents refer to the land
mortgaged in 1962; DBP did not even bother to submit the Tax Declaration, under which its claim is based.

 Ruling:

 The annotation of such unilateral claim at the back of Dimakuta’s TCT cannot improve petitioners’ position.This undated
annotation should have been disallowed outright for being violative of Sections 60 in relation to Section 54, and Section
61 of the Presidential Decree No. 1529, otherwise known as the Property Registration Decree – basic provisions, which every
Register of Deeds is presumed to know.

 Ruling:

 The DBP’s annotation that the property originally covered by Tax Declaration No. A-148 is now covered by TCT No. T-
1,997 is neither the deed nor the instrument referred to by Sections 60 and 61 of the above quoted law and such annotation
will in no way change the fact that the two documents refer to different lands: one, which was indeed a subject of the
mortgage contract; and two, which Dimakuta had delivered to DBP in 1970 supposedly for another loan, but, which was,
however, disapproved.

 Ruling:

 It should be underscored that it was this annotation, albeit irregular, that paved to the sale of the land now in question.

 Needles to say, the bank utterly failed to establish, by preponderance of evidence, that TCT No. T-1,997 originated from Tax
Declaration No. A-148.

 Ruling:

 The DBP contends that the prescriptive period for the reconveyance of fraudulently registered real property is ten (10) years
reckoned from the date of the issuance of the certificate of title.

 While the above disquisition of DBP is true, the 10- year prescriptive period applies only when the reconveyance is based on
fraud which makes a contract voidable (and that the aggrieved party is not in possession of the land whose title is to be
actually,reconveyed).

 Ruling:

 It does not apply to an action to nullify a contract which is void ab initio, as in the present petition. Article 1410of the Civil
Code categorically states that an action for the declaration of the inexistence of a contract does not prescribe. The spouses’
action is an action for "Annulment of Title, Recovery of Possession and Damages," grounded on the theory that the DBP
foreclosed their land covered by TCT No. T-1997 without any legal right to do so, rendering the sale and the subsequent
issuance of TCT in DBP's name void ab initio and subject to attack at any time conformably to the rule in Article 1410 of the
Civil Code.

ANITA A. LEDDA vs.

BANK OF THE PHILIPPINE ISLANDS

ISSUE:

May a pre-screened credit card client-user,

who did not submit or sign any credit card application form or terms and conditions as supposed proof of his conformity and
acceptance, be bound by the stipulations

(e.g. imposition of interest and other charges)

in the said terms and conditions?

FACTS:

As one of BPI’s valued clients, Ledda was issued a pre-approved BPI credit card.
The BPI Credit Card Package, which allegedly included the Terms and Conditions governing the use of the credit card, was
delivered at Ledda’s residence

Thereafter, Ledda used the credit card for various purchases of goods and services and cash advances.

Ledda defaulted in the payment of her credit card obligation in the principal amount of P322,138.58.

FACTS:

Consequently, BPI sent letters to Ledda demanding the payment of P548,143.73, representing the principal obligation with 3.25%
finance charge and 6% late payment charge per month.

Despite BPI’s repeated demands, Ledda failed to pay her credit card obligation.

BPI filed an action for collection of sum of money with the RTC of Makati.

The trial court declared Ledda in default for failing to file Answer within the prescribed period, despite receipt of the complaint
and summons.

FACTS:

Upon Ledda’s motion for reconsideration, the trial court lifted the default order and admitted Ledda’s Answer Ad Cautelam.

While she filed a Pre-Trial Brief, Ledda and her counsel failed to appear during the continuation of the Pre-Trial. Hence, the trial
court allowed BPI to present its evidence ex-parte.

BPI did not present as evidence the Terms and Conditions which Ledda allegedly received and accepted.

FACTS:

Procedural:

The trial court ruled in favor of BPI and ordered Ledda to pay:

P548,143.73 as and for actual damages, with finance and late-payment charges at the rate of three and one-fourth percent (3.25%)
and six percent (6%) per month, respectively, to be counted from 19 October 2007 until the amount is fully paid

Attorney’s fees equivalent to twenty-five percent (25%) of the total obligation due and demandable, exclusive of appearance fee
for every court hearing, and

Costs of suit.

FACTS:

The Court of Appeals recomputed Ledda’s total credit card obligation by deducting P226,000.15, representing interests and
charges, the principal amount, on which the reduced interest rates should be imposed.

The Court of Appeals awarded BPI P10,000 attorney’s fees, pursuant to the ruling in Macalinao.

Ledda contends that the case of Alcaraz v. Court of Appeals, instead of Macalinao v. Bank of the Philippine Islands which the
Court of Appeals invoked, is applicable in the computation of the interest rate on the unpaid credit card obligation.

RESOLUTION:

The ruling in Alcaraz v. Court of Appeals applies squarely to the present case. Ledda was a “pre-screened” client who did not
sign any credit card application form or terms and conditions prior to the issuance of the credit card. BPI issued a pre-approved
credit card to Ledda who, like Alcaraz, did not sign any credit card application form prior to the issuance of the credit card. Like
the credit card issuer in Alcaraz, BPI, which has the burden to prove its affirmative allegations, failed to establish Ledda’s
agreement with the Terms and Conditions governing the use of the credit card. It must be noted that BPI did not present as
evidence the Terms and Conditions which Ledda allegedly received and accepted.

RESOLUTION:
 Clearly, BPI failed to prove Ledda’s conformity and acceptance of the stipulations contained in the Terms and Conditions.
Therefore, as the Court held in Alcaraz, the Terms and Conditions do not bind petitioner (Ledda in this case) “without a clear
showing that x x x petitioner was aware of and consented to the provisions of [such] document.”

Since there is no dispute that Ledda received, accepted and used the BPI credit card issued to her and that she defaulted in the
payment of the total amount arising from the use of such credit card, Ledda is liable to pay BPI P322,138.58 representing the
principal amount of her unpaid credit card obligation. Consistent with Alcaraz, Ledda must also pay interest on the total unpaid
credit card amount at the rate of 12% per annum since her credit card obligation consists of a loan or forbearance of money.

Note:

The court cited the case of Eastern Shipping Lines, Inc. v. Court of Appeals to explain the imposition of the then prevailing
legal interest rate of 12% per annum under Central Bank Circular No. 416 for obligations consisting in the payment of a sum of
money, i.e., a loan or forbearance of money.

However, the Supreme Court’s pronouncement in Nacar vs. Gallery Frames modified the previous guidelines laid down in
Eastern Shipping Lines, Inc. vs. Court of Appeals, G.R. No. 97412 (12 July 1994). Previously, in Eastern Shipping Lines, Inc. vs.
Court of Appeals, the Supreme Court held that for loans and forbearance of money, in the absence of stipulation, the rate of
interest shall be twelve percent (12%) while for obligations not constituting a loan or forbearance of money, the rate of interest
shall be six percent (6%). When the judgment of the court becomes final and executory, the rate of interest shall be twelve percent
(12%) since it is akin to a forbearance of money. Now, with Nacar vs. Gallery Frames, the interest rate, regardless of the source of
the obligation, is pegged at a uniform rate of six percent (6%).

Note:

The Supreme Court cited as basis BSP-MB Resolution No. 796 dated 16 May 2013 and BSP Circular No. 799, Series of
2013, which pegged the interest rates for loans and forbearance of money, goods and credits, as well as judgments, at six percent
(6%). The Supreme Court held that the BSP is authorized to set interest rates and to enforce its Circulars, citing its previous ruling
in Advocates for Truth in Lending Act, Inc. vs. Bangko Sentral Monetary Board, G.R. No. 192986 (15 January 2013).

• Philippine Amanah Bank v. Contreras

• GR No. 173168, September 29, 2014

• Issues:

• Are banks obliged to determine any agreement entered into by the registered owner of the mortgaged property regarding the
proceeds of the loan?

• Are government banks covered by the prohibition against the alienation or encumbrance on the lot for five (5) years indicated
in the Original Certificate of Title?

• Facts:

• On August 3, 1980, respondent, Evangelista Contreras and Calinico Ilogon entered into a Deed of Confirmation of Sale under
which the title of the land was transferred to the latter, who in turn mortgaged to the petitioner bank.

• On October 25, 1980, respondent and Calinico executed an Agreement stating, among others, that the deed of sale they
executed was for the purpose of securing a loan with the petitioner bank.

• On May 20, 1981, the respondent wrote a letter and went to the petitioner bank directing the latter’s manager not to release
the loan to Calinico. However, despite this the loaned amount was still released to Calinico.

• The Original Certificate of Title of the land presented as collateral does not contain any inscription or annotation of
encumbrance on Calinico’s title.

• The petitioner bank subsequently extrajudicially foreclosed the mortgage due to spouses Ilogon’s failure to pay.
• The Provincial Sheriff sold the mortgaged property at public auction to the petitioner bank as the highest bidder and a
Certificate of Sale was issued to it.

• Because the mortgagor failed to redeem the mortgaged property within the period prescribed by law, the title to the property
was consolidated in the petitioner bank’s name. The Original Certificate of Title was cancelled and Transfer Certificate of
Title was issued in the petitioner bank’s name.

• Decision:

Any private agreement entered into by a mortgagor regarding the proceeds of the loan was not the concern of the bank, as it
was not a privy to this agreement. Although the rule that persons dealing with registered lands can rely solely on the certificate of
title does not apply to banks, the Court ruled in this case that there is nothing in the documents presented by debtor-mortgagor
Calinico that would arouse suspicion of the petitioner bank to prompt a more extensive inquiry. The respondent also admitted that
there was no encumbrance annotated on Calinico’s title at the time of the latter’s loan application.

While the Original Certificate of Title contained a prohibition against the alienation and encumbrance of the subject land
within five (5) years from the date of the patent, there was also an express wording in the OCT that the prohibition does not cover
alienation and encumbrance “in favor of the Government or any of its branches, unit or institutions.”

• Heirs of Felino Timbol, Jr. v. PNB

• G.R. No. 207408, 18 April 2016

• Subject

• Mortgage; Foreclosure

• Issue

• Is a foreclosure based on a mortgage contract providing for an increase in the mortgaged obligation valid?

• Facts

• Felino Timbol, Jr. (Timbol) owned Karrich Holdings, Ltd. (KHL) and Karrich Auto Exchange (KAE)

• KHL applied with PNB for credit facilities, with KAE acting as co-borrower

• The credit facilities were granted

• Facts

• Timbol executed real estate mortgage

• Timbol, KAE and KHL defaulted in the payment of their loan obligation

• PNB foreclosed the mortgaged properties

• Facts

• Timbol petitioned for the annulment of the real estate mortgage, and of the foreclosure and auction sale

• RTC declared the foreclosure null and void:

• The mortgaged loan did not reflect the actual amount of the loan obtained, which vitiates the subsequent foreclosure

• Timbol died and was substituted by his heirs

• Facts

• The CA reversed the decision of the RTC:

• Timbol never denied that he defaulted in the payment of the obligation, which justifies the foreclosure
• The heirs of Timbol petitioned for review on certiorari

• Ruling

[ISSUE: Is the foreclosure based on a mortgage contract providing for an increase in the mortgaged obligation valid?]

• YES, the foreclosure is proper:

• It was done in accordance with the terms of the real estate mortgage executed by the parties

• Timbol recognized the obligation when he requested for more time to pay

• Ruling

• Timbol’s claim that PNB bloated the amount of the obligation was unsubstantiated considering that he agreed to the
mortgage contract:

• “It is unbelievable for an established businessman like Timbol will sign a mortgage contract without knowing its
terms and conditions.”

• The petition was denied

 Philippine National Bank vs. Spouses Eduardo and Ma. Rosario et., al.,

 G.R NO. 1958989 September 24, 2014

 Kristina cazandra dl. Remorozo 3b

 Issue of the case

 Was there a breached of contractual obligation on the part of petitioner PNB under the Credit Agreement when it failed to
release the remaining balance of the approved loan to the respondents even when the latter had not had a single history of
payment given to the bank?

 Facts of the case

 Respondent Eduarosa Realty Development, Inc. (EDRI) was engaged in the realty construction and sale of condominium
buildings which was later obtained loans from petitioner PNB through respondent Rosario.

 They entered into several credit agreements to finance the completion of condominium property. Pursuant to the Credit
Agreement, they agreed to secured the debt. Several securities for the loans was executed.

 As to its first amendment, EDRI obtained an additional loan of with additional security of a lot. On its second amendment,
repayment dates of loan and extension was executed. Third amendment was again entered by the parties with an additional
loan given to EDRI subject to several conditions stated in the agreement.

 Respondent EDRI failed to settle its obligation. PNB consolidated its title and caused the cancellation of TCI.

 Respondent filed a complaint for annulment of sale before the RTC alleging that the title of the mortgage property that was
transferred to PNB as a consequence to the foreclosure was null and void since no new loans were released to them, hence,
violates the provision of the supplement to the Real Estate Mortgage. PNB contented that the mortgage contract was
supported by the valuable consideration and the loan proceeds under credit agreement was given to them.

 Regional Trial Court ruled in favor of the respondents and likewise, Court of Appeals affirmed the decision of the RTC.

 Ruling of the case

 Yes, there was a breached of contractual obligation when PNB did not release the remaining balance of the approved loan to
the respondents considering that the latter had no history of any payment either an interest or principal of the loan.

 The agreement between PNB and the respondent was one of a loan and under the law, a loan requires the delivery of money
or any other consumable object by one party to another who acquires ownership thereof, in the condition that the same
amount or quality shall be paid.
 Loan is a reciprocal obligation, as it arises from the same cause where one party is the creditor, and the other is the debtor.
The obligation of one party in a reciprocal obligation is dependent upon the obligation of the other, and the performance
should ideally simultaneous. This means that in a loan, the creditor should release the full loan amounted the debtor repays it
when it becomes due and demandable.

 In this case, PNB did not released the balance of the last loan proceeds in accordance with the Third Amendment. Therefore,
PNB had no right to demand from the respondent compliance with their own obligation under the loan. Indeed, if a party in a
reciprocal contract like a loan does not perform its obligation, the other party cannot be obliged to perform what is expected
of them while the other’s obligation remains unfulfilled.

 PNB was guilty of breach of contract as the credit agreement had been violated. For its failure to release the balance of the
approved loan, the construction of the condominium project was not finished, transgressing the very purpose of the credit
agreements, that is, to finance the completion of said project.

 As a banking institution, PNB owes it to the respondents to observe the high standards of integrity and performance in all its
transactions because its business is imbued with public interest and to ensure public confidence in the banking system.

 Thus, PNB was duly bound to comply with the terms and stipulations under its credit agreement with the respondents,
specifically the release of the amount of the additional loan on its entirely, lest it erodes public confidence. Yet, PNB failed in
this regard.

 UNIVERSITY OF MINDANAO vs. BANGKO SENTRAL NG PILIPINAS

 G.R. No. 194964 – 65

 January 11, 2016

 ISSUE:

 Whether or not BSP exercised due diligence required of a banking institution in its dealings with FISLAI and DSLAI and
may claim good faith in the execution of the mortgage contracts with Saturnino Petalcorin.

 FACTS:

 University of Mindanao is an educational institution. For the year 1982, its Board of Trustees was chaired by Guillermo
Torres and his wife, Dolores Torres, was the Assistant Treasurer.

 Before 1982, Guillermo and Dolores incorporated and operated two thrift banks, First Iligan Savings and Loan Association,
Inc. (FISLAI) and Davao Savings and Loan Association, Inc. (DSLAI) Guillermo chaired both thrift banks while his wife
acted as the Treasurer.

 Upon Guillermo’s request, Bangko Sentral ng Pilipinas (BSP) issued a Php1.9 million standby emergency credit to FISLAI.

 On May 25, 1982, University of Mindanao’s VP for Finance, Saturnino Petalcorin, executed a real estate mortgage over
University of Mindanao’s property in Cagayan de Oro City in favor of BSP. The mortgage served as security for FISLAI’s
1.9 million loan. It was allegedly executed on University of Mindanao’s behalf.

 As proof of his authority, Petalcorin showed a Secretary’s Certificate signed by UM’s Corporate Secretary. The certificate
stated that Petalcorin was authorized to mortgage real estate properties with BSP to serve as security for the credit facility of
FISLAI.

 On October 21, 1982, BSP granted FISLAI an additional loan of Php620, 700. 00 and Saturnino Petalcorin executed another
deed of real estate mortgage, allegedly on behalf of University of Mindanao, over its two properties in Iligan City. This
mortgage served as additional security to FISLAI’s loan.

 BSP also granted emergency advances to DSLAI in the amounts of Php1.6 million and Php6.4 million.

 In 1985, FISLAI, DSLAI, and Land Bank of the Philippines entered into a MOA intended to rehabilitate the thrift banks,
which had been suffering from their depositors’ heavy withdrawals. Among the terms of the agreement was the merger of
FISLAI and DSLAI, which became known as Mindanao Savings and Loan Association, Inc. (MSLAI).

 Guillermo Torres died in March, 1989.

 MSLAI failed to recover from its losses and was liquidated in May 1991.

 In 1999, BSP sent a letter to University of Mindanao, informing that the bank would foreclose its properties if MSLAI’s total
outstanding obligation of Php12.5 million remained unpaid.

 In its reply to BSP, University of Mindanao denied that its properties were mortgaged. It also denied having received any
loan proceeds from BSP.

 The university filed complaints for nullification and cancellation of mortgage. It alleged that it did not obtain any loan from
BSP.

 University of Mindanao also alleged that it never authorized Saturnino Petalcorin to execute real estate mortgage contracts
involving its properties to secure FISLAI’s debts. It never ratified the execution of the mortgage contracts. Moreover, as an
educational institution, it cannot mortgage its properties to secure another person’s debts.

 The RTC rendered a decision in favor of University of Mindanao. It found that there was no board resolution giving
Saturnino Petalcorin authority to execute mortgage contracts on behalf of the university.

 The Court of Appeals reversed the decision of the RTC. It ruled that although BSP failed to prove that the UM Board of
Trustees actually passed a resolution authorizing Petalcorin to mortgage the subject real properties, it merely relied in good
faith on the Secretary’s Certificate. UM is estopped from denying Saturnino Petalcorin’s authority.

 HELD:

 NO.

 The banking institution is “impressed with public interest” such that the public’s faith is of “paramount importance”. Thus,
banks are required to exercise the highest degree of diligence in their transactions.

 For its failure to exercise the diligence required of banks, BSP cannot claim good faith in the execution of the mortgage
contracts with Saturnino Petalcorin. BSP did not inquire further as to Petalcorin’s authority.

 Banks cannot rely on assumptions. This will be contrary to the high standard of diligence required of them.

 The CA’s decision was reversed and set aside. The RTC’s decision was reinstated.

 G.R. No. 177260

 LOTTO RESTAURANT CORPORATION

 -versus-

 BPI FAMILY SAVINGS BANK, INC.

 ISSUE

 Whether or not a bank has the right to adjust interest rate from a fixed rate to the prevailing market interest rate under a loan
agreement

 FACTS

 Lotto Restaurant Corp. obtained a loan from DBS Bank (now BPI Family Savings bank)

 7.EFFECTIVE INTEREST RATE (nr=er0 11.5* % p.a.)

Method of Computation attached – 12.24.99 – 12.24.2000

8. Schedule of Payment

a. Single payment due on _________ P __________ Date

 b. Total Installment Payments ___________ P __________ payable in
180*months/year (no.of payments) * Thereafter interest to be based on prevailing
market rate.

at Php 35,045 each instalment ______ 1.24.00 (sic)-12.24.00

(emphasis added)

 After a year , DBS Bank, increased the interest rate from 11.5% to 19% per annum

 Lotto Restaurant contested the new interest rate and stop paying the monthly amortization

 BPI Bank foreclosed the real estate mortgage for non-payment of loan

 RULING

 YES. The Court has previously upheld as valid the proviso in loans that the interest rate would depend on the prevailing
market rate. Such provision does not signify an automatic increase in the interest. It simply means that the bank may adjust
the interest according to the prevailing market rate. This may result to either an increase or a decrease in the interest.

 As held in Manila International Airport Authority v. Judge Gingoyon,513 Phil. 43,50-51 (2005), various stipulations in a
contract must be read together and given effect as their meanings warrant. Taken together, paragraphs 7 and 8 intended the
11.5% interest rate to apply only to the first year of the loan.

PDIC
vs.
PCRBI, RBCI, BEAI and PRBI

G.R. No. 176438               January 24, 2011

MARIA SHARON BELLEZA REYES Banking Laws - Block A

ISSUE:

Is prior approval of the Monetary Board of the Bangko Sentral ng Pilipinas necessary before the PDIC may conduct an
investigation of respondent banks?

FACTS:

• The PDIC Board passed a resolution approving the conduct of an investigation, in accordance with Section 9(b-1) of
Republic Act (R.A.) No. 3591, as amended, on the basis of the Reports of Examination of the Bangko Sentral ng Pilipinas
(BSP) on ten (10) banks. The said resolution created a Special Investigation Team to conduct the said investigation, with the
authority to administer oaths, to examine, take and preserve testimony of any person relating to the subject of the
investigation, and to examine pertinent bank records. Another resolution approving the conduct of an investigation on
PCIRBI on the basis of a complaint affidavit filed by a corporate depositor.

• On June 7, 2005, the PDIC Investigation Team personally served the Notice of Investigation on PCRBI at its Head Office in
Pajo, Lapu-Lapu City.6

• According to PDIC, in the course of its investigation, PCRBI was found to have granted loans to certain individuals, which
were settled by way of dacion of properties. These properties, however, had already been previously foreclosed and
consolidated under the names of PRBI, BEAI and RBCI.

• On June 15, 2005, PDIC issued similar notices of investigation to PRBI and BEAI.

• Subsequently, PRBI and BEAI refused entry to their bank premises and access to their records and documents by the PDIC
Investigation Team, upon advice of their respective counsels.15
• On June 16 and 17, 2005, Atty. Victoria G. Noel (Atty. Noel) of the Tiongson & Antenor Cruz Law Office sent letters to the
PDIC informing it of her legal advice to PCRBI and BEAI not to submit to PDIC investigation on the ground that its
investigatory power pursuant to Section 9(b-1) of R.A. No. 3591, as amended (An Act Establishing The Philippine Deposit
Insurance Corporation, Defining Its Powers And Duties And For Other Purposes), cannot be differentiated from the
examination powers accorded to PDIC under Section 8, paragraph 8 of the same law, under which, prior approval from the
Monetary Board is required.

• On June 17, 2005, PDIC General Counsel Romeo M. Mendoza sent a reply to Atty. Noel stating that "PDIC’s investigation
power, as distinguished from the examination power of the PDIC under Section 8 of the same law, does not need prior
approval of the Monetary Board."17 PDIC then urged PRBI and BEAI "not to impede the conduct of PDIC’s investigation" as
the same "constitutes a violation of the PDIC Charter for which PRBI and BEAI may be held criminally and/or
administratively liable.”

• On June 27 and 28, 2005, the Banks, through counsel, sought further clarification from PDIC on its source of authority to
conduct the impending investigations and requested that PDIC refrain from proceeding with the investigations.

• Simultaneously, the Banks wrote to the Monetary Board requesting a clarification on the parameters of PDIC’s power of
investigation/examination over the Banks and for an issuance of a directive to PDIC not to pursue the investigations pending
the requested clarification.

• Decision:

• The SC ruled that prior approval of the of Monetary Board is not required for PDIC to conduct an investigation on the
Banks.

• Examination involves an evaluation of the current status of a bank and determines its compliance with the set standards
regarding solvency, liquidity, asset valuation, operations, systems, management, and compliance with banking laws, rules
and regulations.

• Investigation, on the other hand, is conducted based on specific findings of certain acts or omissions which are subject of a
complaint or a Final Report of Examination.

• Clearly, investigation does not involve a general evaluation of the status of a bank.1âwphi1 An investigation zeroes in on
specific acts and omissions uncovered via an examination, or which are cited in a complaint.

• An examination entails a review of essentially all the functions and facets of a bank and its operation. It necessitates poring
through voluminous documents, and requires a detailed evaluation thereof. Such a process then involves an intrusion into a
bank’s records.

• In contrast, although it also involves a detailed evaluation, an investigation centers on specific acts of omissions and, thus,
requires a less invasive assessment.

 COMMISION OF INTERNAL REVENUE – Petitioner

VERSUS

PHILIPPINE NATIONAL BANK – Respondent

G.R. No. 195147

 ISSUE

 Whether of not the respondent bank’s interbank call loans is considered as loan agreement or deposit substitute which is
subject to documentary stamp taxes?

 FACTS

 Petitioner issued letter of authority which authorized the examination of PNB’s book accounts and other accounting records
in relation of its internal revenue taxes.

 PNB received the preliminary assessment notice which indicated deficiency payments of documentary stamp taxes (DST),
and withholding taxes.
 PNB immediately paid for the assessment of expanding withholding tax but filed protest for deficiency documentary stamp
taxes (DST) arising from PNB’s interbank call loans and special saving account.

 The petitioner argues that;

- R.A. no. 8424 of 1998 and R.A. No. 9243 of 2004 confirms the nature and character of interbank call loans as loan
agreement and/or debt instrument.

- PNB’s transaction under interbank call loans agreement.

 HELD

 Lack of merits

 It is a basic rule that in case of doubt, such statutes are to be construed most strongly against the government and in favor of
the subjects or citizens because burdens are not to be imposed nor presumed to be imposed beyond what statutes express and
clearly import.

 An interbank call loan refers to the cost of borrowing from other resident banks and non – bank financial institution with
quasi – banking authority that is payable on call or demand. Under the Manual of Regulation for Banks (MORB) issued by
the Bangko Sentral ng Pilipinas (BSP), interbank borrowing which include interbank call loans, shall be evidenced by
deposit substitute instrument.

 Loan Agreement – refers to a contract in writing where one or two parties delivers to another money or other consumable
thing, upon the condition that same amount of the same kind and quality shall be paid. The term shall include credit facilities,
which may be evidenced by credit memo, advice or drawings.

 Deposit substitutes shall mean an alternative form of obtaining funds from the public, other than deposit, through the
issuance, endorsement, or acceptance of debt instrument for the borrower’s own account, for the purpose of rendering or
purchasing of receivables and other obligations, or financing their own needs or the needs for their agent or dealer.

• BANKING LAW
Case Brief

• MARYROSE ANGIELEY M. PEÑAFLOR

• Block III – A

• Navarro v. Rural Bank of Tarlac

GR. No. 180060
July 13, 2016

• Facts:

• This petition stems from the complaint for a sum of money filed by the Rural Bank of Tarlac Inc., against Sps. Navarro.

• Petitioners obtained a bank loan in the amount of Php 558,000 for the purchase of a motor vehicle (Kia Advantage Van
1998).

• Petitioners surrendered the vehicle to the bank, so that the latter would be able to sell it and apply the proceeds to their loan
obligations.

• The only written agreement pertaining to the surrender of the vehicle was the acknowledgment receipt, which stated that the
bank “received from MR. AUGUSTO G. NAVARRO of Bgy. Sto. Domingo II Capas, Tarlac (1) one unit KIA
ADVANTAGE VAN , in good and running condition.”

• The van was sold for only Php 150,000 three months after it was surrendered.

• Respondent bank claimed that petitioners still had an unpaid balance of Php 315,677.80 excluding interests, penalties, and
liquidated damages even after the sale of the van.

• Petitioner maintained that by surrendering the vehicle, their remaining obligation must be deemed to have been fully paid by
way of a dacion en pago.
• Issues:

• Whether the selling price of the vehicle was enough to satisfy the unpaid balance, interest, and other charges?

• Whether the petitioner is correct for asserting that the conveyance of their vehicle already served to offset the claims of the
bank by means of dacion en pago.

• Ruling:

• Petition is unmeritorious.

• Petitioners failed to introduce any acceptable evidentiary reference despite of the numerous opportunities given to present
evidence of their actual payment more than the bank admitted receiving.

• The court stresses that petitioners assertion of the amount paid is an affirmative defense under Section 5(b), Rule 6 of the
Rules of Court, which they have the burden to substantiate.

• The court found nothing attached or referenced that would evidence additional payment. Clearly, Sps. Navarro failed to take
advantage of the apparent opportunities to prove payment in their Answer with Counterclaim and Comment/Opposition to
Plaintiff’s Motion for Summary Judgment before RTC; their Appellants Brief and Motion for Reconsideration before the CA;
and even their Petition for Review on Certiorari , Reply to Comment, and Memorandum before the SC.

• Also petitioners did not seek to present any additional piece of evidence that would substantiate their claim of a dacion en
pago agreement with respect to the surrender of the vehicle.

• The lower court said in its decision that “if the intention of the parties is to consider the surrender of the Kia Van as FULL
payment, a receipt to that effect should have been signed or acknowledged by the bank. There was none.

• WHEREFORE, Petition is DENIED.