Memo LegOp Lecture Notes Judge Serrano Lecture With Samples

8/12/2019 Memo LegOp Lecture Notes Judge Serrano Lecture With Samples

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San Beda College Alabang Academic Bar Operations 2011 Lecture Not

LECTURER JUDGE ALBERTO SERRANOSubject Head: Karla Rosal Juan Miguel Talatala Cherry Joy Ycong Loralyn Lazaro Nadine Alessandra Gloria

Over-All Chairman: Jan Raphael Salud | Vice-Chairperson for Academics: Jonalyn Porquez and Michael Quesada | V ice-Chairperson for Logistics: Cristina Elaine Mangrobang |Vice-Chairperson for Finance: Amerissa Base | Vice-Chairperson for Secretariat: Patricia David | Vice-Chairperson for Recruitment: Kathleen May Clareza P a g e

TRIAL MEMORANDUM &LEGAL OPINION

1. Read carefully the instructions in the Supreme Court Gu idelines on the Trial Memorandumand Legal Opinion Exam. (See Annex A)

2. Budget your time wisely. Use the draft pad to maintain cleanliness in your answer p ad.3. Memorize the format of the Trial Memoranda and Legal Opinion.

Trial Memorandum Legal Opinion

Statement of the Case

Statement of the Facts

Statement of the Issues

Arguments

Prayer

(Note: There is no standard form for a

legal opinion. The following is a

recommended format for a legal

opinion)

Opening Statement

Brief Statement of the Facts

Issue/s

Position

Discussion

Recommendation

Closing Statement


This would refer to the relief or action that is being asked, which will depend on the

facts given in the problem

Example:

Breach of Contract = Specific Performance with Damages

Culpa Aquiliana = Action for Damages

Annulment = Declaration of Nullity of Marriage

Statement of the Facts

State only the relevant facts of the case.

Statement of the Issues

Always go straight to the point.

Arguments

Cite only the relevant or applicable portions of the provisions of law and jurisprudenc

provided in the problem. Take note of the instructions given by the Supreme Court on

the number of arguments allowed.

Prayer

Memorize the form of the prayer and how to state damages.

Example:

Wherefore, plaintiff respectfully prays that judgment be rendered i n th

favor declaring that the real estate mortgage constituted in over the subject

property be declared null and void and ordering defendants to pay, jointly an

severally the following:

1. (Amount) by way of moral damages;2. (Amount) by way of exemplary damages; and3. (Amount) by way of attorneys fees and costs of suit.

Plaintiff further prays for such and further relief as may be deemed just

and equitable.

4. In the given problem, mark the relevant facts, p rovisions of law and j urisprudence that wbe useful in the construction of your trial memorandum and legal opinion. This way it w

be easier for you to recall the relevant portions of the transcript and jurisprudence.

5. Memorize standard opening statements for your trial memorandum and legal opinion.Examples:

Trial Memorandum Legal Opinion


The instant suit is based on

plaintiffs/defendants _____________.

This action seeks, among others, the_____________.

Opening Statement

I refer to your request for an opinion

whether under the terms of your exist

Lease Agreement, you can file a crimicase, like theft or estafa, against yo

defaulting lessees who refuse or fail


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return the leased property despite

demand.

This refers to your query concerning

________________

Issues

Based on the pleadings and evidence

adduced by the parties, the following are

the issues to be resolved in the instantcase:

Facts

As gathered from the information you

have given during our

interview/consultation

Closing Statement

I trust that we have sufficiently addressed

your concerns. Thank you very much.

I trust that I have sufficiently addressed

your concerns. Should you have further

queries regarding this matter, please feel

free to contact the undersigned. Thank

you very much.

I hope that I have completely answeredyour query. Should you need further

clarification on the matter, please feel free

to call us.

6. For the legal opinion problem, you will be asked to write one legal document that may beused in connection with your recommended course of action.

Study the basic legal forms. (See Annex B)

E.g. Complaint, Petition, Special Power of Attorney

7. The legal opinion is essentially in a letter format. Make sure that you disclose to yourclient his rights and obligations under the problem given. You will be speaking with a clientso avoid using legalese, but maintain formal English.

8. PRACTICE.1. If you would like to argue for the plaintiff or defendant, practice writing a trial

memorandum for either one only. (See Annex C for sample Trial Memorandum a

Legal Opinion)

2. Read Supreme Court decisions which are in the format of a m emorandum, such athose penned by Justice Carpio, Tinga and Panganiban. They are essentially that o

trial memorandum the difference only lies in the point of view of the writer--that

the Supreme Court Justice. (See Annex D, available only in soft copy of this

document)

- Observe how they present the statement of the case, facts, issues andarguments.

- Observe their use of transitions and terms in inserting their arguments odiscussion.

Note: This task is for you to merely observe the writing style (how t

present the different parts of a memorandum, transitional terms in insert

arguments and their basis) of the Ponente in a memorandum form. Keep

mind that what is going to be asked in the exam is a Trial Memorandum a

NOT a decision.


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ANNEX A

INSTRUCTIONS FOR ESSAY EXAMS

You are presented with a hypothetical case plus research materials (provisions of law and

jurisprudence) that you may want to use in your work.

The laws and jurisprudence accompanying the problems are designed to provide sufficient basis for

preparing an excellent trial memorandum or legal opinion. But you are free to include such laws, rules and

principles not provided that you feel will enhance your work.

Choose the side of the dispute that you want to uphold and defend and prepare a trial memorandum

in support of your side.

Omit the case caption.

Do not write more than four arguments.

You have been given, apart from this Test Question, a Draft Pad, and an Answer Pad. Use the Draft Pad

for making a draft of your memorandum. This will permit you to freely edit and rewrite your work. Editing

and rewriting are essential to sound legal writing.

The bells will be rung one hour before the end of the exam to signal the need for you to begin

transferring your work to your Answer Pad.

You may, of course, prefer to skip the preparation of a draft and write your essay directly on your

Answer Pad. That is allowed.

Quality of writing, not length is desired.

You are free to jot notes or place helpful markings like underlines on the test questions and the

enclosed materials.

Corrections even on your final essay on the Answer Pad are allowed and will not result in any

deduction. Still, it is advised that you write clearly, legibly and in an orderly manner.

When the bell rings a second timeto signal the end of the exam, your test questions, Draft Pad, and

Essay Pad will be collected whether you are finished or not. The time pressure is a part of the exam.

You will not be graded for a technically right or wrong answer but for the quality of your legal

advocacy.(Emphasis supplied)

The test is intended to measure your skills in:

1. Communicating in English 20%2. Sorting out the conflicting claims and extracting

those facts that are relevant to the issue or issues

15%

in the case

3. Identifying the issue or issues presented -- 15%;and

15%

4. Constructing your arguments and persuading yourreader to your point of view

50%

PART 1TRIAL MEMORANDUM:

Consider the following direct testimonies given in a hypothetical case for annulment of contract. Assuthat you are the lawyer for either one of the parties.

Using the information given, choose one side and write a memorandum of arguments that the court m

consider before deciding the case.

PART 2LEGAL OPINION:

Below is an exchange between you and a hypothetical client. Based on the information given, write (1

brief legal opinion/advice specifying the relevant facts of the case, the legal problems raised by y

hypothetical client, your assessment of the issues i nvolved, and the possible courses of action that may

taken under the law; and (2) one legal document that may be used in connection with your recommen

course of action.


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ANNEX B (Basic Legal Forms)

COMPLAINT

Contents of a Complaint

Caption

Parties

Ultimate Facts and Material Allegations

Arguments and applicable provisions of law & jurisprudence

Prayer

Signature of Counsel

Verification and Certification of Non-Forum shopping

Example:

REPUBLIC OF THE PHILIPPINES

NATIONAL CAPITAL JUDICIAL REGION

METROPOLITAN TRIAL COURT

Branch III, Quezon City

JUAN DELA CRUZ,

Plaintiff,

- versus - Civil Case No. 1234

ANNA MANALASTAS, For: Ejectment

Defendant.

x ----------------------------------x

COMPLAINT

COMES NOW, the Plaintiff in the above-entitled case, through counsel, and to this

Honorable Court alleges:

1. That plaintiff is of age, married and residing at No. 9 Bagong Daan Street, Quezon City,while defendant is likewise of age, married and residing at No. 10 Bagong Daan Street, Quezon

City, where he may be served with summons;

2. That plaintiff is the owner of an apartment located at No. 10 Bagong Daan Street,Quezon City;

3. That on June 10, 2007, plaintiff leased the said apartment to the defendant for the nthree (3) years at a monthly rental of P10,000.00, payable within the first five days of each mon

and that the lease contract thereon is hereto attached as Annex A;

4. That since June 11, 2010, the lease contract had already expired and, despite repeademands, defendant had refused to vacate the premises and continues to occupy the same.

5. That written demand (Annex B hereof) to vacate and pay rentals in arrears was sentand received by defendant but despite said demand, he failed to vacate the same or pay s

rentals.

WHEREFORE, it is respectfully prayed that judgment be rendered against the defend

ordering her:

1. To vacate the premises;2. To pay the monthly sum of P10,000.00 beginning on June 11, 2010, with inter

thereon at the legal rate until fully paid, until the defendant vacates said premis

3. To pay the sum of P2,000.00 as litigation expenses and attorneys fees.Quezon City, July 7, 2010.

JUAN TAMAD

Attorney for the Plaintiff

ABC Tower, Quezon City

IBP No. 12345 ; 1/2/1998 Quezon C

PTR No. 12345; 2/3/1998 Quezon C

Roll no. 24681 1/2/1998

MCLE Compliance No. 36912 4/5/20

VERIFICATION

CERTIFICATION OF NON-FORUM SHOPPING

JURAT

PETITIONREPUBLIC OF THE PHILIPPINES

NATIONAL CAPITAL JUDICIAL REGION

REGIONAL TRIAL COURT

Branch 1, Quezon City

IN RE: PETITION FOR ADOPTION

OF SOPHIA DELGADO

SP No. 888888

LEO FONACIER and ANNA MANALASTAS FONACIER, Petitioners

x ------------------------------------------ x


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PETITION

PETITIONERS, through counsel, respectfully state that:

1. Petitioners are husband and wife, both of legal age, and residents of No. 100 St. Peters street,

Ayala Heights, Quezon City.

2. They have no legitimate children of their own and desire to jointly adopt a minor named

SOPHIA DELGADO, 7 years old, the legitimate child of ANDRES DELGADO and ROSELIA DELGADO.

3. The parents of the minor are not insane, intemperate and are in full possession of civil

capacity; they have not abandoned the minor child. With full knowledge of petitioners intention, they have

expressly given their written consent to the adoption, as shown by their statement, a copy of which is

attached as ANNEX A.

4. Petitioners are qualified to adopt the minor and are financially capable of supporting the

minor; they are also morally qualified to bring up and educate the said minor.

WHEREFORE, it is respectfully prayed that judgment be rendered in petitioners favor adjudging

the minor child SOPHIA DELGADO freed from all legal obligations of obedience and maintenance with

respect to his/her natural parents and that he/she be declared to all legal intents and purposes, the child of

herein petitioners and that his/her surname be changed to that of petitioners.

Quezon City; 11 July 2011.

JUAN TAMAD

Attorney for the Plaintiff

ABC Tower, Quezon City

IBP No. 12345 ; 1/2/1998 Quezon City

PTR No. 12345; 2/3/1998 Quezon City

Roll no. 24681 1/2/1998

MCLE Compliance No. 36912 4/5/2010

Verification

Certification against Forum Shopping

Jurat

SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WE, (Insert Name of Principal) single/married (insert name of spouse if married), of legal age, w

residence and postal address at (Address) do hereby APPOINT (Insert name of Agent /Attorney-In-Fact)

single/married (insert name of spouse if married), likewise of legal age, with postal address at (Address) a

our true and legal representative to act for and in our name and stead and to perform the following acts:

1. (e.g. To sell, offer for sale, and come to an agreement as to the purchase price and thereafter

to sign for us and in our name and receive payment from the sale of our property more

particularly described as follows: (Insert Description of Property) )

HEREBY GRANTING unto our representative full power and authority to execute and

perform every act necessary to render effective the power to sell the foregoing properties, as

though we ourselves, have so performed it, and

HEREBY APPROVING ALL that he may do by virtue hereof with full right of substitution of

his person and revocation of this instrument.

IN WITNESS WHEREOF, WE HAVE HEREUNTO SET OUR HANDS THIS ____ DAY OF

_______________ 20__, AT (Insert Place of execution of this Instrument).

_______________________________ ____________________________

(Name of Principal ) (Name of Agent /Attorney-In-Fact)

Republic of the Philippines )

_____________________ ) S.S.

BEFORE ME, personally appeared:

Name Valid Government Issued I.D. No. Date/Place Issued

Known to me and to me known to be the same persons who executed the foregoing instrument

and acknowledged to me that the same is their free and voluntary act and deed. WITNESS MY

HAND AND SEAL, on the date and place first above written.

Notary Public

Doc. No.______;

Page No. ______;

Book No.______;

Series of 20___.


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ANNEX C

SAMPLE TRIAL MEMORANDUM

COMES NOW, Petitioner DOMINADOR MADLANGTUTA through undersigned counsel and unto this

Honorable Court most respectfully submits this Memorandumand states that:

PREFATORY STATEMENT

1. The present petition is for the declaration of absolute nullity of a void marriage under Article 36 ofthe Family Code. Petitioner invokes as a ground for this petition the psychological incapacity of

respondent which renders the latter incapable of complying with her essential marital obligations.

STATEMENT OF THE FACTS

2. On 9 September 2009, Petitioner filed a petition for the declaration of absolute nullity of a voidmarriage based on the provision of Article 36 of the Family Code.

3. On 7 December 2009, Petitioner filed an Ex-parte Motion for Issuance of Alias Summons statingthe fact that the summons was not served on respondent or her representative at No. 9418, Don

Manalo Blvd., Alabang Hills, Muntinlupa and requested that an alias summons be issued by the

Court on respondent at her representative at her present residential address at No.13 A. Molave

Street, Batungbacal Executive Village, Payatas, Quezon City.

4. On 6 January 2010, the Court Process Server certified that on 5 January 2010, a copy of the Aliassummons together with the Petition and its annexes were personally served to respondent at her

present address.

5. On 19 January 2010, Petitioner filed a Manifestation and Motion due to the failure of therespondent to file an answer within the reglementary period provided by law from service of

summons and in order to expedite the proceedings, moved that an Order be issued by this

Honorable Court directing the public prosecutor to investigate whether or not collusion exists

between the parties.

6. In its Order dated 29 January 2010, the Regional Trial Court ordered the City Prosecutor to conductan investigation to determine whether or not there was such collusion. In the same order, the

Court Social Worker was directed by the court to conduct a social case study report.

7. A Subpoena was issued by the Office of City Prosecution on 18 February 2010, directing thepetitioner to appear and testify under oath before the investigating prosecutor.

8. On 13 March 2010, the assistant City Prosecutor submitted a Manifestation to the Court statingthat that no collusion exists between the parties and that the evidence was neither fabricated norsuppressed.

9. On 11 March 2010, this Honorable Court issued an Order dismissing the instant petition dueimproper venue, citing Section 4 of A.M. N o. 02-11-10-SC which provides that Sec. 4. Venue

petition shall be filed in the Family Court of the province or city where the petitioner or t

respondent has been residing for at least s ix (6) months prior to the date of the filing.

10. Petitioner then filed an Urgent Motion for Reconsideration dated 29 March 2010, stating that fthat the number of the residence stated in the petition was erroneously indicated therein as 4

rather than 421, which is the true and correct number of the residence of the petitioner.

11. This Honorable Court then issued an Order dated 5 April 2010, which granted the petitioneUrgent Motion for Reconsideration. The City Prosecutor was then ordered by the Court to condan investigation to determine whether or not c ollusion exists between the parties.

12. A Subpoena was issued by the Office of City Prosecutor on 27 April 2010, directing the petitioto appear before the investigating prosecutor.

13. On 21 May 2010, the Assistant City Prosecutor, in its Manifestation, established that no collusexists between the parties and that the evidence was neither fabricated nor suppressed.

14. On 28 May, 2010, Patt Y. Gasan, a Social Welfare Officer, submitted to the Court her social cstudy report. In her report, the social welfare officer recommended that the present petition

granted for the reasons stated in said report.

15. On 16 June 2010, Plaintiff filed an Ex-Parte Motion to Set Case for Pre-Trial.16. On 3 August 2010, a preliminary conference was conducted before the court wherein Petitio

had his Documentary Exhibits pre-marked. The Court then set the pre-trial conference onSeptember 2010.

17. At the pre-trial conference on 13 September 2010, petitioner adopted the minutes of preliminary conference as well as the pre-trial brief he earlier submitted.

18. On 11 October 2010, Petitioner and Atty. Jose Pakundo Alitaptap testified in open court. Twere thereafter cross examined by the public prosecutor.

19. On 22 February 2011, petitioner presented as its third witness, clinical psychology Dr. Boy AsoAfter her testimony, petitioner manifested that he intends to present his fourth witness, the co

social worker. Since the said witness will merely identify the case study report she prepared on

child of the petitioner, the Public Prosecutor agreed to just stipulate with petitioner on

existence and validity of the report. Thereafter, petitioner rested its case and asked for fifteen (

days to submit his Formal Offer of Documentary Evidence.

20. On 25 February 2011, petitioner filed his written Formal Offer of Documentary Exhibits.


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21. The court set the hearing for presentation of respondents evidence on 5 April 2011. On the saiddate, the public prosecutor manifested that, since respondent failed to participate in the

proceedings, the state had no other option but t o have the case submitted for Decision.

22. The Court, noting the manifestation of the public prosecutor, issued an Order submitting the casefor Decision and directing the parties to file their respective memoranda on or before 20 April

2011.

Hence, this memorandum of the petitioner.

STATEMENT OF THE ISSUE

23. The only issue in this petition is whether or not the marriage between petitioner and respondent isNULL and VOID due to psychological incapacity of respondent to perform her essential marital

obligations, pursuant to, and in accordance with, the provisions of Article 36 of the Family Code.

THE ARGUMENT

24. The petition should be granted.25. Firstly, the testimony of the petitioner shows to us a firsthand experience of the incapacity of the

respondent to perform her essential marital obligations:

On the night of their honeymoon, respondent wept profusely in one corner of the

bedroom and repeatedly said that she missed her mother. Despite assurances from

petitioner that they shall always be in touch with respondents mother, respondent

refused to stop crying. Nevertheless, after a few minutes, respondent ceased crying andbegan gathering all their wedding gifts. When petitioner asked respondent for an

explanation, respondent said she wanted to list down the price of each wedding gift so

that she would know how much money each guest spent for his/her gift.

During the course of their marriage, respondent made it a point to always be with her

mother, whether during weekends, holidays or on special occasions. She would insist

that petitioner and their daughter should always be with her on these visits. However,

when it came to petitioners parents and r elatives, respondents would make upall sorts

of excuses to defer visiting them. It came to a point where petitioner and respondent

would argue whenever petitioner would attempt to bring respondent and their

daughter to his parents house. This exasperated petitioner who subsequently stopped

trying to convince respondent to visit his relatives.

Respondents conduct towards petitioner in public is markedly different from the way

she treats petitioner at home. Respondent would portray the image of a loving, caring,

and affectionate wife when she, petitioner and their daughter would go out or werewith the company of friends. However, once she and petitioner were left alone or were

at home, respondent would be cold and indifferent towards petitioner.

26. The testimony of Atty. Jose Pakundo Alitaptap c orroborates with the testimony by the petitioneI have observed that, from the start of their marriage, petitioner and r espondent wo

often quarrel, at times even in front of their child. The quarrels were mostly promp

by some act or statement made by respondent. Respondent has a very domin

personality, she always insists on what she wants, even if it would be inconvenient

petitioner to comply. She also is not as affectionate to petitioner who, on the ot

hand, is quite expressive with his feelings. These quarrels were the result of a c

between respondents stubborn, domineering and dispassionate or undemonstrat

character and petitioners expressive, emotional nature and his yearning for a wiwarmth and affection.

I have also noticed that when it comes to petitioners relatives respondent would m

all sorts of excuses to prevent petitioner from visiting them or she would not

petitioner in these visits. However, when it came to respondents relatives, m

particularly, her mother, respondent would be adamant in her demand that petitio

should join her in her visits. I noticed that this would likewise result in serious squab

between them.

Respondent would also have the same stubborn attitude vis--vis petitioner whe

came to Friday nights. She expected petitioner to take her out to dine every Fri

evening, regardless of the work schedule of petitioner or his state of health at that ti

If petitioner fails to bring her out on a Friday night, respondent would throw a tantr

and there would be times when respondent would give petitioner the cold treatm

for several weeks.

Since the time they got married until the time they separated, petitioner

respondent have had serious quarrels. Their family life was not a happy or tranquil o

the fights were usually more mean or serious on special occasions like ChristmSomehow, respondent would always find a way to dampen the mood of petitioner a

their child during these occasions.

27. Furthermore, the Court Social Worker testified i n her social case study report:The herein couple have settled to live separately accepting the stark reality of

incurability of ones problems or malady that could have made the petitioner the vic

of the worsening consequences of his kind of marriage. This is a case of an estrang

couple who have found peace in living separately; nevertheless, the petitioner rema

obliged to provide financially for the respondent and their only child. However,

present situation must be properly addressed in order to clear their behaviour

decisions on their future relationships.

28. A perusal of the evidence presented by petitioner, both testimonial and documentary, would shthat indeed respondent is psychologically incapacitated to fulfil her essential marital obligatio

Respondent on the other hand, failed to present any evidence to r efute the claim of Petitioner.

29. By the very nature of Article 36, courts, despite having the primary task and burden of decision-making, must not discount but, instead, must consider as decisive evidence the expert opinion


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on the psychological and mental temperaments of the parties . (Edward Kenneth Ngo Te Vs.

Rowena Ong Gutierrez Yu-Te, et al., G.R. No. 161793, 13 February, 2009)

30. Verily, the evidence must show a link, medical or the like, between the acts that manifestpsychological incapacity and the psychological disorder itself. (Edward Kenneth Ngo Te Vs. Rowena

Ong Gutierrez Yu-Te, et al., G.R. No. 161793, 13 February, 2009)

31. It is respectfully submitted to this court that the petitioner has proven through the psychologicalevaluation report of Dr. Boy Aso III that indeed the respondent is psychologically incapable of

complying with her essential marital obligations. The report shows that respondent is suffering

from 301.81 Narcissistic Personality Disorder due to her grandiose sense of self-importance, senseof entitlement, interpersonal exploitativeness, arrogant and haughty behaviour, as well as lack of

empathy.

32. The report further provides that since the psychological incapacity is rooted on a personalitydisorder, it is deemed to have been existent at the time of the celebration of the marriage and

even prior thereto because a personality disorder is something that starts to develop from

childhood or early adolescence into adulthood.

33. It is also in the expert opinion of Dr. Aso III that since respondents psychological incapacity isanchored on her Narcissistic Personality Disorder, the same is incurable.

34. Having proven that the personality disorder of respondent, is serious, incurable, directly linked toher marital obligations, and existing at the time of marriage it is respectfully submitted that the

Court has no other option but grant this petition to have the marriage of the petitioner and the

respondent declared null and void.

35. Moreover, the testimony of Atty. Jose Pakundo Alitaptap also corroborated the testimony of thepetitioner and the clinical psychologist which likewise proves that indeed respondent is incapable

of fulfilling her essential marital obligations.

36. Furthermore, the petition should be granted because of the manifestation of the Assistant CityProsecutor that indeed there was no collusi on between the petitioner and respondent in the filing

of the case and the social case studyof the court social worker, which also recommended that the

present petition be granted.

PRAYER

WHEREFORE, it is respectfully prayed that, judgment be rendered by this Honorable Court Declaring the

marriage between petitioner and respondent NULLand VOIDdue to psychological incapacity of respondent to

perform her essential marital obligations, pursuant to, and in accordance with, the provisions of Article 36 of the

Family Code.

Petitioner prays for such relief or remedy as this Honorable Court may deem just and equitable underthe premises.

Makati City, 11 April 2011.

SAMPLE LEGAL OPINION

September 22, 2011

JUDY ANN SANCHEZ

911 Bluewhale Street

Palanan, Makati City

Dear Ms. Sanchez:

This refers to your query regarding the possibility of filing an action for damages against McbMetropark Branch due to the physical injuries you sustained from falling in their staircase.

It is in my opinion that you may file an action for damages, more specifically under Article 2176 of t

Civil Code, which states that Whoever by act or omission causes damage to another, there being fault

negligence, is obliged to pay for the damage done. Such fault or negligence , if there is no pre-existing contract

relation between the parties, is called a quasi-delict

Negligence, as defined in Jarco Marketing Corporation v. Court of Appeals (321 SCRA 375 ), is

omission to do something which a reasonable man, guided by those considerations which ordinarily regulate

conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would

do. It is the failure to observe, for the protection of the interest of another person, that degree of care, precaut

and vigilance which the ci rcumstances justly demand, whereby such other person suffers injury."

Undoubtedly, the person wearing the McBee costume was negligent. In Philippine Natio

Construction Corporation v. Court of Appeals (467 SCRA 569), the Supreme Court pronounced.

The test for determining whether a person is negligent in doing an act whereby injury or dama

results to the person or property of another is this: could a prudent man, in the position of the per

to whom negligence is attributed, foresee harm to the person injured as a reasonable consequence

the course actually pursued? If so, the law imposes a duty on the actor to refrain from that course o

take precautions to guard against its mischievous results, and the failure to do so constitu

negligence. xxx xxx.

The McBee employee wearing the mascot was well aware of the size of his costume. Thus, he sho

have foreseen the harm he could cause by hurrying down the staircase, especially to those ascending from

opposite direction.

McBee-Metrobanks management is also responsible for the injuries you sustained. T his is supported

Article 2180 and 2202 of the Civil Code, which provides:

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own

or omissions, but also for those of persons for whom one is r esponsible.xx xx xx

The owners and managers of an establishment or enterprise are likewise responsible


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damages caused by their employees in the service of the branches in which the latter are

employed or on the occasion of their functions.

xx xx xx

And this fact of responsibility cannot be denied by McBee, as the circumstances of your case fall

squarely with the doctrine of Res Ipsa Loquitur (the thing speaks for itself). In Child Learning Center, Inc. v.

Tagorio, (476 SCRA 236), the Supreme Court enunciated:

xx xx xx

The doctrine of res ipsa loquitor applies where (1) the accident was of such character as to warrant an

inference that it would not have happened except for the defendant's negligence; (2) the accident musthave been caused by an agency or instrumentality within the exclusive management or control of the

person charged with the negligence complained of; and (3) the acci dent must not have been due to any

voluntary action or contribution on the part of the person injured.

xx xx xx

First, the mishap would not have happened were it not for the negligence of the employee wearing the

McBee costume. Second, the mascot was within the exclusive control and management of the employees of the

McBee-Metro Bank Branch. Third, you did not contribute to your own injury as you just followed the advice of

another employee that it is safe for you to proceed to the second floor because the party was almost over.

Aside from actual damages, you may also seek moral damages as found in Article 2217 and 2219 of the

Civil Code, which states:

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,

besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

Though incapable of pecuniary computation, moral damages may be recovered if they arethe proximate result of the defendant's wrongful act for omission (Emphasis Supplied).

xx xx xx

Art. 2219. Moral damages may be recovered in the following and analogous cases:

xx xx xx

(2) Quasi-delicts causing physical injuries;

xx xx xx

At the onset, you have sufficiently shown that you sustained physical injuries, which was also admitted

by McBee in writing. Moreover, there are enough facts gathered from your daughters statement to establish the

negligence of the McBee employees. Lastly, the negligence of McBee employees was the proximate cause of the

injuries you sustained. Lastly, your case falls within the instances provided in Art. 2219 and 2220 that entitles an

injured party to claim moral damages. Therefore, upon considering the foregoing applicable laws andjurisprudence, I am in the opinion that an action for damages against McBee Metropark Branch will prosper.

Attached herewith is a draft of a complaint for damages. Please read it and we shall discuss the mat

in further detail during our next meeting.

I trust that I have sufficiently addressed your concerns. Should you have further queries regarding t

matter, please feel free to contact the undersigned. Thank you very much.

Respectfully Yours,

ATTY. JUAN DELA CRUZ


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ANNEX D

DECISIONS PENNED BY JUSTICE PANGANIBAN, JUSTICE CARPIO, JUSTICE TINGA

Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 150487 July 10, 2003

GERARDO F. SAMSON JR.,petitioner,

vs.

BANK OF THE PHILIPPINE ISLANDS, respondent.

PANGANIBAN,J.:

Gross negligence of a bank in the handling of its client's deposit amounts to bad faith that calls for an award

of moral damages. Credit is very important to businessmen, and its loss or impairment needs to be

recognized and compensated.

The Case

Before us is a Petition for Review1under Rule 45 of the Rules of Court, seeking to set aside the March 30,

2001 Decision2and the October 22, 2001 Resolution 3 of the Court of Appeals (CA) in CA-GR CV No. 54599.

The dispositive portion of the assailed Decision reads as follows:

"WHEREFORE, foregoing premises considered, the Decision appealed from is AFFIRMED WITH A

MODIFICATION that the award of moral damages is reduced to P50,000.00."4

The assailed Resolution denied the Motions for Reconsideration filed by the parties.

The Facts

The CA summarized the antecedents of the case as follows:

"Gerardo F. Samson, Jr. filed an action for damages against the Bank of the Philippine Islands.

"In his complaint, [petitioner] avers, inter aliathat he is a client/depositor of [respondent] with

Savings Account No. 3085-0125-75 through the [respondent's] Express Teller System[,] a 24-ho

banking service; that on August 20, 1990, [petitioner] deposited to his BPI account a Prudential

Bank Check No. 209116 in the amount of Three Thousand Five Hundred Pesos (P3,500.00); that

of said date, [petitioner's] account balance was Three Hundred Sixty-Seven and 38/100 Pesos

(P367.38); that on August 24, 1990, [petitioner] instructed his daughter to withdraw P2,000.00

from the said account; that the withdrawal was declined twice as the Express Teller transaction

record showed 'Sorry, Insufficient Funds'; that because of such eventuality, [petitioner] suffere

embarrassment as he could not then and there produce the required cash with which to fulfill h

commitment and monetary obligation towards a creditor who had waited at his residence; that

on September 12, 1990, [petitioner] deposited to his aforesaid account through the Express Tethe amount of Five Thousand Five Hundred Pesos (P5,500.00); that he discovered that his

available total balance as of said date was only Three Hundred Forty-Two and 38/100 Pesos

(P342.38) without his earlier check deposit of Three Thousand Five Hundred Pesos (P3,500.00) o

August 20, 1990 but with a Twenty-Five Peso (P25.00) penalty/service charge; that [petitioner]

complained to [respondent] about the discrepancy; that [respondent] confirmed the P3,500.00

check deposit but could not account the same; that investigation only ensued after [petitioner]

informed [respondent] that his P3,500.00 Prudential Bank check was encashed by [respondent

security guard named Nonilon E. Rondina; that per such investigation, it was discovered that on

of the deposit envelopes was missing; that [respondent] did nothing to look for the missing che

deposit or to inform [petitioner] about it; that despite [respondent's] knowledge of the

irregularity and suspicious discrepancy in its records as early as of August 20, 1990, it did n ot ev

bother to conduct its own inquiry into said irregularity; that worse, despite being at fault,

[respondent's] Manager, Nerissa M. Cayanga, displayed arrogance, indifference and discourtes

towards [petitioner].

"In its Answer, [respondent] Bank denied all the material allegations in the [C]omplaint and

alleged among others, that the [C]omplaint fails to state a cause of action; that [petitioner] has

violated the provisions of the covering contract of deposit which provides that representatives

not allowed to contract business on the account on behalf of the depositor; that [petitioner's]

claim has been paid, waived and extinguished; that [petitioner] by his i naction in reporting the

loss of his check deposit, is estopped from claiming damages from defendant.

"After trial on the merits, the trial court rendered [a Decision in favor of petitioner]."5

Ruling of the Court of Appeals

The CA affirmed the ruling of the trial court, but modified the amount of damages. It held that since the

banking business was affected with public interest, Bank of the Philippine Islands (BPI) was required to

exercise a high degree of care with respect to the accounts of its clients. Thus, the bank was rendered lia

by its negligence resulting in damage to its depositor.


11/16





Since it was undisputed that BPI had lost the check of petitioner, the appellate court reviewed the evidence

and held that respondent bank was grossly negligent in its failure to observe the required degree of care.

This gross negligence on the part of BPI amounted to bad faith that entitled petitioner to moral damages.

The moral damages of P200,000 awarded by the trial court was, however, found to be excessive. It was

therefore reduced to P50,000, because petitioner claimed only P3,500, which had already been credited

back to his account.

Hence, this Petition.6

Issues:

In his Memorandum, petitioner submits the following issues for the Court's consideration:

"I

Whether the reduction of the award of moral damages to Php50,000.00, a mere one-fourth of the moral

damages awarded by the trial court, was proper.

"II

Assuming that Respondent BPI is not precluded from raising this defense in this appeal, whether petitioner

was negligent in demanding the return of his deposit, which was lost through the bank's gross negligence

and inaction."7

In sum, the main issue in this case is whether the CA erred in reducing the award of moral damages from

P200,000 to only P50,000.

The Court's Ruling

The Petition is partly meritorious.

Sole Issue:

Amount of Moral Damages

Moral damages are meant to compensate the claimant for any physical suffering, mental anguish, fright,

serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar

injuries unjustly caused.8Although incapable of pecuniary estimation, the amount must somehow be

proportional to and in approximation of the suffering inflicted. 9Moral damages are not punitive in

nature10

and were never intended to enrich the claimant at the expense of the defendant.11

There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral

damages, since each case must be governed by its own peculiar facts.12

Trial courts are given discretion in

determining the amount, with the limitation that it "should not be palpably and scandalously

excessive."13

Indeed, it must be commensurate to the loss or injury suffered.14

In the present case, petitioner bases his claim on the failure of respondent to credit the sum of P3,500 to

account due to its gross negligence. As a result of such failure, he was unable to fulfill his obligation to a

valued creditor, resulting in the severance of his credit line. He further alleges that he suffered humiliatio

and besmirched reputation.15

According to him, his suffering was exacerbated by his subjection to

indifference, discourtesy and arrogance from respondents' officers.

Moral damages are awarded to achieve a "spiritual status quo," thus:

"Moral damages are awarded to enable the injured party to obtain means, diversions or

amusements that will serve to alleviate the moral suffering he/she has undergone, by reason o

the defendant's culpable action. Its award is aimed at restoration, as much as possible, of the

spiritual status quo ante; thus, it must be proportionate to the suffering inflicted. Since each ca

must be governed by its own peculiar circumstances, there is no hard and fast rule in determin

the proper amount. . . .."16

The social standing of the aggrieved party is essential to the determination of the proper amount of the

award. Otherwise, the goal of enabling him to obtain means, diversions, or amusements to restore him to

the status quo antewould not be achieved.

We believe that the award should be increased to P100,000, considering (1) that petitioner was a

businessman and was the hi ghest lay person in the United Methodist Church; (2) that he was regarded by

respondent and its officers with arrogance and a condescending manner; and (3) that respondent

successfully postponed compensating him for more than a decade. This amount is more than the P50,000

granted by the CA, but not as much as the P200,000 granted by the RTC.

That petitioner reported the missing check deposit to respondent only after three weeks did not constitu

contributory negligence. The injury resulted from the denial of hi s withdrawal due to insufficient funds, a

injury he suffered before learning that his check deposit had been lost. Respondent, not he, immediately

knew that a deposit envelop was missing, yet it did nothing to solve the problem. His alleged delay in

reporting the matter did not at all contribute to his injury.

Though the amount of P3,500 was already credited back to his account, this step was made only after his

persistent prompting. Prior to this development, he suffered damages that could no longer be reversed b

the belated restoration of the amount lost. It is for this suffering that moral damages are due.


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In Prudential Bank v. CA,17

Philippine National Bank v. CA18

and Metropolitan Bank v. Wong,19

the Court

consistently awarded moral damages of P100,000 in consideration of the reputation and the social standing

of the claimant, as well as the rulings in similar cases involving the negligence of banks with regard to the

accounts of their depositors.

WHEREFORE, the Petition is partly GRANTED and the assailed Decision MODIFIED. The award of moral

damages is increased to P100,000. No pronouncement as to costs.

SO ORDERED.


SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 188365 June 29, 2011

BPI FAMILY SAVINGS BANK, INC.,Petitioner,

vs.

PRYCE GASES, INC., INTERNATIONAL FINANCE CORPORATION, and NEDERLANDSE FINANCIERINGS-

MAATSCHAPPIJ VOOR ONTWIKKELINGSLANDEN N.V.,Respondents.

D E C I S I O N

CARPIO,J.:

The Case

Before the Court is a petition for review1assailing the Decision

2promulgated on 26 February 2008 and the

Resolution3promulgated on 11 June 2009 of the Court of Appeals in CA-G.R. SP No. 98626.

The Antecedent Facts

Pryce Gases, Inc. (PGI) is a corporation engaged in the business of producing, selling and trading in all kin

of liquids, gases, and other chemicals, including but not limited to oxygen, acetylene, hydrogen, nitrogen

argon, carbon dioxide, carbonex, nitrous oxide, compressed air, helium, and other allied or related

products. PGI is a debtor of the International Finance Corporation (IFC), an international organization and

an affiliate of the International Bank of Reconstruction and Development (World Bank), and the

Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO), a Dutch development ba

engaged in promoting the expansion of private enterprise in emerging markets.

On 27 August 2002, IFC and FMO filed a Petition for Rehabilitation4with the Regional Trial Court of Maka

due to the failure of PGI to service its debts as well as the refusal of PGIs parent company, the Pryce

Corporation, to provide financial support to PGI. The case was raffled to Branch 142 and was docketed as

Proc. No. 02-1016. The petition for rehabilitation was meant to preserve PGIs workforce and ensure that

cash flow would not be diverted to ill-advised ventures but would instead be channeled back to its

operating capital to generate profits to pay off and retire debts. IFC and FMO proposed a financial

restructuring that called for the conversion of dollar-denominated loans to peso and the splitting of the

whole debt instrument into two categories: (1) the sustainable debt which would be rescheduled as a sen

loan and secured by PGIs assets; and (2) the unsustainable portion to be transformed into redeemable

preferred shares with voting rights. Under the proposal, senior loans shall be paid in five years while the

shares are forecast to be redeemed in ten years. Based on the proposed financial restructuring, PGIs loa

from BPI Family Savings Bank, Inc. (BFB) shall be paid in ten years as it was a non-MTI5creditor.

Presiding Judge Estela Perlas-Bernabe of RTC, Branch 142, inhibited herself from further hearing the case

The case was re-raffled to RTC, Branch 138.

The Ruling of the Trial Court

In an Order6dated 24 January 2003, the RTC, Branch 138, gave due course to the petition. The RTC, Bran

138, appointed Mr. Gener Mendoza (Mendoza) as Rehabilitation Receiver and directed him to submit his

evaluation, study and recommendation on the proposed rehabilitation of PGI.

In a Manifestation7dated 29 May 2003, PGI informed RTC, Branch 138, that its parent company, Pryce

Corporation, had offered to help through dacion en pagoof its real estate assets to PGIs creditors, subje

to certain terms and conditions.

In a Compliance8dated July 2003, Mendoza submitted his recommendation which, among others, states:

2. Creditors Secured with Non-Operating Assets. - Payment of principal and interest accrued as of August

31, 2002 by way of assets already mortgaged to them at dacionvalues pegged to the average of two

appraisals to be undertaken by B angko Sentral-accredited appraisal firms who are nominated by thecreditors in a meeting called for that purpose.

9
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In its Comment10

to Mendozas Compliance, BFB objected to dacion en pagoas a mode of payment. BFBs

exposure to PGI was secured by assets that were considered non-operating and not critical to the

rehabilitation plan recommended by Mendoza. PGI and Pryce Corporation submitted a Partial

Opposition11

to the provision on income sharing of receivers recommended revised rehabilitation plan but

manifested their conformity to the other provisions of the plan.

In an Order12

dated 10 October 2003, the RTC, Branch 138, approved the rehabilitation plan.

On 3 November 2003, BFB filed a notice of appeal .13

PGI filed a motion to dismiss the appeal on the ground

that BFB failed to perfect the appeal because of failure to file the record on appeal within the required

period.

On 20 April 2006, before the RTC, Branch 138, could resolve PG Is motion to dismiss, BFB filed its Opposition

(Re: Additional Argument in Support of Motion to Dismiss Appeal dated 27 July 2004) and Motion With

Leave to Withdraw Notice of Appeal Dated 3 November 2003 and Instead Be Allowed to File a Petition for

Review.14

1avvphi1

In an Order15

dated 9 May 2006, the RTC, Branch 138 , dismissed BFBs appeal. The RTC, Branch 138, ruled

that the law clearly states that in special proceedings, record on appeal is required to perfect the appeal.

The dispositive portion of the Order reads:

WHEREFORE, the Motion to Dismiss Appeal filed by respondent Pryce Gases, Inc. is granted and the appeal

of BPI Family Savings Bank, Inc. is dismissed. Consequently, no action need to be taken by the Court on the

Motion for Leave to Withdraw Notice of Appeal dated 3 November 2003 and Instead Be Allowed to File a

Petition for Review filed by BPI Family Savings Bank, I nc.

SO ORDERED.16

BFB filed a motion for reconsideration of the 9 May 2006 Order. In its Order dated 16 February 2007 ,17

the

RTC, Branch 138, denied the motion on the ground that the Interim Rules of Procedure on Corporate

Rehabilitation prohibit the filing of motions for reconsideration.

On 19 April 2007, BFB filed a petition for certiorar i18

before the Court of Appeals.

The Decision of the Court of Appeals

In its 26 February 2008 Decision, the Court of Appeals dismissed the petition. The Court of Appeals ruled

that corporate rehabilitations are special proceedings and as such, appeals from the final order or decisio

therein should be by record on appeal in accordance with Section 2, Rule 41 of the 1997 Rules of Civil

Procedure. The Court of Appeals ruled that when BFB filed the notice of appeal, the rule in force was the

Interim Rules of Procedure on Corporate Rehabilitation which required the filing of a record on appeal. Th

Court of Appeals ruled that the mere filing of a notice of appeal would not suffice without the required

record on appeal. The Court of Appeals further ruled that BFBs prayer that the petition be treated as file

under Rule 43 of the 1997 Rules of Civil Procedure lacked merit because it was filed out of time. The Court

of Appeals ruled that due to the dismissal of BFBs appeal and the denial of its motion for reconsideratio

by the RTC, Branch 138, the 10 October 2003 Order had become final and executory. Finally, the Court of

Appeals ruled that BFBs petition was grossly defective because the verification was signed by an employof the Bank of the Philippine Islands, a completely different entity from BPI Family Savings Bank, Inc.

BFB filed a motion for reconsideration. In its 11 June 2009 Resolution, the Court of Appeals denied the

motion for lack of merit.

Hence, the petition before this Court on the following grounds:

1. The Honorable Court of Appeals resolved an issue in a manner contrary to law and

jurisprudence when it upheld the ruling of the lower court that dismissed the appeal of petition

bank; and

2. The Honorable Court of Appeals resolved an issue in a manner contrary to law and

jurisprudence when it upheld the ruling of the lower court which in effect forced and compelle

petitioner bank to accept a dacion en pagoarrangement against its consent.19

The Issue

The issue in this case is whether the Court of Appeals committed a reversible error in sustaining the RTC,

Branch 138, in dismissing BFBs appeal.

The Ruling of this Court

The petition has no merit.

Section 5 of the Interim Rules on Corporate Rehabilitation provides that "(t)he review of any order or

decision of the court or an appeal therefrom shall be in accordance with the Rules of Court x x x." Under

A.M. No. 00-8-10-SC, a petition for corporate rehabilitation is considered a special proceeding.

20

Thus, thperiod of appeal provided in paragraph 19(b) of the Interim Rules Relative to the Implementation of Bata
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Pambansa Blg.129 for special proceedings shall apply,21

that is, the period of appeal shall be 30 days since a

record of appeal is required.22

Thus:

19. Period of Appeal. -

(a) x x x

(b) In appeals in special proceedings in accordance with Rule 109 of the Rules of Court and other

cases wherein multiple appeals are allowed, the period of appeal shall be thirty (30) days, a record

of appeal being required.

On 14 September 2004, this Court issued A.M. No. 04-9-07-SC providing that all decisions and final orders in

cases falling under the Interim Rules of Corporate Rehabilitation and the Interim Rules of Procedure

Governing Intra-Corporate Controversies under Republic Act No. 8799 shall be appealed to the Court of

Appeals through a petition for review under Rule 43 of the Rules of Court, to be filed within fifteen (15) days

from notice of the decision or final order of the Regional Trial Court .23

However, in this case, BFB filed a

notice of appeal on 3 November 2003, before the effectivity of A.M. No. 04-9-07-SC. Hence, at the time of

filing of BFBs appeal, the applicable mode of appeal is Section 2, Rule 41 of the 1997 Rules of Civil

Procedure which provides:

Sec. 2. Modes of Appeal. -

(a) Ordinary appeal.- The appeal to the Court of Appeals in cases decided by the Regional Trial

Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with thecourt which rendered the judgment or final order appealed from and serving a copy thereof upon

the adverse party. No record on appeal shall be required except in special proceedings and other

cases of multiple or separate appeals where the law or these Rules so require. In such cases, the

record on appeal shall be filed and served in like manner.

Under Section 9, Rule 41 of the 1997 Rules of Civil Procedure, "(a) partys appe al by record on appeal is

deemed perfected as to him with respect to the subject matter thereof upon approval of the record on

appeal filed in due time."

In this case, BFB did not perfect the appeal when it failed to file the record on appeal.1avvphi1The filing of

the notice of appeal on 3 November 2003 was not sufficient because at the time of its filing, the Rules

required the filing of the record on appeal and not merely a notice of appeal. The issuance by the Court of

A.M. No. 04-9-07-SC providing that all decisions and final orders in cases falling under the Interim Rules of

Corporate Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate Controversies

under Republic Act No. 8799 shall be appealed to the Court of Appeals through a petition for review under

Rule 43 of the Rules of Court, to be filed within 15 days from notice of the decision or final order of the

Regional Trial Court, did not change the fact that BFBs appeal was not perfected. Further, BFB filed its

Motion With Leave to Withdraw Notice of Appeal only on 20 April 2006 or almost two years after the

issuance of A.M. No. 04-9-07-SC on 14 September 2004.

Appeal is not a matter of right but a mere statutory privilege.24

The party who seeks to exercise the right

appeal must comply with the requirements of the rules, failing in which the right to appeal is lost.25

Whil

the Court, in certain cases, applies the policy of liberal construction, it may be invoked only in situations

where there is some excusable formal deficiency or error in a pleading, but not where its application

subverts the essence of the proceeding or results in the utter disregard of the Rules of Court.26

In addition, BFB filed a motion for reconsideration of the 9 May 2006 Order of the RTC, Branch 138. Unde

Section 1, Rule 3 of the Interim Rules of Procedure on Corporate Rehabilitation, the proceedings shall be

summary and non-adversarial in nature and a motion for new trial or reconsideration is a prohibited

pleading. Hence, in view of the failure of BFB to perfect its appeal and its subsequent filing of a motion fo

reconsideration which is a prohibited pleading, the 10 October 2003 Order of the RTC, Branch 138,

approving the rehabilitation plan had become final and executory.

WHEREFORE, we DENYthe petition. We AFFIRMthe 26 February 2008 Decision and the 11 June 2009

Resolution of the Court of Appeals in CA-G.R. SP No. 98626.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice
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SUPREME COURT

Manila

EN BANC

G.R. No. 164641 December 20, 2007

BANK OF THE PHILIPPINE ISLANDS, as successor of Far East Bank and Trust Company, petitioner,

vs.SECURITIES AND EXCHANGE COMMISSION, REHABILITATION HOLDINGS, INC., VELASCO, JR., ASB

DEVELOPMENT CORPORATION, ASB LAND, INC., ASB FINANCE, INC., MAKATI HOPE CHRISTIAN SCHOOL,

INC., BEL-AIR HOLDINGS CORP., WINCHESTER TRADING, INC., VYL DEVELOPMENT CORP., GERRICK

HOLDINGS CORP., NEIGHBORHOOD HOLDINGS, INC., and THE COURT OF APPEALS,respondents.

D E C I S I O N

TINGA,J.:

For resolution is a petition seeking to nullify the 30 January 2004 Decision1of the Court of Appeals in CA-

G.R. SP No. 773092upholding the Securities and Exchange Commissions (SEC) approval of the rehabilitation

of the ASB Group of Companies (ASB Group) in SEC En BancCase No. EB-726.3

The antecedent facts are as follows:

The Bank of the Philippine Islands (BPI), through its predecessor-in- interest, Far East Bank and Trust

Company (FEBTC), extended credit accommodations to the ASB Group4with an outstanding aggregate

principal amount of P86,800,000.00, secured by a real estate mortgage over two (2) properties located in

Greenhills, San Juan.5On 2 May 2000, the ASB Group filed a petition for rehabilitation and suspension of

payments before the SEC, docketed as SEC Case No. 05-00-6609 .6Thereafter, on 18 August 2000, the

interim receiver submitted its Proposed Rehabilitation Plan (Rehabilitation Plan )7for the ASB Group. The

Rehabilitation Plan provides, among others, a dacion en pago by the ASB Group to BPI of one of the

properties mortgaged to the latter at the ASB Group as selling value of P84,000,000.00 against the total

amount of the ASB Groups exposure to the bank. In turn, ASB Group would require the release of the other

property mortgaged to BPI, to be thereafter placed in the asset pool. Specifically, the pertinent portion of

the plan reads:

"x x x ASB plans to invoke a dacion en pagofor its #35 Eisenhower property at ASBs selling value

of P84 million against the total amount of the ASBs exposure to the bank. In return, ASB requests

the release of the #27 Annapolis property which w ill be placed in the ASB creditors asset pool."8

The dacionwould constitute full payment of the entire obligation due to BPI because the balance was t

to be considered waived, as per the Rehabilitation Plan.9

BPI opposed the Rehabilitation Plan and moved for the dismissal of the ASB Groups petition

rehabilitation.10

However, on 26 April 2001, the SEC hearing panel issued an order11

approving ASB Grou

proposed rehabilitation plan and appointed Mr. Fortunato Cruz as rehabilitation receiver.

BPI filed a petition for review12

of the 26 April 2001 order before the SEC en banc, imputing grave abuse

discretion on the part of the hearing panel. It argued that the Order constituted an arbitrary violation

BPIs freedom and right to contract since the Rehabilitation Plan compelled B PI to enter into a dacion

pagoagreement with the ASB Group.13

The SEC en bancdenied the petition.14

BPI then filed a petition for review15

before the Court of Appeals (CA), claiming that the SEC en bancerre

affirming the approval of the Rehabilitation Plan despite being violative of BPIs contractual rights.

contended that the terms of the Rehabilitation Plan would impair its freedom to contract, and alleged t

thedacion en pagowas a mode of payment beneficial to the ASB Group only .16

The CA dismissed the petition for lack of merit. It held that considering that the dacion en pagotransact

could proceed only proceed upon the mutual agreement of the parties, BPIs assertion that it is be

coerced could not be sustained. At no point would the Rehabilitation Plan compel secured creditors suc

BPI to agree to a settlement agreement against their will, the CA added. Moreover, BPI could refuse

accept any arrangement contemplated by the receiver and just assert its preferred right in the liquidat

and distribution of the assets of the ASB Group.17

BPI filed a motion for reconsideration, but the same w

denied for lack of merit.18

Before this Court, BPI asserts that the CA er red in ruling that the approval by the SEC of the ASB Grou

Rehabilitation Plan did not violate BPIs rights as a creditor.19

It maintains its position that the dacion

pagois a form of coercion or compulsion, and violative of the rights of secured creditors .20

It asserts tha

order for the Rehabilitation Plan to be feasible and legally tenable, it must reflect the express and f

consent of the parties; i.e,that the conditions should not be imposed but agreed upon by the parties

approving the Rehabilitation Plan, the SEC hearing panel totally disregarded the efficacy of the mortga

agreements between the parties, and sanctioned a mode of payment which is solely for the unilate

benefit of the ASB Group.21

This is so because in the event that the secured creditors such as itself wo

not agree to dacion en pago, the ASB Groups obligations would be settled at the selling prices of t

mortgaged properties to be dictated by the ASB Group,22

rendering BPIs status as a preferred cred

illusory.23

BPI further claims that despite its rejection of the Rehabilitation Plan, no effort was made to resolve

impasse on the valuation of the mortgaged properties. With no repayment scheme for secured creditnot accepting the Rehabilitation Plan, the same has become discriminatory .

24Moreover, any interfere
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