DEVELOPMENT BANK OF THE PHILIPPINES v.

COURT OF APEEALS
G.R.No. 138703,June 30, 2006

Facts: In March 1968, DBP granted to private respondents an industrial loan in the amount of P2,500,000 P500,000 n cash and
P2,000,000 in DBP Progress Bank. It was evidenced by a promissory note and secured by a mortgage executed by respondents
over their present and future properties. Another loan was granted by DBP in the for of a 5-year revolving guarantee to
P1,700,000. In 1975, the outstanding accounts wth DBP was restructured in view of failure to pay. Amounting to P4,655,992.35
were consolidated into a single account. On the other hand, all accrued interest and charges due amounting to P3,074,672.21
were denominated as Notes Taken for Interests and evidenced by a separate promissory note. For failure to comply with its
obligation, DBP initiated foreclosure proceedings upon its computation that respondents loans were arrears by
P62,954,473.68. Respondents contended that the collection was unconscionable if not unlawful or usurious. RTC, as affirmed by
the CA, ruled in favor of the respondents.

Issue:Whether the prestation to collect by the DBP is unconscionable or usurious

Held:It cannot be determined whether DBP in fact applied an interest rate higher than what is prescribed under the law.
Assuming it did exceed 12% in addition to the other penalties stipulated in the note, this should be stricken out for being
usurious.

The petition is partly granted. Decision of the court of Appeals is reversed and set aside. The case is remanded o the trial court
for the determination of the total amount of the respondents obligation based on the promissory notes, according to the
interest rate agreed upon by the parties on the interest rate of 12% per annum, whichever is lower.

GSIS vs. Eduardo Santiago, G.R. No.155206, October 28, 2003

G.R. No. 155206 October 28, 2003

GSIS vs Eduardo M. Santiago, substituted by his widow Rosario Enriquez Vda. De Santiango

Facts:Deceased spouses Jose C. Zulueta and Soledad Ramos obtained various loans from herein petitioner GSIS secured by real
estate mortgages over parcels of land. The Zuluetas failed to pay their loans to GSIS and the latter foreclosed the real estate
mortgages. The mortgaged properties were sold at public auction by GSIS submitting a bid price. Not all lots covered by the
mortgaged titles, however, were sold. Ninety-one (91) lots were expressly excluded from the auction since the lots were
sufficient to pay for all the mortgage debts. Thereafter, An Affidavit of Consolidation of Ownership was executed by GSIS over
Zuluetas lots, including the lots, which were already excluded from the foreclosure and sold the foreclosed properties to
Yorkstown Development Corporation which sale was disapproved by the President. After GSIS had re-acquired the properties
sold to said Corporation, it began disposing the foreclosed lots including the excluded ones.
Eduardo Santiago and Antonio Vic Zulueta executed an agreement whereby Zulueta transferred all his rights and
interests over the excluded lots. They wrote a demand letter to GSIS for the return excluded lots and later filed with the (RTC) a
complaint for reconveyance of real estate against the GSIS. the petitioner maintains that it did not act in bad faith nor could
fraud or malice be attributed when it erroneously included in its certificate of sale, and subsequently consolidated the titles in
its name over the subject lots despite the fact that these were expressly excluded from the foreclosure sale, and that its failure
to apprise or return to the Zuluetas, the respondents predecessors-in-interest, the seventy-eight lots excluded from the
foreclosure sale cannot be imputed against them because the petitioner had no such obligation under the pertinent loan and
mortgage agreement. The RTC rendered judgment ordering the GSIS to reconvey to the respondent herein, the78 lots excluded
from the foreclosure sale. The CA affimed the decision in toto.Hence this petition.

Issue:W/N the GSIS committed an act of negligence amounting to bad faith when it included the subject properties into the
consolidated titles in its name and its failure to apprise or inform the defendant herein of the exclusion of said properties from
the public sale?

Held:Yes. The petitioner is not an ordinary mortgagee. It is a government financial institution and, like banks, is expected to
exercise greater care and prudence in its dealings, including those involving registered lands.Due diligence required of banks
extend even to persons, or institutions like the petitioner, regularly engaged in the business of lending money secured by real
estate mortgages. Thus, in a case the court ruled that Banks, indeed, should exercise more care and prudence i n dealing even
with registered lands, than private individuals, for their business is one affected with public interest, keeping in trust money
belonging to their depositors, which they should guard against loss by not committing any act of negligence which amounts to
lack of good faith by which they would be denied the protective mantle of land registration statute, extended only to
purchasers for value and in good faith, as well as to mortgagees of the same character and description.
In this case, the petitioner executed an affidavit in consolidating its ownership and causing the issuance of titles in its
name over the subject lots despite the fact that these were expressly excluded from the foreclosure sale. By so doing, the
petitioner acted in gross and evident bad faith. It cannot feign ignorance of the fact that the subject lots were excluded from
the sale at public auction. Its act constituted gross negligence amounting to bad faith. Further, the petitioners acts of
concealing the existence of these lots, its failure to return them to the Zuluetas and even its attempt to sell them to a third
party is proof of the petitioners intent to defraud the Zuluetas and appropriate for itself the subject lots. The petitioner had the
legal duty to return the subject lots to the Zuluetas. The petitioners attempts to justify its omission by insisting that it had no
such duty under the mortgage contract is obviously clutching at straw. Article 22 of the Civil Code provides that "every person
who, through an act of performance by another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him."

Van Twest v. Court of Appeals, 230 SCRA 42 (1994)

FACTS:
-Alexander Van Twest and Gloria Anacleto opened a joint foreign currency savings account with Interbank to hold funds which
"belonged entirely and exclusively" to Van Twest, to "facilitate the funding of certain business undertakings" of both of them
and which funds were to be "temporarily (held) in trust" by Gloria Anacleto, who "shall turnover the same to plaintiff upon
demand."
-Van Twest further alleged that withdrawals from the account were always made through their joint signatures; that when his
business relationship with Gloria Anacleto turned sour, the latter unilaterally closed their joint account, withdrew the remaining
balance of and placed the money in her own personal account with the same bank.

-Van Twest thus sought an injunctive writ to prevent Gloria Anacleto from withdrawing the money at any time and thereby
defeat Van Twest's main and pending action.
-The RTC granted the writ of preliminary injunction.
-CA reversed the order holding that Anacleto is a co-owner of the funds who could unilaterally control the application thereof.
-Hence, petition for review seeking the reinstatement of writ of preliminary injunction.
-Anacleto contends for the first time that the personal currency deposit she is maintaining is exempt from process issued by
courts pursuant to RA 6426.
ISSUE:
-Whether or not Anacleto may invoke RA 6426.
HELD:
- Anacletos contentions do not persuade. Her belated invocation of the provisions of R.A. No. 6426 as amended violates basic
procedural due process by interposing a new matter before this Court the consideration of which would further delay a final
disposition on the propriety of petitioner of petitioner's application for an injunctive writ.
-On a substantive, the Court holds that the privileges extended by the statute cited by private respondent are actually enjoyed,
and are invocable only, by the petitioner, both because private respondent's transactions fall outside the ambit of the statute,
and because petitioner is the owner of the foreign exchange fund subject of this case. This conclusion is anchored on the
consistent and contemporaneous administrative construction by the Central Bank of the basic statute, as manifested in the
relevant circulars issued by it in implementation of that law, which are entitled to great respect by the courts.

Republic vs. Security Credit & Acceptance Corp., 19 SCRA 58

Facts:This is an original quo warranto proceeding, initiated by the Solicitor General, to dissolve the Security and Acceptance
Corporation for allegedly engaging in banking operations without the authority required therefor by the General Banking Act
(Republic Act No. 337).
Security Credit and acceptance corporation is a duly registered corporation with SEC. The company's articles of
incorporation authorize it only to engage primarily in financing agricultural, commercial and industrial projects, and secondarily,
in buying and selling stocks and bonds of any corporation, The Superintendent of Banks of the Central Bank of the Philippines
thru its legal counsel rendered an opinion that respondent herein is a banking institution within the purview of RA 337. The
Corporation therefore is performing 'banking functions' as contemplated in Republic Act No. 337, without having first complied
with the provisions of said Act. Based from the findings, Central Bank advised the corporation to comply with the requirements
of the General Banking Act. Notwithstanding the advised from the central bank, the corporation, continued performing the
functions and activities which had been declared to constitute illegal banking.
Issue: WON the corporation is engaged in banking.
Held: The Court held that the corporation herein has violated the law by engaging in banking without securing the
administrative authority required by RA 337. It is clear that the transactions of respondent corporation partake of the nature of
banking. Indeed, a bank has been defined as
; ... a moneyed institute [Talmage vs. Pell 7 N.Y. (3 Seld.) 328, 347, 348] founded to facilitate the borrowing, lending and safe-
keeping of money (Smith vs. Kansas City Title & Trust Co., 41 S. Ct. 243, 255 U.S. 180, 210, 65 L. Ed. 577) and to deal, in notes,
bills of exchange, and credits (State vs. CorningsSav. Bank, 115 N.W. 937, 139 Iowa 338).(Banks & Banking, by Zellmann Vol. 1,
p. 46).
Moreover, it has been held that:
An investment company which loans out the money of its customers, collects the interest and charges a commission to both
lender and borrower, is a bank. (Western Investment Banking Co. vs. Murray, 56 P. 728, 730, 731; 6 Ariz 215.)
... any person engaged in the business carried on by banks of deposit, of discount, or of circulation is doing a banking business,
although but one of these functions is exercised. (MacLaren vs. State, 124 N.W. 667, 141 Wis. 577, 135 Am. S.R. 55, 18 Ann. Cas.
826; 9 C.J.S. 30.)
Thus, the writ prayed for should be, as it is hereby granted and defendant corporation is, accordingly, ordered DISSOLved.

De la Rama v. Villarosa, 8 SCRA 413 (1963)

FACTS:

-Lourdes de la Rama brought an action in the Court of first Instance of Negros Occidental against lessee Augusto R. Villarosa and
the latter's surety, the Luzon Surety Co., Inc. for judicial confirmation of the cancellation, rescission and annulment of a contract
of lease of sugarland, and the payment of the unpaid balance of the rental for the 1953-54 sugarcane crop year, the rental for
the 1954-55 crop year, rental and partly the reasonable value for the use and occupation of the leased premises for the 1955-
56 crop year, with stipulated attorney's fees, and interests, etc.

-The court rendered a partial summary judgment decreeing the lease rescinded, cancelled and ordering defendant Augusto R.
Villarosa to surrender and deliver to De la Rama or her representatives the possession of the leased premises, etc.

-Luzon Surety appealed.

-Upon Motion of De La Rama, the Lower Court issued an order for the issuance of writ of execution.

-Accordingly, the sheriff garnished the deposit of Luson Surety with the Philippine Trust Company to the amount of P71,533.99.

-Only the sum of P31,535.57 was paid to the sheriff.

-CA modified the decision of the Trial Court with respect to the amount.

-Luzon Surety thereafter invoked the provisions of Sec. 5 of Rule 39, of the Rules of Court and demanded that an interest of 6%
should be paid on the difference between the sum actually garnished and the sum obtained in the final judgment.

-Motion was denied. Hence, this appeal.

HELD:
-The mere garnishment of funds belonging to the party upon order of the court does not have the effect of delivering the
money garnished to the sheriff or to the party in whose favor the attachment is issued. The fund is retained by the garnishee or
the person holding the money for the defendant.
-The garnishee, or one in whose hands property is attached or garnished, is universally regarded as charged with its legal
custody pending the outcome of the attachment of garnishment, unless, by local statute and practice, he is permitted to
surrender or pay the garnished property or funds into court, to the attaching officer, or to a receiver or trustee appointed to
receive them.
-The effect of the garnishment, therefore, was to require the Philippine Trust Company, holder of the funds of the Luzon Surety
Co., to set aside said amount from the funds of the Luzon Surety Co. and keep the same subject to the final orders of the Court.
In the case at bar there was never in order to deliver the full amount garnished to the plaintiff-appellee; all that was ordered to
be delivered after the judgment had become final was the amount found by the Court of Appeals to be due. The balance of the
amount garnished, therefore, remained all the time in the possession of the bank as part of the funds of the Luzon Surety Co.,
although the same could not be disposed of by the owner.