Here are select October 2012 rulings of the Supreme Court of the Philippines on commercial law:
Banks; degree of diligence required. Public interest is intimately carved into the banking industry because the primordial concern here is the trust and confidence of the public. This fiduciary nature of every bank’s relationship with its clients/depositors impels it to exercise the highest degree of care, definitely more than that of a reasonable man or a good father of a family. It is, therefore, required to treat the accounts and deposits of these individuals with meticulous care. The rationale behind this is well expressed in Sandejas v. Ignacio,
The banking system has become an indispensable institution in the modern world and plays a vital role in the economic life of every civilized society – banks have attained a ubiquitous presence among the people, who have come to regard them with respect and even gratitude and most of all, confidence, and it is for this reason, banks should guard against injury attributable to negligence or bad faith on its part.
Considering that banks can only act through their officers and employees, the fiduciary obligation laid down for these institutions necessarily extends to their employees. Thus, banks must ensure that their employees observe the same high level of integrity and performance for it is only through this that banks may meet and comply with their own fiduciary duty. It has been repeatedly held that “a bank’s liability as an obligor is not merely vicarious, but primary” since they are expected to observe an equally high degree of diligence, not only in the selection, but also in the supervision of its employees. Thus, even if it is their employees who are negligent, the bank’s responsibility to its client remains paramount making its liability to the same to be a direct one. Westmont Bank, formerly Associates Bank now United Overseas Bank Philippines vs.. Myrna Dela Rosa-Ramos, Domingo Tan and William Co., G.R. No. 160260. October 24, 2012.
Corporate rehabilitation; results. Corporate 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 being to enable the company to gain a new lease on life and allow its creditors to be paid their claims out of its earnings. A principal feature of corporate rehabilitation is the Stay Order which defers all actions or claims against the corporation seeking corporate rehabilitation from the date of its issuance until the dismissal of the petition or termination of the rehabilitation proceedings. Under Section 24, Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation which was in force at the time TCEI filed its petition for rehabilitation a quo, the approval of the rehabilitation plan also produces the following results:
a. The plan and its provisions shall be binding upon the debtor and all persons who may be affected by it, including the creditors, whether or not such persons have participated in the proceedings or opposed the plan or whether or not their claims have been scheduled;
b. The debtor shall comply with the provisions of the plan and shall take all actions necessary to carry out the plan;
c. Payments shall be made to the creditors in accordance with the provisions of the plan;
d. Contracts and other arrangements between the debtor and its creditors shall be interpreted as continuing to apply to the extent that they do not conflict with the provisions of the plan; and
e. Any compromises on amounts or rescheduling of timing of payments by the debtor shall be binding on creditors regardless of whether or not the plan is successfully implemented. Town and Country Enterprises, Inc. vs. Hon. Norberto J. Quisumbing, Jr., et al./Town and Country Enterprises, G.R. No. 173610/G.R. No. 174132. October 1, 2012
Rehabilitation stay order; effect on properties already foreclosed. Having purchased the subject realties at public auction on 7 November 2001, Metrobank undoubtedly acquired ownership over the same when TCEI failed to exercise its right of redemption within the three-month period prescribed under the foregoing provision. With ownership already vested in its favor as of 6 February 2002, it matters little that Metrobank caused the certificate of sale to be registered with the Cavite Provincial Registry only on 10 April 2002 and/or rxecuted an affidavit consolidating its ownership over the same properties only on 25 April 2003. The rule is settled that the mortgagor loses all interest over the foreclosed property after the expiration of the redemption period and the purchaser becomes the absolute owner thereof when no redemption is made.36 By the time that the Rehabilitation Court issued the 8 October 2002 Stay Order in SEC Case No. 023-02, it cannot, therefore, be gainsaid that Metrobank had long acquired ownership over the subject realties.
Viewed in the foregoing light, the CA cannot be faulted for upholding the RTC’s grant of a writ of possession in favor of Metrobank on 11 January 2005. If the purchaser at the foreclosure sale, upon posting of the requisite bond, is entitled to a writ of possession even during the redemption period under Section 7 of Act 3135,37 as amended, it has been consistently ruled that there is no reason to withhold said writ after the expiration of the redemption period when no redemption is effected by the mortgagor. Indeed, the rule is settled that the right of the purchaser to the possession of the foreclosed property becomes absolute after the redemption period, without a redemption being effected by the property owner. Since the basis of this right to possession is the purchaser’s ownership of the property, the mere filing of an ex parte motion for the issuance of the writ of possession would suffice, and no bond is required.
Considering that Metrobank acquired ownership over the mortgaged properties upon the expiration of the redemption period on 6 February 2002, TCEI is also out on a limb in invoking the Stay Order issued by the Rehabilitation Court on 8 October 2002 and the approval of its rehabilitation plan on 29 March 2004. An essential function of corporate rehabilitation is, admittedly, the Stay Order which is a mechanism of suspension of all actions and claims against the distressed corporation upon the due appointment of a management committee or rehabilitation receiver. The Stay Order issued by the Rehabilitation Court in SEC Case No. 023-02 cannot, however, apply to the mortgage obligations owing to Metrobank which had already been enforced even before TCEI’s filing of its petition for corporate rehabilitation on 1 October 2002. Town and Country Enterprises, Inc. vs. Hon. Norberto J. Quisumbing, Jr., et al./Town and Country Enterprises, G.R. No. 173610/G.R. No. 174132. October 1, 2012
(Hector thanks Dianne Caroline V. Ducepec for her assistance to Lexoterica.)