G.R. No.

221218

ANTHONY T. REYES, Petitioner,

vs.
ALEJANDRO NG WEE, LUIS JUAN VIRATA, UEM-MARA PHILIPPINES CORP., WESTMONT
INVESTMENT CORP., MARIZA SANTOS-TAN, SIMEON CUA, VICENTE CUALOPING, HENRY
CUALOPING, and MANUEL ESTRELLA, Respondents

Facts: Ng Wee was a valued client of Westmont Bank. Sometime in 1998, he was enticed by the
bank manager to make money placements with Westmont Investment Corporation (Wincorp)...
corporation organized and licensed to operate as an investment house, and one of the bank's
affiliates. Offered to him were "sans recourse" transactions Lured by representations that the
"sans recourse" transactions are safe, stable, high-yielding, and involve little to no risk, Ng Wee,
sometime in 1998, placed investments thereon under accounts in his own name, or in those of
his trustees: Angel Archangel, Elizabeth Ng Wee, Roberto Tabada Tan, and Alex Lim Tan. In
exchange, Wincorp issued Ng Wee and his trustees Confirmation Advices informing them of the
identity of the borrower with whom they were matched, and the terms under which the said
borrower would repay them .The contents of a Confirmation Advice are typically as follows:
This is to confirm that pursuant to your authority, we have acted in your behalf and/or for your
benefit, risk or account without recourse or liability, real or contingent, to Westmont
Investment Corporation in respect of the loan granted to the Borrower named and under the
terms specified hereunder Special Power of Attorneys (SPAs) are also prepared for the
signature of the lender investor. Ng Wee's initial investments were matched with Hottick
Holdings Corporation (Hottick), one of Wincorp's accredited borrowers, the majority shares of
which was owned by a Malaysian national by the name of Tan Sri Halim Saad (Halim Saad).
Halim Saad was then the controlling shareowner of UEM-MARA, which has substantial interests
in the Manila Cavite Express Tollway Project (Cavitex) Hottick was extended a credit facility with
a maximum drawdown of P1,500,908,026.87 in consideration of the following securities it
issued in favor of Wincorp: (1) a Suretyship Agreement executed by herein petitioner Luis Juan
Virata (Virata); (2) a Suretyship Agreement[executed by YBHG Tan Sri Halim Saad; and a Third
Party Real Estate Mortgage executed by National Steel Corporation (NSC). Hottick fully availed
of the loan facility extended by Wincorp, but it defaulted in paying its outstanding obligations
when the Asian financial crisis struck. As a result, Wincorp filed a collection suit against Hottick,
Halim Saad, and NSC for the repayment of the loan and related costs. A Writ of Preliminary
Attachment was then issued against Halim Saad's properties, which included the assets of UEM-
MARA Philippines Corporation (UEM-MARA) To induce the parties to settle, petitioner Virata
offered to guarantee the full payment of the loan. The guarantee was embodied in the July 27,
1999 Memorandum of Agreement between him and Wincorp. Virata was then able to broker a
compromise between Wincorp and Halim Saad that paved the way for the execution of a
Settlement Agreement dated July 28, 1999. In the Settlement Agreement, Halim Saad agreed to
pay USD1,000,000.00 to Wincorp in satisfaction of any and all claims the latter may have
against the former under the Surety Agreement that secured Hottick's loan. As a result,
Wincorp dropped Halim Saad from the case and the Writ of Preliminary Attachment over the

Digested by: Daniel Huliganga

assets of UEM-MARA was dissolved. Thereafter, Wincorp executed a Waiver and Quitclaim[19]
dated December 1, 1999 in favor of Virata, releasing the latter from any obligation arising from
the Memorandum of Agreement, except for his obligation to transfer forty percent (40%)
equity of UEM Development Philippines, Inc. (UPDI) and forty percent (40%) of UPDI's interest
in the tollway project to Wincorp. Apparently, the Memorandum of Agreement is a mere
accommodation that is not meant to give rise to any legal obligation in Wincorp's favor as
against Virata, other than the stipulated equity transfer. Alarmed by the news of Hottick's
default and financial distress, Ng Wee confronted Wincorp and inquired about the status of his
investments. Wincorp assured him that the losses from the Hottick account will be absorbed by
the company and that his investments would be transferred instead to a new borrower
account. In view of these representations, Ng Wee continued making money placements,
rolling over his previous investments in Hottick and even increased his stakes in the new
borrower account Power Merge Corporation (Power Merge) Power Merge... primary purpose
of which is to invest in, purchase, or otherwise acquire and own, hold, use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real or personal property of every kind and
description. Petitioner Virata is the majority stockholder of the corporation, owning 374,996
out of its 375,000 subscribed capital stock In a special meeting of Wincorp's board of directors
held on February 9, 1999, the investment house resolved to file the collection case against
Halim Saad and Hottick, and, on even date, approved Power Merge's application for a credit
line, extending a credit facility to the latter in the maximum amount of P1,300,000,000.00.
Thus, on February 15, 1999, Wincorp President Ong and Vice-President for Operations
petitioner Anthony Reyes (Reyes) executed a Credit Line Agreement in favor of Power Merge
with petitioner Virata's conformity. Barely a month later, on March 11, 1999, Wincorp, through
another board meeting allegedly attended by the same personalities, increased Power Merge's
maximum credit limit to P2,500,000,000.00. Accordingly, an Amendment to the Credit Line
Agreement (Amendment) was executed on March 15, 1999 by the same representatives of the
two parties. Power Merge made a total of six (6) drawdowns from the amended Credit Line
Agreement in the aggregate amount of P2,183,755,253.11. After receiving the promissory notes
from Power Merge, Wincorp, in turn, issued Confirmation Advices to Ng Wee and his trustees,
as well as to the other investors who were matched with Power Merge. Unknown to Ng Wee,
however, was that on the very same dates the Credit Line Agreement and its subsequent
Amendment were entered into by Wincorp and Power Merge, additional contracts (Side
Agreements) were likewise executed by the two corporations absolving Power Merge of liability
as regards the Promissory Notes it issued. Pertinently, the Side Agreement dated February 15,
1999 reads: WHEREAS, Powermerge has entered into the Credit Line Agreement with Wincorp
as an accommodation in order to allow Wincorp to hold Powermerge paper instead of the
obligations of Hottick which are right now held by Wincorp. Powermerge hereby agrees to
execute promissory notes in the aggregate principal sum of P1,200,000,000.00 in favor of
Wincorp and in exchange therefore, Wincorp hereby assigns, transfers, and conveys to
Powermerge all of its rights, titles and interests by way of a sub participation over the
promissory notes and other obligations executed by Hottick in favor of Wincorp; Provided
however that the only obligation of Powermerge to Wincorp shall be to return and deliver to
Wincorp all the rights, title and interests conveyed by Wincorp hereby to Powermerge over the
Hottick obligations. Powermerge shall have no obligation to pay under its promissory notes

Digested by: Daniel Huliganga

executed in favor of Wincorp but shall be obligated merely to return whatever [it] may have
received from Wincorp pursuant to this agreement.
x x x xWincorp confirms and agrees that this accommodation being entered into by the parties
is not intended to create a payment obligation on the part of Powermerge.(emphasis
added)Save for the amount, identical provisions were included in the March 15, 1999 Side
Agreement.By virtue of these contracts, Wincorp was able to assign its rights to the uncollected
Hottick obligations and hold Power Merge papers instead.However, this also meant that if
Power Merge subsequently defaults in the payment of its obligations, it would refuse, as it did
in fact refuse, payment to its investors.
Despite repeated demands, Ng Wee was not able to collect Power Merge's outstanding
obligation under the Confirmation Advices in the amount of P213,290,410.36. This prompted
Ng Wee, on October 19, 2000, to institute a Complaint for Sum of Money with Damages with
prayer for the issuance of a Writ of Preliminary Attachment (Complaint), docketed as Civil Case
No. 00-99006 before the Regional Trial Court (RTC), Branch 39 of Manila (RTC)
Ng Wee claimed that he fell prey to the intricate scheme of fraud and deceit that was hatched
by Wincorp and Power Merge. As he later discovered, Power Merge's default was inevitable
from the very start since it only had subscribed capital in the amount of P37,500,000.00, of
which only P9,375,000.00 is actually paid up. He then attributed gross negligence, if not fraud
and bad faith, on the part of Wincorp and its directors for approving Power Merge's credit line
application and its subsequent increase to the amount of P2,500,000,000.00 despite its glaring
inability to pay. Ng Wee also sought to pierce the separate juridical personality of Power Merge
since Virata owns almost all of the company's stocks. It was further alleged that Virata acquired
Interest in UEM-MARA using the funds swindled from the Wincorp investors. Wincorp admitted
that it brokered Power Merge Promissory Notes to investors through "sans recourse"
transactions. It contended, however, that its only role was to match an investor with corporate
borrowers and, hence, assumed no liability for the monies that Ng Wee loaned to Power
Merge. As proof thereof, Wincorp brought to the attention of the RTC the language of the SPAs
executed by the investors. “Sans recourse" transactions, Wincorp added, are perfectly legal
under Presidential Decree No. 129 (PD 129), otherwise known as the Investment Houses Law,
and forms part of the brokering functions of an investment house. As a duly licensed
investment house, it was authorized to offer the "sans recourse" transactions to the public,
even without a license to perform quasi-banking functions. Wincorp directors argued that they
can only be held liable under Section 31 of Batas Pambansa Blg. (BP) 68,[49] the Corporation
Code, if they assented to a patently unlawful act, or are guilty of either gross negligence or bad
faith in directing the affairs of the corporation. They explained that the provision is inapplicable
since the approval of Power Merge's credit line application was done in good faith and that
they merely relied on the vetting done by the various departments of the company
To implement this arrangement, Wincorp and Power Merge entered into a Credit Line
Agreement with the understanding that Power Merge and Virata's only obligation thereunder
would be to collect payments on the Hottick papers. The Credit Line Agreement and the
issuance of the promissory notes, according to Virata, were mere accommodations to help
Wincorp enforce the outstanding obligations of Hottick. RTC in favor of Ng Wee The RTC
ratiocinated that the "sans recourse" transactions were used to conceal Wincorp's direct
borrowing; that Wincorp negated its acts and practices under the "sans recourse" transactions

Digested by: Daniel Huliganga

when it advanced the accrued interest due to the investors to conceal the fact that their
borrowers have already defaulted in their obligations; that Wincorp is a vendor in bad faith
since it knew that the Power Merge notes were uncollectible from the beginning by virtue of
the Side Agreements; and that, in any event, Wincorp violated its fiduciary responsibilities as
the investors' agent. The RTC held Power Merge equally guilty because Wincorp could not have
perpetrated the fraud without its indispensable participation as a conduit for the scheme CA
promulgated the challenged ruling substantially affirming the findings of the trial court CA
likewise found that Wincorp and Power Merge perpetrated an elaborate scheme of fraud to
inveigle Ng Wee into investing funds. Ng Wee would not have placed his investments in the
"sans recourse" transactions had he not been deceived into believing that Power Merge is
financially capable of paying the returns on his investments. In sync with the RTC, the CA found
that Wincorp misrepresented Power Merge's financial capacity when it accredited Power
Merge as a corporate borrower and granted it a P2,500,000,000.00 credit facility despite the
telling signs that the latter would not be able to perform its obligations, to wit: (1) Power Merge
had only been in existence for two years when it was granted the credit facility; (2) Power
Merge was thinly capitalized with only P37,500,000.00 subscribed capital; (3) Power Merge was
not an on-going concern since it never secured the necessary permits and licenses to conduct
business, it never engaged in any lucrative business, and it did not file the necessary reports
with the SEC; and (4) No security was demanded by Wincorp or was furnished by Power Merge
in relation to the latter's drawdowns The intent of Wincorp to deceive became even more
manifest when it entered into the Side Agreements with Power Merge. The Side Agreements
rendered worthless Power Merge's Promissory Notes that Wincorp offered to Ng Wee and the
other investors. Meanwhile, the "sans recourse" nature of the transactions prevented the
investors from recovering their investments from the investment house. Because of the
foregoing fraudulent acts, Wincorp was held liable to Ng Wee as a vendor of security in bad
faith, and for acting beyond the scope of its authority as Ng Wee's agent when it knowingly
purchased worthless securities for him and his co-investors

Issues: Whether or not Ng Wee was able to establish his cause/s of action against Wincorp and
Power Merge;
Ruling: Evidence on record would belie petitioners' claim that Ng Wee is not the real party in
interest. Elizabeth Ng Wee, Alex Lim Tan and Angel Archangel were straightforward in their
testimonies that the funds invested in Power Merge belonged to Ng Wee, albeit recorded
under their names. They likewise executed documents denominated as "Declaration of Trust"
wherein they categorically stated that they merely held the funds in trust for Ng Wee, the
beneficial owner. The only question that remains now is: from whom can Ng Wee recover the
P213,290,410.36 investment? Only Wincorp is liable to Ng Wee for fraud; Power Merge is liable
based on contract Ng Wee would not have placed funds or invested [in] the "sans recourse"
transactions under the Power Merge borrower account had he not been deceived into believing
that Power Merge is financially capable of paying the returns of his investments/money
placements. He intent to defraud and deceive [Ng Wee] of his investments/money placements
was manifest from the very start. Wincorp and Power Merge entered into a Credit Line
Agreement on February 15, 1999 and an Amendment to Credit Line Agreement on March 15,
1999. It is interesting to note that they simultaneously executed two Side Agreements which

Digested by: Daniel Huliganga

are peculiar because: (1) The dates of execution of the two Side Agreements coincide with the
dates of execution of the credit agreements; (2) [The] two Side Agreements were executed by
the same exact parties: Antonio Ong and Anthony Reyes for and on behalf of Wincorp and
[Virata] and Augusto Geluz for and on behalf of Power Merge; (3) The Credit Line Agreement
dated February 15, 1999 and the First Side Agreement dated February 15, 1999 were both
acknowledged before notary public, Atty. Fina De La Cuesta-Tantuico while the Amendment to
Credit Line Agreement dated March 15, 1999 and the Second Side Agreement dated March 15,
1999 were both acknowledged before notary public, Atty. Eric R.G. Espiritu; (4) The two Side
Agreements have the same exact provisions as the two credit agreements insofar as it purports
to extend a credit line and increase the credit line of Power Merge but the two Side
Agreements relieve Power Merge from any liability arising from the execution of the
agreements and promissory notes Even as an agent, Wincorp can still be held liable The
argument that Wincorp is a mere agent that could not be held liable for Power Merge's unpaid
loan is equally unavailing... agency, in Wincorp's case, is not a veritable defense. Agency, in
Wincorp's case, is not a veritable defense. Through the contract of agency, a person binds
himself to render some service or to do something in representation or on behalf of another,
with the consent or authority of the latter. As the basis of agency is representation, there must
be, on the part of the principal, an actual intention to appoint, an intention naturally inferable
from the principal's words or actions. In the same manner, there must be an intention on the
part of the agent to accept the appointment and act upon it. Absent such mutual intent, there
is generally no agency. There is no dearth of statutory provisions in the New Civil Code that aim
to preserve the fiduciary character of the relationship between principal and agent. Of the
established rules under the code, one cannot be more basic than the obligation of the agent to
carry out the purpose of the agency within the bounds of his authority. Though he may perform
acts in a manner more advantageous to the principal than that specified by him, in no case shall
the agent carry out the agency if its execution would manifestly result or damage to the
principal. In the instant case, the SPAs executed by Ng Wee constituted Wincorp as agent
relative to the borrowings of Power Merge, allegedly without risk of liability on the part of
Wincorp. However, the SPAs, as couched, do not specifically include a provision empowering
Wincorp to excuse Power Merge from repaying the amounts it had drawn from its credit line
via the Side Agreements. They merely authorize Wincorp "to agree, deliver, sign, execute loan
documents" relative to the borrowing of a corporate borrower. Otherwise stated, Wincorp had
no authority to absolve Power Merge from the latter's indebtedness to its lenders. Doing so
therefore violated the express terms of the SPAs that limited Wincorp's authority to contracting
the loan. In no way can the execution of the Side Agreements be considered as part and parcel
of Wincorp's authority since it was not mentioned with specificity in the SPAs. As far as the
investors are concerned, the Side Agreements amounted to a gratuitous waiver of Power
Merge's obligation, which authority is required under the law to be contained in an SPA for its
accomplishment. Finally, the benefit from the Side Agreements, if any, redounded instead to
the agent itself, Wincorp, which was able to hold Power Merge papers that are more valuable
than the outstanding Hottick obligations that it exchanged. In discharging its duties as an
alleged agent, Wincorp then elected to put primacy over its own interest than that of its
principal, in clear contravention of the law. And when Wincorp thereafter concealed from the

Digested by: Daniel Huliganga

investors the existence of the Side Agreements, the company became liable for fraud even as
an agent.

PEOPLE OF THE PHILIPPINES vs. ERVIN Y. MATEO, ET. AL

G.R. No. 210612, October 09, 2017

Facts: An Information was filed charging accused-appellant, together with Evelyn E. Mateo,
Carmelita B. Galvez, Romeo L. Esteban, Galileo J. Saporsantos and Nenita S. Saporsantos with
the crime of syndicated estafa which alleges that said accused, being officers and/or agents of
Mateo Management Group Holding Company, a corporation operating on funds solicited from
the public, conspiring and operating as a syndicate, feloniously defraud complainants by means
of false pretenses to the effect that they have the business and power accept investments from
the general public and the capacity to pay the complainants guaranteed lucrative commissions,
and induced complainants to invest and deliver the total amount of P200,000.00 as investment
or deposit and thereafter, having in their possession said amount, with intent to gain,
misappropriated the same to their own personal use to the damage and prejudice of said
complainants.

Appellant insists that no sufficient evidence was presented to prove that he actually performed
any 'false pretenses' against the private complainants.

Issue: Whether or not there is a 'fraudulent representations' against the private complainants,"
given the findings of both the RTC and the CA of the existence of conspiracy among appellant
and his co-accused. 

Ruling:
The Articles of Partnership of MMG named appellant as the sole general partner with a capital
contribution of ₱49,750,000.00; (2) his signatures appear in the MOA entered into by the
complainants and facilitated by his co-accused Geraldine Alejandro; (3) his signatures also
appear in the Secretary's Certificate and Signature Cards which were submitted to Allied Bank
when the partnership opened an account; (4) the MOA are notarized and it was only on appeal
that he denied his signatures appearing therein or questioned the authenticity and due
execution of the said documents.

Digested by: Daniel Huliganga

PRISCILLA Z. ORBE, Petitioner, vs. LEONORA O. MIARAL, Respondent.
August 16, 2017 G.R. No. 217777

FACTS:
On 6 March 1996, Leonora O. Miaral (respondent) agreed to engage in the garment exportation
business with her sister, Priscilla Z. Orbe (petitioner). They executed a partnership
agreement where they agreed to contribute Two Hundred Fifty Thousand Pesos (₱250,000.00)
each to Toppy Co., Inc. and Miaral Enterprises, and to equally divide the profits they may earn.
xxx Petitioner likewise discovered that there was no exportation of garments to the United
States or any other transactions in the United States that took place. Petitioner demanded from
respondent and Anne Kristine the total payment of Two Hundred Three Thousand Nine
Hundred Ninety-Nine Pesos (₱203,999.00) and One Thousand Dollars (US$1,000.00). Despite
demands, respondent and Anne Kristine failed to return the money. On 7 February 2011,
petitioner filed a complaint for estafa against respondent and Anne Kristine before the Office of
the City Prosecutor (OCP) of Quezon City.

On 10 August 2012, the OCP of Quezon. City issued a Resolution resolving the Motion for
Reconsideration with Motion for Inhibition filed by respondent and Anne Kristine, assailing the
15 July 2011 Resolution, the dispositive portion of which reads: Premises considered, the
resolution dated July 15, 2011 is hereby set aside on the ground that the transaction between
the parties is civil in nature. The attached Motion to Withdraw Information against movants in
Crim. Case No. Q-12-174206 is to be filed in court for the purpose. Accordingly, the City
Prosecutor filed with the RTC a Motion to Withdraw Information.

On 27 August 2013, the RTC issued an Order denying the Motion to Withdraw Information, and
directing the arraignment of respondent and Anne Kristine. The Motion for Reconsideration
was denied by the RTC in its Order dated 7 January 2014.

Court of Appeals granted the petition, and reversed and set aside the assailed Orders of the
RTC. It further directed the RTC to issue an order for the withdrawal of the Information for
estafa against respondent and Anne Kristine. Petitioner filed a Motion for

Digested by: Daniel Huliganga

Reconsideration dated 18 October 2014 which was denied by the Court of Appeals on 24 March
2015.
ISSUE:
Whether the Court of Appeals committed reversible error in reversing and setting aside the 27
August 2013 and 7 January 2014 Orders of the RTC, and in directing the issuance of an Order for
the Withdrawal of the Information for estafa against respondent and Anne Kristine as a
partner .
HELD:
We disagree with the ruling of the Court of Appeals when it sustained the OCP on the issue of
whether there is probable cause to file an Information. The OCP was in the best position to
determine whether or not there was probable cause that the crime of estafa was committed.
However, the OCP erred gravely, amounting to grave abuse of discretion, when it
applied United States v. Clarin as basis for dismissing the complaint for lack of probable
cause. United States v. Clarin has already been superseded by Liwanag v. Court of Appeals.
In Clarin, four individuals entered into a contract of partnership for the business of buying and
selling mangoes. When one of the partners demanded from the other three the return of his
monetary contribution, this Court ruled that "the action that lies with the [capitalist] partner x x
x for the recovery of his money is not a criminal action for estafa, but a civil one arising from the
partnership contract for a liquidation of the partnership and a levy on its assets, if there should
be any." Simply put, if a partner demands his money back, the duty to return the contribution
does not devolve on the other partners; the duty now belongs to the partnership itself as a
separate and distinct personality.
In 1997, a case with similar circumstances was decided differently. In Liwanag v. Court of
Appeals, three individuals entered into a contract of partnership for the business of buying and
selling cigarettes. They agreed that one would contribute money to buy the cigarettes while the
other two would act as agents in selling. When the capitalist partner demanded from the
industrial partners her monetary contribution because they stopped informing her of business
updates, this time, this Court held the industrial partners liable for estafa.
In this case, the OCP erred gravely when it based its conclusion on
the Clarin case. Liwanag applies to the partnership agreement executed between petitioner
and respondent. Petitioner's initial contributions of ₱183,999.00 and ₱20,000.00 were all for
specific purposes: for the buying and selling of garments and for the salaries of the factory
workers, respectively. When respondent failed to account for these amounts or to return these
amounts to petitioner upon demand, there is probable cause to hold that respondent
misappropriated the amounts and had not used them for their intended purposes. The
Information for estafa should thus proceed.
In Liwanag, this Court held:
Thus, even assuming that a contract of partnership was indeed entered into by and between
the parties, we have ruled that when money or property [had] been received by a partner for
a specific purpose (such as that obtaining in the instant case) and he later misappropriated it,
such partner is guilty of estafa.

Digested by: Daniel Huliganga

WHEREFORE, we GRANT the petition. We REVERSE the 24 September 2014 Decision and the 24
March 2015 Resolution of the Court of Appeals in CA-G.R. SP No. 134555. We REINSTATE the
Orders of the Regional Trial Court of Quezon City, Branch 104, dated 27 August 2013 and 7
January 2014, directing the arraignment of Leonora 0. Miaral and Anne Kristine Miaral. The case
against Leonora O. Miaral and Anne Kristine Miaral may still proceed because prescription has
not set in.

SECURITY BANK CORPORATION vs. GREAT WALL COMMERCIAL PRESS COMPANY, INC.,
ALFREDO BURIEL ATIENZA, FREDINO CHENG ATIENZA and SPS. FREDERICK CHENG ATIENZA
and MONICA CU ATIENZA
G.R. No. 219345
January 30, 2017

FACTS: On May 15, 2013, Security Bank filed a Complaint for Sum of Money with Application for
Issuance of a Writ of Preliminary Attachment against respondents Great Wall Commercial Press
Company, Inc. and its sureties, Alfredo Buriel Atienza, Fredino Cheng Atienza, and Spouses
Frederick Cheng Atienza and Monica Cu Atienza, before the RTC. The complaint sought to
recover from respondents their unpaid obligations under a credit facility covered by several
trust receipts and surety agreements, as well as interests, attorney's fees and costs. Security
Bank argued that in spite of the lapse of the maturity date of the obligations from December
11, 2012 to May 7, 2013, respondents failed to pay their obligations. The total principal amount
sought was ₱10,000,000.00. The RTC granted the application for a writ of preliminary
attachment of Security Bank, which then posted a bond in the amount aforementioned.
Respondents filed their Motion to Lift Writ of Preliminary Attachment Ad Cautelam, claiming
that the writ was issued with grave abuse of discretion based on the following grounds: (1)
Security Bank's allegations in its application did not show a prima facie basis therefor; (2) the
application and the accompanying affidavits failed to allege at least one circumstance which
would show fraudulent intent on their part; and (3) the general imputation of fraud was
contradicted by their efforts to secure an approval for a loan restructure. Respondents filed a
motion for reconsideration, but it was denied; respondents filed a petition for certiorari before
the CA, which lifted the writ of preliminary attachment, explaining that the allegations of
Security Bank were insufficient to warrant the provisional remedy of preliminary attachment. It
pointed out that fraudulent intent could not be inferred from a debtor's inability to pay or
comply with its obligations.

ISSUES:
1. Whether or not the CA erred in nullifying the writ of preliminary attachment issued by
the trial court.

Digested by: Daniel Huliganga

 2. Whether or not fraud must be proved in relation to trust receipts.

HELD:
1. Yes. In this case, Security Bank relied on Section 1 (d), Rule 57 of the Rules of Court as
basis of its application for a writ of preliminary attachment, which reads that “In an
action against a party who has been guilty of a fraud in contracting the debt or incurring
the obligation upon which the action is brought, or in the performance thereof; For a
writ of preliminary attachment to issue under the above-quoted rule, the applicant must
sufficiently show the factual circumstances of the alleged fraud. It is settled that
fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt
or failure to comply with his obligation.” While fraud cannot be presumed, it need not
be proved by direct evidence and can well be inferred from attendant circumstances.
Fraud by its nature is not a thing susceptible of ocular observation or readily
demonstrable physically; it must of necessity be proved in many cases by inferences
from circumstances shown to have been involved in the transaction in question. During
the negotiation for the approval of the loan application/ renewal of Respondents the
latter through Alfredo Buriel Atienza, Fredino Cheng Atienza and Sps. Frederick Cheng
Atienza and Monica Cu Atienza, assured SBC that the loan obligation covered by the
several Trust Receipts shall be paid in full on or before its maturity date pursuant to the
terms and conditions of the aforesaid trust receipts. However, Respondents as well as
the sureties failed to pay the aforesaid obligation. In addition, the assurance to pay in
full the obligation is further solidified by the warranty of solvency provisions of the
Credit Agreement. To allay whatever fear or apprehension of herein plaintiff on the
commitment of Respondents to honor its obligations, defendants-sureties likewise
executed a "Continuing Suretyship Agreement. The loan application was eventually
approved, needless to say that without said representations and warranties, including
the Continuing Suretyship Agreement, the plaintiff would not have approved and
granted the credit facility to Respondents. It is thus clear that Respondents, Alfredo
Buriel Atienza, Fredino Cheng Atienza and Sps. Frederick Cheng Atienza and Monica Cu
Atienza, misled SBC and employed fraud in contracting said obligation. After a judicious
study of the records, the Court finds that Security Bank was able to substantiate its
factual allegation of fraud, particularly, the violation of the trust receipt agreements, to
warrant the issuance of the writ of preliminary attachment. These circumstances of the
fraud committed by respondents in the performance of their obligation undoubtedly
support the issuance of a writ of preliminary attachment in favor of Security Bank.
2. No. A trust receipt transaction is one where the entrustee has the obligation to deliver
to the entruster the price of the sale, or if the merchandise is not sold, to return the
merchandise to the entruster. The obligations under the trust receipts are governed by
a special law, Presidential Decree (P.D.) No. 115 and failure of the entrustee to tum over
the proceeds of the sale of the goods, covered by the trust receipt to the entruster or to
return said goods if they were not disposed of in accordance with the terms of the trust

Digested by: Daniel Huliganga

 receipt shall be punishable as estafa under Article 315 (1) of the Revised Penal Code,
without need of proving intent to defraud.  The offense punished under P.D. No. 115 is
in the nature of malum prohibitum. Mere failure to deliver the proceeds of the sale or
the goods, if not sold, constitutes a criminal offense that causes prejudice not only to
another, but more to the public interest. The present case, however, only deals with the
civil fraud in the noncompliance with the trust receipts to warrant the issuance of a writ
of preliminary attached. A fortiori, in a civil case involving a trust receipt, the entrustee's
failure to comply with its obligations under the trust receipt constitute as civil fraud
provided that it is alleged, and substantiated with specificity, in the complaint, its
attachments and supporting evidence. The CA stated in the assailed decision that under
Section 1 (d) of Rule 57, fraud must only be present at the time of contracting the
obligation, and not thereafter. Hence, the CA did not consider the allegation of fraud -
that respondents offered a repayment proposal but questionably failed to attend the
meeting with Security Bank regarding the said proposal - because these acts were done
after contracting the obligation. In this regard, the CA erred.

JAMES IENT v. TULLETT PREBON, GR No. 189158, 2017-01-11

Facts: Tullet Prebon and the company of Lent and Schulze Tradition Philippines are competitors
in the deal breaking business. At some point in time several Tullet deal brokers resigned and
went to work with Tradition Philippines. Tullet filed a complaint against Tradition for sabotoging
their business by taking their deal breakers. Tullet wanted Tradition to be criminally liable
under Sections 31, 34 and 144 of the Corporation Code

Issue: Whether or not Lent and Schulze could be criminally liable.

Ruling: In a Resolution dated February 17, 2009, State Prosecutor Cresencio F. Delos Trinos, Jr.
(Prosecutor Delos Trinos), Acting City Prosecutor of Makati City, dismissed the criminal
complaints.
On the issue of conspiracy, Prosecutor Delos Trinos found that since Villalon and Chuidian did
not commit any acts in violation of Sections 31 and 34 of the Corporation Code, the charge of
conspiracy against Schulze and Ient had no basis.

On April 23, 2009, then Secretary of Justice Raul M. Gonzalez reversed and set aside Prosecutor
Delos Trinos's resolution and directed the latter to file the information for violation of Sections
31 and 34 in relation to Section 144 of the Corporation Code against Villalon, Chuidian, Harvey,
Schulze, and Ient before the proper court.

Digested by: Daniel Huliganga

Undeniably, respondents Villalon, Chuidian and Harvey occupied positions of high responsibility
and great trust as they were members of the board of directors and corporate officers of
complainant. The consolidated petitions are GRANTED
fidelity on corporate officers and directors but without unduly impeding them in the discharge
of their work with concerns of litigation.

SPS. MAY S. VILLALUZ AND JOHNNY VILLALUZ v. LAND BANK OF PHILIPPINES, GR No. 192602,
2017-01-18

Facts: Sometime in 1996, Paula Agbisit (Agbisit), mother of petitioner May S. Villaluz (May),
requested the latter to provide her with collateral for a loan. At the time, Agbisit was the
chairperson of Milflores Cooperative and she needed P600,000 to P650,000 for the expansion
of her backyard cut flowers business. May convinced her husband, Johnny Villaluz (collectively,
the Spouses Villaluz), to allow Agbisit to use their land, located in Calinan, Davao City and
covered by Transfer Certificate of Title (TCT) No. T-202276, as collateral. On March 25, 1996,
the Spouses Villaluz executed a Special Power of Attorney in favor of Agbisit authorizing her to,
among others, "negotiate for the sale, mortgage, or other forms of disposition a parcel of land
covered by Transfer Certificate of Title No. T-202276" and "sign in our behalf all documents
relating to the sale, loan or mortgage, or other disposition of the aforementioned property."

On June 19, 1996, Agbisit executed her own Special Power of Attorney, appointing Milflores
Cooperative as attorney-in-fact in obtaining a loan from and executing a real mortgage in favor
of Land Bank of the Philippines (Land Bank). On June 21, 1996, Milflores Cooperative, in a
representative capacity, executed a Real Estate Mortgage in favor of Land Bank in consideration
of the P3,000,000 loan to be extended by the latter. On June 24, 1996, Milflores Cooperative
also executed a Deed of Assignment of the Produce/Inventory as additional collateral for the
loan. Land Bank partially released one-third of the total loan amount, or P995,500, to Milflores
Cooperative on June 25, 1996. On the same day, Agbisit borrowed the amount of P604,750
from Milflores Cooperative. Land Bank released the remaining loan amount of P2,000,500 to
Milflores Cooperative on October 4, 1996. Unfortunately, Milflores Cooperative was unable to
pay its obligations to Land Bank. Thus, Land Bank filed a petition for extra-judicial foreclosure
sale with the Office of the Clerk of Court of Davao City. Sometime in August, 2003, the Spouses
Villaluz learned that an auction sale covering their land had been set tor October 2, 2003. Land
Bank won the auction sale as the sole bidder. The Spouses Villaluz filed a complaint with the
Regional Trial Court (RTC) of Davao City seeking the annulment of the foreclosure sale.

Digested by: Daniel Huliganga

Issue: Whether Agbisit could have validly delegated her authority as attorney-in-fact to
Milflores Cooperative

Ruling: Citing Article 1892 of the Civil Code, the RTC held that the delegation was valid since the
Special Power of Attorney executed by the Spouses Villaluz had no specific prohibition against
Agbisit appointing a substitute. Accordingly, the RTC dismissed the complaint... the CA affirmed
the RTC Decision... the petition is DENIED. The Decision dated September 22, 2009 and
Resolution dated May 26, 2010 of the Court of Appeals in CA-G.R. CV No. 01307 are AFFIRMED

BP OIL v. TOTAL DISTRIBUTION, GR No. 214406, 2017-02-06

Facts: A Complaint for Sum of Money was filed by petitioner BP Oil against respondent Total
Distribution & Logistic Systems, Inc. (TDLSI) on April 15, 2002, seeking to recover the sum of
P36,440,351.79 representing the total value of the moneys, stock and accounts receivables that
TDLSI has allegedly refused to return to BP Oil.
In its Decision dated January 21, 2011, the RTC ruled in favor of the petitioner
After the respondent elevated the case to the CA, the latter court reversed and set aside the
decision of the RTC and found in favor of the respondent in its Decision dated April 30, 2014.

Issue: THE COURT OF APPEALS ERRED IN NOT RULING THAT TDLSI HAS MADE A JUDICIAL
ADMISSION THAT IT HAS POSSESSION OF THE STOCKS, MONEYS AND RECEIVABLES THAT BP OIL
SEEKS TO RECOVER IN THE COMPLAINT

Ruling: The Rules of Court require that only questions of law should be raised in petitions filed
under Rule 45. This court is not a trier of facts. This is erroneous. The fact is, TDLSI indeed
admitted the existence of Exhibit "J." Thus, Exhibit "J" can be considered as an admission
against interest. Admissions against interest are those made by a party to a litigation or by one
in privity with or identified in legal interest with such party, and are admissible whether or not
the declarant is available as a witness. An admission against interest is the best evidence that
affords the greatest certainty of the facts in dispute, based on the presumption that no man
would declare anything against himself unless such declaration is true. It is fair to presume that
the declaration corresponds with the truth, and it is his fault if it does not. No doubt,
admissions against interest may be refuted by the declarant. In this case, however, respondent
failed to refute the contents of Exhibit "J."
Wherefore, the Petition for Review on Certiorari under Rule 45 of the Rules of Court dated
November 10, 2014 of BP Oil and Chemicals International Philippines, Inc. is GRANTED.
Consequently, the Decision dated April 30, 2014 of the Court of Appeals is REVERSED and SET
ASIDE and the Decision dated January 21, 2011 of the Regional Trial Court, Branch 148, Makati
City is AFFIRMED and REINSTATED, with the MODIFICATION that the interest imposed should

Digested by: Daniel Huliganga

be 12% per annum from July 19, 2001 until June 30, 2013 and 6% per annum from July 1, 2013
until fully paid.

Digested by: Daniel Huliganga