MANILA, Philippines -- A bank has been ordered by a local court to pay P1 billion to a client whom it defrauded of some P400 million in a padded loan transaction.
In his decision, Judge Jesus Mupas of the Pasay City regional trial court court ruled that the United Coconut Planters Bank should pay Eulalio Ganzon Inc. (EGI), a mid-sized real estate developer, a total of P1,070,719, 368.50, which represents "the combined value of the foreclosed properties and the properties subject to dacion en pago." This refers to two major transactions undertaken between the bank and EGI from April 2000 to May 2001.
The court said EGI was misled to believe that it still owed the bank money. Through the foreclosure and the dacion en pago (a special mode of payment where the debtor offers a collateral to the creditor who accepts it as equivalent of payment of an outstanding debt), the bank managed to gain control of EGI assets.
The court added that the company's obligation worth P618-million had been fully paid.
The court said the bank should pay the company some P158,378, 177.82 in excess foreclosure proceeds plus 12 percent interest per annum from April 13, 2000 until full payment; P166,127,368.50 in dacion en pago payments plus 12 percent interest per annum from May 8, 2001 until full payment, P32,296, 77.78 for repossessing movables, furniture, fixtures, and equipment plus 12 percent interest from April 13, 2000 until full payment; P87,578,846.60 for repossessing 28 condominium units in EGI-Rufino Plaza in Taft Avenue plus 12 percent interest until full payment; P1.55 million in court filing fees, P30 million in moral damages, P10 million in exemplary damages, and attorney's fees equivalent to 10 percent of all amounts due the plaintiff.
Mupas issued the decision following UCPB's repeated refusal to produce in court documents related to the credit accounts of the real estate developer represented by the Roque and Butuyan Law Office.
The court said UCPB's claim that its documentation on the case was incomplete was "shocking," considering that seven years have passed since the bank foreclosed EGI's properties and entered into a dacio en pago with the company.
"The refusal of UCPB to be transparent with the documents in its possession can only lead to the conclusion that it is hiding these documents because they are damaging to its interest," Mupas noted in his 32-page decision.
"The business of banking is imbued with public interest," said Mupas, citing a Supreme Court ruling. "The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks."