UCPB ordered to pay P1.5B due to overpayment, damages

The Pasay City Regional Trial Court Branch 112 ordered the United Coconut Planters Bank (UCPB) to pay a real estate developer at least P1.5 billion in overpayment and damages for bloating its loan obligations.

In a 36-page decision, the Pasay Court, through Judge Jesus Mupas upheld his Dec. 18, 2007 decision against UCPB which it had challenged and brought all the way to the Supreme Court.

The court, in its 2007 ruling, held that UCPB is liable to pay real estate developer E. Ganzon Inc. (EGI) of P1.071 billion representing the combined value of the foreclosed properties and the properties subject to dacion en pago in excess of EGI’s obligation.

This has ballooned to at least P1.5 billion because of the running interest.

EGI, represented by Attys. Teodoro Jumamil  and Joel Butuyan, in its 2004 complaint said UCPB padded the principal loan amounts, interest charges, transaction costs to reflect a bigger amount of indebtedness.

The case stemmed after EGI, in 1998, failed to keep its debt payments up to date, the bank assessed the real estate developer P400 million more than the actual principal through various transactions from April 2000 to May 2001.

These included foreclosure, or repossessing mortgaged properties whose values were previously agreed upon, and dacion en pago, which allows the use of real estate assets to pay for debts, on agreed property values.

EGI had learned of the bank’s duplicity when it received a confidential memorandum between the bank officers which revealed that UCPB was keeping two separate books of accounts—one “actual”and the other, “disclosed” or padded—on the real estate developer’s loan transactions. This “2 books” was admitted by one of the bank officers in her letter to their chief legal officer.

The lower court held that EGI’s debts were already fully settled and ordered UCPB to pay some P158,378,177.82 in excess of foreclosure proceeds plus 12-percent interest per annum from April 13, 2000 until full payment.

The court said the bank’s actions in the transactions was “reprehensible” and “grossly” violated the obligation of the bank to observe high standards of integrity and  fiduciary duty to a client.

“The many reprehensible acts committed by UCPB against EGI grossly violates the bank’s fiduciary duty and it falls short of the required high standard of integrity that are required of banking institutions,” the court said.

In addition, Judge Mupas ordered UCPB to pay EGI P P166,127,368.50 in dacion en pago payments plus 12 percent interest per annum from May 8, 2001 and until full payment;

The amount of  P32,296,77.78 in repossessed movables, furniture, fixtures, and equipment plus 12-percent interest from April 13, 2000 until full payment;

The amount of P87,578,846.60 in 28 repossessed condominium units at the 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,  P30 million in compensatory damages and attorney’s fees equivalent to 10 percent of all amounts due to EGI.

The court issued a default ruling after UCPB refused to comply with a court order directing it to produce crucial bank documents upon EGI’s request.

“When the Court of Appeals rendered a decision which the Supreme Court affirmed, giving defendant UCPB the chance to present its evidence, defendant UCPB was given a second chance to lay down all the documents that will explain in complete and transparent details how the multiple loan proceeds were credited to plaintiff EGI, how the same loan proceeds were disbursed, who were the payees, how the interest for those loans accumulated, among many other details,” the court said.

“Sadly, defendant UCPB was only willing to present summarized numbers and has failed to present the supporting documents behind those summary of numbers.” RAM/rga