001 Galvez vs CA and Asia UB - Letters of Credit

7/24/2019 001 Galvez vs CA and Asia UB - Letters of Credit

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SECOND DIVISION

RAFAEL H. GALVEZ and

KATHERINE L. GUY,

Petitioners,

-versus-

HON. COURT OF APPEALS and

ASIA UNITED BANK,

Respondents.x - - - - - - - - - - - - - - - - - - - - - - - - xASIA UNITED BANK,

Petitioner,

-versus-

GILBERT G. GUY, PHILIP LEUNG,

KATHERINE L. GUY, RAFAEL H. GALVEZ

and EUGENIO H. GALVEZ, JR.,

Respondents.x - - - - - - - - - - - - - - - - - - - - - - - - - - x

GILBERT G. GUY, PHILIP LEUNG and

EUGENIO H. GALVEZ, JR.,

Petitioners,

G.R. No. 18!1!

G.R. No. 18!!

G.R. No. 188"#"

Present:CARPIO, J.,Chairperson,


2/13

-versus-

ASIA UNITED BANK,

Respondent.

BRION,PEREZ,SERENO, andREES, JJ.

Pro!u"#ated:Apri" $%, $&'$

x ----------------------------------------------------------------------------------------x

D E C I S I O N

PEREZ, J.:

THE FACTSIn '(((, Radio )arine Net*or+ S!artnet In. R)SI "ai!in# to do /usiness

under the na!e S!artnet Phi"ippines0'1and2or S!artnet Phi"ippines, In. SPI,0$1app"ied

3or an O!ni/us Credit 4ine 3or various redit 3ai"ities *ith Asia 5nited Ban+ A5B. 6o

indue A5B to extend the O!ni/us Credit 4ine, R)SI, throu#h its diretors and o33iers,

presented its Arti"es o3 Inorporation *ith its 7&&-peso !i""ion apita"i8ation and its

on#ressiona" te"eo! 3ranhise. R)SI *as represented /9 the 3o""o*in# o33iers and

diretors oup9in# the 3o""o*in# positions:

i"/ert u9 - Exe. ;-Pres.2inania" O33ier2Co!ptro""er

Satis3ied *ith the redit *orthiness o3 R)SI, A5B #ranted it a P$%& !i""ion

O!ni/us Credit 4ine, under the na!e o3 S!artnet Phi"ippines, R)SIs


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Co., an independent aountin# 3ir!. Attahed to this authorit9 *as the A!ended Arti"es

o3 Inorporation o3 R)SI, doin# /usiness under the na!e o3 S!artnet Phi"ippines, and

the Seretar9s Certi3iate o3 SPI authori8in# its diretors, i"/ert u9 and Phi"ip 4eun#

to transat *ith A5B.01Prior to this !aor transation, ho*ever, and, un+no*n to A5B,

*hi"e R)SI *as doin# /usiness under the na!e o3 S!artnet Phi"ippines, and that there

*as a division under the na!e S!artnet Phi"ippines, i"/ert u9, et a". 3or!ed a

su/sidiar9 orporation, the SPI *ith a paid-up apita" o3 on"9 P$,%&&.&&.

Be"ievin# that SPI is the sa!e as S!artnet Phi"ippines - the division o3 R)SI -

A5B #ranted to it, a!on# others, Irrevoa/"e 4etter o3 Credit No. ((&?' in the tota"

su! o3 $(,?&&.&& in 3avor o3 Rohde @ Sh*ar8 Support Centre Asia Ptd. 4td., *hih is

the su/et o3 these onso"idated petitions. 6o over the "ia/i"it9 o3 this Irrevoa/"e 4etter

o3 Credit, i"/ert u9 exeuted Pro!issor9 Note No. &'&77% in /eha"3 o3 SPI in 3avor o3A5B. 6his pro!issor9 note *as rene*ed t*ie, one, in the na!e o3 SPI Pro!issor9

Note No. &''D, and "ast, in the na!e o3 S!artnet Phi"ippines under Pro!issor9 Note

No. '?'?', /o"sterin# A5Bs /e"ie3 that R)SIs diretors and o33iers onsistent"9 treated

this "etter o3 redit, a!on# others, as o/"i#ations o3 R)SI.

hen R)SIs o/"i#ations re!ained unpaid, A5B sent "etters de!andin#

pa9!ents. R)SI denied "ia/i"it9 ontendin# that the transation *as inurred so"e"9 /9

SPI, a orporation *hih /e"on#s to the u9 roup o3 Co!panies, /ut *hih has a

separate and distint persona"it9 3ro! R)SI. R)SI 3urther "ai!ed that *hi"e S!artnet

Phi"ippines is an R)SI division, SPI, is a su/sidiar9 o3 R)SI, and hene, is a separate

entit9.

A##rieved, A5B 3i"ed a ase o3 s9ndiated esta3a under Arti"e ?'% $ a o3 the

Revised Pena" Code in re"ation to Setion ' o3 Presidentia"


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*hih, in"udin# the ontrovers9 su/et o3 this petition, a!ounted to hundreds o3

!i""ions o3 pesos.

In a Reso"ution dated ? Apri" $&&,0G1 the Proseutor 3ound pro/a/"e ause to

indit i"/ert . u9, et a". 3or esta3a /ut dis!issed the har#e o3 vio"ation o3 P< No.

'D( a#ainst the sa!e 3or insu33iien9 o3 evidene, thus:

FERE>ORE, it is reo!!ended that respondents /e har#ed 3or

ES6A>A under Arti"e ?'%, par. $a o3 the Revised Pena" Code, and theattahed in3or!ation /e 3i"ed *ith the Re#iona" 6ria" Court in Pasi# Cit9,*ith a reo!!ended /ai" o3 P7&,&&&.&& 3or eah respondent.

It is 3urther reo!!ended that the har#e o3 vio"ation o3 P.


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present petitions /e3ore this Court assai"in# the CA


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Net*or+ *S+a&n-,In. 6his *as a !onth a3ter or#ani8in# its su/sidiar9 orporation

the S+a&n- P/('(00(n-, In2. *ith a apita" o3 on"9 P$,%&&.&&.0'?1A 9ear ear"ier,

i"/ert u9, et a"., esta/"ished S+a&n- P/('(00(n-as a division o3 Radio )arine

under *hih R)SI operated its /usiness.

It *as, ho*ever, on"9 on $ )arh '((D, *hen the Seurities and Exhan#e

Co!!ission approved the a!ended orporate na!e, and on"9 in Oto/er '((( did R)SI

re#ister S!artnet Phi"ippines as its /usiness na!e *ith the


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>irst, i"/ert u9, Phi"ip 4eun#, =atherine u9, Ra3ae" a"ve8 and Eu#ene

a"ve8, Jr., inter"o+in# diretors o3 R)SI and SPI, represented to A5B in their

transations that S!artnet Phi"ippines and SPI *ere one and the sa!e entit9. hi"eEu#ene a"ve8, Jr. *as not a diretor o3 SPI, he ative"9 dea"t *ith A5B in his apait9

as R)SIs Chie3 >inania" O33ier2Co!ptro""er /9 3a"se"9 representin# that SPI and R)SI

*ere the sa!e entit9. i"/ert u9, Phi"ip 4eun#, =atherine u9, Ra3ae" a"ve8, and

Eu#ene a"ve8, Jr. used the /usiness na!es S!artnet Phi"ippines, R)SI, and SPI

interhan#ea/"9 and *ithout an9 distintion. 6he9 suess3u""9 did this /9 usin# the

on3usin# si!i"arit9 o3 R)SIs /usiness na!e, i.e., S!artnet Phi"ippines its division, and,

S!artnet Phi"ippines, In. the su/sidiar9 orporation. >urther, the9 *ere a/"e to hide the

identit9 o3 SPI, /9 havin# a"!ost the sa!e diretors as that o3 R)SI. In order to "et it

appear that SPI is the sa!e as that o3 S!artnet Phi"ippines, the9 su/!itted in their

app"iation dou!ents o3 R)SI, in"udin# its A!ended Arti"es o3 Inorporation,0'1third-part9 rea" estate !ort#a#e o3 ood"and Co!pan90'G1in 3avor o3 S!artnet

Phi"ippines, and audited annua" 3inania" state!ent o3 S; @ Co. 0'D1i"/ert u9, et

a". a"so used R)SI "etterhead in their o33iia" o!!uniations *ith the /an+ and the

ontents o3 these o33iia" o!!uniations0'(1on"usive"9 pointed to R)SI as the one

*hih transated *ith the /an+.

6hese iru!stanes are a"" indiia o3 deeit.


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Phi"ippines and its re#istration as /usiness na!e as S!artnet Phi"ippines *ith the


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It is true that ordinari"9, in a "etter o3 redit transation, the /an+ !ere"9 su/stitutes its

o*n pro!ise to pa9 3or the pro!ise to pa9 o3 one o3 its usto!ers, *ho in turn pro!ises

to pa9 the /an+ the a!ount o3 3unds !entioned in the "etters o3 redit p"us redit or

o!!it!ents 3ees !utua""9 a#reed upon. One the issuin# /an+ sha"" have paid the

/ene3iiar9 a3ter the "atters o!p"iane *ith the ter!s o3 the "etter o3 redit, the issuin#

/an+ is entit"ed to rei!/urse!ent 3or the a!ount it paid under the "etter o3 redit.0$(1

In the present ase, ho*ever, no rei!/urse!ent *as !ade outri#ht, preise"9

/eause the "etter o3 redit *as seured /9 a pro!issor9 note exeuted /9 SPI. 6he /an+

*ou"d have not a#reed to this transation had it not /een deeived /9 i"/ert u9, et

a". into /e"ievin# the R)SI and SPI *ere one and the sa!e entit9. u9 and his ohorts

ats in ' seurin# the "etter o3 redit #uaranteed /9 a pro!issor9 note in /eha"3 o3 SPI

and, $ their at o3 representin# SPI as R)SIs


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e, there3ore, sustain the 3indin#s o3 the CA and the Cit9 Proseutors Reso"ution

3indin# that pro/a/"e ause exists a#ainst i"/ert u9, et a". 3or the ri!e o3 esta3a under

Arti"e ?'% $a o3 the Revised Pena" Code and that i"/ert u9, et a". are pro/a/"9

#ui"t9 thereo3 and shou"d /e he"d 3or tria". A5Bs vo"u!inous dou!ents su/!itted to this

Court overo!e this di33iu"t9 and esta/"ished that there is su33iient #round to en#ender

a *e""-#rounded /e"ie3 that a ri!e has /een o!!itted and that the respondents are

pro/a/"9 #ui"t9 thereo3 and shou"d /e he"d 3or tria".

4est it /e !isunderstood, *e reiterate that this Courts 3indin# o3 pro/a/"e ause is

#rounded on 3raud o!!itted throu#h deeit *hih surrounded i"/ert u9, et

a". transation *ith A5B, thus, vio"atin# Arti"e ?'% $ a o3 the Revised Pena" Code it

is neither their at o3 /orro*in# !one9 and not pa9in# the!, nor their denia" thereo3, /ut

their ver9 at o3 deeivin# A5B in order 3or the "atter to part *ith its !one9. As ear"9 asthe Pena" Code o3 Spain, *hih *as en3ored in the Phi"ippines as ear"9 as 'DDG unti" it

*as rep"aed /9 the Revised Pena" Code in '(?$, the at o3 3raud throu#h 3a"se pretenses

or si!i"ar deeit *as a"read9 /ein# punished. Arti"e ??% o3 the Pena" Code o3 Spain

punished a person *ho de3rauded another /9 3a"se"9 pretendin# to possess an9 po*er,

in3"uene, Hua"i3iation, propert9, redit, a#en9 or /usiness, or /9 !eans o3 si!i"ar

deeit.0?%1

Anent the issue as to *hether or not i"/ert u9, et a". shou"d /e har#ed 3or

s9ndiated esta3a in re"ation to Setion ' o3 P< No. 'D(, *hih states that:

SEC '. An9 person or persons *ho sha"" o!!it esta3a or other

3or!s o3 s*ind"in# as de3ined in Arti"e ?'% and ?' o3 the Revised Pena"Code, as a!ended, sha"" /e punished /9 "i3e i!prison!ent to death i3 thes*ind"in# esta3a is o!!itted /9 a s9ndiate onsistin# o3 3ive or !orepersons 3or!ed *ith the intention o3 arr9in# out the un"a*3u" or i""e#a"at, transation, enterprise or she!e, and the de3raudation resu"ts in the!isappropriation o3 !one9s ontri/uted /9 sto+ho"ders, or !e!/ers o3rura" /an+s, ooperatives, sa!ahan# na9ons, or 3ar!ers assoiations, oro3 3unds so"iited /9 orporations2 assoiations 3ro! the #enera" pu/"i.

e ho"d that the a3ore-Huoted "a* app"ies to the ase at /ar, 3or the 3o""o*in#

reasons:

5nder Setion ' o3 P< No. 'D(, the e"e!ents o3 s9ndiated esta3a are:

a esta3a or other 3or!s o3 s*ind"in# as de3ined in Arti"e ?'% and ?' o3 the Revised
http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn35http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn35http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn35


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Pena" Code is o!!itted / the esta3a or s*ind"in# is o!!itted /9 a s9ndiate o3 3ive

or !ore persons and de3raudation resu"ts in the !isappropriation o3 !one9s

ontri/uted /9 sto+ho"ders, or !e!/ers o3 rura" /an+s, ooperatives,sa!ahan# na9on0s1,

or 3ar!ers assoiations or o3 3unds so"iited /9 orporations2assoiations 3ro! the #enera"

pu/"i.0?1

>irst, as de3ined under Setion ' o3 P< No. 'D(, a s9ndiate onsists o3 3ive or

!ore persons 3or!ed *ith the intention o3 arr9in# out the un"a*3u" or i""e#a" at,

transation, enterprise or she!e. >ive % aused, na!e"9, i"/ert . u9, Ra3ae" F.

a"ve8, Phi"ip 4eun#, =atherine 4. u9, and Eu#enio F. a"ve8, Jr. *ere, a a""

invo"ved in the 3or!ation o3 the entities used to de3raud A5B and / the9 *ere the

o33iers and diretors, /oth o3 R)SI and SPI, *hose on3or!ities paved the *a9 3or

A5B to #rant the "etter o3 redit su/et o3 this ase, in A5Bs honest /e"ie3 that SPI, asi"/ert u9, et a". represented, *as a !ere division o3 R)SI. As a"read9 disussed,

a"thou#h Eu#enio a"ve8, Jr. *as not a diretor o3 SPI, he, to#ether *ith i"/ert u9 and

Phi"ip 4eun#, ative"9 partiipated in the she!e throu#h their si#ned orrespondenes

*ith the /an+ and their attendane in the !eetin#s *ith exeutives o3 A5B. 0?G1Ra3ae"

a"ve8 and =atherine u9, on the other hand, *ere the diretors o3 R)SI and SPI *ho

aused and authori8ed i"/ert u9 and Phi"ip 4eun# to transat *ith A5B.0?D1

Seond, *hi"e these orporations *ere esta/"ished presu!a/"9 in aordane *ith

"a*, it annot /e denied that i"/ert . u9, Ra3ae" F. a"ve8, Phi"ip 4eun#, =atherine

4. u9, and Eu#enio F. a"ve8, Jr. used these orporations to arr9 out the i""e#a" and

un"a*3u" at o3 !isrepresentin# SPI as a !ere division o3 R)SI, and, despite +no*in#

SPIs separate uridia" persona"it9, app"ied 3or a "etter o3 redit seured /9 SPIs

pro!issor9 note, +no*in# 3u""9 that SPI has no redit "ine *ith A5B. 6he iru!stanes

o3 the reation o3 these entities and their dea"in#s *ith the /an+ revea" this ri!ina" intent

to de3raud and to deeive A5B.

6hird, the 3at that the de3raudation o3 A5B resu"ted to !isappropriation o3 the

!one9 *hih it so"iited 3ro! the #enera" pu/"i in the 3or! o3 deposits *as su/stantia""9

esta/"ished.

0?(1

Setion ?.' o3 the enera" Ban+in# 4a* de3ines /an+s as entities en#a#edin the "endin# o3 3unds o/tained in the 3or! o3 deposits. 6he O"d enera" Ban+in# At

R.A. No. ??G #ave a 3u""er piture o3 the /asi /an+in# 3untion o3 o/tainin# 3unds 3ro!

the pu/"i /9 *a9 o3 deposits and the "endin# o3 these 3unds as 3o""o*s:

Se $. On"9 entities du"9 authori8ed /9 the )onetar9 Board o3 the Centra"Ban+ !a9 en#a#e in the "endin# o3 3unds o/tained 4&o+ /- 0%'(2
http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn36http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn37http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn38http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn39http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn36http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn37http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn38http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/187919.htm#_ftn39


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/&o%)/ /- &-2-(0 o4 d-0o( o4 an9 :(nd,and a"" entities re#u"ar"9ondutin# suh operations sha"" /e onsidered as /an+in# institutions,xxxx.

i"/ert u9 et a". *ant this Court to /e"ieve that A5B, /ein# a o!!eria" /an+,

is /e9ond the overa#e o3 P< No. 'D(. e ho"d, ho*ever, that a /an+ is a orporation

*hose 3und o!es 3ro! the #enera" pu/"i. P.


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SO ORDERED.

001 Galvez vs CA and Asia UB - Letters of Credit

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