Court orders UCPB to pay client P1 billion

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A PASAY Court has ordered the United Coconut Planters Bank (UCPB) to pay a client an estimated P1 billion after the lender was found to have overcharged E. Ganzon Inc. (EGI), a real-estate developer with properties in Metro Manila. Besides involving attorney’s fees, court suit costs, damages, and interest, the amount covers the various forms of overpayment collected by the Philippines’ thirteenth-largest lender from EGI from April 2000 to May 2001.

In a decision dated December 18, 2007, the court said the company only owed the bank a total of P618 million overall.

In mid-1998, after EGI failed to keep its debt payments current, the lender collected P400 million more than the principal through various transactions undertaken from April 2000 to May 2001. These transactions 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, provided that both the creditor and the borrower agree on the properties’ values.

Besides declaring that EGI’s debts were already fully settled, the court also instructed the bank to pay the company some P158,378,177.82 in excess of foreclosure proceeds plus 12-percent interest per annum from April 13, 2000 until full payment. This is in addition to P166,127,368.50 in dacion en pago payments plus 12 percent interest per annum from May 8, 2001
aa 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.

“All in all, total payments of plaintiff EGI to UCPB is P1,070,719.368.50, this amount representing the combined value of the foreclosed properties and the properties subject to dacion en pago,” said the decision, penned by Judge Jesus B. Mupas of Pasay’s Regional Trial Court Branch 112.

The UCPB’s lawyer in this case, Atty. Eduardo de Mesa, said he has already filed an appeal to reverse the lower court’s decision.

“EGI is just looking for a way to skip paying its obligations,” de Mesa told the BusinessMirror in a Monday phone interview.

The court had also said that “UCPB committed breach of contract when it foreclosed some of the properties of EGI at merely P723,592,000. The correct valuation of the foreclosed properties is P904,491,052 and it is this amount that must be deemed to have been paid to UCPB when the foreclosure was effected.”

According to the ruling, EGI claimed that “the principal loan amounts, interest charges, transaction costs were padded to reflect a bigger amount of indebtedness.”

For this reason, EGI filed a separate criminal case in a Makati City court against six bank officers in October 2001. Among those named in the suit included Lorenzo V. Tan, the bank’s former president, Jeronimo Kilayko, UCPB corporate secretary and University of the Philippines law professor Virgilio Jacinto, UCPB first vice president Enrique Gana, UCPB vice president Jaime Jacinto, and UCPB assistant vice president Emily Lazaro.

Among the 42 universal and commercial banks in the country, the United Coconut Planters Bank ranked thirteenth in terms of total assets. As of December 2006, its assets amounted to P107 billion, up by 3 percent in the same period in 2005. The bank’s total contingent account in 2006 totaled P41 billion. (With Jesse Edep)

Originally entitled “UCPB told to pay overcharged debtor,” this story was published at BusinessMirror’s January 23, 2008 print and online editions.



Filed under Serious stuff

4 responses to “Court orders UCPB to pay client P1 billion

  1. a 1Billion Peso fine? That’s enough to trigger a bank-run 😦

  2. Well…not exactly. As indicated in the story above, the bank’s contingent account–financial provisions made in the event that the bank is forced to pay other parties, are penalized by the regulator, BSP, or incurs any additional liability arising from any transaction–is P41 B. It’s fairly sufficient, I think. Problem is, I wasn’t able to find out whether that P41 B includes this liability. Thanks for continuing to read this blog of mine, my friend. But then again, you have two links in my blogroll, an oversight which I intend to correct soon.

  3. 2 links to li’l ole me? hehe… anyway, 1 from 41 is not that huge, even though it’s ‘billions’ they’re talking about. but it’s the intangibles that worry me – the perception of small depositors that a huge (relative to their deposits) amount money is leaving their bank – and it is often (i think, please correct me if i’m wrong) intangibles such as this that trigger bank-runs.

  4. bloggerblabla

    Whether UCPB was bought by Union Bank or not — I think they should improve their service. I just made an over-the-counter payment to UCPB Valero, Makati Branch and it seems their tellers are a bit slow in computations. I hope UCPB improves their service, anyways, that’s what they are here for–service.

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