Koruga vs. Arcena, GR No.

168332 & 169053, June 19, 2009

Facts:
Koruga is a minority stockholder of Banco Filipino Savings and Mortgage Bank. On August 20, 2003, she filed a
complaint before the Makati RTC against its board of directors for allegedly engaging in unsafe and fraudulent
banking practices.
The complaint filed by Koruga charged the defendants with violation of Section 31 to 34 of the Corporation
Code which prohibit self-dealing and conflict of interest of directors and officers; invoked her right to inspect
the corporations records under Section 74 of the Corporation Code and prayed for receivership and creation of
a management committee pursuant to the Rules of Civil Procedure, the Securities Regulation Code, the Interim
Rules of Procedure Governing Intra-Corporate Controversies, the General Banking Law of 2000, and the New
Central Bank Act.
She claimed that Banco Filipino's management had:

engaged in unsafe, unsound, and even fraudulent banking practices;

engaged in self-dealing;

violated banking laws prohibiting or limiting DOSRI transactions;

put the bank and its depositors in jeopardy.

The respondents, however, questioned the jurisdiction of the trial court, and even went to as far as getting an
injunction from the Court of Appeals.

In a decision dated July 20, 2005, the appellate court directed the trial court to proceed with the hearings,
having found no grave abuse of discretion when it accepted the case.
The case was eventually brought to the Supreme Court.
Issue: WON the RTC has jurisdiction over the case.
Held: RTC has no jurisdiction.
The SC quashed Korugas complaint filed at the Makati City Regional Trial Court, saying the latter has no
jurisdiction to hear complaints on a banks operations. The court pointed out that it is the
BangkoSentralngPilipinas and not the RTC which has jurisdiction over the case.
In its decision, the high court said: "It is clear that the acts complained of pertain to the conduct of Banco
Filipinos banking business... It is the governments responsibility to see to it that the financial interests of
those who deal with banks and banking institutions... are protected... That task is delegated to the BSP..."
The General Banking Law of 2000, which provides powers to the Monetary Board, restricts the bank exposures
of directors and its officers. It also allows the Monetary Board to determine whether a bank is conducting
business in an unsafe manner.

The New Central Bank Act, on the other hand, provides the Monetary Board with the power to impose
administrative sanctions on the officers and board members of erring banks.
"[Under the law], it is the Monetary Board that exercises exclusive jurisdiction over proceedings for
receivership of banks. Thus, the courts jurisdiction could only have been invoked after the Monetary Board
had taken action on the matter and only on the ground that the action taken was in excess of jurisdiction or
with such grave abuse of discretion as to amount to lack or excess of jurisdiction.
Finally, there is one other reason why Korugas complaint before the RTC cannot prosper. Given her own
admission and the same is likewise supported by evidence that she is merely a minority stockholder of
Banco Filipino, she would not have the standing to question the Monetary Boards action. Section 30 of the
New Central Bank Act provides:
The petition for certiorari may only be filed by the stockholders of record representing the majority of the
capital stock within ten (10) days from receipt by the board of directors of the institution of the order directing
receivership, liquidation or conservatorship.
All the foregoing discussion yields the inevitable conclusion that the CA erred in upholding the jurisdiction of,
and remanding the case to, the RTC. Given that the RTC does not have jurisdiction over the subject matter of
the case, its refusal to dismiss the case on that ground amounted to grave abuse of discretion.

SIMEX INTERNATIONAL (MANILA),INCORPORATED, vs. THE HONORABLE COURT OF APPEALS

and TRADERS ROYAL BANK,
.BOTTOMLINE: You got preexisting 90K and you deposited 100K, but it was not updated by the
bank, 8 checks bounced and you lost business partners. (burn down the bank? Hahira) Can you
demand moral and exemplary damages?
FACTS: We are concerned in this case with the question of damages, specifically moral and
exemplary damages The petitioner is a private corporation engaged in the exportation of food
products. It buys these products from various local suppliers and then sells them abroad,
particularly in the United States, Canada and the Middle East. Most of its exports are purchased by
the petitioner on credit. The petitioner was a depositor of the respondent bank and maintained a
checking account in its branch at Romulo Avenue, account in the said bank the amount of
P100,000.00, thus increasing its balance as of that date to P190,380.74. , the petitioner issued
several checks against its deposit but was surprised to learn later that they had been dishonored
for insufficient funds. There were 8 dishonored checks. The California Manufacturing Corporation
sent on June 9, 1981, a letter of demand to the petitioner, threatening prosecution if the dishonored
check issued to it was not made good. . Malabon also canceled the petitioner's credit line and

demanded that future payments be made by it in cash or certified check The petitioner complained
to the respondent bank on June 10,1981.
Investigation disclosed that the sum ofP100,000.00 deposited by the petitioner on May25, 1981,
had not been credited to it. The error was rectified on June 17, 1981, and the dishonored checks
were paid after they were re-deposited , the petitioner demanded reparation from the respondent
bank for its "gross and wanton negligence." This demand was not met. Court of First Instance of
Rizal claiming from the private respondent moral damages in the sum ofP1,000,000.00 and
exemplary damages in the sum of P500,000.00, plus 25% attorney's fees, and costs. Judge Johnico
G. Serquinia rendered judgment holding that moral and exemplary damages were not called for
under the circumstances. However, observing that the plaintiff's right had been violated, he
ordered the defendant to pay nominal damages in the amount of P20,000.00plus P5,000.00
attorney's fees and costs. The respondent court found with the trial court that the private
respondent was guilty of negligence but agreed that the petitioner was nevertheless not entitled to
moral damages The error should not have been committed in the first place. The respondent bank
has not even explained why it was committed at all. It is true that the dishonored checks were, as
the Court of Appeals put it, "eventually" paid. However, this took almost a month when, properly,
the checks should have been paid immediately upon presentment.
ISSUE: After all that you went through, the judge only awarded you 20k and 5k, can you demand for
1,000,000 damage?
RULING: We also note that while stressing the rectification made by the respondent bank, the
decision practically ignored the prejudice suffered by the petitioner. Article 2205 of the Civil Code
provides that actual or compensatory damages may be received "(2) for injury to the plaintiff s

business standing or commercial credit." We agree that moral damages are not awarded to penalize
the defendant but to compensate the plaintiff for the injuries he may have suffered From every
viewpoint except that of the petitioner's, its claim of moral damages in the amount of
P1,000,000.00 is nothing short of preposterous. Its business certainly is not that big, or its name
that prestigious, to sustain such an extravagant pretense Considering all this, we feel that the
award of nominal damages in the sum of P20,000.00 was not the proper relief to which the
petitioner was entitled. Under Article2221 of the Civil Code, "nominal damages are adjudicated in
order that a right of the plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him." the proper remedy is the award to it of moral damages, which we impose, in our
discretion, in the same amount of P20,000.00.