SC orders Gwen to settle P39M debt to HSBC following 1996 loan dispute

Cebu Provincial Governor Gwen Garcia speaks in a press conference on May 17. | CDN Digital Photo/ Pia Piquero

CEBU CITY, Philippines — The Supreme Court (SC) has ordered Cebu Gov. Gwendolyn Garcia to pay around $700,000 (roughly P39 million in today’s rates) for failing to settle a debt she obtained from the Hongkong and Shanghai Banking Corp. Ltd. (HSBC) in 1996.

This after the High Court has rejected Garcia’s petition to dismiss the alias writ of execution which mandated her to pay damages to HSBC over the 1996 loan.
An alias writ of execution is a follow-up order to help enforce a judgment when the initial attempt was unsuccessful.

The decision was promulgated on Dec. 4, 2023, but made public only last week. It was penned by Associate Justice Antonio Kho Jr.

In it, the SC ordered the Makati Regional Trial Court (RTC) to enforce its 2012 resolution requiring Garcia to pay HSBC $700,000 in damages, including a 12-percent legal interest from July 17, 2000, and P404,560.50 in legal costs.

READ: Cebu gov told to pay bank $700,000 in damages

They also called Garcia for her alleged “dilatory” petitions, causing the five-year effectivity period of the 2018 alias writ of execution to lapse.
While they have yet to receive a copy of the decision, Garcia’s legal counsel, in response, said this development has no “real and imminent threat.”

“Unless and until the Supreme Court decides with finality that this case could still be revived, any attempt to enforce a decision that has been dead for 10 years would be premature,” said lawyer Alex Avisado Jr. in a statement sent to reporters.

Garcia’s camp also urged the public not to be swayed by “incomplete and misleading reports” regarding the case.

READ: Cebu Province is now debt-free proclaims Gwen

The case

The case stemmed from Garcia’s loan from HSBC amounting to $900,000 to buy a light cargo transit barge for her company in 1996.

At that time, Garcia had not entered politics yet and was running a family business.

Her first stint into politics was in 2004 when she became governor of Cebu. She also served as a member of the House of Representatives from 2013 to 2019 when she was re-elected as governor.

“According to SC, she allegedly failed to repay or settle the loan with HSBC, one of the world’s oldest and largest banks, prompting legal action.

They sued Garcia before Branch 57 of the Regional Trial Court in Makati City which ruled in favor of HSBC and ordered Garcia and her ex-husband to pay the bank $890,347.92.

The case was elevated to the Court of Appeals but while it reiterated the local court’s decision, it reduced the damages to $700,000.

By March 31, 2020, or approximately 30 years since she availed the loan, Garcia’s outstanding debt to HSBC amounted to $720,000 plus $103,522.91 in interest.

But according to Avisado, his client has already put up a collateral that was “worth more than the reward,” leading them to challenge the decision.

“This award was contested by our client since it had no basis (Gov. Gwen actually put up a collateral that was worth more than the award) and especially since HSBC wanted to enforce collection at already a ridiculous sum of Two Million Eight Hundred Thousand US Dollars (2,800,000 USD),” he added.

While this case was pending in the SC, Avisado said HSBC then filed a petition to revive the court’s judgment since it has been more than 10 years since the decision had become final.

“Unfortunately for HSBC, the Regional Trial Court of Taguig Branch 153 dismissed the petition since the action had already prescribed and the award could no longer be enforced. This prompted HSBC to elevate the dismissal to the Court of Appeals where it is now pending,” the lawyer said. /clorenciana