METROPOLITAN BANK &TRUST COMPANY vs. CHUY LU TAN, ROMERO TANCO, DR.
SY SE HIONG, and TAN CHU HSIU YEN G.R. No. 202176, August 1, 2016
Ponente: J. Peralta, 3rd Division
Nature of Action: Petition for review on certiorari seeking to reverse and set aside the decision and resolution of CA. The assailed CA Decision reversed and set aside the RTC decision in an action for collection of sum of money while the CA Resolution denied petitioner’s motion for reconsideration.
Facts: Respondents Chuy Lu Tan (Chuy) and Romeo Tanco (Tanco) obtained 5 loans from Metrobank amounting to P19,900,000.00 The loans are evidenced by 5 Promissory Notes which respondents executed in different dates. As security, Chuy executed a Real Estate Mortgage (REM) over a parcel of land in Quezon City covered by TCT No. RT-53314. In addition, respondents Sy Se Hiong (Sy) and Tan Chu Hsiu Yen (Tan) also executed a Continuing Surety Agreement whereby they bound themselves to be solidarily liable with Chuy and Tanco for the loan “plus interests at the rate stated in the obligation secured thereby, any or all penalties, costs and expenses which may be incurred by Metrobank in granting and/or collecting the aforesaid obligations/
indebtedness/instruments, and including those for the custody, maintenance, and preservation of the securities given therefor, as may be incurred by Metrobank before or after the date of the Surety Agreement.”
Chuy and Tanco failed to settle their loans which ballooned to P24,353,062.03 despite Metrobank’s repeated demands. This prompted Metrobank to extrajudicially foreclose the mortgage and the property was sold to it as the highest bidder for the amount of P24,572,268.00. Metrobank claims that there remained a deficiency of P1,641,815 because of the cost of foreclosure, interest, penalty charges, attorney’s fees, etc. Metrobank demanded payment of deficiency from respondents but respondents did not heed to Metrobank’s demand. Metrobank then filed an action for collection of sum of money against respondents. RTC ruled in favor of Metrobank and ordered herein respondents Chuy, Tanco, Sy, and Tan solidarily liable to Metrobank for the deficiency. Petitioner and respondents, except Chuy, appealed to CA. CA reversed and set aside RTC decision and dismissed Metrobank’s complaint. Metrobank moved for reconsideration but it was denied. Hence, the present petition.
sold on installment basis [Civil Code, Art. 1484(3)]. Act No. 3135, which governs the extrajudicial foreclosure of mortgages, while silent as to the mortgagee's right to recover, does not, on the other hand, prohibit recovery of deficiency. Accordingly, it has been held that a deficiency claim arising from the extrajudicial foreclosure is allowed.
Indeed, the fact that the mortgaged property was sold at an amount less than its actual market value should not militate against the right to such recovery. This Court has likewise ruled that in deference to the rule that a mortgage is simply a security and cannot be considered payment of an outstanding obligation, the creditor is not barred from recovering the deficiency even if it bought the mortgaged property at the extrajudicial foreclosure sale at a lower price than its market value notwithstanding the fact that said value is more than or equal to the total amount of the debtor's obligation.
WHEREFORE, the petition is PARTLY GRANTED. The March 20, 2012 Decision and June 11, 2012 Resolution of the Court of Appeals in CA-GR. CV No. 92543 are REVERSED and SET ASIDE. The July 17, 2008 Decision of the Regional Trial Court of Makati City, Branch 61 is REINSTATED with the MODIFICATION that the sum of~l,641,815.00
MORTGAGE
HEIRS OF FELINO TIMBOL JR. vs. PHILIPPINE NATIONAL BANK G.R. No. 207408, April 18, 2015
Ponente: J. Carpio, 2nd Division
Nature of the Action: Petition for review on certiorari under Rule 45 assailing the Decision and Resolution of CA reversing and setting aside the RTC Decision.
Facts: In December 1996, Karrich Holdings Ltd (KHL) based in HK and owned by Felino Timbol applied with PNB’s wholly-owned HK-based subsidiary, PNB-IFL, for credit facilities in the amount of P22,796,200. As security, Timbol executed real estate mortgages (REM) on his behalf and on behalf of Emmanuela Languardia over 9 parcels of real estate registered in the name of Mr. and Mrs.
Timbol, Jr. When Timbol defaulted in paying his loan obligations, PNB, on behalf of PNB-IFL, sent a demand letter stating that Timbol’s loan obligaton is P38,088,173.59. Timbol still failed to pay his obligation so on Nov. 15, 1999, PNB caused the foreclosure of the mortgaged properties claiming that Timbol violated the terms of the REM by defaulting on the payment of loan obligation despite demands.
As of the date of foreclosure, the outstanding balance of Timbol already amounted to P42,320,611.62.
PNB was allegedly the highest bidder at the public auction sale with a bid price of P35,669,000. On August 4, 2000, Timbol and Languardia filed suit against PNB, Espina, and the RD of Makati for annulment of REM, foreclosure, and auction sale, for accounting and damages, and for a temporary restraining order and/or injunction. They accused PNB of deliberately “bloating” the amount of the obligation and that the foreclosure proceedings are highly irregular, invalid, and illegal.
RTC granted the issuance of a writ of preliminary injunction and denied PNB’s motion for reconsideration and supplemental motion for reconsideration while grating Timbol’s motion to reduce bond which would ultimately be nullified and set aside by the SC. RTC declared the foreclosure of mortgage by the defendant bank to be null and void. PNB elevated the case to CA and while the case was pending, Timbol died. He was substituted by his heirs as petitioners. CA reversed RTC’s decision dismissing the complaint. Petitioners filed a motion for reconsideration but was denied. Hence, this instant petition.
Issue: Whether or not PNB has the right to foreclose the real estate mortgage.
In addition, petitioners never raised the authority of PNB to foreclose the mortgage on behalf of PNB-IFL in their complaint before the trial court or in the proceedings before the CA.
It is not too late for petitioners to raise these issues before the Court. It is noteworthy that all these could have been ventilated in the proceedings before the CA had petitioners not neglected to file their Appellee’s Brief.
Thus, the foregoing discussion puts to rest the issues raised by petitioners. Consequently, the REM, the subsequent foreclosure and auction sale are held to be valid. No irregularity attended the execution of the mortgage contract, the foreclosure, and the auction sale, the same being within the terms agreed upon by petitioner’s predecessor-in-interest and PNB.
Wherefore, the petition is Denied. The Decision of the CA is Affirmed.
So ordered.