Facts:
4E Steel Builders Corporation and
Spouses Filomeno G. Ecraela & Virginia Ecraela filed suit against
Maybank Philippines, Inc. and the
Sheriff of the City of Caloocan following an extrajudicial foreclosure and sale conducted on November 21, 2003 in Caloocan City by notary Atty. Antonio D. Seludo, involving five parcels of land covered by TCT Nos. 340528, C-316200, 215757, 309070, and C-322693. The parties executed a Credit Agreement on December 14, 1999, granting a credit line not exceeding PHP 4,800,000, and the borrowers signed five promissory notes (Nos. 99-038, 2000-035, 2000-48, 2000-051 and 2000-066) that contained identical
acceleration clauses and, in two instances, an
automatic conversion clause; the credit line was renewed on December 14, 2001 and consolidated into Promissory Note No. 04-004-00-0117-5 for PHP 4,800,000 maturing June 10, 2002. When payments became due, Maybank demanded payment, issued a statement of account reflecting a principal of PHP 4,800,000 with accrued interest and penalties, and thereafter instituted extrajudicial foreclosure proceedings in Branch 125, Regional Trial Court (RTC) of Caloocan City; the RTC denied plaintiffs’ motion for preliminary injunction and dismissed their amended complaint, prompting appeal to the Court of Appeals (CA). The CA partially granted the appeal, holding that the foreclosure sale in favor of Maybank was void because Maybank admitted majority foreign ownership and therefore was disqualified from participating in the 2003 foreclosure under
R.A. No. 133 as amended by
R.A. No. 4882, annulled the sale and cancelled the certificate of sale, ordered appointment of an independent accountant to determine the exact loan obligations with modified interest and penalty rates, and both parties sought review by this Court in consolidated petitions filed under Rule 45, resolved March 13, 2023.
Issues:
Whether the principal loan obligation of
4E Steel Builders Corporation and
Spouses Filomeno G. Ecraela & Virginia Ecraela amounts to PHP 4,800,000.00? Whether
Maybank Philippines, Inc.’s participation in and acquisition by extrajudicial foreclosure of the subject properties was authorized by law? Whether the stipulations on interest rates and penalty charges are valid and enforceable? Whether appointment of an independent accountant is necessary to determine the total loan obligation?
Ruling:
Ratio:
Doctrine: