G.R. No. 219772 - Office of the Ombudsman vs. Mendoza

On April 22, 1977, the Spouses Julieta and Daniel Danico obtained an agricultural loan of P150,000.00 from Development Bank of the Philippines (DBP).
The loan was secured by:

A real estate mortgage (REM) over four properties covered by OCT No. P-1439, TCT Nos. T-8127 and T-3278, and OCT No. P-537; and
A chattel mortgage over a Massey Fergusson tractor with accessories.

On July 12, 1982, the Department of Agrarian Reform (DAR) certified that the mortgaged properties, except TCT No. T-8127, were seized under PD No. 27 (Operation Land Transfer).
On August 6, 1982, DBP foreclosed extrajudicially the property covered by TCT No. T-8127 due to default. The redemption period expired on September 12, 1983, after which DBP consolidated ownership under TCT No. T-19241.

Lot No. 861 (OCT No. P-1439) for P511,290.00; and
Portion of Lot No. 857 (TCT No. T-3278) for P242,644.50, both part of NPC’s reservoir area.

The deed of sale for each sale contained stipulations that the properties were mortgaged to DBP for P393,353.97 and P509,320.82, respectively, with the proceeds to be applied to satisfy the loan obligations.
DBP consented to the sale on condition that a portion of the proceeds would be applied to the Spouses Danico’s outstanding loan.

NPC paid DBP P92,003.47 on November 17, 1986 from the proceeds of the sale of the portion of Lot No. 857 but did not remit the P301,350.50 from the sale of Lot No. 861.
On October 10, 1985, DBP and Daniel Danico entered into a Deed of Conditional Sale covering TCT No. T-8127 (now T-19241) for P491,600.00, subject to payment terms with interest.
NPC requested delivery of the original titles after issuing a disbursement voucher for P301,350.50 in 1986, but DBP refused to release titles, insisting on full payment including interest.
On January 10, 1999, Julieta Danico and heirs filed suit against DBP and NPC to cancel the mortgage and enjoin DBP from possession of the foreclosed property, claiming the loan obligation had been fully paid by NPC.
DBP filed for a writ of possession over the foreclosed property and counterclaimed, asserting that the total loan obligation was P902,674.79—combining two separate loan accounts.
NPC acknowledged payment of P301,350.50 through a disbursement voucher and a check but contested further liability.

The RTC ordered trial of related cases and stayed proceedings pending NPC’s tender of the P301,350.50 payment.
NPC tendered and consigned the check for P301,350.50, but DBP refused to accept it without interest.
The RTC, in a January 2, 2003 Decision, ruled:

The extrajudicial foreclosure of TCT No. T-8127 and consolidation under TCT No. T-19241 was valid and legal;
DBP was directed to accept P301,350.50 as full payment of the Spouses Danico’s loan; and
NPC was without liability beyond that amount.

The Court of Appeals in its December 2, 2010 Decision affirmed the RTC ruling in toto.

Whether NPC is liable to pay DBP the total loan amount of P902,674.79, representing the combined liabilities from the two loan accounts.
Whether NPC is liable to pay interest and penalty charges on the loan obligations, including interest on delayed payments.