Case Digest (G.R. No. 138703)
Facts:
Development Bank of the Philippines and Privatization and Management Office v. Hon. Court of Appeals, G.R. No. 138703, June 30, 2006, Supreme Court Second Division, Azcuna, J., writing for the Court.The petitioners are Development Bank of the Philippines (DBP) and the Privatization and Management Office (PMO) (successor to the Asset Privatization Trust, APT). The respondents are Philippine United Foundry and Machinery Corporation and Philippine Iron Manufacturing Co., Inc. The present matter is a petition for review on certiorari under Rule 45 seeking reversal of the Court of Appeals (CA) decision of May 7, 1999 in CA-G.R. CV No. 49239 which had affirmed the Regional Trial Court (RTC), Branch 98, Quezon City, in Civil Case No. Q-49650.
The factual background is that DBP initially extended an industrial loan in March–June 1968 to the respondent companies (P2.5 million: P500,000 cash and P2,000,000 in DBP Progress Bonds), evidenced by a promissory note and secured by a mortgage over present and future assets. A revolving guarantee of P1.7 million was added in an amended mortgage in November 1968. In 1975 the parties restructured outstanding balances (consolidated principal P4,655,992.35) into new promissory notes dated November 12, 1975 (one note for principal, another for accrued interest), providing for 12% interest and various penalty/service charges. Despite restructuring, respondents defaulted and DBP later refinanced the obligations through three foreign-currency–denominated promissory notes dated December 11, 1980; June 5, 1981; and December 16, 1981, each secured by mortgages and containing variable interest, penalty and service-charge provisions.
DBP computed arrearages and in October 1985 initiated foreclosure on mortgages, claiming an indebtedness of P62,954,473.68 (after crediting intermittent payments). Foreclosure was repeatedly suspended between 1985–1986 upon respondents’ representations; on December 23, 1986 respondents filed suit for injunction (later amended to seek annulment of the mortgage and to implead APT/PMO). The RTC issued a temporary restraining order (Dec. 24, 1986) and a writ of preliminary injunction (May 4, 1987). After trial the RTC rendered judgment in favor of respondents ordering them to pay only the original loans of P6,200,000, to apply prior payments (P5,335,827.71) to interest and penalties, and permanently enjoining DBP/APT from foreclosing and from charging further interest/penalties arising from the AFP’s alleged failure to honor a separate manufacturing contract.
DBP and APT (later PMO) appealed to the CA, which affirmed the RTC. DBP filed a motion for reconsideration with the CA that remained unresolved; PMO (as successor-in-interest) filed the present Rule 45 petition with the Supreme Court challenging the CA’s treatment of (a) the computation of indebtedness and alleged unilateral increase in inte...(Subscriber-Only)
Issues:
- Did the Court of Appeals err in affirming the trial court’s conclusion that the respondents’ total obligation was only P6.2 million and in finding that DBP had unilaterally increased interest and charges?
- Can the respondents be excused from or relieved of their obligations to DBP/PMO because the Armed Forces of the Philippines (AFP) allegedly failed to honor a separate manufacturing contract?
- Did the issuance and perpetuation of the injunctions against foreclosure violate Presidential Decree No. 385 and Proclamation No. 50?
- Was the petition of PMO barred by forum shopping because a co-defendant ...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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