Case Digest (G.R. No. 160758) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In July 1976, GuariAa Agricultural and Realty Development Corporation (GuariAa) applied for a ₱3,387,000 loan from the Development Bank of the Philippines (DBP) to develop a resort in Trapiche, Oton, Iloilo. On August 5, 1976, DBP approved the loan evidenced by a promissory note due November 3, 1988. To secure repayment, GuariAa executed on October 5, 1976 a real estate mortgage over several properties and on May 17, 1977 a chattel mortgage over resort personalty. DBP released ₱3,003,617.49 in staggered instalments, withholding interest, but refused further disbursements upon finding the project incomplete. Despite GuariAa’s demand, DBP paid some suppliers directly and warned by letter (February 27, 1978) and telegram (June 9, 1978) that it would foreclose if construction lagged. Without first demanding payment of the loan principal, DBP initiated extrajudicial foreclosure and purchased the mortgaged assets at a sheriff’s sale on January 15, 1979. GuariAa sued in the RTC (Civil Case Digest (G.R. No. 160758) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Loan Agreement and Security
- July 1976: GuariAa Agricultural and Realty Development Corp. (GuariAa) applied for a ₱3,387,000 loan from the Development Bank of the Philippines (DBP) to develop a resort; promissory note due November 3, 1988.
- October 5, 1976: Executed real estate mortgage over several properties; May 17, 1977: Executed chattel mortgage over resort personalty; required cash equity of ₱1,470,951.00.
- Disbursement and Project Issues
- DBP released ₱3,003,617.49 in instalments (withholding ₱148,102.98 as interest) but refused balance release, citing incomplete construction and substandard improvements.
- DBP sent a letter (Feb 27, 1978) and telegram (June 9, 1978) demanding completion or face foreclosure; directly paid some suppliers over GuariAa’s objection.
- Foreclosure Proceedings
- DBP initiated extrajudicial foreclosure; published notice; held public auction on January 15, 1979; DBP acquired certificates of sale and later obtained a writ of possession (June 16, 1982).
- Publication of the foreclosure notice damaged GuariAa’s business reputation, causing patrons to believe the resort had closed.
- Judicial History
- January 6, 1979: GuariAa sued in RTC Iloilo (Civil Case No. 12707) for specific performance and injunction; February 6, 1979: Amended complaint to annul foreclosure and cancel certificates of sale.
- January 6, 1998: RTC nullified the sale, ordered DBP to restore possession, pay rent, and award attorney’s fees. March 26, 2003: CA affirmed (deleted attorney’s fees). October 9, 2003: CA denied DBP’s motion for reconsideration. DBP filed petition to the SC (G.R. No. 160758).
Issues:
- Whether the CA decision (March 26, 2003) and resolution (October 9, 2003) were issued in accordance with law, prevailing jurisprudence, and supported by evidence.
- Whether the CA adhered to proper judicial procedure and the Law of the Case doctrine in deciding C.A.-G.R. CV No. 59491.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)