Case Digest (G.R. No. 106231)
Facts:
From February to October 1997, CPR Promotions and Marketing, Inc., represented by its President, Cornelio P. Reynoso, Jr., and its Treasurer, Leoniza F. Reynoso, obtained fifteen (15) separate loans from Metropolitan Bank and Trust Company (MBTC) evidenced by promissory notes totaling ₱12,891,397.78. To secure these obligations, the spouses Reynoso executed two real estate mortgages over titles Nos. 624835, 565381, 263421, and 274682 between February and July 1996, and on December 8, 1997 they entered into a continuing surety agreement, binding them in solidarity with CPR Promotions for loans up to ₱13,000,000. Upon default, MBTC initiated an extra-judicial foreclosure under Act No. 3135, as amended. On May 5 and 6, 1998, the mortgaged properties were publicly auctioned; MBTC submitted the highest bids of ₱10,374,000 and ₱3,240,000, resulting in certificates of sale. MBTC alleged a deficiency balance of ₱2,628,520.73 and filed Civil Case No. 99-230 in RTC Makati for its recoveryCase Digest (G.R. No. 106231)
Facts:
- Background and Parties
- Petitioner: Metropolitan Bank and Trust Company (MBTC).
- Respondents: CPR Promotions and Marketing, Inc. (CPR Promotions) and Spouses Cornelio P. Reynoso, Jr. and Leoniza F. Reynoso (Spouses Reynoso).
- Loan Instruments
- From February to October 1997, CPR Promotions obtained fifteen (15) promissory notes signed by the Spouses Reynoso as corporate officers, totaling ₱12,891,397.78 in principal.
- To secure these loans, the Spouses Reynoso executed:
- A mortgage on TCT No. 624835 (₱6,500,000) on February 2, 1996.
- A mortgage on TCT Nos. 565381, 263421, 274682 (₱2,500,000) on July 18, 1996.
- Foreclosure Proceedings
- Upon default, MBTC filed an extrajudicial foreclosure petition under Act No. 3135 on March 6, 1998, alleging a total amount due of ₱11,216,783.99 as of February 10, 1998.
- Public auctions were held May 5 (₱10,374,000 bid) and May 6 (₱3,240,000 bid) 1998, yielding sale proceeds of ₱13,614,000. MBTC claimed a deficiency of ₱2,628,520.73 plus interest and foreclosure expenses.
- Trial and Appellate Decisions
- RTC, Makati City (Oct. 11, 2007): Held respondents liable for ₱2,628,520.73 plus stipulated interest and penalties; awarded costs.
- CA, Branch 59 (Sept. 28, 2011): Reversed; ordered MBTC to refund respondents ₱722,602.22 (excess proceeds) with 6% legal interest from March 26, 1999. Reconsideration denied Feb. 13, 2012.
Issues:
- Liability under Surety Agreement
- Did the CA abuse its discretion by disregarding the continuing surety agreement and ruling the Spouses Reynoso are not solidarily liable with CPR Promotions?
- Deficiency and Excess Calculations
- Did the CA misappreciate the promissory notes, mortgages, foreclosure petition, certificates of sale, and statement of account, thus erroneously finding no deficiency and ordering a refund of ₱722,602.22?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)