Case Digest (G.R. No. 226272)
Facts:
Panacan Lumber Co., Antonio B. Go, Ma. Teresa C. Go and Dorotea B. Go v. Solidbank Corp. (now Metropolitan Bank & Trust Company), G.R. No. 226272, September 16, 2020, the Supreme Court Second Division, Hernando, J., writing for the Court.Petitioners Panacan Lumber Co. (PLC), Antonio B. Go, Ma. Teresa C. Go and Dorotea B. Go sued respondent Solidbank Corp. (later Metropolitan Bank & Trust Company, MBTC) after Solidbank foreclosed a real estate mortgage (REM) over land covered by TCT No. T-217531 and acquired the title at public auction. The litigation arose out of a March 7, 1997 foreign letter of credit (FLC) for US$168,000 issued by Solidbank in favor of PLC to finance lumber imports, an allegedly related domestic letter of credit (DLC) issued by PCIB as collateral, a March 27, 1997 P700,000.00 loan (PN No. 96000251) secured by the REM, and a later renewal promissory note. PLC partially paid US$60,000 on the FLC but defaulted on remaining obligations; Solidbank refused to release shipping documents and later amended petitions for extrajudicial foreclosure, increasing the claimed indebtedness to P9,151,667.89. A public auction was held on October 4, 1999 where Solidbank was the highest bidder.
On November 22, 1999 petitioners filed a complaint seeking injunctive relief and damages, alleging wrongful inclusion of the FLC in foreclosure and absence of personal notice of amended petitions. The trial court (RTC, Branch 42, Manila) issued a writ of preliminary injunction on October 31, 2000 enjoining consolidation of title but later tried the case on the merits. Procedural skirmishes ensued: Solidbank failed to timely present evidence, the RTC initially admitted evidence over petitioners’ objection, and Judge Clemena denied motions for reconsideration and inhibition, prompting petitioners to file a Rule 65 certiorari petition before the Court of Appeals (CA). The CA granted that Rule 65 petition in March 2010, set aside certain RTC orders, and ordered the case considered submitted; the CA’s resolution denying reconsideration was itself the subject of a Rule 45 petition to the Supreme Court, which the Court denied in September 2010 and January 2011.
On February 13, 2012 the RTC rendered judgment in favor of petitioners: nullifying the foreclosure proceedings and sale, declaring the MBTC registration void, awarding temperate damages (P400,000) and attorney’s fees (P100,000), and dismissing Solidbank’s counterclaims. On appeal, the CA in its July 31, 2015 Decision reversed and set aside the RTC: it (a) affirmed an outstanding FLC balance of US$108,000 and the P700,000 renewal PN obligation with specified interest; (b) declared the consolidation of title in MBTC null and void for violating the injunction but granted mortgagors a one-year redemption period; (c) deleted the RTC’s awards for temperate damages and attorney’s fees; and (d) affirmed dismissal of Solidbank’s counterclaims. The CA denied reconsideration in A...(Subscriber-Only)
Issues:
- Whether the extrajudicial foreclosure of the REM is null and void because Solidbank failed to give petitioners personal notice of its two amended petitions for extrajudicial foreclosure.
- Whether the PCIB domestic letter of credit (DLC) secured the transaction covered by Solidbank’s foreign letter of credit (FLC) and, if so, whether Solidbank breached the FLC agreement by withholding shipping documents.
- Whether the Deed of Real Estate Mortgage (REM) covers PLC’s other loan obligations, specifically the FLC and the renewal promissory note.
- Whether Solidbank committed breach of contract by amending the foreclosure petition to include PLC’s other obligations.
- Whether the appellate court erred in adjudicating and affirming Solidbank’s claims for indebtedness and interest despite Solidbank’...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)