Case Digest (G.R. No. 186166)
Facts:
On September 30, 1999, respondent Jose C. Go obtained two loans from petitioner Philippine Bank of Communications (PBCom), secured by promissory notes for P17,982,222.22 and P80 million, respectively, with a ten-year repayment period ending September 30, 2009. To secure these obligations, Go executed two pledge agreements dated September 29, 1999, covering shares of stock in Ever Gotesco Resources and Holdings, Inc., with values exceeding the loan amounts at the time. However, about two years later, due to a steep decline in the market value of the pledged shares, PBCom notified Go on June 15, 2001, of its renunciation of the pledge agreements.
Thereafter, PBCom filed a complaint for sum of money with a writ of preliminary attachment against Jose C. Go and his wife, Elvy T. Go (collectively, Spouses Go) before the Regional Trial Court (RTC), Branch 42, Manila, docketed as Civil Case No. 01-101190. PBCom alleged that Spouses Go defaulted on payment, having only paid three intere
Case Digest (G.R. No. 186166)
Facts:
- Loan agreements and pledges
- On September 30, 1999, respondent Jose C. Go obtained two loans from Philippine Bank of Communications (PBCom), evidenced by two promissory notes:
- First loan: P17,982,222.22
- Second loan: P80 million
- To secure the loans, Go executed two pledge agreements dated September 29, 1999, covering shares of stock in Ever Gotesco Resources and Holdings, Inc.:
- First pledge valued at P27,827,122.22 securing the first loan.
- Second pledge valued at P70,155,100.00 securing the second loan.
- Two years later, the market value of the pledged shares plummeted to less than P0.04 per share. PBCom notified Go on June 15, 2001, that it was renouncing the pledge agreements.
- Complaint and Answer
- PBCom filed a complaint for sum of money with a prayer for a writ of preliminary attachment against Go and his wife, Elvy T. Go, alleging default on the promissory notes after only three interest installment payments (September, November, December 1999). It declared the entire balance immediately due and demandable.
- PBCom alleged it made repeated demands for payment, but Spouses Go imposed conditions for payment such as lifting of garnishment by Bangko Sentral ng Pilipinas (BSP).
- Spouses Go filed an Answer with Counterclaim denying material allegations and asserting:
- Loans were payable only after ten years (September 30, 2009), so obligations were not yet due.
- Substantial payments had been made; accounting reconciliation was necessary.
- No demand for full payment had been made by PBCom prior to filing suit.
- The pledge values initially exceeded or equaled loan amounts, so PBCom was fully secured.
- Decline in pledged shares’ market value was speculative and not permanent; renunciation of pledges was unfair.
- Motion for summary judgment and trial court decision
- PBCom filed a verified motion for summary judgment arguing:
- Material allegations of the complaint were admitted by Spouses Go, eliminating need for trial.
- No real defenses or genuine issues of material fact were tendered.
- Causes of action supported by admissions and authentic documents.
- RTC granted the motion, rendering judgment ordering Spouses Go to pay the total amount due (P117,567,779.75), plus interest, attorney’s fees, and costs.
- Spouses Go’s motion for reconsideration was denied.
- Court of Appeals decision
- On July 28, 2006, the Court of Appeals (CA) reversed the RTC judgment and denied PBCom’s motion for summary judgment.
- The CA ruled the supposed admissions in the pleadings were insufficient as Spouses Go raised genuine issues regarding:
- Fact of default.
- Amount of outstanding obligation.
- Existence of prior demand.
- The case was remanded to the RTC for trial on the merits.
- PBCom’s motion for reconsideration was denied by CA on November 27, 2006.
Issues:
- Whether the Court of Appeals erred or committed grave abuse of discretion in ruling that genuine issues exist on material facts despite alleged unequivocal admissions made by Spouses Go in the pleadings.
- Whether the Court of Appeals erred or acted in grave abuse of discretion in holding that issues were raised on the fact of default, the amount of obligation, and the existence of prior demand, despite pleadings to the contrary.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)