G.R. No. 111584 - Producers Bank of the Philippines vs. Court of Appeals

In April 1982, respondents Salvador Y. Chua and Emilia U. Chua (private respondents) transferred their accounts from Pacific Banking Corporation to petitioner Producers Bank of the Philippines (petitioner) after assurances from Jimmy Rojas, branch manager, of longer loan terms and lower interest rates; they maintained substantial savings and current deposits and obtained various loans from petitioner, including a P2,000,000 loan secured by a real estate mortgage payable over three years (1982–1985).
On January 20, 1984, private respondents deposited P960,000.00 with petitioner, which was entered in their savings passbook (Passbook No. 38240) and evidenced by a deposit slip, but petitioner failed to credit the deposit because its Branch Manager, Sixto Castillo, absconded with depositors’ funds.

Despite an available balance of P1,051,051.19, petitioner dishonored checks drawn by private respondents for creditors, and refused to furnish copies of account ledgers when requested; private respondents filed Civil Case No. 2718 for damages on January 30, 1984.
While Civil Case No. 2718 was pending, petitioner filed an application with the City Sheriff of Bacolod for extrajudicial foreclosure of the real estate mortgage on October 15, 1984; private respondents filed Civil Case No. 3276 for injunction and damages alleging the foreclosure petition was baseless and maliciously intended to harass them.

On April 26, 1988, the Regional Trial Court (Branch 48, Bacolod) rendered judgment in favor of private respondents ordering, inter alia: P2,000,000.00 moral damages; monthly awards for unrealized profits (P90,000 and P18,000) commencing October 16, 1984; exemplary damages of P250,000.00; an offset of the P960,000 deposit (with interests) against an agricultural loan of P1,300,000.00; reformation of the mortgage to reflect a maturity of April 15, 1987; accounting for certain accounts; attorneys’ fees at 15% and costs; and permanent injunction.
On appeal, the Court of Appeals (CA) on October 31, 1991 modified the trial court’s decision: reduced damages to P500,000.00 for moral and exemplary damages (combined), awarded P18,000/month as unrealized profits from gasoline business beginning October 16, 1984, allowed offsetting of obligations with adjudged damages, ordered accounting for 1982 accounts, required plaintiffs to settle loans within 90 days (with relief from penalties/surcharges from January 20, 1984), denied mortgage reformation, and awarded P100,000.00 as attorney’s fees.
Petitioner moved for partial reconsideration before the CA; the motion was denied on August 12, 1993. Petitioner then filed a petition for review with the Supreme Court raising several assignments of error.

Whether petitioner had a legal and valid right to proceed with extrajudicial foreclosure of the real estate mortgage.
Whether the loan secured by the mortgage was due and demandable at the time petitioner filed for foreclosure (October 15, 1984).

Whether private respondents were properly relieved from payment of penalties and surcharges starting January 20, 1984.
Whether the awards of moral damages, exemplary damages, unrealized profits (P18,000/month), attorneys’ fees, and costs were proper and in proper amounts.
Whether private respondents were entitled to an accounting for specified account numbers for January–December 1982.
Whether the CA and trial court findings of fact on the above matters should be revisited by the Supreme Court.