Case Digest (G.R. No. 200553)
Facts:
Spouses Gildardo C. Loquellano and Rosalina Juliet B. Loquellano v. Hongkong and Shanghai Banking Corporation, Ltd., Hongkong and Shanghai Banking Corporation-Staff Retirement Plan and Manuel Estacion, G.R. No. 200553, December 10, 2018, Supreme Court Third Division, Peralta, J., writing for the Court.Petitioner Rosalina Juliet Loquellano was a regular employee of respondent Hongkong and Shanghai Banking Corporation, Ltd. (respondent bank) and therefore an automatic member of respondent Hongkong and Shanghai Banking Corporation‑Staff Retirement Plan (HSBC‑SRP). In 1988 she obtained a housing loan of P400,000.00 repayable over 25 years at 6% per annum; the loan application provided that the loan was secured by setting‑off retirement benefits and by a chattel/real estate mortgage. She executed the promissory note and, on September 5, 1990, the spouses executed a real estate mortgage over their house and lot (TCT No. 95422) with Manuel S. Estacion signing as managing trustee for HSBC‑SRP.
A labor dispute between the bank and its union culminated in a strike on December 22, 1993; petitioner Rosalina was dismissed effective December 27, 1993. After dismissal, salary deductions for loan amortizations ceased beginning January 1994. HSBC‑SRP sent demand letters on June 13 and November 28, 1994; petitioner offered partial payment which HSBC‑SRP rejected. An Installment Due Reminder of July 26, 1995 showed arrears and an outstanding balance; on August 11, 1995 Rosalina deposited payments covering arrears through August 1995, which the bank accepted and credited. Subsequent installment reminders from September 1995 through June 1996 reflected decreasing balances and continued debits from Rosalina’s savings account until June 1996.
Despite these credits, HSBC‑SRP extrajudicially foreclosed the mortgaged property on May 20, 1996; Estacion was the highest bidder at public auction and a Certificate of Sale was issued June 5, 1996. On August 22, 1996 the Loquellanos filed with the Regional Trial Court (RTC) of Parañaque (Civil Case No. 96‑0363) a Complaint for Annulment of Sale with Damages and a Preliminary Injunction, alleging the foreclosure was tainted by bad faith because they had become updated on their loan obligations after August 11, 1995.
The RTC (Branch 274) rendered judgment on March 1, 2005 in favor of the petitioners: it made permanent a prior writ of preliminary injunction, annulled the extrajudicial foreclosure sale, and awarded P2,000,000.00 moral damages, P500,000.00 exemplary damages, P100,000.00 attorney’s fees plus P2,000.00 per appearance, and costs. The RTC held (inter alia) that HSBC‑SRP’s rules were not incorporated in the mortgage contract, that HSBC‑SRP had accepted payments (estopping it from foreclosing), and that the acceleration argument premised on termination was not tenable because the dismissal remained pending in appeal.
Respondents appealed or cross‑appealed to the Court of Appeals (CA) which, in a Decision dated August 11, 2011 (and a Resolution dated February 1, 2012), reversed and set aside the RTC decision and dismissed the complaint. The CA held that Rosalina’s loan obligations accelerated upon termination under the SRP rules (requiring single payment of the outstanding balance), that the mortgage and SRP rules bound her, and that foreclosure was proper for petitioners’ default; the CA also held the bank was not a prop...(Subscriber-Only)
Issues:
- May the Supreme Court, in a Rule 45 petition, review the factual findings insofar as the Court of Appeals’ findings conflict with those of the trial court?
- Was the extrajudicial foreclosure and auction sale of petitioners’ mortgaged property on May 20, 1996 valid?
- Are petitioners entitled to moral and exemplary damages and attorney’s fees for the alleged invalid foreclo...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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