G.R. No. 208638 - Spouses Ong vs. BPI Family Savings Bank, Inc.

Spouses Francisco Ong and Betty Lim Ong, and Spouses Joseph Ong Chuan and Esperanza Ong Chuan (collectively, “petitioners”) operate Melbros Printing Center.
In December 1996, managers of Bank of Southeast Asia (BSA) solicited their application for loan and credit facilities to finance business expansion.

In April 1997, petitioners executed a Real Estate Mortgage (REM) over their Paco, Manila property (TCT No. 143457) as security for a P20 million credit line: a P15 million term loan and a P5 million revolving “omnibus” credit line.
BSA released only P10,444,271.49 of the term loan and P3 million of the omnibus line, promising to release the remaining P2 million upon full payment of the first P3 million drawdown. Petitioners paid the P3 million but BSA refused to release the balance. Petitioners then stopped paying amortizations on the term loan.

BPI Family Savings Bank (BPI) merged with BSA, acquiring its rights and obligations, and filed for extrajudicial foreclosure of the REM due to petitioners’ alleged default.
Petitioners obtained a Temporary Restraining Order and Preliminary Injunction and sued for damages (P23,570,881.32 actual, P1 million moral, P500,000 attorney’s fees). The trial court awarded P20,469,498 actual damages and P500,000 attorney’s fees; the Court of Appeals reversed and dismissed the complaint; the CA denied reconsideration. Petitioners elevated the case to the Supreme Court.

Whether a binding credit line contract existed between petitioners and BSA regarding the P5 million omnibus facility.
Whether BSA incurred delay or breach in performing its obligation to release the full credit line.

Whether petitioners are entitled to damages for BSA’s breach.
Whether BPI, as successor-in-interest, may still foreclose the mortgage despite its predecessor’s breach.