Case Digest (G.R. No. 200299)
Facts:
Spouses Juan Chuy Tan and Mary Tan (Deceased) substituted by the surviving heirs, Joel Tan and Eric Tan v. China Banking Corporation, G.R. No. 200299, August 17, 2016, Supreme Court Third Division, Perez, J., writing for the Court.Petitioner heirs sued as substitutes for their deceased parents who had been officers/guarantors of Lorenze Realty and Development Corporation (Lorenze Realty), a borrower that executed multiple promissory notes in 1997 in favor of respondent China Banking Corporation (China Bank). The notes, aggregating a principal of P71,050,000.00, stipulated a penalty of 1/10 of 1% per day (equivalent to 2% per month or 24% per annum) on the total obligation from default until full payment, and 10% of the total amount due as attorney’s fees.
Lorenze Realty mortgaged eleven parcels of land as security. After default, China Bank extrajudicially foreclosed the mortgages, complied with notice and publication requirements, and purchased the properties at public auction as the highest bidder for P85,000,000.00. China Bank’s Statement of Account (10 Aug 1998) showed total indebtedness of P114,258,179.81 (principal, interest, penalties, registration and other expenses). After crediting the P85,000,000.00 sale proceeds, China Bank claimed a deficiency of P29,258,179.81 and filed Civil Case No. 98-3069 for collection before the Regional Trial Court (RTC) of Makati City, Branch 142, naming Lorenze Realty and certain officers, including Juan Chuy Tan and Mary Tan, as defendants.
The RTC (Decision dated 29 December 2003) granted judgment for China Bank, awarding the claimed deficiency of P29,258,179.81, imposing penalties of 2% per month until fully paid, and awarding 5% attorney’s fees. On appeal, the Court of Appeals (CA) affirmed with modification in a Decision dated 14 October 2011: it reduced the penalty surcharge from 2% per month (24% p.a.) to 12% p.a., and reduced attorney’s fees from 5% to 2% of the total amount due. The CA denied the defendants’ motion for reconsideration in a Resolution dated 24 January 2012.
Petitioners invoked a Petition for Review on Certiorari under Rule 45 seeking reversal of the CA, contending the P85...(Pro-only)
Issues:
- Whether Lorenze Realty’s obligation was fully extinguished when the real properties constituting the loan securities were sold at public auction for P85,000,0...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)