G.R. No. 173090-91 - Union Bank of the Philippines vs. Spouses Rodolfo T. Tiu and Victoria N. Tiu

On November 21, 1995, Union Bank of the Philippines (petitioner) and spouses Rodolfo T. Tiu and Victoria N. Tiu (respondents) entered into a Credit Line Agreement (CLA) granting the spouses access to approved credit facilities.
Between September 22, 1997 and March 26, 1998, the spouses Tiu availed various loans totaling US$3,632,000.00 evidenced by promissory notes denominated in US dollars.
On June 23, 1998, Union Bank advised redenomination of loans to Philippine peso equivalent on July 15, 1998 due to currency risks; the spouses Tiu authorized the redenomination at US$1 = P41.40 with 19% interest for one year.

On December 21, 1999, the parties executed a Restructuring Agreement where the spouses Tiu confirmed debt amounting to P155,364,800.00 (principal plus interest/service and penalty charges) and waived any right to dispute it.
The restructured amount consisted of P150,364,800.00 (loan value at the agreed exchange rate) and P5,000,000.00 additional loan for interest payments.
The total restructured obligation after deductions (dacion price of properties) and additions (taxes, expenses, fees) was P104,668,741.00.
Properties were conveyed by the Tiu spouses and Juanita Tiu (mother of Rodolfo) via Deeds of Dacion in Payment: ten parcels in Labangon, Cebu City (P25,130,000.00) and one parcel in Mandaue City (P36,080,000.00), both with lease arrangements back to the Tius for two years.
The spouses Tiu executed a Real Estate Mortgage on their residential property in Mandaue City (TCT No. T-11951).

The spouses Tiu alleged payments to Union Bank: P15,000,000.00 on August 3, 1999, P13,197,546.79 as of May 8, 2001, and claimed total payments including properties ceded totaled P89,407,546.79.
Union Bank claimed failure to comply with payment schemes and initiated extrajudicial foreclosure on the residential mortgaged property with a scheduled auction on July 18, 2002.

The spouses Tiu, along with other family members, filed a complaint in the RTC to declare the foreclosure null and void, praying for declaration of full payment, injunction on auction, return of properties, and damages.
The spouses Tiu contended the loans were originally peso-denominated, that they were forced into the Restructuring Agreement, and that improvements on the mortgaged lot were owned by third parties (family).
They also alleged Union Bank unlawfully withheld certificates of shares and titles, despite no lien.
Union Bank denied these contentions, asserting the Restructuring Agreement was voluntarily entered and foreclosure was valid.

RTC issued Temporary Restraining Order, Writ of Preliminary Injunction, but ultimately ruled in favor of Union Bank on December 16, 2004, dismissing the complaint and lifting the injunction.
Both parties filed motions for reconsideration, denied by RTC on January 19, 2005.
Subsequent attempts by Union Bank to proceed with foreclosure sale were met with Court of Appeals' Temporary Restraining Order.
The Court of Appeals, on February 21, 2006, rendered a joint decision:

Invalidated the Restructuring Agreement as a novation due to no stipulation for dollar repayment and no dollar exchange received;
Declared loans were peso loans from beginning and thus no conversion was necessary;
Ordered return of excess payment and rentals, cancellation of foreclosure;
Ordered return of certificates and titles to spouses Tiu;
Imposed moral, exemplary damages and attorney's fees against Union Bank.

Union Bank filed Petition for Review on Certiorari challenging various findings, especially on validity of dollar loans, novation, foreclosure, rental payments, damages, and appellate jurisdiction.

Whether the Court of Appeals erred in ruling there were no dollar loans despite admissions.
Whether the Restructuring Agreement is valid, considering admissions and consideration.
Whether it was erroneous to permanently enjoin Union Bank from foreclosing the mortgage despite admitted non-payment.
Whether the Court of Appeals erred in fixing the spouses' obligation contrary to promissory notes and agreement.
Whether the Court of Appeals erred in ordering return of alleged illegal rentals without factual basis.
Whether the Court of Appeals erred in concluding full payment of obligation without sufficient evidence.
Whether the Court erred in holding the house included in the mortgage belonged not to the spouses.
Whether ordering return of certificates and titles to spouses was erroneous.
Whether the Court of Appeals violated doctrines and principles on appellate jurisdiction.
Whether damages awarded against Union Bank were proper.