Case Digest (G.R. No. 222448)
Facts:
United Coconut Planters Bank v. Editha F. Ang and Violeta M. Fernandez, G.R. No. 222448, November 24, 2021, Supreme Court Third Division, Carandang, J., writing for the Court.On April 30, 1997, petitioner United Coconut Planters Bank (UCPB) granted respondents Editha F. Ang and Violeta M. Fernandez a term loan (aggregating about Php16 million principal) evidenced by five promissory notes, some denominated in US dollars, and secured by several real estate mortgages over various titled lots. The Credit Agreement and its incorporated Terms & Conditions provided that interest would be based on prevailing market references (MRR, T-bill or other market-based rates) and expressly allowed quarterly review and resetting “at the option of the bank.” The borrowers made payments for about a year but ceased amortizations after April 30, 1998; total partial payments amounted to about Php2,349,514.95.
After demand, UCPB initiated extrajudicial foreclosure proceedings under Act No. 3135 before Notary Public Immanuel L. Sodusta. A Notice of Sale was issued in June 1999 and the mortgaged properties were sold at public auction to UCPB on August 2, 1999 for Php21,985,000.00. A Final Deed of Sale followed and tax declarations were subsequently issued in UCPB’s name; UCPB later sold some foreclosed lots to Eddie Po on August 1, 2013.
On July 10, 2000 Ang and Fernandez filed in the Regional Trial Court (RTC) a Petition for Declaration of Nullity of Foreclosure, Auction Sale and Promissory Note & Fixing of True Account, seeking among other reliefs annulment of the sale, nullity of dollar‑denominated notes insofar as payment was required in pesos at an allegedly inflated rate, nullity of interest‑fixing provisions, and damages and attorney’s fees. The RTC, in a June 22, 2011 Decision, initially declared the interest provisions and the five promissory notes null and void for violating Articles 1308–1309 of the Civil Code and R.A. No. 3765 (Truth in Lending Act), and nullified the auction sale while directing recomputation of indebtedness.
After motions for reconsideration, the RTC on December 5, 2011 issued an order reversing itself: it declared the August 2, 1999 auction sale valid, held petitioners liable for the principal plus compounded legal interest of 12% and penalties, ordered application of auction proceeds against indebtedness, and directed deduction of payments already made. The Court of Appeals (CA), however, in a May 11, 2015 Decision (denied reconsideration December 4, 2015), reversed the RTC in part: it held the promissory notes valid, declared the interest‑fixing provisions null and void under Article 1308, ruled the auction sale null and void, and remanded for recomputation of indebtedness with legal interest of 12% until June 30, 2013 and 6% thereafter. UCPB filed a Rule 45 petition for review on certiorari to the Supreme Court.
The Supreme Court initially denied the petition for procedural defects on M...(Subscriber-Only)
Issues:
- Should the petition be dismissed for raising questions of fact in violation of Rule 45 of the Rules of Court?
- Are the stipulations on the payment of interest in the Credit Agreement, promissory notes, and disclosure statements valid?
- Is the extrajudicial foreclosure and auction sale valid despite the nullity of the provisions imposing interest and any resulting erroneous computation o...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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