G.R. No. 184122 - Bank of the Philippine Islands vs. Spouses Yu

Respondents Norman and Angelina Yu, doing business as Tuanson Trading, and Tuanson Builders Corporation borrowed a total of P75 million from Far East Bank and Trust Company.
They executed real estate mortgages over several properties, including lands in Legazpi City.
In 1999, unable to meet their loan obligations, they requested a loan restructuring, which was granted, reducing their loan balance to P33,400,000.00.
Despite restructuring, the Yus struggled to make payments and requested the release of some mortgaged lands, which BPI ignored, leading to the bank's extrajudicial foreclosure of the properties.

The Yus filed a complaint against BPI and the winning bidder, Magnacraft Development Corporation, seeking to annul the foreclosure sale.
A compromise agreement was reached between the Yus and Magnacraft, affirming Magnacraft's ownership of three out of ten auctioned parcels, leading to the dismissal of the complaint against Magnacraft.

On October 24, 2003, the Yus filed a new complaint against BPI for recovery of alleged excessive penalty charges, attorney's fees, and foreclosure expenses.
BPI admitted to the foreclosure and provided a breakdown of the amounts involved, including principal debt, interest, and penalty charges.
The Yus claimed that BPI's penalty charges were excessive, attorney's fees were unjustified, and foreclosure expenses lacked supporting documentation.

The Yus moved for summary judgment, asserting that no genuine issues of fact existed based on the pleadings and evidence presented.
They waived their claim for moral damages to facilitate a summary judgment.

The RTC granted a partial summary judgment, reducing the penalty charge from 36% to 12% per annum but maintaining the attorney's fees at 10%.
The RTC determined that certain issues required further evidence, including the justification of foreclosure expenses and the validity of the foreclosure of the Pili property.

On January 3, 2006, the RTC issued a revised summary judgment:
- Deleted the penalty charges due to non-compliance with the Truth in Lending Act.
- Reduced attorney's fees to 1% of the principal and interest.
- Upheld the reasonableness of foreclosure expenses and ordered the turnover of excess bid proceeds to the Yus.
- Dismissed BPI's counterclaims for lack of merit.

BPI appealed the RTC's decision, but the Court of Appeals affirmed the ruling in all respects.
BPI's motion for reconsideration was denied, prompting its appeal to the Supreme Court.

BPI raised two main issues:
1. Whether the case presented genuine issues of fact warranting a summary judgment.
2. Whether the RTC and CA correctly deleted penalty charges, reduced attorney's fees, and dismissed BPI's counterclaims.

The Court affirmed that a summary judgment is appropriate when essential facts are uncontested.
The RTC and CA correctly determined that the issues raised by BPI could be resolved based on the established facts and admissions, negating the need for a trial.

The Court upheld the deletion of penalty charges based on BPI's violation of the Truth in...continue reading