Case Summary (G.R. No. 208638)
Procedural History
Upon petitioners’ refusal to continue term‐loan amortizations, BPI (as BSA’s successor) filed for extrajudicial foreclosure. Petitioners countered with an action for damages, alleging wrongful delay and breach, and obtained a temporary restraining order. The RTC, on November 10, 2008, awarded actual damages of P20,469,498.00 and attorney’s fees of P500,000.00. The CA reversed on January 31, 2013, dismissing the damage claim, and denied reconsideration on August 16, 2013. Petitioners sought Supreme Court review under Rule 45.
Issues Presented
- Existence and binding nature of the credit line contract;
- Whether BSA/BPI incurred delay in performance;
- Entitlement of petitioners to damages;
- Right of BPI to foreclose the mortgage.
Contract Perfection and Reciprocal Obligations
Under Article 1934, a loan contract is perfected upon delivery of the loan proceeds. By approving and releasing P3 million of the omnibus line, BSA and petitioners manifested mutual assent, perfecting the revolving‐credit contract despite nonrelease of the full P5 million. Reciprocal obligations in a loan dictate that the creditor must fully disburse before demanding repayment; delay or partial performance constitutes breach under Article 1170.
Breach by Delay and Failure to Release Funds
BSA’s refusal to release the remaining P2 million after petitioners complied was a clear violation of the credit agreement and constituted negligent delay. Petitioners’ inability to procure essential machinery in time for the school‐supplies season forced cancellation of purchase orders and tarnished their business reputation. BSA’s invocation of “availability of funds” without prior notice further negated good faith, as the agreement unambiguously allowed draws up to P5 million.
Successor Liability after Merger
Pursuant to Corporation Code Section 80 and the Articles of Merger, BPI acquired not only BSA’s assets but also its liabilities and contractual obligations. Good faith does not absolve a surviving corporation from predecessor defaults. BPI’s foreclosure petition, therefore, depended on the state of BSA’s performance: a contract in breach cannot support a foreclosure.
Prematurity of Foreclosure
Foreclosure of a mortgage is accessory to the principal obligation. Without full performance by the lender, the mortgagor has no default. The Court held that petitioners’ refusal to continue amortizations was justified by BSA’s prior breach, making the extrajudicial foreclosure premature and void.
Damages and Relief
The Court affirmed
...continue readingCase Syllabus (G.R. No. 208638)
Facts
- Petitioners are engaged in the printing business under the name “MELBROS PRINTING CENTER.”
- In December 1996, Bank of Southeast Asia (BSA) managers offered petitioners various loan and credit facilities.
- In April 1997, petitioners executed a real estate mortgage over their Paco, Manila property (TCT No. 143457) securing a ₱15,000,000 term loan and a ₱5,000,000 credit line (total ₱20,000,000).
- BSA released only ₱10,444,271.49 of the term loan and ₱3,000,000 of the credit line.
- BSA conditioned releasing the remaining ₱2,000,000 on petitioners’ payment of the initial ₱3,000,000; petitioners complied but BSA still refused to release the balance.
- Petitioners then stopped paying amortizations on the term loan.
- BPI Family Savings Bank merged with BSA and assumed its rights and obligations.
- BPI filed for extrajudicial foreclosure of the mortgage; petitioners sought damages, a TRO, and a preliminary injunction, claiming actual damages of ₱23,570,881.32, moral damages, and attorney’s fees.
Procedural History
- November 10, 2008 (RTC Decision): Ruled in favor of petitioners; awarded ₱20,469,498 actual damages and ₱500,000 attorney’s fees.
- January 31, 2013 (CA Decision): Reversed RTC; dismissed petitioners’ complaint.
- August 16, 2013 (CA Resolution): Denied petitioners’ motion for reconsideration.
- Petitioners filed a Rule 45 petition before the Supreme Court.
Issues
- Whether a binding contract existed between petitioners and BSA regarding the omnibus credit line.
- Whether BSA incurred delay in performing its credit‐release obligations.
- Whether petitioners are entitled to damages due to BSA’s breach.
- Whether BPI, as successo