G.R. NO. 169116 - BANK OF THE PHILIPPINE ISLANDS, VS. SPS. IRENEO M. SANTIAGO AND LIWANAG P. SANTIAGO, CENTROGEN, INC., REPRESENTED BY EDWIN SANTIAGO.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE, premises considered, the petition is DISMISSED. The assailed orders dated March 20, 2003 and August 25, 2003 of the respondent court in Civil Case No. SC-4259 are hereby AFFIRMED. Petitioner BPI is a banking institution duly organized and existing as such under the Philippine laws. Private respondent Centrogen, Inc. (Centrogen) is a domestic corporation engaged in pharmaceutical business, duly organized and existing as such under the Philippine laws and represented in this act by its President, Edwin Santiago, son of private respondents Spouses Ireneo M. Santiago and Liwanag P. Santiago. On several occasions, private respondent Centrogen obtained loans from Far East Bank and Trust Company (FEBTC) in different amounts, the total of which reached the sum P4,650,000.00, as evidenced by promissory notes executed by Edwin Santiago. As a security for a fraction of the loan obligation, Ireneo M. Santiago executed a Real Estate Mortgage over a parcel of land covered by TCT No. T-131382 registered under his name and located at Sta Cruz, Laguna, with an area of 2,166 square meters (subject property). [4] The mortgage secured the principal loan in the amount of P490,000.00. Later on, the same property secured another loan obligation in the amount of P1,504,280.00. [5] Subsequently, however, Centrogen incurred default and therefore the loan obligation became due and demandable. Meanwhile, FEBTC merged with the BPI with the latter as the surviving corporation. As a result, BPI assumed all the rights, privileges and obligations of FEBTC. On 13 December 2002, BPI filed an Extra-Judicial Foreclosure of Real Estate Mortgage [6] over the subject property before the RTC of Sta. Cruz, Laguna. In order to validly effect the foreclosure, a Notice of Sale was issued by the Provincial Sheriff on 21 January 2003. On the same day, the Spouses Santiago were served with the copy of the Notice of Sale. Upon receipt of the Notice of Sale, the Spouses Santiago and Centrogen filed a Complaint seeking the issuance of a Temporary Restraining Order and Preliminary and Final Injunction and in the alternative, for the annulment of the Real Estate Mortgage with BPI. The complaint alleged that the initial loan obligation in the amount of P490,000.00, including interest thereon was fully paid as evidenced by Union Bank Check No. 0363020895 dated 20 December 2001 in the amount of P648,521.51 with BPI as payee. Such payment notwithstanding, the amount was still included in the amount of computation of the arrears as shown by the document of Extra-Judicial Foreclosure of Real Estate Mortgage filed by the latter. In addition, the Spouses Santiago and Centrogen asseverated that the original loan agreement was for the amount of Five Million Pesos. Such amount will be supposedly utilized to finance the squalene project of the company. However, after the amount of Two Million Pesos was released and was accordingly used in funding the erection of the structural details of the project