G.R. No. 148753 - NEW SAMPAGUITA BUILDERS CONSTRUCTION, INC. (NSBCI) AND SPOUSES EDUARDO R. DEE AND ARCELITA M. DEE, VS. PHILIPPINE NATIONAL BANK.

Ruling

WHEREFORE, the decision of the Regional Trial Court of Dagupan City, Branch 40 dated December 28, 1995 is REVERSED and SET ASIDE . The foreclosure proceedings of the mortgaged properties of defendants-appellees [4] and the February 26, 1992 auction sale are declared legal and valid and said defendants-appellees are ordered to pay plaintiff-appellant PNB, [5] jointly and severally[,] the amount of deficiency that will be computed by the trial court based on the original penalty of 6% per annum as explicitly stated in the loan documents and to pay attorneys fees in an amount equivalent to x x x 1% of the total amount due and the costs of suit and expenses of litigation. [6] The Facts The facts are narrated by the CA as follows: On February 11, 1989, Board Resolution No. 05, Series of 1989 was approved by [Petitioner] NSBCI [1)] authorizing the company to x x x apply for or secure a commercial loan with the PNB in an aggregate amount of P 8.0M, under such terms agreed by the Bank and the NSBCI, using or mortgaging the real estate properties registered in the name of its President and Chairman of the Board [Petitioner] Eduardo R. Dee as collateral; [and] 2) authorizing [petitioner-spouses] to secure the loan and to sign any [and all] documents which may be required by [Respondent] PNB[,] and that [petitioner-spouses] shall act as sureties or co-obligors who shall be jointly and severally liable with [Petitioner] NSBCI for the payment of any [and all] obligations. On August 15, 1989, Resolution No. 77 was approved by granting the request of [Respondent] PNB thru its Board NSBCI for an P 8 Million loan broken down into a revolving credit line of P 7.7M and an unadvised line of P 0.3M for additional operating and working capital [7] to mobilize its various construction projects, namely: 1) MWSS Watermain; 2) NEA-Liberty farm; 3) Olongapo City Pag-Asa Public Market; 4) Renovation of COA-NCR Buildings 1, 2 and 9; 5) Dupels, Inc., Extensive prawn farm development project; 6) Banawe Hotel Phase II; 7) Clark Air Base -- Barracks and Buildings; and 8) Others: EDSA Lighting, Roxas Blvd. Painting NEA Sapang Palay and Angeles City. The loan of [Petitioner] NSBCI was secured by a first mortgage on the following: a) three (3) parcels of residential land located at Mangaldan, Pangasinan with total land area of 1,214 square meters[,] including improvements thereon and registered under TCT Nos. 128449, 126071, and 126072 of the Registry of Deeds of Pangasinan; b) six (6) parcels of residential land situated at San Fabian, Pangasinan with total area of 1,767 square meters[,] including improvements thereon and covered by TCT Nos. 144006, 144005, 120458, 120890, 144161[,] and 121127 of the Registry of Deeds of Pangasinan; and c) a residential lot and improvements thereon located at Mangaldan, Pangasinan with an area of 4,437 square meters and covered by TCT No. 140378 of the Registry of Deeds of Pangasinan. The loan was further secured by the joint and several s