G.R. No. 194201 - SPOUSES BAYANI H. ANDAL AND GRACIA G. ANDAL, VS. PHILIPPINE NATIONAL BANK, REGISTER OF DEEDS OF BATANGAS CITY, JOSE C. CORALES.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, [respondent bank] executed a release of real estate mortgage over the parcels of land covered by TCT Nos. T-31193 and RT-363 (3351). However, despite payment x x x, [respondent bank] proceeded to foreclose the real estate mortgage, particularly with respect to the three (3) parcels of land covered by TCT Nos. T-641, T-32037 and T-16730 x x x. x x x [A] public auction sale of the properties proceeded, with the [respondent bank] emerging as the highest and winning bidder. Accordingly, on August 30, 2002, a certificate of sale of the properties involved was issued. [Respondent bank] consolidated its ownership over the said properties and TCT Nos. T-52889, T-52890, and T-52891 were issued in lieu of the cancelled TCT[s] x x x. This prompted [petitioners-spouses] to file x x x a complaint for annulment of mortgage, sheriffs certificate of sale, declaration of nullity of the increased interest rates and penalty charges plus damages, with the RTC of Batangas City. In their amended complaint, [petitioners-spouses] alleged that they tried to religiously pay their loan obligation to [respondent bank], but the exorbitant rate of interest unilaterally determined and imposed by the latter prevented the former from paying their obligation. [Petitioners-spouses] also alleged that they signed the promissory notes in blank, relying on the representation of [respondent bank] that they were merely proforma [sic] bank requirements. Further, [petitioners-spouses] alleged that the unilateral increase of interest rates and exorbitant penalty charges are akin to unjust enrichment at their expense, giving [respondent bank] no right to foreclose their mortgaged properties. x x x. x x x x On August 27, 2004 [respondent bank] filed its answer, denying the allegations in the complaint. x x x [respondent bank] alleged that: the penalty charges imposed on the loan was expressly stipulated under the credit agreements and in the promissory notes; although [petitioners-spouses] paid to [respondent bank] P14,800,000.00 on July 10, 2001, the former was still indebted to the latter in the amount of P33,960,633.87; assuming arguendo that the imposition was improper, the foreclosure of the mortgaged properties is in order since [respondent banks] bid in the amount of P28,965,100.00 was based on the aggregate appraised rates of the foreclosed properties. x x x [4] After trial, the RTC rendered judgment [5] in favor of petitioners-spouses and against respondent bank, ordering that: The rate of interest should be reduced as it is hereby reduced to 6% in accordance with Article 2209 of the Civil Code effective the next 30, 31 and 180 days respectively from the date of the twelve (12) promissory notes x x x covered by the real estate x x x mortgages, to be applied on a declining balance of the principal after the partial payments of P14,800,00.00 (paid July 17, 2001) and P2,000,000.00 [6] (payments of P300,000.00 on October 1, 1999, P1,800,000.00 as [of] December 1, 1999, P7