SECOND DIVISION
G.R. No. 207408, April 18, 2016
HEIRS OF FELINO M. TIMBOL, JR., NAMELY, MICHAEL JOHN JORGE TIMBOL, FELINO JAMES JORGE TIMBOL, AND MARILOU TIMBOL, Petitioners, v. PHILIPPINE NATIONAL BANK, Respondent.
D E C I S I O N
CARPIO, J.:
Sometime in December 1996, Karrich Holdings Ltd. ["KHL"], based in Hong Kong and owned by Felino M. Timbol, Jr. ["Timbol"] applied with Philippine National Bank ["PNB"]'s wholly-owned Hong Kong-based subsidiary, PNB International Finance Limited ["PNB-IFL"] for credit facilities. Karrich Auto Exchange ["KAE"], then named Superkinis Auto Sales, a sole proprietorship based in the Philippines and also owned by Timbol, acted as co-borrower. The credit facilities were granted in the total amount of USD 850,000.00, or PhP 22,796,200.00.
As security, Timbol executed real estate mortgages on his behalf and on behalf of Emmanuela Laguardia ["Laguardia"], over nine (9) different parcels of real estate registered in the name of Mr. and Mrs. Felino M. Timbol, Jr. Timbol was supposedly made to sign the real estate mortgage forms and Promissory Note forms in blank, among other documents, and thereafter returned the same to PNB. Timbol was allegedly never furnished with copies of the finished forms, a statement PNB would later categorically deny.
The first Real Estate Mortgage was in consideration of credit accommodations in the amount of Thirteen Million Fifty Three Thousand Six Hundred Pesos (Php 13,053,600.00, Philippine currency) and further read pertinently as follows:
chanRoblesvirtualLawlibraryWITNESSETH: That for and in consideration of credit accommodations obtained from the Mortgagee and to secure the payment of the same x x x the Mortgagors hereby transfer and convey by way of mortgage unto the Mortgagee its successors or assigns, the following:The consideration for the second Real Estate Mortgage amounted to Seven Million Five Hundred Ninety-Eight Thousand Eight Hundred Fifty Pesos and 0/100 (PhP 7,598,850.00, Philippine currency). The mortgage was constituted over a 293-sq.m. parcel of land covered by TCT No. 177564. The third Real Estate Mortgage secured an obligation amounting to Two Million One Hundred Forty-Three Thousand Seven Hundred Fifty Pesos and 0/100 (Php 2,143,750.00, Philippine currency) and covered an 87.5 sq.m. parcel of land under TCT No. 207636.
Seven (7) real estate properties covered by TCT Nos. 196111, 196112, 196113, 196114, 196115, 196116 and 196117 with their technical descriptions detailed in the attached Annex A.x x x
The real estate mortgages were annotated on the aforementioned transfer certificates of title. On later perusal of the transfer certificates of title, however, Timbol supposedly discovered that the amounts annotated as mortgaged added up to One Hundred One Million One Hundred Seventeen Thousand Eight Hundred Pesos and 0/100 (PhP 101,117,800.00). Over time, Timbol signed several Promissory Notes, attesting to availments under the credit line amounting to Eight Hundred Forty-Nine Thousand Five Hundred Ninety-Five US Dollars and 7/100 (USD 849,595.07). On April 1, 1998, the credit facilities were reduced to Eight Hundred Forty-Eight Thousand Three Hundred US Dollars and 0/100 (USD 848,300.00), pursuant to the letter sent by PNB-IFL to KAE/ KHL.
When Timbol, KAE, and KHL defaulted on the payment 6f their loan obligation, PNB, on behalf of PNB-IFL, sent a demand letter dated September 2, 1999, advising them that their total outstanding obligation stood at Thirty-Eight Million, Eighty-Eight Thousand One Hundred Seventy-Three Pesos and 59/100 (PhP 38,088,173.59), inclusive of penalties and interests. In a response apparently dated October 19, 1999, Timbol, signing in representation of KHL, manifested that he was "well aware" of the "P33 Million" outstanding obligation and that he was awaiting the outcome of a pending application for another loan. Timbol thus requested for additional time to settle the obligation with PNB-IFL and for the conversion of the same to Philippine currency.
On November 15, 1999, PNB caused the foreclosure of the mortgaged properties, claiming that Timbol/KAE/KHL had violated the terms of the real estate mortgage by defaulting on the payment of the loan obligation despite demands. As of the date of the foreclosure, the outstanding obligation already amounted to One Million Twenty-One Thousand Seven Hundred Forty-Three US Dollars and 40/100 (USD 1,021,743.40) or Forty-Two Million Three Hundred Twenty Thousand Six Hundred Eleven Pesos and 62/100 (PhP 42,320,611.62). Atty. Ricardo M. Espina ["Espina"] notarized the Notice of Extra-Judicial Sale.
PNB was allegedly the highest bidder at the public auction sale with a bid price of Thirty-Five Million Six Hundred Sixty-Nine Thousand Pesos and 0/100 (PhP 35,669,000.00). Espina issued the corresponding Certificate of Sale dated December 10, 1999.
On August 4, 2000, Timbol and Laguardia filed suit against PNB, Espina, and the Register of Deeds of Makati City for annulment of the real estate mortgage, of the foreclosure and auction sale, for accounting and damages, and for a temporary restraining order and/or injunction. They accused PNB of deliberately "bloating" the amount of the obligation. They furthermore assailed the foreclosure proceedings as highly irregular, invalid, and illegal, because the petition for the extra-judicial foreclosure had not been filed in accordance with Supreme Court Administrative Order No. 3; the Notice of Notary Public's Sale did not specify the newspaper in which the Notice of Sale would be published, and was neither raffled for this purpose nor properly posted; and the Notary did not conduct an actual public bidding. They moreover faulted Defendant Espina for refusing to furnish Timbol with copies of documents relative to the supposed auction sale. Meanwhile, the Makati City Register of Deeds gave plaintiff Timbol a Certification that no December 11, 1996 Deed of Mortgage in favor of PNB-IFL covering the transfer certificates of title in question was located in the records. Nor had any certificate of sale been registered on the titles. Plaintiffs thus prayed that the mortgage and Promissory Notes, and the extra-judicial foreclosure, the foreclosure sale, and any subsequent Certificate of Sale, be declared null and void; that the mortgage liens annotated on the transfer certificates of title be cancelled; that PNB be directed to render an accounting of plaintiffs' true and actual obligation; and that damages and attorney's fees be awarded. Plaintiffs also prayed for preliminary and permanent injunctive relief to restrain PNB from consolidating its title to and ownership over the real properties, and to restrain the Makati City Registry of Deeds from canceling plaintiffs' titles and issuing new ones in lieu thereof.
During the hearings on his prayer for a temporary restraining order or writ of preliminary injunction, Timbol affirmed the Affidavit he executed for that purpose.
By Order dated September 8, 2000, the RTC granted the issuance of a writ of preliminary injunction prayed for. The RTC denied PNB's Motion for Reconsideration and Supplemental Motion for Reconsideration, while granting the plaintiffs' Motion to Reduce Bond. PNB elevated the RTC's Order all the way to the Supreme Court which would ultimately nullify and set aside the same in its February 11, 2005 Decision in G.R. No. 157535.
Meanwhile, in his Answer, Espina defended the validity of the foreclosure sale proceedings and explained that it was PNB's Atty; Geromo who rejected Plaintiff Timbol's request for copies of the mortgage documents and promissory notes. Espina pointed out that the1 alleged Special Power of Attorney supposedly authorizing plaintiff Timbol to represent Laguardia had already been revoked by a July 20, 1998 Order of the Regional Trial Court of Parañaque City, where a petition for legal separation was already pending. Espina further accused Plaintiff Timbol of coming to court with unclean hands, having also breached his obligations to PNB-IFL. Espina made crossclaims for indemnification as well as counterclaims for moral and exemplary damages, attorney's fees, and litigation expenses.
For its part, PNB insisted that the Real Estate Mortgage contracts had been "already in printed form" at the time Timbol signed the same, and that it was not PNB-IFL's practice that these be signed in blank. PNB also argued that the total amount of Timbol/KAE/KHL's obligation already included interest at agreed-upon rates and that the foreclosure proceedings had been proper and valid. Thus PNB asserted that any damage that might result to plaintiffs were merely damnum absque injuria. PNB added that the proceedings were governed by Act No. 3135, not Administrative Order No. 3, as stipulated in the mortgage contracts themselves. PNB moreover explained that the mortgage over seven (7) properties covered by TCT Nos. 196111 thru 196117, all of the Register of Deeds of Makati, altogether secured an obligation of only Thirteen Million Fifty-Three Thousand Six Hundred Pesos and 0/100 (PhP 13,053,600.00), with each of the other mortgages over two (2) properties securing obligations of only Two Million One Hundred Forty-Three Thousand Seven Hundred Fifty Pesos and 0/100 (PhP 2,143,750.00) and Seven Million Five Hundred Ninety-Eight Thousand Eight Hundred Fifty Pesos and 0/100 (PhP 7,598,850.00), rendering plaintiffs' computation; erroneous. PNB advanced counterclaims for actual, moral, and exemplary, damages as well as litigation expenses and attorney's fees.6ChanRoblesVirtualawlibrary
WHEREFORE, the foreclosure of mortgage made by the defendant bank on November 15, 1999 is hereby declared null and void over the properties covered by TCTs Nos. 196111, 196112, 196113, 196114, 196115, 196116, 196117, 207636 and 177564 of the Registry of Deeds of Makati City.The RTC found that "[t]he mortgage loan annotated at the back of the titles did not reflect the actual amount of the loan obtained by the plaintiffs." This, the RTC held, "vitiated the subsequent foreclosure of the mortgage initiated by the defendant bank."8
SO ORDERED.7ChanRoblesVirtualawlibrary
WHEREFORE, the appeal is PARTIALLY GRANTED. The January 5, 2005 Decision of Branch 150 of the Makati City RTC is hereby REVERSED and SET ASIDE. However, Defendant-Appellant's plea for moral and exemplary damages, together with attorney's fees and costs^ is DENIED. A new judgment is hereby entered DISMISSING the complaint.The Court of Appeals held that factual issues raised by PNB have been "definitively laid to rest" by this Court's decision in PNB v. Timbol17 where it was found that "respondents never denied that they defaulted in the payment of the obligation."18 In the same decision, this Court upheld PNB's argument that "Supreme Court Administrative Order No. 3 does not apply, the extrajudicial foreclosure having been conducted by a notary public to which mode of foreclosure respondents agreed in the REMs, hence, proper."
SO ORDERED.16ChanRoblesVirtualawlibrary
x x x the 7 titles collectively secured the amount of P13,053,600.00. Such claim despite respondent Timbol's admission in his October 27, 1999 letter to petitioner's counsel that he and his company's outstanding obligation was P33,000,000.00 is grossly misleading and is a gross [m]isrepresentation.19ChanRoblesVirtualawlibraryThe Court of Appeals noted that the Court's pronouncements in PNB v. Timbol settle the question on PNB's "attempt to hide something" and the alleged bloating of the amounts in the mortgage documents.20 On the other hand, the Court of Appeals held that "PNB sufficiently demonstrated plaintiffs-appellees' satisfaction with the loan transaction, proving that Timbol never questioned his obligation and even repeatedly made partial payments on his principal obligations and the interests accruing thereon."21
Petitioners contend that "[PNB] should have first filed a motion for reconsideration of the RTC Decision before interposing its appeal."26A.
The court a quo erred in not dismissing the appeal outright because PNB did not even bother filing a motion for reconsideration of the RTC Decision.B.
The court a quo erred in applying the Decision of the Honorable [Court] in G.R. No. 157535 as the issue on that case is on the injunction only.C.
The court a quo erred in not holding that PNB deliberately did not provide Felino M. Timbol, Jr. with copies of the loan and mortgage documents.D.
The court a quo erred in not sustaining the factual findings of the RTC that PNB deliberately failed to provide Timbol with the documents.E.
The court a quo erred in not holding that there was an absence of a proper authority coming from PNB-IFL as to the assignment of its rights and interest in favor of PNB.25ChanRoblesVirtualawlibrary
21. APPOINTMENT OF AGENT; ASSIGNMENT. - The Mortgagee hereby appoints the Philippine National Bank (Head Office, Pasay City) as its attorney-in-fact with full power and authority to exercise all its rights and obligations under this Agreement, such as but not limited to foreclosure of the Mortgaged Properties, taking possession and selling of the mortgaged/foreclosed properties, and execution of covering documents. x x x.37ChanRoblesVirtualawlibraryThus, PNB concludes that the petition must be dismissed for failure of petitioners to "present a valid and legitimate question of law x x x that would warrant the exercise of [the Court's] discretionary power of review."38
SECTION 1. Grounds of and period for filing motion for new trial or reconsideration. — Within the period for taking an appeal, the aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the following causes materially affecting the substantial rights of said party:The use of the term may in the provision means that the same is permissive and not mandatory. As such, a party aggrieved by the trial court's decision may either move for reconsideration or appeal to the Court of Appeals.
chanRoblesvirtualLawlibrary(a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; orWithin the same period, the aggrieved party may also move for reconsideration upon the grounds that the damages awarded are excessive, that the evidence is insufficient to justify the decision or final order, or that the decision or final order is contrary to law. (Emphasis supplied)
(b) Newly discovered evidence, which he could not, with1 reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result.
SEC. 3. Period of ordinary appeal, appeal in habeas corpus cases. — The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order. However, an appeal in habeas corpus cases shall be taken within forty-eight (48) hours from notice of the judgment or final order appealed from.This means that, within 15 days from notice of judgment, a party may file either an appeal or a motion for reconsideration.
The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (Emphasis supplied)
21. APPOINTMENT OF AGENT; ASSIGNMENT. The Mortgagee hereby appoints the Philippine National Bank (Head Office, Pasay City) as its attorney-in-fact with full power and authority to exercise all its rights and obligations under this Agreement, such as but not limited to foreclosure of the Mortgaged Properties, taking possession and selling of the mortgaged/foreclosed properties, and execution of covering documents. The Mortgagee may also assign its rights and interest: under this Agreement even without need of prior notice to, or consent of, the Mortgagors.61 (Emphasis supplied)The terms of the contract are clear and should end any further discussion on this issue.
Endnotes:
1Rollo, pp. 3-16.
2 Id. at 18-30. Penned by Associate Justice Ramon A. Cruz, with Associate Justices Romeo F. Barza and Stephen C. Cruz concurring.
3 Id. at 32-33.
4 Id. at 34-46. Penned by Judge Reinato G. Quilala.
5 Records (Vol. I), pp. 1-15.
6Rollo, pp. 19-22.
7 Id. at 46.
8 Id. at 44.
9 Id.
10 Id. at 45.
11 Id.
12 Id.
13 Id.
14 CA rollo, pp. 122-124.
15 Id. at 130-131.
16Rollo, p. 28.
17 491 Phil. 352 (2005).
18 Id. at 367.
19Rollo, p. 26.
20 Id.
21 Id.
22 Id. at 26-27.
23 Id. at 27.
24 Id. at 28.cralawred
25 Id. at 6.
26 Id. at 7.cralawred
27 Supra note 17.
28Rollo, p.8.
29 Id. at 9-11.
30 Id. at 68.
31 Id. at 69.
32 Id. at 70.
33 Id. at 72.
34 Id. at 72-73.
35 Id. at 73.
36 Id. at 74.
37 Id. at 75.
38 Id.
39Chua Giok Ong v. Court of Appeals, 233 Phil. 110, 116 (1987).cralawred
40 CA rollo, pp. 106, 110.
41 Id. at 104.
42 Id. at 111.
43 Id. at 117.
44 Id. at 157-160.
45 Id. at 159.
46 Supra note 17.
47 Supra note 17, at 369.
48 Supra note 17, at 367.
49 Supra note 17, at 368-369.
50 Supra note 17, at 369.
51Radio Communications of the Philippines, Inc. v. Court of Appeals, 522 Phil. 267, 273, (2006), citing Padillo v. Court of Appeals, 422 Phil. 334 (2001). (Emphasis in the original)
52Lopez v. Esquivel, Jr., 604 Phil. 437, 456 (2009).
53Radio Communications of the Philippines, Inc. v. Court of Appeals, supra note 51, citing Padillo v. Court of Appeals, 422 Phil. 334, 351 (2001).
54Banco de Oro-EPCI, Inc. v. Tansipek, 611 Phil. 90, 99 (2009), citing People v. Pinuila, 103 Phil. 992, 1000 (1958).
55Escobar v. Luna, 547 Phil. 661, 669 (2007), citing Kabankalan Catholic College v. Kabankalan Catholic College Union-PACIWU-TUCP, 500 Phil. 254, 266 (2005).
56Banco de Oro-EPCI, Inc. v. Tansipek, supra note 54.
57Development Bank of the Philippines v. Guariña Agricultural and Realty Development Corporation, G.R. No. 160758, 15 January 2014, 713 SCRA 292, citing Bachrach Motor Co. v. Esteva, 67 Phil. 16 (1938).
58 Records (Vol. II), p. 883.
59 Id. at 960.
60 Id. at 965-966.
61 Id. at 840.
62 Records (Vol. I), pp. 1-15.