Balance of Principal P 9,551,827.64 Add: Interest Due 1,417,761.24 Late Payment Charges 155,546.25 MRI 0.00 Fire Insurance 0.00 Foreclosure Expenses 155,817.23 Sub-total P 11,280,952.36 Less: Unapplied Payment 908,241.01 Total Amount Due As of 08/07/96 (Auction Date) 10,372,711.35
Add: Attorney's Fees (15%) 1,555,906.70 Liquidated Damages (15%) 1,555,906.70 Interest on P 10,372,711.35 from 08/07/96 to 04/07/97 (243 days) at 17.25% p.a. 1,207,772.58 x x x x
Asset Acquired Expenses: Documentary Stamps 155,595.00 Capital Gains Tax 518,635.57 Foreclosure Fee 207,534.23 Registration and Filing Fee 23,718.00 Add'l. Registration & Filing Fee 660.00 906,142.79 Interest on P 906,142.79 from 08/07/96 to 04/07/97 (243 days) at 17.25% p.a. 105,509.00 Cancellation Fee 300.00 Total Amount Due As of 04/07/97 (Subject to Audit) P 15,704,249.12
May 14, 1997
ORIENT DEVELOPMENT BANKING CORPORATION
7th Floor Ever Gotesco Corporate Center
C.M. Recto Avenue corner Matapang Street
ManilaAttention: MS. AIDA C. DELA ROSASenior Vice-President
Gentlemen:
This refers to your undertaking to settle the account of SUPREME TRANS LINER, INC. and spouses MOISES C. ALVAREZ and PAULITA S. ALVAREZ, covering the real estate property located in the Poblacion, City of Lucena under TCT No. T-79193 which was foreclosed by BPI FAMILY SAVINGS BANK, INC.
With regard to the proposed refinancing of the account, we interpose no objection to the annotation of your mortgage lien thereon subject to the following conditions:
- That all expenses for the registration of the annotation of mortgage and other incidental registration and cancellation expenses shall be borne by the borrower.
- That you will recognize our mortgage liens as first and superior until the loan with us is fully paid.
- That you will annotate your mortgage lien and pay us the full amount to close the loan within five (5) working days from the receipt of the titles. If within this period, you have not registered the same and paid us in full, you will immediately and unconditionally return the titles to us without need of demand, free from liens/encumbrances other than our lien.
- That in case of loss of titles, you will undertake and shoulder the cost of re-issuance of a new owner's titles.
- That we will issue the Certificate of Redemption after full payment of P15,704,249.12. representing the outstanding balance of the loan as of May 15, 1997 including interest and other charges thereof within a period of five (5) working days after clearance of the check payment.
- That we will release the title and the Certificate of Redemption and other pertinent papers only to your authorized representative with complete authorization and identification.
- That all expenses related to the cancellation of your annotated mortgage lien should the Bank be not fully paid on the period above indicated shall be charged to you.
If you find the foregoing conditions acceptable, please indicate your conformity on the space provided below and return to us the duplicate copy.Very truly yours,
BPI FAMILY BANK
BY:
(SGD.) LOLITA C. CARRIDOManagerC O N F O R M E :
ORIENT DEVELOPMENT BANKING CORPORATION
(SGD.) AIDA C. DELA ROSA
Senior Vice President
C O N F O R M E :
SUPREME TRANS LINER, INC.
(SGD.) MOISES C. ALVAREZ/PAULITA S. ALVAREZ
Mortgagors6
(Underscoring in the original; emphasis supplied.)
WHEREFORE, foregoing considered, the appealed decision is hereby REVERSED and SET ASIDE. A new one is hereby entered as follows:
- Plaintiffs-appellants' complaint for damages against defendant-appellee is hereby REINSTATED;
- Defendant-appellee is hereby ORDERED to return to plaintiffs-appellees (sic) the invalidly collected amount of P3,111,813.40 plus six (6) percent legal interest from May 21, 1997 until fully returned;
- Defendant-appellee is hereby ORDERED to pay plaintiffs-appellees (sic) the amount of P100,000.00 as moral damages, P100,000.00 as exemplary damages and P100,000.00 as attorney's fees;
- Costs against defendant-appellee.
SO ORDERED.8
1. ... the Certificate of Sale, the bid price of P10,372,711.35 includes penalty charges and as such for purposes of computing the redemption price petitioner can no longer impose upon the private respondents the penalty charges in the form of 15% attorney's fees and the 15% liquidated damages in the aggregate amount of P3,111,813.40, although the evidence presented by the parties show otherwise.
2. ... private respondents cannot be considered to be under estoppel to question the propriety of the aforestated penalty charges despite the fact that, as found by the Honorable Trial Court, "there was very active negotiation between the parties in the computation of the redemption price" culminating into the signing freely and voluntarily by the petitioner, the private respondents and Orient Bank, which financed the redemption of the foreclosed property, of Exhibit "3", wherein they mutually agreed that the redemption price is in the sum of P15,704,249.12.
3. ... petitioner [to] pay private respondents damages in the aggregate amount of P300,000.00 on the ground that the former acted in bad faith in the imposition upon them of the aforestated penalty charges, when in truth it is entitled thereto as the law and the contract expressly provide and that private respondents agreed to pay the same.12
SEC. 78. x x x In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real estate which is security for any loan granted before the passage of this Act or under the provisions of this Act, the mortgagor or debtor whose real property has been sold at public auction, judicially or extrajudicially, for the full or partial payment of an obligation to any bank, banking or credit institution, within the purview of this Act shall have the right, within one year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to redeem the property by paying the amount fixed by the court in the order of execution, or the amount due under the mortgage deed, as the case may be, with interest thereon at the rate specified in the mortgage, and all the costs, and judicial and other expenses incurred by the bank or institution concerned by reason of the execution and sale and as a result of the custody of said property less the income received from the property. x x x x (Emphasis supplied.)
23. Application of Proceeds of Foreclosure Sale. The proceeds of sale of the mortgaged property/ies shall be applied as follows:
a) To the payment of the expenses and cost of foreclosure and sale, including the attorney's fees as herein provided;
b) To the satisfaction of all interest and charges accruing upon the obligations herein and hereby secured.
c) To the satisfaction of the principal amount of the obligations herein and hereby secured.
d) To the satisfaction of all other obligations then owed by the Borrower/Mortgagor to the Bank or any of its subsidiaries/affiliates such as, but not limited to BPI Credit Corporation; or to Bank of the Philippine Islands or any of its subsidiaries/affiliates such as, but not limited to BPI Leasing Corporation, BPI Express Card Corporation, BPI Securities Corporation and BPI Agricultural Development Bank; and
e) The balance, if any, to be due to the Borrower/Mortgagor.
x x x x
31. Attorney's Fees: In case the Bank should engage the services of counsel to enforce its rights under this Agreement, the Borrower/Mortgagor shall pay an amount equivalent to fifteen (15%) percent of the total amount claimed by the Bank, which in no case shall be less than P2,000.00, Philippine currency, plus costs, collection expenses and disbursements allowed by law, all of which shall be secured by this mortgage.15
10. ADDITIONAL CHARGES IN CASE CERTAIN STIPULATIONS ARE NOT MET BY THE BORROWER
a. Post Default Penalty 3.00% per month
b. Attorney's Services 15% of sum due but not less than P2,000.00
c. Liquidated Damages 15% of sum due but not less than P10,000.00
d. Collection & Legal Cost As provided by the Rules of Court
e. Others (Specify)
SEC. 3. CAPITAL GAINS TAX. -
(1) In case the mortgagor exercises his right of redemption within one year from the issuance of the certificate of sale, no capital gains tax shall be imposed because no capital gains has been derived by the mortgagor and no sale or transfer of real property was realized. x x x
(2) In case of non-redemption, the capital gains [tax] on the foreclosure sale imposed under Secs. 24(D)(1) and 27(D)(5) of the Tax Code of 1997 shall become due based on the bid price of the highest bidder but only upon the expiration of the one-year period of redemption provided for under Sec. 6 of Act No. 3135, as amended by Act No. 4118, and shall be paid within thirty (30) days from the expiration of the said one-year redemption period.
SEC. 4. DOCUMENTARY STAMP TAX. -
(1) In case the mortgagor exercises his right of redemption, the transaction shall only be subject to the P15.00 documentary stamp tax imposed under Sec. 188 of the Tax Code of 1997 because no land or realty was sold or transferred for a consideration.
(2) In case of non-redemption, the corresponding documentary stamp tax shall be levied, collected and paid by the person making, signing, issuing, accepting, or transferring the real property wherever the document is made, signed, issued, accepted or transferred where the property is situated in the Philippines. x x x (Emphasis supplied.)
Although the subject foreclosure sale and redemption took place before the effectivity of RR No. 4-99, its provisions may be given retroactive effect in this case.
SEC. 246. Non-Retroactivity of Rulings. - Any revocation, modification, or reversal of any of the rules and regulations promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation, modification, or reversal will be prejudicial to the taxpayers, except in the following cases:
(a) where the taxpayer deliberately misstates or omits material facts from his return or in any document required of him by the Bureau of Internal Revenue;
(b) where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based; or
(c) where the taxpayer acted in bad faith.
Endnotes:
* Designated Acting Chairperson per Special Order No. 925 dated January 24, 2011.
** Designated additional member per Special Order No. 926 dated January 24, 2011.
1 Records, pp. 48-52.
2 Id. at 9.
3 Id. at 14.
4 Id. at 18.
5 Id. at 393-401. Penned by Judge Rafael R. Lagos.
6 Id. at 46-47.
7 Rollo (G.R. No. 165617), pp. 23-36. Penned by Associate Justice Eugenio S. Labitoria and concurred in by Associate Justices Mercedes Gozo-Dadole and Rosmari D. Carandang.
8 Id. at 36.
9 Id. at 30-34.
10 Id. at 41-42. Penned by Associate Justice Eugenio S. Labitoria and concurred in by Associate Justices Edgardo P. Cruz and Rosmari D. Carandang.
11 Id. at 11, 15 and 18.
12 Rollo (G.R. No. 165837), pp. 13-14.
13 Tecklo v. Rural Bank of Pamplona, Inc., G.R. No. 171201, June 18, 2010, 621 SCRA 262, 273, citing Heirs of Norberto J. Quisumbing v. Philippine National Bank, G.R. No. 178242, January 20, 2009, 576 SCRA 762, 772; Union Bank of the Philippines v. Court of Appeals, G.R. No. 134068, June 25, 2001, 359 SCRA 480, 490, citing Ponce de Leon v. Rehabilitation Finance Corporation, No. L-24571, December 18, 1970, 36 SCRA 289 and Sy v. Court of Appeals, G.R. No. 83139, April 12, 1989, 172 SCRA 125.
14 Records, pp. 48-51.
15 Id. at 50.
16 Id. at 45.
17 Now Sec. 39(A) of the National Internal Revenue Code of 1997.
SEC. 39. Capital Gains and Losses. -
(A) Definitions. - As used in this Title -
(1) Capital Assets. - The term "capital assets" means property held by the taxpayer (whether or not connected with his trade or business), but does not include stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, or property used in the trade or business, of a character which is subject to the allowance for depreciation provided in Subsection (F) of Section 34; or real property used in trade or business of the taxpayer.
18 De Leon and De Leon, Jr., The National Internal Revenue Code Annotated, 2003 Ed., Vol. 1, pp. 130-131, citing BIR Ruling No. 134, July 12, 1990.
19 BIR Ruling [DA-062-06] February 28, 2006.
20 Spouses Alfredo & Imelda Diaz v. BIR, C.T.A. Case No. 6244, March 5, 2003.
21 De Leon and De Leon, Jr., supra, Vol. 2, p. 540.