Benedict v. Rural Bank Of Pamplona

CARPIO, J.:

The Case This is a petition for review1 of the 17 May 2005 Decision2 and the 14 December 2005 Resolution3 of the Court of Appeals in CA-G.R. CV No. 59769. In its 17 May 2005 Decision, the Court of Appeals affirmed with modification the 22 May 1998 Decision4 of the Regional Trial Court (Branch 61) of Naga City in Civil Case No. RTC 96-3521. In its 14 December 2005 Resolution, the Court of Appeals denied petitioners' motion for reconsideration.

The Antecedent Facts On 20 January 1994, spouses Roberto and Maria Antonette Co obtained from respondent Rural Bank of Pamplona, Inc. a ₱100,000.00 loan5 due in three months or on 20 April 1994. The loan was secured by a real estate mortgage6 on a 262-square meter residential lot owned by spouses Co located in San Felipe, Naga City and covered by Transfer Certificate of Title (TCT) No. 24196. The mortgage was registered in the Register of Deeds of Naga City on 21 January 1994 and duly annotated on the TCT of the mortgaged property as Entry No. 58182.7 One of the stipulations in the mortgage contract was that the mortgaged property would also answer for the future loans of the mortgagor.

Pursuant to this provision, spouses Co obtained on 4 March 1994 a second loan8 from respondent bank in the amount of ₱150,000.00 due in three months or on 2 June 1994.1avvphi1 Petitioners, spouses Benedict and Maricel Dy Tecklo, meanwhile instituted an action for collection of sum of money against spouses Co. The case, docketed as Civil Case No. 94-3161, was assigned to the Regional Trial Court (Branch 25) of Naga City. In the said case, petitioners obtained a writ of attachment on the mortgaged property of spouses Co. The notice of attachment was annotated on the TCT of the mortgaged property as Entry No. 58941.9 When the two loans remained unpaid after becoming due and demandable, respondent bank instituted extrajudicial foreclosure proceedings. In its 5 September 1994 petition for extrajudicial foreclosure, respondent bank sought the satisfaction solely of the first loan although the second loan had also become due.10 At the public auction scheduled on 19 December 1994, respondent bank offered the winning bid of ₱142,000.00, which did not include the second loan.11 The provisional certificate of sale to respondent bank was annotated on the TCT of the mortgaged property as Entry No. 60794.12 Petitioners then exercised the right of redemption as successors-in-interest of the judgment debtor.

Stepping into the shoes of spouses Co, petitioners tendered on 9 August 1995 the amount of ₱155,769.50, based on the computation made by the Office of the Provincial Sheriff, as follows: Bid price …..................................................... ₱142,000.00 Interest on the bid price from December 19, 1994 to August 9, 1995 at 1% per month …........................................ 10,934.00 Expenses incurred in connection with the registration of the Provisional Certificate of Sale …....................................

2,647.00 Interest on the expenses …........................... 188.50