Augusto v. Rural Bank Of Tarlac

FIRST DIVISION July 13, 2016 G.R. No. 180060 SPOUSES AUGUSTO and NORA NAVARRO, Petitioners, vs. RURAL BANK OF TARLAC, INC., Respondent. SERENO,CJ: The case before this Court concerns the availability of the remedy of an ordinary appeal under Rule 41 of the Rules of Court1 in challenging the decision of the Regional Trial Court (RTC)2 to resolve a case by way of a summary judgment. The Court of Appeals (CA) dismissed3 the appeal outright in light of Section 2, Rule 50 of the Rules of Court.

The provision directs the dismissal of appeals filed through Rule 41 if they merely raise pure questions of law. Spouses Augusto and Nora Navarro now come before this Court arguing that their appeal should not have been dismissed, since the issues they raised included questions of fact. FACTS This petition stems from the complaint for a sum of money filed by the Rural Bank of Tarlac, Inc., against Spouses Navarro.

It is undisputed that petitioners obtained a bank loan in the amount of P558,000 for the purchase of a motor vehicle, and that they were unable to complete the agreed monthly installments. It is also uncontested that they surrendered their vehicle (a 1998 Kia Advantage van) to the bank, so that the latter could sell it and apply the proceeds of the sale to their obligations.4 The parties, however, disagreed as to the effect of the surrender of the vehicle under that circumstance. According to the bank, petitioners still had an unpaid balance of P315,677.80 excluding interests, penalties, and liquidated damages even after the sale of the van.

5 It claimed that their monthly installments amounted to only P92,322.20,6 while it was able to sell the vehicle for only Pl50,000.00.7 Thus, it alleged that it could only credit the total amount of P242,322.20 in their favor.8 Spouses Navarro did not deny that they had executed a Promissory Note in favor of the bank, and that the terms were correctly reflected in the note.9 They claim, however, that when they surrendered the vehicle, they understood that it would serve as complete satisfaction of their remaining loan obligation by way of a dacion en pago. In view of the spouses' Answer, the bank filed a Motion for Summary Judgment under Section 1, Rule 3 5 of the Rules of Court.10 It alleged that the only issue before the trial court was whether the selling price of the vehicle was enough to satisfy the unpaid balance, interest, and other charges. It argued that a summary judgment was proper, since there was no more genuine issue relating to any material fact, and that the matter before the court was merely the computation of the remaining balance.

To support its motion, the bank presented the Promissory Note executed by the spouses for the amount of P558,000,11 as well as the receipts for the sale of the vehicle to a certain Corazon Quesada for Pl50,000;12 and acknowledged the spouses' total monthly installments of P92,322.20.13 Based on its own accounting,14 the total payments amounted to P242,322.20, while their total running balance was P3l5,677.80 excluding interests, penalties, and liquidated damages. Spouses Navarro opposed the motion.15 While they did not assail the amount for which the van was sold, they nevertheless asserted that by surrendering the vehicle, their remaining obligation must be deemed to have been fully paid. To prove their assertion, they presented an acknowledgment receipt, which stated that the bank had "[r]eceived x x x one unit KIA ADVANTAGE VAN, in good and running condition."16 They argued that there still existed a question of fact, since there must be a proper accounting of their correct balance.

In the alternative, they averred that the deductible amount for the sale of the van must be based on its value at the time they surrendered it to the bank. They also claimed that their monthly installments had already amounted to P161,137.69. The spouses, however, did not attach receipts or any other kind of evidence to support this contention.

By way of a summary judgment, the R TC rendered a Decision17 in favor of the bank. It explained that Spouses Navarro remained obligated to pay the remaining principal loan amount of P315,677.80 plus legal interest and attorney's foes.18 The trial court ruled:19 Defendants claimed they had paid the sum of P161,137.69 as of March 18, 2002, and had in fact surrendered one Kia Van by way of "dacion en pago" thereby extinguishing the obligation.

If the intention of parties is to consider the surrender of the Kia Van as full payment, a receipt to that effect should have been signed or acknowledged by the bank. There was none. Further, it is the burden of defendants to prove that their payments to the bank amounted to P161,137.69 as of March 18, 2002, which should be evidenced by receipts of payment to the bank.

Thus, the Court finds that the motion for summary judgment is proper. The Court agrees that the obligation of the defendants or the principal balance is P315,677.80. However, the interest of 32% per annum , the 12% penalty and 12% liquidated damages, all totaling 56% plus 25% attorney's fees may be [unconscionable], as the charges amounted to 81% of the principal balance.

The Court has to [reduce] this x x x. The legal rate of 12% per annum should be applied in this case, which should be computed from December 7, 2002 on the balance of the principal amount which was P315,677.80. The computation should be - P 315,677.80 x 1% (per month) x eight months from December 2002 up to July, 2003) =total interest due or P25,244.16 Thus, the total amount to be paid is computed in this manner - - - Plus P315,677.80 25,244.16