Goldwell Properties Tagaytay v. Metropolitan Bank

HERNANDO, J.:

This Petition for Review on Certiorari challenges January 31, 2013 Decision1 and November 7, 2013 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 92874. The issuances of the appellate court affirmed the July 14, 2008 Decision3 and October 23, 2008 Order4 of the Regional Trial Court (RTC) of Makati, Branch 59, in Civil Case No. 07-183, which dismissed the Complaint for Specific Performance; Accounting and Damages with Prayer for the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order filed by the petitioners. The Antecedents: Petitioner Goldwell Properties Tagaytay, Inc. (Goldwell) obtained loans from respondent Metropolitan Bank and Trust Company (Metrobank) in 2001 covered by several promissory notes5 (PN) and secured by real estate mortgages and a continuing surety agreement.6 Petitioner Nova Northstar Realty Corporation (Nova) also obtained loans from Metrobank under PN Nos. TLS 2568 and TLS 2559 secured by a real estate mortgage and continuing surety agreement.7 When Nova and Goldwell (debtor companies) experienced financial difficulties, both requested Metrobank to modify their interest payment scheme from monthly to quarterly.

According to Metrobank, when the debtor companies made the request during the last week of October 2001, a branch manager of Metrobank immediately referred the matter to its executive committee. On December 11, 2001, or roughly a month and a half later, Metrobank's executive committee approved the request.8 On the other hand, the petitioners, in a letter9 dated April 24, 2002, alleged that it took the bank four months to reduce the approval in writing, which resulted in the accumulation of interest and in their failure to pay. Hence, the debtor companies requested for the restructuring of their outstanding loans10 and stated the following: Our collection from our receivables can pay 25% of our interest due if reduced to 10% interest per annum.

The 70% interest balance [can] be capitalized and added to the principal of P49.28 Million. We can pay the interest due, quarterly, on the new loan balance and the loan principal renewable yearly. Should our collection allow, like before, we will reduce balance as fast as we can.11 The parties executed two Debt Settlement Agreements (DSAs) both dated August 15, 2003.

One was between Metrobank and Nova as debtor-mortgagor,12 with spouses Jose N. Hernandez and Eva L. Hernandez (spouses Hernandez) as sureties. The other involved Metrobank and Goldwell as borrower-mortgagor,13 Nova and Nova Northstar Service Apartment Hotel Co., Inc. as third-party mortgagors, and the spouses Hernandez as sureties. In Nova's DSA, Nova and the spouses Hernandez acknowledged that as of July 31, 2003, they had a total outstanding obligation of P19,539,999.33 to Metrobank, broken down as follows:14 Principal P12,000,000.00 Past Due Interest @ 16% p.a.

(from 06.28.01 - 07.31.03) 3,911,066.06 Value Added Tax @ 10% p.a. (from 01.01.03 - 07.31.03) 113,066.60 Penalty charges @ 18% p.a. (from 06.28.01 - 07.31.03) 3,515,866.67