Rolando v. Export And Industry Bank

CAGUIOA, J.:

This is a Petition for Review on Certiorari1 (Petition) filed under Rule 45 of the 1997 Rules of Court (1997 Rules) against the Decision2 dated January 20, 2014 (assailed Decision) and Resolution3 dated September 17, 2014 (assailed Resolution) rendered by the Court of Appeals4 (CA) in CA-G.R. CV No. 98745. The assailed Decision and Resolution affirmed the Resolution5 dated February 9, 2012 issued by the Regional Trial Court of Makati City, Branch 145 (RTC) in Civil Case No. 03-1467 which upheld the extra-judicial foreclosure of the property covered by Transfer Certificate of Title (TCT) No. 149646 registered in the name of petitioners Rolando Rodriguez (Rolando) and Cynthia Rodriguez (Cynthia). The Facts In 1997, Urban Bank, Inc. (Urban Bank) granted Rolando and Cynthia (collectively, Spouses Rodriguez) credit accommodations dubbed as "Readycheck Mortgage Lines"6 (RCMLs) with the following particulars: Grantee Date Security Amount Cynthia Rodriguez via Account No. 7255-00017-0 August 18, 1997 Real Estate Mortgage over agricultural land in Negros Occidental, covered by TCT No. 140004 (Negros property) P3,591,000.00 Rolando Rodriguez via Account No. 7255-00016-4 September 15, 1997 Mortgage Contract over residential property in San Lorenzo Village, Makati City covered by TCT No. 149646 (Makati property) P2,344,000.00 Total P5,935,000.007 On April 12, 1999, Urban Bank granted Rolando an increased RCML amounting to P6,000,000.00 (1999 RCML).8 The terms and conditions of the 1999 RCML were summarized in a Letter-Agreement9 of even date, as follows: We are pleased to inform you of the approval of your [RCML] in the amount of PESOS: SIX MILLION (PHP6,000,000.00), subject to the following terms and conditions: 1.

Via x x x [(1999 RCML)]; 2. Opening of a special checking account with the Bank shall be required. Maximum amount per availment shall be [Php500,000.00 per check.

Availments shall be released through your [s]pecial checking account and shall be used to fund checks drawn against said account and other charges which may be debited against said account pursuant to the [1999 RCML]; 3. Interest shall be determined by the Bank every month and shall be indicated in your monthly statement of account; 4. Payments of availments or charges on the line shall be deposited to the special checking account, at any of the Bank's offices.

Any excess payment shall be treated as a deposit in the special checking account which shall not earn interest; 5. Service fee of ½ of 1.0% p.a. of the amount of the line shall be payable upon signing of the [1999 RCML] and charged to the line.

Documentary stamp taxes in the amount of [P9,000.00 shall be for your account and charged to the line; 6. Registered first real estate mortgage on a house and lot located at No. 24, Melantic10 St., San Lorenzo Village, Makati City covered by TCT No. 149646 registered under the name of Rolando C. Rodriguez married to Cynthia C. Rodriguez. x x x x 9.

Joint and Several Signature of Spouse: Ms. Cynthia C. Rodriguez; x x x x 12. Line shall expire on June 30, 2000; and 13. Purpose: Working Capital (This facility shall cancel the [individual] RCML of Ms. Cynthia C. Rodriguez for [P3,591,000.00 with Account No. 7255-00017-0 and [the individual] RCML of Mr. Rolando C. Rodriguez with Account No. 7255-00016-4.

The [Negros property] securing the existing [individual] RCML of Ms. Cynthia C. Rodriguez shall also be released.)11 (Emphasis and underscoring supplied; emphasis in the original omitted) In accordance with clause 6 above, Spouses Rodriguez executed an Additional Mortgage Agreement12 covering the Makati property.13 As shown by the residential address indicated therein, the Makati property stood as Spouses Rodriguez's family home. Notably, the Additional Mortgage Agreement only covered the amount of P3,656,000.00, or the difference between P6,000,000.00 (the amount of the 1999 RCML) and P2,344,000.00 (the amount of Rolando's individual RCML).14 The corresponding Loan Agreement and the Additional Mortgage Agreement were signed by Spouses Rodriguez and notarized by Export and Industry Bank, Inc. 's (EIB) notary public.15 Spouses Rodriguez later drew the following checks against their special checking account under the 1999 RCML: Check No. 048101 Php500,000.00 Check No. 04810 Php500,000.00 Check No. 048103 Php500,000.00 Check No. 048104 Php500,000.00 Check No. 048105 Php382,558.11 Total Php2,382,558.1116 On April 26, 2000, the Bangko Sentral ng Pilipinas (BSP) ordered the closure of Urban Bank.

On January 31, 2002, the Certificate of Filing of Articles of Incorporation and Plan of Merger (between Urban Bank and EIB) was issued by the Securities and Exchange Commission (SEC). Pursuant to the merger, all assets and liabilities of Urban Bank were transferred to EIB.17 On May 15, 2002, Spouses Rodriguez received a fax from EIB regarding the statement of account pertaining to Rolando's individual RCML (May 2002 SOA).18 The statement reflected a principal outstanding balance of P2,344,000.00: STATEMENT OF ACCOUNT ROLANDO RODRIGUEZ AS OF APRIL 30, 2002 [Account No.]: 7255-00016-4 Interest Rate: 18.00% p.a. Credit Line: Php2,344,000.00 Penalty: 2.00% p.m.

Value Date: 09.01.97 Due Date: 09.01.98 Current Principal Balance 0.00 Past Due Principal Balance 2,344,000.00 Unpaid Interests and Due 2,943,872.37 Past Due Penalty 4,392,436.54 OTHER CHARGES 0.00