MARYLOU B.
TOLENTINO, M.D., G.R. No. 171354
Petitioner,
Present:
-
versus - Ynares-Santiago, J. (Chairperson),
Austria-Martinez,
Callejo,
Sr.,*
Chico-Nazario, and
Nachura, JJ.
COURT OF APPEALS
and CITYTRUST
BANKING
CORPORATION, Promulgated:
Respondents.
March 7, 2007
x
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x
YNARES-SANTIAGO, J.:
This Petition for Review on Certiorari[1] assails the October 28,
2005 Decision[2]
of the Court of Appeals in CA-G.R. CV. No. 83794, which reversed the April 22,
2004 Decision[3]
of the Regional Trial Court of Mandaluyong City, Branch 213 in Civil Case No.
MC-00-1063, as well as the January 31, 2006 Resolution[4] denying petitioner’s
Motion for Reconsideration.
The antecedent facts are as follows:
In May 1996, petitioner Marylou
B. Tolentino (Tolentino) applied for and was granted by private respondent
Citytrust Banking Corporation (“Citytrust,” now Bank of the Philippine Islands)
a Business Credit Line Facility for P2,450,000[5] secured
by a First Real Estate Mortgage[6]
over her property covered by Transfer Certificate of Title (TCT) No. 1933.[7]
On July 16, 1998, Citytrust informed Tolentino that her credit line has expired thereby making her P2,611,440.23
outstanding balance immediately due and demandable.[8] Tolentino failed to settle her obligations
thus her property was extrajudicially foreclosed and sold in a public auction,
with Citytrust as the highest bidder. On
April 13, 1999, the Certificate of Sale was registered and duly annotated on
TCT No. 1933.
As of March 17, 2000, the “Statement of Account To Redeem” [9] sent by Citytrust showed
petitioner’s outstanding obligation at P5,386,993.91. Petitioner asked for a re-computation and the
deletion of certain charges, such as the late payment charges, foreclosure
expenses, attorney’s fees, liquidated damages, and interests, but was denied by
Citytrust. As of April 10, 2000, petitioner’s
outstanding balance amounted to P5,431,337.41.
On April 7, 2000, petitioner filed a Complaint for Judicial Redemption,
Accounting and Damages, with application for the issuance of a Temporary
Restraining Order/Writ of Preliminary Injunction, against Citytrust and the
Register of Deeds of Mandaluyong City.[10] Petitioner alleged that the bank unilaterally
increased the interest charges in her credit line from 17.75% to 23.04%; that
she was forced to convert her existing Home Owners Credit Line into an Amortized
Term Loan with interest of 19.50%;[11] that the bank cancelled
her credit line when she refused the said conversion; that her mortgaged
property was foreclosed and sold at public auction but the bank did not remit
the balance of the proceeds of the foreclosure sale; and that the bank unjustifiably
refused her request for accounting and re-computation of the redemption amount.
In its Answer with Counterclaim,[12] Citytrust asserted that petitioner’s
credit line has a term of one year and that upon the expiration of the said
period, it may be cancelled and closed; that the inclusion of late payment
charges, foreclosure expense, attorney’s fees, liquidated damages, foreclosure
fee, and interests in the redemption price was in accordance with the terms and
conditions of their loan and mortgage contracts; that the bid price was applied
to the outstanding obligations of petitioner; and that the Complaint of
petitioner was merely dilatory and frivolous considering that she has admitted
having defaulted in the payment of her obligations.
Meanwhile, TCT No. 1933 was cancelled
and a new title[13]
was issued in favor of Citytrust. However,
petitioner was able to secure a writ of preliminary injunction,[14]
which enjoined Citytrust from taking possession, selling, and/or otherwise
disposing of the foreclosed property.
After trial on the merits, the Regional Trial Court of Mandaluyong City,
Branch 213, rendered judgment upholding petitioner’s right of redemption, but at
the price computed by private respondent.
The dispositive portion of the Decision reads:
WHEREFORE,
judgment is hereby rendered upholding the right of the herein plaintiff MARILOU
TOLENTINO to redeem the foreclosed property covered by Transfer Certificate of
Title No. 1933 in accordance however with the computation stated in the account
to redeem as of April 10, 2000 issued by the defendant CITYTRUST BANKING
CORPORATION (now FAMILY BANK) particularly marked as Exhibit 10 for the
Defendant.
SO
ORDERED.[15]
The trial court held that the filing of an action for judicial redemption
by petitioner is equivalent to a formal offer to redeem. Having exercised her right of legal
redemption, petitioner should not be barred from redeeming the property, but at
the redemption price as computed by Citytrust pursuant to the provisions of
their loan agreement. The trial court
held that petitioner cannot belatedly claim that the loan agreement and
mortgage contract are contracts of adhesion considering that she freely and
voluntarily executed the same, nor was she ignorant of the nature and
provisions of the agreements.
Both the petitioner and the bank appealed to the Court of Appeals, which
rendered the assailed Decision, the dispositive portion of which reads:
WHEREFORE, premises
considered, the appeal of plaintiff is DISMISSED for lack of merit, while the
appeal of defendant Bank of the Philippine Islands is hereby GRANTED. The appealed Decision dated April 22, 2004 of
the Regional Trial Court of Mandaluyong City, Branch 213 is hereby REVERSED and
SET ASIDE. A new judgment is hereby
entered DISMISSING the complaint in Civil Case No. MC-00-1063.
With costs against the
plaintiff-appellant.
SO ORDERED.[16]
The Court of Appeals held that petitioner’s act of filing an action for
judicial redemption without simultaneous consignation of redemption money was not
valid. Having failed to exercise her
right of redemption within the one-year period provided by law, petitioner thus
lost all her rights over the foreclosed property. The appellate court noted that as early as
March 17, 2000, Citytrust computed the redemption price at P5,386,993.91;
however, petitioner only offered to pay P3 million pesos, without attempting to
tender a single centavo to private respondent. Further, records show that when asked during
trial if she was prepared to tender the amount, petitioner replied in the
negative.
Petitioner’s motion for reconsideration was
denied; hence, this petition.
Petitioner insists that the mortgage agreement is a contract of adhesion since it was solely prepared by the bank
and her only participation thereto was to affix her signature; that the 25%
attorney’s fees, penalty, late payment charges, and liquidated damages are
excessive and unconscionable; that the capital gains tax should not have been
added to the computation of the redemption price; that the filing of the complaint
for judicial redemption effectively tolled the running one-year prescriptive period;
that the consignation of the redemption price is only necessary if the
redemption suit was filed after the expiration of the redemption period; and
that without admitting the loss of right to redeem, the surplus of the proceeds
of the foreclosure sale should have been returned to her.
The petition lacks merit.
A contract of adhesion is an agreement where one of the parties
imposes a ready-made form of contract
which the other party may accept or
reject, but which the latter cannot
modify. One party prepares the stipulation in the contract, while the
other party merely affixes his signature or his “adhesion” thereto giving no
room for negotiation and depriving the latter of the opportunity to bargain on
equal footing.[17]
It bears stressing that a contract of adhesion is just as binding as
ordinary contracts. However, there are
instances when this Court has struck down such contract as void when the weaker
party is imposed upon in dealing with the dominant bargaining party and is
reduced to the alternative of taking it or leaving it, completely deprived of
the opportunity to bargain on equal footing. Nevertheless, a contract of
adhesion is not invalid per se; it is not entirely prohibited. The one who
adheres to the contract is in reality free to reject it entirely; if he
adheres, he gives his consent.[18]
Should there be any ambiguity in a contract of adhesion, such ambiguity
is to be construed against the party who prepared
it. If, however, the stipulations are not obscure, but are
clear and leave no doubt on the intention of the parties, the literal meaning
of its stipulations must be held controlling.[19]
In the instant case, it has not been shown that petitioner signed the contracts
through mistake, violence, intimidation, undue influence, or fraud. Petitioner even admitted during trial that
she was not compelled to sign the contracts, nor was she totally ignorant of
their nature, having been engaged in business since 1984.[20] Petitioner only raised in issue the following
stipulations before the redemption period expired, to wit:
2. Loan
Line – CityTrust shall make the Loan Line available to Client for a period
of one (1) year from the date of this Agreement subject to Section 19; xxx
19. Cancellation
– (a) The Loan Line may be cancelled by either party upon thirty-day written
notice to the other party.
(b) CityTrust may shorten the period of availability
of the Loan Line upon thirty-day written notice to Client.
(c) Upon cancellation of the Loan Line or expiration
of the period of availability of the Loan Line, the Loan Account and CityTrust
Business Credit Line Current Account shall be automatically cancelled/closed
and Client shall immediately pay the entire Outstanding Balance. Client shall immediately surrender to
CityTrust any and all unused CityTrust Business Credit Line Check(s) as well as
the ATM card issued to access the CityTrust Business Credit Line Current
Account.
7. Interest
on Outstanding Balance – The Outstanding Balance shall earn simple
interest, computed daily, at such per annum rate for such interest period (of
not less than 30 days) as shall be determined in advance by CityTrust and
advised initially through the Letter of Approval and thereafter through the
Statement of Loan Account. Interest
shall be calculated on the basis of actual number of days elapsed and a year of
360 days. Interest accrued shall be
automatically debited by the CityTrust against the Loan Account.
9. Penalty
Charges – Failure to make the full remittance required to cover the Excess
Availment within fifteen (15) days from
the date that the same is incurred shall subject the Excess Availment to
penalty charge. Failure to make the full
remittance required to cover an Excess Availment within fifty-nine (59) days
from the date that the same is incurred shall subject the entire Outstanding
Balance to the aforesaid penalty charge.
Penalty charges shall be imposed by CityTrust without prejudice to
Sections 7 (Interest on Outstanding Balance) and 15 [Events of Default].
The penalty charge shall be such per annum rate as
shall be determined by CityTrust and advised through the Statement of Loan
Account and Demand Statement. Sail
penalty charge shall be fixed for thirty (30) days or such other period as may
be determined by CityTrust and shall be automatically debited against the Loan
Account.
20. Collection/Attorney’s
Fees – in the event CityTrust is compelled to litigate or engage the
services of a lawyer or collection agent for collection or implementation of
the terms of the Agreements, Client shall pay attorney’s fees in the sum
equivalent to twenty-five (25%) percent of the amount due but which attorney’s
fees shall in any case be not less than FIVE THOUSAND PESOS (P5,000.00) plus
costs of suit and other litigation expenses and, in addition, liquidated
damages in the sum equivalent to ten (10%) percent of the amount due but which
liquidated damages shall in any case be not less than ONE THOUSAND PESOS
(P1,000.00).[21]
We find the above-quoted provisions explicit and leave no room for
construction. It is easily understood,
especially by a businesswoman like the petitioner. Thus, we agree with the conclusion of the
trial and appellate courts that no compelling reasons were presented to declare
the subject contractual documents as void contracts of adhesion.[22]
Anent the legality of petitioner’s judicial redemption and the bank’s
computation of the redemption price, Section 6 of Act No. 3135,[23] as amended,[24] provides for the
requisites for a valid redemption, to wit:
SEC. 6. In all cases in which an extrajudicial
sale is made under the special power hereinbefore referred to, the debtor, his
successors in interest or any judicial creditor or judgment creditor of said
debtor, or any person having a lien on the property subsequent to the mortgage
or deed of trust under which the property is sold, may redeem the same at any
time within the term of one year from and after the date of sale; and such
redemption shall be governed by the provisions of sections four hundred and
sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil
Procedure, insofar as these are not inconsistent with the provisions of this
Act.
However, considering that private respondent is a banking institution,
the determination of the redemption price is governed by Section 78 of the
General Banking Act,[25] as amended by
Presidential Decree No. 1828, which provides:
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.
Section 78 of the General Banking Act amended Section 6 of Act No. 3135
insofar as the redemption price is concerned when the mortgagee is a bank or a
banking or credit institution.[26] Thus, the amount at which the foreclosed
property is redeemable is the amount due under the mortgage deed, or the
outstanding obligation of the mortgagor plus interest and expenses in
accordance with Section 78 of the General Banking Act.[27]
In Banco Filipino Savings and Mortgage Bank v. Court of Appeals,[28] we ruled that the
redemptioner should make an actual tender in good faith of the full amount of
the purchase price, i.e., 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.[29]
As correctly pointed out by the appellate court, the general rule in
redemption is that it is not sufficient that a person offering to redeem simply
manifests his/her desire to do so. The statement of intention must be
accompanied by an actual and simultaneous tender of payment. This constitutes the exercise of the right to
repurchase. Bona fide redemption
necessarily implies a reasonable and valid tender of the entire purchase price,
otherwise the rule on the redemption period fixed by law can easily be
circumvented.[30]
Petitioner however claims, citing Banco Filipino Savings and Mortgage
Bank v. Court of Appeals [31] and Lee Chuy Realty
Corporation v. Court of Appeals[32] that in case of
disagreement over the redemption price, the redemptioner may preserve his right
of redemption through judicial action which must be filed within the one-year
period of redemption. The filing of a court action to enforce redemption,
being equivalent to a formal offer to redeem, would have the effect of
preserving his redemptive rights and “freezing” the expiration of the one-year
period.[33] Bona fide
tender of the redemption price, within the prescribed period is only essential
to preserve the right of redemption for future enforcement beyond such period
of redemption and within the period prescribed for the action by the statute of
limitations. Where the right to redeem
is exercised through judicial action within the reglementary period, the offer
to redeem, accompanied by a bona fide tender of the redemption price,
while proper, may be unessential.[34]
It should, however, be noted that in Hi-Yield Realty, Inc. v. Court of
Appeals,[35]
we held that the action for judicial redemption should be filed on time and in
good faith, the redemption price is finally determined and paid within a
reasonable time, and the rights of the parties are respected. Stated otherwise, the foregoing
interpretation has three critical dimensions:
(1) timely redemption or redemption by expiration date; (2) good faith
as always, meaning, the filing of the action must have been for the sole
purpose of determining the redemption price and not to stretch the redemptive
period indefinitely; and (3) once the redemption price is determined within a
reasonable time, the redemptioner must make prompt payment in full.[36]
The records show that the correct redemption price had been determined
prior to the filing of the complaint for judicial redemption. Petitioner had been furnished updated
Statements of Account specifying the redemption price even prior to the consolidation
of the title of the foreclosed property in the bank’s name. The inclusion of late payment charges,
foreclosure expense, attorney’s fees, liquidated damages, foreclosure fee, and
interests therein was pursuant to the Loan Agreement. Considering that the Loan Agreement was read
and freely adhered to by petitioner, the stipulations therein are binding on
her.[37]
Moreover, petitioner admitted during trial that she was not questioning
the computation of the redemption price, but she was requesting for a
condonation of certain fees and charges.
Q. Now Madam Witness, during the last
hearing, you were questioning the statement of account, the computation, is
that correct?
A. Yes, sir.
Q. In particular, you were questioning the
attorney’s fees of twenty five percent (25%), is that correct?
A. Yes, sir.
Q. Did you not read the mortgage loan
agreement, Madam Witness?
A. I know its [sic] there in the mortgage
loan what I said is that I was requesting
for a condonation.
Q. So, you are [sic] not questioning it?
A. Yes, sir.
Q. In your complaint there is an allegation
that the computation has no basis, do you confirm that, do you still maintain
that?
A. Yes.
Q. Why do you say so?
A. I was
just hoping that some of the items could be condone[d] because they were rather
high, although, normally, in the mortgage contract it is really stated that
they charge twenty five percent for attorney’s fees, so I agreed with it.
Q. So, it is not your statement in your
complaint that the computation has no basis, is not correct?
A. Yes, sir.
Q. So, the
twenty five percent computation here has a basis, which is the mortgage loan
agreement, correct?
A. Yes, in
your agreement.
Q. And in
that agreement you have your signature therein?
A. Yes.
Q. And you
have read that before signing it?
A. Yes,
sir.
Q. So, also with this liquidated
damages of ten percent (10%), there is a basis under the mortgage loan agreement?
A. I’m not sure.
Q. I will show you again the mortgage loan
agreement xxx.
x x x x
Q. Now,
Ms. Witness, can you now say that this statement of account is with basis,
accurate and with basis [sic]?
A. It has
a basis, based on your conditions as prepared by the bank.
Q. Which you have conform[ed] to?
A. Yes, I have to because I executed a
loan.
Q. But the
bank did not compel you to apply for a loan?
A. No,
they did not compel me.
Q. And you
are only asking this court to reduce?
A. Yes, if
possible.[38] (Emphasis supplied)
The records also reveal that petitioner offered to redeem the foreclosed
property for P3 million but failed to tender or consign the same, to wit:
Q. Ms. Witness, you stated that based on
your computation[,] the redemption price should be three million pesos
(P3,000,000.00) more or less?
A. More or less.
Q. Do you have this amount right now? Do you have this three million (P3M) more or
less, do you have this amount right now?
A. Not right now, but if we will be given a
few days to produce it, we will give us [sic] that kind.
x x x x
Q. Did you tender this amount of three
million pesos (P3M) more or less, to the bank?
A. No, because that is not the amount that
they were asking for.
Q. Did you at least offer to pay this
amount of three million pesos (P3M) more or less?
A. During the discussion with the manager,
Ms. Lolita Carrido, I ask [sic] her if the deletion of the said [sic] is
possible but she said it’s not possible.
x x x x
Q. Did you also consign with this amount of
three million pesos (P3M) more or less?
A. No, sir.[39]
Based on the foregoing, it is clear that petitioner did not file the
instant case for judicial redemption in good faith. It was not filed for the purpose of
determining the correct redemption price but to stretch the redemption period
indefinitely, which is not allowed by law.
WHEREFORE, the instant Petition for Review on Certiorari
is DENIED. The Decision of the Court of Appeals in CA-G.R.
CV. No. 83794 dismissing the complaint for judicial redemption for lack of
merit and the Resolution denying petitioner’s motion for reconsideration are AFFIRMED.
SO ORDERED.
CONSUELO
YNARES-SANTIAGO
Associate Justice
WE CONCUR:
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
ROMEO J. CALLEJO, SR. MINITA V.
CHICO-NAZARIO
Associate Justice Associate Justice
ANTONIO
EDUARDO B. NACHURA
Associate Justice
ATTESTATION
I attest that the conclusions in the above decision were
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution
and the Division Chairperson’s Attestation, it is hereby certified that the
conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
REYNATO
S. PUNO
Chief Justice
* On leave.
[1] Rollo, pp. 8-32.
[2] Id. at 33-48; penned by Associate Justice Martin S. Villarama, Jr.
and concurred in by Associate Justices Edgardo F. Sundiam and Japar B.
Dimaampao.
[3] Id. at 33-34.
[4] Id. at 49.
[5] Records, pp. 51-54,
99-101, also known as Homeowners’ Credit Line.
[6] Rollo, pp. 50-53.
[7] Records, pp. 20-23.
[8] Id. at 24.
[9] Id. at 32.
[10] Id. at 7-14.
[11] Id. at 102.
[12] Id. at 44-49.
[13] TCT No. 15625, id. at 72.
[14] Id. at 167-168.
[15] CA Rollo, pp. 44-56.
[16] Id. at 48.
[17] South
Pachem Development, Inc. v. Court of Appeals, G.R. No. 126260,
December 16, 2004, 447 SCRA 85, 95.
[18] Rizal Commercial
Banking Corporation v. Court of Appeals, 364 Phil. 947, 953-954
(2002).
[19] South
Pachem Development, Inc. v. Court of Appeals, supra note 17 at
95-96.
[20] TSN, October 7, 2002, pp.
14-15.
[21] Records, pp. 51-53.
[22] Rollo, p. 40.
[23] An Act to Regulate the
Sale of Property under Special Powers Inserted in or Annexed to Real Estate
Mortgages (1924).
[24] Act No. 4118 (1933).
[25] Republic Act No. 337
(1948).
[26] Sy v. Court of Appeals, G.R. No. 83139, April 12, 1989, 172 SCRA
125, 133-134.
[27] Union Bank of the
Philippines v. Court of Appeals, 412 Phil. 64, 76 (2001).
[28] G.R. No. 143896, July 8,
2005, 463 SCRA 64.
[29] Id. at 75.
[30] BPI Family Savings
Bank, Inc. v. Veloso, G.R. No. 141974, August 9, 2004, 436 SCRA 1, 6.
[31] Supra note 28.
[32] 321 Phil. 185 (1995).
[33] Banco Filipino Savings
and Mortgage Bank v. Court of Appeals, supra note 28 at 75.
[34] Lee Chuy Realty
Corporation v. Court of Appeals, supra note 32 at 190-191.
[35] 437 Phil. 483 (2002).
[36] Id. at 493.
[37] Consing v. Court of Appeals, G.R. No. 143584, March 10, 2004, 425
SCRA 192, 203.
[38] TSN, October 7, 2002, pp.
16-19.
[39] TSN, September 22, 2000,
pp. 33-35.