G.R. No. No. 184122 184122 January January 20, 2010 2010 BPI v. SPS Norman and Angelina Yu !uan"on Builder" #or$ora%ion re$re"en%ed &y Pre". Norman Yu 'A#!S(
Spouses Yu, doing business as Tuanson Trading and Tuanson Builders Corporation (hereafter Tuanson Builders) borrowed various sums totaling P 75 illion from !ar "ast Ban# and Trust Compan$ (!"BTC)% !or &ollatera &ollateral, l, the$ e'e&uted real estate mortgages mortgages over several of their their propertie propertiess in&luding in&luding &ertain lands lo&ated lo&ated in egapi Cit$ owned b$ Tuanson Trading% *nable to pa$ their loans, the Sps Yu and Tuanson Tuanson Builders re+uested a loan restru&turing , whi&h the ban#, now merged with Ban# of the Philippines (BP), granted% B$ this time, the Sps Yu loan balan&e stood at P --, .//,///%//% The restru&tured loan used the same &ollaterals with the e'&eption of TCT ./0.7 that se&ured a loan of P1, 2//%///% 3espite the restru&turing, however, the Sps Yu still had diffi&ulties pa$ing their loan% The$ as#ed BP to release some of the mortgaged lands sin&e their total appraised value far e'&eeded the amount of the remaining debt% 4hen BP ignored their re+uest, Sps Yu withheld withheld pa$ments on their amortiations% Thus, BP e'tra udi&iall$ fore&losed the mortgaged properties in egapi Cit$ and in Pili, Camarines Sur% Sps Yu sought the annulment of the fore&losure sale b$ &ourt a&tion against BP and the winning bidder agna&raft 3evelopment Corporation (hereafter agna&raft)% n the &ourse of the pro&eedings, however, Sps Yu and agna&raft entered into a &ompromise agreement that affirmed the latter6s ownership of - out of the 1/ par&els of land that were au&tioned% B$ virtue of this agreement, the &ourt dismissed the &omplaint against agna&raft, without preudi&e to the Yus Yus filing a new one against BP% n &tober 0//-, the Sps Yu Yu filed their new &omplaint before the 8TC 8TC against BP for re&over$ of alleged e'&essive penalt$ &harges, attorne$6s fees, fore&losure fore&losure e'penses that the ban# &aused to be in&orporated in the pri&e of the au&tioned properties% BP essentiall$ admitted admitted the fore&losure of the mortgaged mortgaged properties for P-9, /55,05.%95 &orresponded onl$ to Sps Yu debt as of date of filing of the petition% The noti&e of the au&tion sale said that the total was in&lusive of interest, penalt$ &harges, attorne$6s fee and e'penses of this fore&losure% BP further admitted that its bid of P.5,/9/,522%.1 for all the au&tioned properties% BP also admitted that agna&raft agna&raft submitted submitted the highest highest and winning winning bid of P.5,5/ P.5,5//,/// /,///%//% %//% The sheriff turned over this amount to BP% :&&ording to BP, it in turn remitted to the Cler# of Court the P./9,.--%59 differen&e between its bid pri&e and that of agna&rafts% :lthough the pro&eeds of the sale e'&eeded the P-9,/55,05.%95 stated in the noti&e of sale b$ P2,/-5,-11%.2, P2,/-5,-11%.2, the bid amount in&reased be&ause it now in&luded litigation e'penses and attorne$6s fees as well as interests and penalties as re&omputed%
BP admitted that it also pushed through with the se&ond au&tion for the sale of a lot in Pili, Camarines Sur that se&ured a remaining debt of P5,520,///%BP made the lone bid of P1,7/1,9-.%/9% The Yus had three &auses of a&tion against BP% First. The ban# imposed e'&essive penalt$ &harges and interests; over P5 million in penalt$ &harges &omputed at -2< per annum &ompared to the 10< per annum that the Courtfi'ed in &ases% n addition, BP &olle&ted a 1.< $earl$ interest on the prin&ipal, bringing the &ombined penalt$ &harges and interest to 5/< of the prin&ipal per annum% Second. BP also imposed a &harge of P.,/50,/.2%11 in attorne$6s fees, the e+uivalent of 1/< of the prin&ipal, interest, and penalt$ &harges% Third % BP did not provide do&uments to support its &laim for fore&losure e'penses of P..2,702%7. and &ost of publi&ation of P51=,/59%01% :s an alternative to their three &auses of a&tion, the Yus &laimed that BP was in estoppel to &laim more than the amount stated in its published noti&es% Conse+uentl$, it must turn over the e'&ess bid of P2,/-5,-11%.2% 8TC partiall$ granted% t redu&ed the penalt$ &harge of -2< per annum to 10< per annum until the debt would have been full$ paid but maintained the attorne$6s fees as reasonable &onsidering that BP alread$ waived the amount that formed part of the attorne$6s fee and redu&ed the rate of attorne$6s fee it &olle&ted from 05 < to 1/< of the amount due% The 8TC ruled that fa&ts ne&essar$ to resolve the issues on penalties and fees had been admitted b$ the parties thus dispensing with the need to re&eive eviden&e% BP appealed to C: whi&h affirmed 8TC6s de&ision% ISS)*(
4hether or not the referen&e to the penalt$ &harges in the promissor$ note &onstitutes substantial &omplian&e with the dis&losure re+uirement of the Truth in ending :&t% +*-( Ye". Both the 8TC and C: de&isions &ited BPs alleged violation of the Truth in ending :&t and the ruling
of the Court in New Sampaguita Builders Construction, Inc. v. Philippine National Bank to ustif$ their deletion of the penalt$ &harges% Se&tion . of the Truth in ending :&t states that; S"C% .% :n$ &reditor shall furnish to ea&h person to whom &redit is e'tended, prior to the &onsummation of the transa&tion, a &lear statement in writing setting forth, to the e'tent appli&able and in a&&ordan&e with rules and regulations pres&ribed b$ the Board, the following information; (1) the &ash pri&e or delivered pri&e of the propert$ or servi&e to be a&+uired> (0) the amounts, if an$, to be &redited as down pa$ment and?or trade@in> (-) the differen&e between the amounts set forth under &lauses (1) and (0)> (.) the &harges, individuall$ itemied, whi&h are paid or to be paid b$ su&h person in &onne&tion with the transa&tion but whi&h are not in&ident to the e'tension of &redit> (5) the total amount to be finan&ed> (2) the finan&e &harge e'pressed in terms of pesos and &entavos> and (7) the per&entage that the finan&e bears to the total amount to be finan&ed e'pressed as a simple annual rate on the outstanding unpaid balan&e of the obligation%
Penalt$ &harge, whi&h is li+uidated damages resulting from a brea&h, falls under item (2) or finan&e &harge% : finan&e &harge represents the amount to be paid b$ the debtor in&ident to the e'tension of &redit% The lender ma$ provide for a penalt$ &lause so long as the amount or rate of the &harge and the &onditions under whi&h it is to be paid are dis&losed to the borrower before he enters into the &redit agreement% n this &ase, although BP failed to state the penalt$ &harges in the dis&losure statement, the promissor$ note that the Yus signed, on the same date as the dis&losure statement, &ontained a penalt$ &lause t hat said; ?4e ointl$ and severall$, promise to further pa$ a late pa$ment &harge on an$ overdue amount herein at the rate of -< per month% The promissor$ note is an a&#nowledgment of a debt and &ommitment to repa$ it on the date and under the &onditions that the parties agreed on% t is a valid &ontra&t absent proof of a&ts whi&h might have vitiated &onsent% The 8TC and C: relied on the ruling in New Sampaguita as authorit$ that the non@dis&losure of the penalt$ &harge renders its imposition illegal% But New Sampaguita is not attended b$ the same &ir&umstan&es% 4hat New Sampaguita disallowed, be&ause it was not mentioned either in the dis&losure statement or in the promissor$ note, was the unilateral in&rease in the rates of penalt$ &harges that the &reditor imposed on the borrower% Aere, however, it is not shown that BP in&reased the rate of penalt$ &harge that it &olle&ted from the Yus% The ruling that is more in point is that laid down in The Consolidated Bank and Trust Corporation v. Court of ppeals, a &ase &ited in New Sampaguita% The Consolidated Bank ruling de&lared valid the penalt$ &harges that were stipulated in the promissor$ notes% 4hat the Court disallowed in that &ase was the &olle&tion of a handling &harge that the promissor$ notes did not &ontain% The Court has affirmed that finan&ial &harges are ampl$ dis&losed if stated in the promissor$ note in the &ase of !evelopment Bank of the Philippines v. rcilla, "r. The Court there said, *nder Cir&ular 15= of the Central Ban#, the lender is re+uired to in&lude the information re+uired b$ 8%:% -725 in the &ontra&t &overing the &redit transa&tion or an$ other do&ument to be a&#nowledged and signed b$ the borrower% n addition, the &ontra&t or do&ument shall spe&if$ additional &harges, if an$, whi&h will be &olle&ted in &ase &ertain stipulations in the &ontra&t are not met b$ the debtor% n this &ase, the promissor$ notes signed b$ the Yus &ontained data, in&luding penalt$ &harges, re+uired b$ the Truth in ending :&t% The$ &annot avoid liabilit$ based on a rigid interpreta tion of the Truth in ending :&t that &ontravenes its goal% onetheless, the &ourts have authorit$ to redu&e penalt$ &harges when these are unreasonable and ini+uitous% Considering that BP had alread$ re&eived over P0%7 million in interest and that it see#s to impose the penalt$ &harge of -< per month or -2< per annum on the total amount due prin&ipal plus interest, with interest not paid when due added to and be&oming part of the prin&ipal and also bearing interest at the same rate, the Court finds the ruling of the 8TC in its original de&ision reasonable and fair% Thus, the penalt$ &harge of 10< per annum or 1< per month is imposed%
