CPN CARGO FORWARDING, ET AL., PLAINTIFFS-APPELLANTS, VS. PHILIPPINE POSTAL SAVINGS BANK ET. AL., DEFENDANTS-APPELLEES.
CARANDANG, R., J.:
On January 23, 1998, plaintiffs-appellants CPN CARGO FORWARDING, CPN MOTOR SALES & RISEN CHRIST CATHOLIC SCHOOL availed of a credit facility worth P13,000,000.00 (Thirteen Million Pesos) from defendant-appellee PHILIPPINE POSTAL SAVINGS BANK (PSSB) for the purpose of securing additional working capital and to pay plaintiffs-appellee’s then existing loan with the Philippine National Bank2. The loan consisting of a 10-year term loan of P5,000,000.00 (Five Million Pesos) and a revolving credit line of P8,000,000.00 (Eight Million Pesos) with one-year renewable loan term was covered by a Term Loan Agreement3 and a Loan/Line Agreement4. The amount of P8,000,000.00 was released to plaintiffs-appellants via promissory notes of P2,000,000.00 (Two Million Pesos), P1,000,000.00 (One Million Pesos) and P5,000,000.00 (Five Million Pesos). Plaintiffs-appellants’ total loan obligation was secured by a Real Estate Mortgage5 over a property located in Tabaco, Albay covered by TCT No. 761686 in the name of plaintiff-appellant Fr. Nestor P. Chavez. Plaintiffs-appellants were later beset with economic difficulties, thus, from August 1998 onwards, or after only seven monthly payments, two of which were even in checks that were subsequently dishonored, they ceased to pay the amortization on their loan. On August 10, 1999, defendant-appellee sent plaintiffs-appellants a demand letter7 advising them of the impending foreclosure proceedings on the property and allowing for a period of 15 days within which plaintiffs-appellants may settle the account to prevent foreclosure. On November 25, 1999, defendant bank extra-judicially foreclosed the mortgaged property and was declared the highest bidder at the public auction sale conducted by the Clerk of Court and Ex-Officio Sheriff with a bid price of P20,571,000.00 (Twenty Million Five Hundred Seventy One Thousand Pesos). The Certificate of Sale8 was duly registered with the Office of the Register of Deeds of Legaspi City on December 21, 1999. In a Letter9 dated October 17, 2000, plaintiffs-appellants offered to redeem the property for P20,000,000.00 (Twenty Million Pesos) within the redemption period of one year. Upon expiration of the redemption period and without plaintiffs-appellants having redeemed the subject property, defendant-appellee consolidated its title to the foreclosed property and TCT No. 76168 was thereafter cancelled and TCT No. T-12559610 issued in favor of the defendant-appellee.
On February 26, 2001, plaintiffs-appellants filed a Complaint for Nullification of Foreclosure Proceedings and Mortgage Documents and Damages assailing the validity of the foreclosure proceedings for being premature and for failure to comply with the publication requirements of Act 3135. On February 24, 2004, the trial court rendered the assailed Decision, the dispositive portion of which reads:
“WHEREFORE, for want of merit, this case is hereby ordered DISMISSED.
Cost against plaintiffs.
SO ORDERED.”
Then, on April 22, 2002, the trial court granted defendant-appellee’s ex-parte petition for the issuance of a writ of possession and issued the corresponding writ prayed for. Plaintiffs-appellants’ motion for reconsideration having been denied, defendant-appellee was placed in possession of the subject property.
Hence, the instant appeal on the general argument that –
The Regional Trial Court Branch 18 of Tabaco City gravely erred in dismissing the case for want of merit.
Plaintiffs-appellants deny having agreed to the terms of the loan contract on the ground that the loan documents were prepared unilaterally and exclusively by defendant-appellee and, more importantly, that they were made to sign the same in blank without any opportunity to examine the material contents thereof. More particularly, they complained that the appropriate interest rate on their loan should only be pegged at 25% as verbally agreed upon by the parties and not 32% as what was eventually imposed by defendant-appellee in the written contract. Plaintiffs-appellants assail further the correctness of the amount of the loan which they claim could only be attributed to the fact that defendant-appellee led them to believe that nothing irregular could result from their act of signing six (6) promissory notes in blank. Plaintiffs-appellants assail the foreclosure sale as null and void for being premature, pointing out the considerable payments they have already made in the amount of P8,984,911.78, which they claim is substantial performance on their part that should reduce the penalty and enable them to settle their account without resort to foreclosure proceedings. Finally, plaintiffs-appellants assert that the foreclosure sale is null and void for failure to comply with the requirement of Act No. 3135 on the posting and publication of notices of foreclosure sales.
The appeal should be dismissed.
Plaintiffs-appellants cannot avoid the effects of their loan contracts with defendant bank on the argument that these agreements are in the nature of contracts of adhesion or that they violate the principle of mutuality of contracts. By signing the various loan documents, plaintiffs-appellants are presumed to have been aware of the consequences of their actions. Considering that they are engaged in several ongoing business concerns, plaintiffs-appellants are supposed to have taken due care in their dealings with defendant-appellee, signing the loan agreements with full knowledge of their contents and of the corresponding obligations. Moreover, granting that plaintiffs-appellants affixed their signatures on the loan documents in blank they admittedly received their copy of the signed documents three days thereafter. However, instead of raising their objections to the provisions of the loan agreements as written and demanding that they be modified to reflect the true intention of the parties, plaintiffs-appellants made use of, and benefited from, the proceeds of the loan. Plaintiffs-appellants are, thus, presumed to have given their tacit approval and conformity to the terms and conditions of the loan as expressed in the written contract, the stipulations of which have the force of law between the parties and should be complied with by them in good faith.11
Moreover, there is no basis to charge the defendant-appellee and its officers of bloating plaintiffs-appellants’ original loan from P13,000,000.00 (Thirteen Million Pesos) to P16,000,000.00 (Sixteen Million Pesos), which allegedly made it difficult for them to pay their indebtedness and avoid foreclosure on the mortgaged property. Plaintiffs-appellants availed of two types of loan from defendant-appellee: one, a straight ten-year term loan of P5,000,000.00 (Five Million Pesos) covered by Promissory Note No. 002/9812 and, two, a revolving credit line in the amount of P8,000,000.00 (Eight Million Pesos). In the second type of credit facility, the bank lends the borrower up to a specified maximum amount throughout the life of the loan agreement and is bound by its terms to have funds available whenever the borrower requires it. The borrower, on the other hand, makes an availment or a drawdown on the credit line in the form of a note or a “promise to pay” a certain principal amount. The balance of all unpaid principals, otherwise known as outstanding drawdowns or availments, at any given time, should not exceed the ceiling or limit under the loan agreement. However, after due payment of any availment or drawdown, the borrower can still make succeeding availments or drawdowns within the maximum amount so long as the line has not yet expired.13 An examination of the evidence showing the number of times plaintiffs-appellants availed of their revolving credit line and the payments made thereon refutes their claim of substantial performance. While plaintiffs-appellants have indeed made payments amounting to P8,984,911.78 as evidenced by receipts issued by defendant bank, most of these payments pertain to the earlier availment of the P8,000,000.00 in separate amounts of P5,000,000.00, P2,000,000.00 and P1,000,000.00, covered by Promissory Note (PN) Nos. 001/9814, 003/9815 and 004/9816, and their corresponding Disclosure Statements, respectively, and not the re-availment in the same separate amounts covered by Promissory Note Nos. 005/9817, 006/9818 and 007/9819 on which defendant-appellee’s claim of credit is anchored. As mentioned earlier, aside from the term loan of P5,000,000.00 payable in monthly amortization of P139,252.60 for a period of ten years, plaintiffs-appellants availed of the P8,000,000.00 revolving credit line. Their first availment consisted of the following: P5,000,000.00 covered by PN No. 001/98 and released on January 23, 1998 but paid in full upon its maturity on April 23, 199820; P2,000,000.00 covered by PN No. 003/98 and released on January 29, 1998 but paid in full upon maturity on April 29, 199821; and P1,000,000.00 under PN No. 004/98, which was released in February 9, 1998 and paid in full on May 12, 199822. It appears, however, that plaintiffs-appellants made a re-availment on their credit line. On April 24, 1998, the day after paying in full the first P5,000,000.00, plaintiffs-appellants re-availed of the same amount of P5,000,000.00 under PN No. 005/98, which was released on the same day and set to mature on October 21, 1998. On April 30, 1998, the day after making full payment on the first P2,000,000.00 under PN No. 003/98, plaintiffs-appellants re-availed of the same amount of P2,000,000.00 under PN No. 006/98. Finally, on May 13, 1998, the day following plaintiffs-appellants’ full payment on the first P1,000,000.00 loan covered by PN No. 004/98 they availed of another P1,000,000.00 under PN No. 007/98. In sum, while plaintiffs-appellants made two full availments on the P8,000,000.00 revolving credit line, their total payments of P8,984,911.78 amount only to the satisfaction of the first availment of P8,000,000.00 and a few installments on the P5,000,000.00 straight term loan23. The payment made on April 23, 1998 in the amount of P5,000,000.00 as evidenced by Official receipt No. 023362 pertain to the loan obligation under PN 001/9824; the payment of P2,000,000.00 on April 29, 1998 evidenced by Official Receipt No. 023368 pertain to the loan under PN No. 003/9825; and the payment on May 12, 1998 in the amount of P1,000,000.00 evidenced by Official receipt No. 023378 pertain to the loan under PN No. 004/98.26 There are no proofs of payment for the renewal promissory notes under the eight million pesos revolving credit line, namely: 005/98, 006/98 and 007/98. Thus, plaintiffs-appellants cannot claim substantial performance in good faith where the second availment of P8,000,000.00, as well as a considerable portion of the P5,000,000.00 straight term loan, remains unpaid up to the present. Moreover, the allegation that there was a deliberate bloating of the amount of their loan appears to be a product of mere afterthought on the part of plaintiffs-appellants, who had at no time made objections to the amount claimed by defendant bank prior to the foreclosure sale and who, after such sale even explicitly stated their intention to redeem the property from defendant-appellee for P20,000,000.00 (Twenty Million Pesos).
We cannot agree with plaintiffs-appellants’ claim that there has been a unilateral increase in the interest rate from the alleged verbal agreement of 25% to what is appearing in the notes executed at 32% per annum. Not only were plaintiffs-appellants reasonably apprised of the interest rates when they received their own copy of the loan agreements three days after, which they did not question, it also appears that the interest in the last three renewal promissory notes for the revolving credit line was reduced to a lower rate, that is, from 32% to 25%.27 The original interest on the ten- year loan was not adjusted.
It cannot be argued that the foreclosure of the mortgage on the property was sought prematurely since it is clear from the records that at the time of the foreclosure sale, plaintiffs-appellants were already in default in the payment of their P13,000,000.00 loan obligation and had failed to pay despite the final notice of demand served upon them. Since the principal obligation was due and unpaid, defendant-appellee properly exercised its right as mortgagee to foreclose on the mortgage and to have the property seized and sold with the view of applying the proceeds thereof to the payment of the obligation.28
Finally, Section 3 of Act No. 313529 provides as follows: “Notice shall be given by posting notices of the sale for not less than 20 days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.” Contrary to plaintiffs-appellants assertions, the foreclosure proceedings complied with the foregoing requirements. The notice of sale of the real property was duly published in the Bicol Chronicle, which is a newspaper of general circulation, once a week for three consecutive weeks, as shown by an Affidavit of Publication30 dated November 22, 1999. The notices of foreclosure sale, on the other hand, were posted as required in three public places in Tabaco, namely, the Municipal Building, the Post Office and the Hall of Justice, as testified to by Sheriff Godofredo Baloloy.31 In the absence of contrary evidence, the presumption prevails that the sheriff performed his official duty of posting the said notices of sale.32 The fact of actual compliance with the posting requirements having been adequately proven, the sheriff’s failure to issue the corresponding certificate of posting is not sufficient to nullify the foreclosure proceedings. After all, a certificate of posting is not required nor considered indispensable for the validity of an extrajudicial foreclosure sale of real property under Act No. 3135. The absence of a certificate of posting is not sufficient to prove the lack of posting.33 It must also be pointed out that plaintiffs-appellants had virtually recognized the validity of the foreclosure proceedings by proposing to redeem the property for P20,000,000.00 (Twenty Million Pesos) on or before November 25, 2000 and later requesting defendant-appellee for an extension of the deadline to December 15, 2000.34 Plaintiffs-appellants failed to fulfill their undertaking to redeem the property before the lapse of the one-year period allowed for the redemption of the property. Accordingly, plaintiffs-appellants’ attempts to question the legality and validity of the foreclosure proceedings must fail.
WHEREFORE, the appeal is hereby DISMISSED. The Decision of the Regional Trial Court, Branch 15, of Tabaco City, Albay, dated February 24, 2004 dismissing the Complaint for Nullification of Foreclosure Proceedings and Mortgage Documents, and Damages is AFFIRMED.
SO ORDERED.
Dacudao, and Perlas-Bernabe, JJ., concur.
1 Rollo, pp. 385-390
2 TSN – April 29, 2003, pp. 8-9
3 Exhibit “4”, Records, pp. 323-329
4 Exhibit “3”, Records, pp. 315-322
5 Exhibit “2”, Records, pp. 310-314
6 Annex “A” of the Complaint, Records, pp. 7-8
7 Exhibit “9-I”, Records, p. 352
8 Exhibit “13”, Records, pp. 358-359
9 Exhibit “16”, Records, p. 362
10 Exhibit “20”, Records, p. 367
11 Article 1159 of the Civil Code
12 Exhibit “8”, Records, p. 333
13 New Sampaguita Builders Construction, Inc. (NSBCI) vs. Philippine National Bank, 435 SCRA 565
14 Exhibit “A”, Records, p. 210
15 Exhibit “B”, Records, p. 212
16 Exhibit “C”, Records, p. 214
17 Exhibit “9-F”, Records, p. 349
18 Exhibit “9-G”, Records, p. 350
19 Exhibit “9-H”, Records, p. 351
20 Exhibit “K”, Records, p. 233
21 Exhibit “L”, Records, p. 234
22 Exhibit “N-1”, Records, p. 236
23 See Exhibits “H”, “I” and “J”, Records, pp. 230-232
24 Exhibit “K”, Records, p. 233
25 Exhibit “L”, Records, p. 234
26 Exhibit “N”, Records, p. 236
27 Exhibits “9-F”, “9-G” and “9-H”, Records, pp. 349-351
28 Peña, Registration of Land Titles and Deeds, 1988 Edition, p. 250
29 “An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages”
30 Executed by Milagros A. Gonzales, Publisher of the Bicol Chronicle; Exhibit “11”, Records, p. 356
31 TSN – July 21, 2003
32 Development Bank of the Philippines vs. Court of Appeals, 403 SCRA 460
33 Development Bank of the Philippines vs. Court of Appeals, 403 SCRA 460, citing Cristobal vs. Court of Appeals, 328 SCRA 256 and Bohanan vs. Court of Appeals, 256 SCRA 355
34 Annex “4” of the Answer to the Complaint, Records, p. 40