Case Digest: Supreme Transliner vs. BPI

G.R. No. 165617 : February 25, 2011

SUPREME TRANSLINER, INC., MOISES C. ALVAREZ and PAULITA S. ALVAREZ, Petitioners, v. BPI FAMILY SAVINGS BANK, INC., Respondent.

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G.R. No. 165837 : February 25, 2011

PHILIPPINE BANK OF COMMUNICATIONS, Petitioner, v. SUPREME TRANSLINER, INC., MOISES C. ALVAREZ and PAULITA S. ALVAREZ, Respondents.

VILLARAMA, JR., J.:

FACTS:

Supreme Transliner, Inc. represented by its Managing Director, Moises C. Alvarez, and Paulita S. Alvarez, obtained a loan in the amount of P9,853,000.00 from BPI Family Savings Bank with a 714-square meter lot covered by Transfer Certificate of Title No. T-79193 in the name of Moises C. Alvarez and Paulita S. Alvarez, as collateral.

For non-payment of the loan, the mortgage was extrajudicially foreclosed and the property was sold to the bank as the highest bidder. Before the expiration of the one-year redemption period, the mortgagors notified the bank of their intention to redeem the property. The mortgagors requested for the elimination of liquidated damages and reduction of attorney’s fees and interest (1% per month) from the amount due but the bank refused.

The mortgagors filed a complaint against the bank to recover the allegedly unlawful and excessive charges. The trial court rendered its decision dismissing the complaint and held that plaintiffs-mortgagors are bound by the terms of the mortgage loan. According to the trial court, plaintiffs-mortgagors are estopped from questioning the correctness of the redemption price as they had freely and voluntarily signed the letter-agreement prepared by the defendant bank. However, the CA ruled that attorney’s fees and liquidated damages were already included in the bid price.

ISSUES:

Whether or not the CA erred in ruling that the subject fees have been paid for.

Whether or not the foreclosing mortgagee should pay capital gains tax upon execution of the certificate of sale, and if paid by the mortgagee, whether the same should be shouldered by the redemptioner.


HELD:

The petition is partly meritorious.

CIVIL LAW: Mortgage

First issue:

Under the Mortgage Loan Agreement, petitioners-mortgagors undertook to pay the attorney’s fees and the costs of registration and foreclosure. The attorney’s fees and liquidated damages were not yet included in the bid price as shown in the Statement of Account prepared by the petitioner bank and given to petitioners-mortgagors. On the other hand, par. 23 of the Mortgage Loan Agreement indicated that asset acquired expenses were to be added to the redemption price as part of “costs and other expenses incurred” by the mortgagee bank in connection with the foreclosure sale.

TAX LAW: Capital gains tax

Second issue:

There is no legal basis for the inclusion of this charge in the redemption price. In foreclosure sale, there is no actual transfer of the mortgaged real property until after the expiration of the one-year redemption period as provided in Act No. 3135 and title thereto is consolidated in the name of the mortgagee in case of non-redemption. In the interim, the mortgagor is given the option whether or not to redeem the real property. The issuance of the Certificate of Sale does not by itself transfer ownership.

MODIFIED.

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