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    Philippine National Bank vs. Spouses Rocamora

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    Amado Espejo
    The Philippine National Bank (PNB) filed a complaint for deficiency judgment against the Spouses Rocamora after foreclosing properties used as collateral for a loan. The Rocamoras argued they did not owe money because PNB increased interest rates and delayed foreclosure. The RTC dismissed PNB's complaint and awarded damages to the Rocamoras. The CA affirmed but reduced damages. The Supreme Court ruled that PNB did not act fraudulently or in bad faith by increasing rates or delaying foreclosure. Moral and exemplary damages require fraudulent, reckless, or oppressive conduct. As such conduct was not proven, the Rocamoras were not entitled to moral, exemplary damages, attorney's fees, or costs.

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    Philippine National Bank vs. Spouses Rocamora

    Uploaded by

    Amado Espejo
    189 views2 pages
    The Philippine National Bank (PNB) filed a complaint for deficiency judgment against the Spouses Rocamora after foreclosing properties used as collateral for a loan. The Rocamoras argued they did not owe money because PNB increased interest rates and delayed foreclosure. The RTC dismissed PNB's complaint and awarded damages to the Rocamoras. The CA affirmed but reduced damages. The Supreme Court ruled that PNB did not act fraudulently or in bad faith by increasing rates or delaying foreclosure. Moral and exemplary damages require fraudulent, reckless, or oppressive conduct. As such conduct was not proven, the Rocamoras were not entitled to moral, exemplary damages, attorney's fees, or costs.

    Original Description:

    PHILIPPINE NATIONAL BANK vs. SPOUSES ROCAMORA G.R. No. 164549. September 18, 2009.

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    The Philippine National Bank (PNB) filed a complaint for deficiency judgment against the Spouses Rocamora after foreclosing properties used as collateral for a loan. The Rocamoras argued they did not owe money because PNB increased interest rates and delayed foreclosure. The RTC dismissed PNB's complaint and awarded damages to the Rocamoras. The CA affirmed but reduced damages. The Supreme Court ruled that PNB did not act fraudulently or in bad faith by increasing rates or delaying foreclosure. Moral and exemplary damages require fraudulent, reckless, or oppressive conduct. As such conduct was not proven, the Rocamoras were not entitled to moral, exemplary damages, attorney's fees, or costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    189 views2 pages

    Philippine National Bank vs. Spouses Rocamora

    Uploaded by

    Amado Espejo
    The Philippine National Bank (PNB) filed a complaint for deficiency judgment against the Spouses Rocamora after foreclosing properties used as collateral for a loan. The Rocamoras argued they did not owe money because PNB increased interest rates and delayed foreclosure. The RTC dismissed PNB's complaint and awarded damages to the Rocamoras. The CA affirmed but reduced damages. The Supreme Court ruled that PNB did not act fraudulently or in bad faith by increasing rates or delaying foreclosure. Moral and exemplary damages require fraudulent, reckless, or oppressive conduct. As such conduct was not proven, the Rocamoras were not entitled to moral, exemplary damages, attorney's fees, or costs.

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    © All Rights Reserved
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    of 2

    PHILIPPINE NATIONAL BANK vs. SPOUSES ROCAMORA G.R. No. 164549.

    September
    18, 2009.

    FACTS:

    On September 25, 1981, the spouses Agustin and Pilar Rocamora obtained a loan from PNB in
    the aggregate amount of P100,000.00 payable in five years. In addition to the principal amount,
    the respondents agreed to pay interest at the rate of 12% per annum, plus a penalty fee of 5% per
    annum in case of delayed payments. The respondents signed two promissory notes evidencing
    the loan. To secure their loan obligations, the respondents executed a real estate mortgage in the
    amount of P10,000, and a chattel mortgage in the amount of P25,000. The payment of the
    remaining P65,000 was under guarantee. Both the promissory note and the real estate mortgage
    deed contained an escalation clause that allowed PNB to increase the 12% interest rate at any
    time without notice, within the limits allowed by law. The respondents only paid a total of
    P32,383.655 on the loan. Hence, the PNB commenced foreclosure proceedings in 1990. The
    foreclosure of the mortgaged properties yielded P75,500.00 as total proceeds. After the
    foreclosure, PNB found that the recovered proceeds and the amounts the respondents previously
    paid were not sufficient to satisfy the loan obligations. PNB thus filed a complaint for deficiency
    judgment before the RTC. The PNB claimed that the outstanding principal balance as of
    foreclosure date (September 19, 1990) was P79,484.65, plus interest and penalties, for a total due
    and demandable obligation of P250,812.10. Allegedly, after deducting the P75,500 proceeds of
    the foreclosure sale, the respondents still owed the bank P206,297.47. The respondents refused to
    pay and alleged that the PNB “practically created” the deficiency by (a) increasing the interest
    rates from 12% to 42% per annum, and (b) failing to immediately foreclose the mortgage. The
    RTC dismissed PNB’s complaint. Instead, it awarded actual, moral, and exemplary damages to
    the respondents after finding that the bank’s actions were contrary to law, justice, and morals.
    Attorney’s fees and costs of suit were also ordered paid. Modifying RTC’s decision by removing
    the actual damages and reducing the amount of the other awarded damages, the CA affirmed the
    RTC ruling.

    ISSUE:

    WON Spouses Rocamora are entitled to damages. (NO)

    RULING:

    Moral damages are not recoverable simply because a contract has been breached. They are
    recoverable only if the defendant acted fraudulently or in bad faith or in wanton disregard of his
    contractual obligations. Art. 2220. Willful injury to property may be a legal ground for awarding
    moral damages if the court should find that, under the circumstances, such damages are justly
    due. The same rule applies to breaches of contract where the defendant acted fraudulently or in
    bad faith. The breach must be wanton, reckless, malicious or in bad faith, and oppressive or
    abusive. Likewise, a breach of contract may give rise to exemplary damages only if the guilty
    party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. We are not
    sufficiently convinced that PNB acted fraudulently, in bad faith, or in wanton disregard of its
    contractual obligations, simply because it increased the interest rates and delayed the foreclosure
    of the mortgages. Bad faith pertains to a dishonest purpose, to some moral obliquity, or to the
    conscious doing of a wrong, a breach of a known duty attributable to a motive, interest or ill-will
    that partakes of the nature of fraud. Proof of actions of this character is undisputably lacking in
    this case. Consequently, we do not find the respondents entitled to an award of moral and
    exemplary damages. Under these circumstances, neither should they recover attorney’s fees and
    litigation expense. Petition denied; decision affirmed with modifications. The moral and
    exemplary damages, attorney’s fees, and litigation costs awarded to the respondents are deleted.

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