G.R. No. 160107, October 22, 2014
SPOUSES JAIME SEBASTIAN AND EVANGELINE SEBASTIAN, Petitioners, vs. BPI FAMILY BANK, INC., CARMELITA ITAPO AND BENJAMIN HAO, Respondents.

FACTS

Petitioners, spouses who were employees of respondent BPI Family Bank, availed of a housing loan from their employer amounting to ₱273,000.00, payable in 108 monthly amortizations to be deducted from Jaime’s salary. They executed a Loan Agreement and a Real Estate Mortgage over a property in Bulacan to secure the loan. Jaime also signed an undated letter-memorandum authorizing automatic salary deductions and stating that the loan would become due and demandable upon his separation from the bank’s service. Both petitioners were later terminated from employment. BPI Family Bank demanded full payment of their outstanding loan and initiated foreclosure proceedings on the mortgaged property. The petitioners filed a complaint for injunction to prevent the foreclosure, arguing that their obligation was not yet due because the legality of their dismissal was pending before the labor court. The Regional Trial Court dismissed their complaint, and the Court of Appeals affirmed the dismissal. In their motion for reconsideration before the CA and later in their petition to the Supreme Court, the petitioners raised for the first time the argument that they were entitled to protections under Republic Act No. 6552 (Realty Installment Buyer Protection Act) and that the loan agreement was a contract of adhesion.

ISSUE

Whether the foreclosure of the real estate mortgage on the petitioners’ property was valid and whether the protections under Republic Act No. 6552 apply to their loan agreement with their employer.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the petitioners could not raise the applicability of Republic Act No. 6552 or the claim that the loan agreement was a contract of adhesion for the first time on appeal, as doing so would violate the respondents’ right to due process. Procedurally, these issues were not raised in the proceedings before the lower courts. On substantive grounds, the Court ruled that Republic Act No. 6552 was enacted to protect buyers of real estate on installment payments, not borrowers who obtain a loan from their employer to finance a purchase. The law covers transactions involving the sale or financing of real estate on installment payments, but the petitioners’ transaction was essentially a loan agreement with their employer, governed by its terms. The letter-memorandum signed by Jaime explicitly provided that the loan would become due and demandable upon separation from service. The Court found the foreclosure to be in order based on the terms of the loan agreement and mortgage contract, which authorized foreclosure upon default. The petitioners’ obligation became due upon their termination, and the bank had a clear right to foreclose. Therefore, the lower courts did not err in dismissing the injunction complaint.