PHILIPPINE DEVELOPMENT AND INDUSTRIAL CORPORATION, PETITIONER, VS. THE HON. COURT OF APPEALS, EQUITABLE PCI BANK (NOW KNOWN AS BANCO DE ORO UNIBANK, INC.), THE REGISTER OF DEEDS OF MANILA, AND M.N. AMOR B. DAIT, IN HIS CAPACITY AS SHERIFF OF THE REGIONAL TRIAL COURT OF MANILA, RESPONDENTS. [G.R. No. 242868] PHILIPPINE DEVELOPMENT AND INDUSTRIAL CORPORATION, PETITIONER, VS. EQUITABLE PCI BANK (NOW KNOWN AS BANCO DE ORO UNIBANK, INC.), M.N. AMOR B. DAIT, SHERIFF IV OF THE RTC-MANILA, AND THE REGISTER OF DEEDS, CITY OF MANILA, RESPONDENTS.
FACTS
Petitioner Philippine Development and Industrial Corporation (PDIC) was granted a credit line by respondent Equitable PCI Bank (EPCIB, now BDO) in 1996, secured by a Real Estate Mortgage (REM) over a parcel of land (mother title). PDIC fully utilized the clean credit line. When PDIC requested funds from the secured credit line in 1997, EPCIB deferred the grant. PDIC sourced other financing. The drawn amounts became past due. In June 2000, the parties entered into a Repayment Agreement where PDIC acknowledged its indebtedness. As per the agreement, PDIC executed new REMs over 29 condominium units and a Bulacan property, and EPCIB released the original REM over the mother title. PDIC defaulted under the Repayment Agreement. After a failed dacion en pago proposal, EPCIB extrajudicially foreclosed the mortgaged properties on April 21, 2003. PDIC filed a complaint for annulment of mortgage and foreclosure sale before the RTC Manila, alleging the 2000 REMs were void due to intimidation and undue influence, claiming it was forced to execute them because EPCIB refused to release the mother title unless it provided substitute collateral. The RTC dismissed the complaint. The Court of Appeals affirmed the RTC’s dismissal. PDIC filed two petitions: G.R. No. 231545 (assailing CA resolutions denying injunctive relief) and G.R. No. 242868 (assailing the CA decision affirming the RTC).
ISSUE
Whether the Court of Appeals erred in affirming the dismissal of PDIC’s complaint for the annulment of the Real Estate Mortgages dated June 8, 2000 and the subsequent foreclosure sale.
RULING
No, the Court of Appeals did not err. The Supreme Court denied the petitions and affirmed the assailed CA rulings. The Court held that PDIC failed to prove by clear and convincing evidence that its consent to the 2000 REMs was vitiated by intimidation or undue influence. The execution of the REMs was a voluntary act pursuant to the Repayment Agreement, which PDIC entered to restructure its past due obligations. The Court found that EPCIB’s act of withholding the mother title until a substitute mortgage was provided was a legitimate exercise of its contractual right as mortgagee, not a form of intimidation. The REMs were valid accessory contracts securing the loan obligations acknowledged in the Repayment Agreement. Since the REMs were valid and PDIC defaulted, the foreclosure sale was likewise valid. The defense of intimidation or undue influence cannot be sustained where the debtor voluntarily entered into an agreement to accommodate its own request for debt restructuring.
