The #SupremeCourtPH (SC) has nullified the foreclosure by Metropolitan Bank and Trust Company (Metrobank) of a mortgaged property after finding that the bank failed to properly account for the borrowers’ loan payments.

In a Decision written by Associate Justice Mario V. Lopez, the SC’s Second Division ruled in favor of Carmelita Cruz and Vilma Low Tay (borrowers), who had taken out several loans from Metrobank using real property in Pasig City as collateral.

The borrowers argued that while they had paid a total of PHP 32.6 million for their loans, Metrobank only recorded PHP 20.5 million, leaving an unaccounted amount of PHP 12.14 million. They filed a Complaint for Accounting before the Marikina Regional Trial Court (RTC), which ruled in their favor. Both the Court of Appeals (CA) and the SC upheld the trial court.

Metrobank, however, proceeded with the foreclosure of the real property before the Pasig City RTC, which ruled in favor of the borrowers when the latter contested the foreclosure sale. The CA reversed the Pasig RTC, prompting the borrowers to seek relief from the SC.

The SC annulled the foreclosure sale. It clarified that ordinarily, a lender’s failure to provide an accounting of loan payments is not a ground for annulling a foreclosure. However, in this case, the SC had already issued a final and executory ruling requiring Metrobank to provide a complete and accurate accounting of the borrowers’ payments.

Until this is resolved, foreclosure cannot proceed, said the SC, as doing so would contradict the its prior ruling.

Read the full text of the Press Release at

https://sc.judiciary.gov.ph/sc-voids-banks-foreclosure-due-to-incomplete-loan-records/.

Read the full text of the Decision at

https://sc.judiciary.gov.ph/236605-carmelita-c-cruz-and-vilma-low-tay-et-al-vs-metropolitan-bank-and-trust-company-et-al/.

Copying of this content is subject to the SC PIO’s Credit Attribution Policy: https://sc.judiciary.gov.ph/credit-attribution-policy/.