Land Bank of the Philippines v. Sprint Business Network and Cargo Services, Inc.

 

Land Bank of the Philippines v. Sprint Business Network and Cargo Services, Inc.

G.R. No. 244414

January 16, 2023

 

FACTS:

Sprint obtained a loan from Land Bank of the Philippines (LBP) with a real estate mortgage in Makati City and registered in the name of Sprint's Vice President, Irene Velasco. Economic crises led Sprint to default on the payment of the loan, prompting LBP to initiate extrajudicial foreclosure proceedings and eventually take ownership of the property as the highest bidder at the public auction after Sprint failed to redeem it. Sprint contested the foreclosure, alleging an agreement with the bank for loan restructuring and suspension of foreclosure pending resolution, which the bank purportedly violated by unilaterally increasing interest rates and charges. Sprint filed a complaint against Land Bank, seeking nullification of the foreclosure, alleging that they requested for a longer term and restructuring of its loan obligation and LBP agreed that no foreclosure proceeding will be initiated until the restructuring of the obligation will be decided upon and the interests are paid. Land Bank denied the agreement to suspend foreclosure and said agreement on the interest rates including attorney's fees as indicated in the promissory notes freely executed by Sprint. During all the meetings and its letters to LBP, Sprint never protested about the interest rates that the bank imposed and cannot allege that the interest rates were excessive and exorbitant that it decided to suspend payments of the loan obligation until such time that the rate of interest is judicially fixed. RTC dismissed Sprint's complaint for lack of evidence supporting the restructuring agreement. CA reversed and held that LBP violated the principle of mutuality of contracts when it unilaterally increased the interest rates.

ISSUE:

Whether or not LBP violated the mutuality of contracts upon unilaterally increasing the interest rates.

HELD:

No. There was no unilateral modification of the interest rates as to amount to a violation of the principle of mutuality of contracts. The Supreme Court subscribed to petitioner bank's argument that if Sprint had any disagreement with the adjusted interest rates, it should have formally objected to it in accordance with their loan agreements. Instead of doing that however, it negotiated for the restructuring of its loan. Nonetheless, Sprint failed to submit its proposal for the restructuring of its loan, or to prove that the petitioner bank agreed to suspend the foreclosure pending restructuring of the loan, or as long as the interests are paid. It must be reiterated that he who asserts a fact must prove such fact through evidence. In this case, Sprint merely presented its bare and self-serving allegations, which were actually belied by the totality of evidence on record. It did not present anything that would evince that there was an agreement with petitioner bank regarding the restructuring of its loan, or the deferment of the foreclosure of the mortgaged property.