Union bank vs tiu (2011)

Facts:

Union bank and respondent spouses tiu entered into a credit line
agreement whereby union bank agreed to make available to the
spouses tiu credit facilities in such amount as may be approved. From
September 22, 1997 to march 26, 1998, the spouses took out various
loans pursuant to this CLA with a total amount of 3,632,000.00 dollars,

Union bank advised the spouses through a letter that because of the
existing currency risk, the loans shall be redenominated to their
equivalent Philippine peso amount. The spouses tiu wrote to Union
bank authorizing the latter to redenominate the loans at the rate of
USS 1 = P 41.40 with interest of one year. Under the same Restructuring
Agreement, the parties declared that the loan obligation to be
restructured is P 104,668,741.00. As provided by the agreement, the
spouses Tiu executed a real estate mortgage in favor of the Union Bank
over their residential property inclusive of lot and improvements.

Asserting that the spouses failed to comply with the payment schemes
set up in the restructuring agreement, the union bank initiated
extrajudicial foreclosure proceedings on the residential property of the
spouses tiu. The property was to be sold at a public auction. The
spouses filed with the RTC a complaint seeking to have the extrajudicial
foreclosure declared null and void.

The spouses claim that from the beginning the loans were in pesos, not
in dollars. The spouses tiu allege that foreclosure sale of the mortgaged
properties was invalid, as the loans have already been fully paid. They
also allege that they are not the owners of the improvements
constructed on the lot because the real owners thereof are the co –
petitioners.
They further claim that prior to the signing of the restructuring
agreement, they entered into a memorandum of agreement with Union
bank whereby the former deposited with the latter several certificates
of stocks of various companies and four certificates of title of various
parcels of land located in cebu. The spouses claim that the said
properties have not been subjected to any lien in favor of the Union
bank, yet the latter continues to hold on to these properties and has
not returned the same to the former.

On the other hand, Union bank claims that the Restructuring

agreement was voluntarily and validly entered into by both parties.
Presenting as evidence the warranties embodied in the real estate
mortgage, union bank contends that the improvements thereon were
absolutely owned by them. Union bank denies receiving certificates of
shares of stock of various companies or the four certificates of title of
various parcels fo land from spouses tiu. However, union bank also
alleges that even if the said certificates were in its possession it is
authorized under the restructuring agreement to retain any and all
properties of the debtor as security of the loan.
ISSUE: (madaming issue un connected lang sa “necessity of formal offer
kukunin natin)
WON THE RESTRUCTURING AGREEMENT IS A VALID AND BINDING
NOVATION OF LOANS of the spouses Tiu.

Yes. The agreement is valid.

 The Restructuring Agreement, being notarized, is a public document
enjoying a prima facie presumption of authenticity and due execution.
Clear and convincing evidence must be presented to overcome such
legal presumption.[76] The spouses Tiu, who attested before the notary
public that the Restructuring Agreement is their own free and voluntary
act and deed,[77] failed to present sufficient evidence to prove
otherwise. It is difficult to believe that the spouses Tiu, veteran
businessmen who operate a multi-million peso company, would sign a
very important document without fully understanding its contents and
consequences.
As we have discussed above, however, while respondent Rodolfo Tiu
appeared to have identified during his testimony a computation dated
July 17, 2002 of the alleged payments made to Union Bank,[78] the
same was not formally offered in evidence. Applying Section 34, Rule
132[79] of the Rules of Court, such computation cannot be considered
by this Court. We have held that a formal offer is necessary because
judges are mandated to rest their findings of facts and their judgment
only and strictly upon the evidence offered by the parties at the trial. It
has several functions: (1) to enable the trial judge to know the purpose
or purposes for which the proponent is presenting the evidence; (2) to
allow opposing parties to examine the evidence and object to its
admissibility; and (3) to facilitate review by the appellate court, which
will not be required to review documents not previously scrutinized by
the trial court.[80]Moreover, even if such computation were admitted
in evidence, the same is self-serving and cannot be given probative
weight. In the case at bar, the records do not contain even a single
receipt evidencing payment to Union Bank.
The Court of Appeals, however, held that several payments made by
the spouses Tiu had been admitted by Union Bank. Indeed, Section 11,
Rule 8 of the Rules of Court provides that an allegation not specifically
denied is deemed admitted. In such a case, no further evidence would
be required to prove the antecedent facts. We should therefore
examine which of the payments specified by the spouses Tiu in their
Amended Complaint[81] were not specifically denied by Union Bank.