Republic of the Philippines

Regional Trial Court

Fourth Judicial Region
Calapan City, Oriental Mindoro
Branch 40

Spouses Edilberto C. Ilano, Jr. and

Rhoda C. Ilano,
Plaintiffs,

- versus - Civil Case No. CV-06-5609

Bank of Commerce, Ex-Oficio Sheriff
RTC, Calapan and The Register of
Deed, Calapan,
Defendants,
x---------------------------------------x
For: Annulment of Loan Documents,
Accounting, Cancellation of Mortgage,
etc. and for the Issuance of Temporary
Restraining Order and/or Writ of
Preliminary Injunction.

AMENDED COMPLAINT

Plaintiffs, by the undersigned counsel, and unto this Honorable Court, most respectfully

allege:

FIRST CAUSE OF ACTION

1. They are both Filipinos, husband and wife, or legal age, and with residence at

Hacienda Rhoda Subdivision, Sta. Isabel, Calapan City, Oriental Mindoro and within the

jurisdiction of this Honorable Court. They maybe served with court processes at the above given

address;

2. Defendant Bank of Commerce is a banking institution with principal office address

at 12th Floor, Phil. First Bldg., 6764 Ayala Avenue, Makati City where it may be served with

summons and other court process;

3. Defendant Ex-Oficio Sheriff of the Office of the Clerk of Court is being sued in his

official capacity and he may be served with summons at the Office of the Clerk of Court, Hall of

Justice, Provincial Capitol Complex, Calapan City;

4. Defendant Register of Deeds of Calapan is also being sued in his official capacity

and he may be served with summons and other process at the Provincial Capitol Complex,

Calapan City;
 5. Plaintiffs are engaged in the business of developing subdivision lots. They own E.C.

Ilano Realty and Management Corporation. In their desire to develop a particular subdivision,

Hacienda Rhoda Subd., the couple decided to apply for and was subsequently granted a loan by

then Traders Royal Bank (now Bank of Commerce) in the principal amount of Four Million

Pesos (P4,000,000.00). To secure the said loan, plaintiffs executed in favor of the defendant

bank a real estate mortgage with a stipulated rate of interest of twenty-one (21) percent per

annum. Further, the loan is covered by several promissory notes as follows:

Number Date Amount

a. PN No. 084-1-01-96-0003-8 1-02-96 P3,380,000.00

b. PN No. 084-1-01-96-0007-1 1-18-96 316,300.00
c. PN No. 084-1-01-96-000-1 1-19-96 303,700.00
d. PN No. 084-1-01-97-0008-3 1-14-97 303,700.00
e. PN No. 084-1-01-97-0007-5 1-29-97 316,300.00
f. PN No. 084-1-01-97-0012-1 1-29-97 3,380,000.00

Copies of the Real Estate Mortgage and Promissory Notes are herein attached as Annexes “A” to

“G”;

6. Out of the original loan as well as the restructured loan which happened later on, the

plaintiffs were able to pay the total amount of Three Million One Hundred Eighty Nine

Thousand Three Hundred Sixty One Pesos (P3,189,361.00) broken down as follows:

Date Amount Paid

1.2.96 P168,958.63
1.18.96 15,777.36
1-19-96 15,178.85
4-01-96 178,603.19
4-17-96 16,133.90
4-18-96 15,491.21
7-16-96 15,777.44
7-17-96 18,178.44
7-19-96 224,368.63
10-15-96 16,067.38
10-16-96 15,427.33
10-17-96 168,598.64
1-13-97 16,584.64
1-14-97 15,148.94
1-29-97 218,067.93
4-18-97 15,722.20
4-21-97 12,026.62
 7-17-97 21,843.85
8-26-97 50,000.00
10-20-97 26,554.87
10-0-97 8,445.13
10-22-97 30,000.00
11-24-97 25,709.24
11-16-98 23,145.74
3-25-98 30,558.10
3-31-98 25,000.00
11-16-98 150,000.00
11-17-98 50,000.00
2-18-99 100,000.00
4-15-99 150,258.44
5-17-99 150,258.44
6-16-99 150,258.44
9-16-99 150,258.44
12-13-99 50,000.00
2-29-00 100,000.00
8-11-00 280,000.00
9-21-00 1,805.00
9-21-00 72,214.61
12-20-00 100,000.00
12-22-01 300,000.00

TOTAL = P3,198,361.00

Copies of the receipts evidencing the above payment are herein attached and marked as Annex

“H” to “H-45”;

7. Since the real estate mortgage covers several parcels of land belonging to the

plaintiff, the defendant bank has agreed and in fact released some of the titles to the plaintiffs

after each partial cancellation of the mortgage and after the payment made by the latter. Copies

of the Certification evidencing the partial cancellation are herein attached and marked as

Annexes “I” to “K”. Over the years, the Bank of Commerce, thru then Traders Royal Bank, has

released a total Sixty-Four (64) titles to herein plaintiffs who used to same in their development

and sale of the subdivision lots;

8. Since the time the plaintiffs acquired the loan, they have faithfully complied with

their obligation based on the agreed schedule of payment with the bank. Unfortunately, business

slowdown and reverses forced the herein plaintiffs to enter into a restructuring agreement with

defendant bank. Thus on March 19, 1999, the plaintiffs executed a restructuring contract, copy

of which is herein attached on Annex “L”;

 9. However, the payments made by herein plaintiffs to defendant bank were applied,

not on the outstanding principal nor interest, but to NTFI, an item not fully explained to the

plaintiffs and which made the principal amount of Four Million Pesos (P4,000,000.00) as of date,

unpaid. A copy of the application of payment made by the bank in herein attached and marked

as Annex “M”;

10. As of July 19, 2001, Plaintiff’s obligation to defendant bank in the form of interest

and penalty and NTFI amortization amounts to P957,681.33, exclusive of the principal. This,

despite the payments made by plaintiffs which caused defendant bank to release some of the

titles mortgaged. A copy of the letter of Traders Royal Bank to this effect dated July 19, 2001 is

herein attached as Annex “A”;

11. On September 17, 2001, plaintiffs were surprised to receive a letter from the

defendant bank stating that their total obligation is still in the principal amount of Five Million

Five Hundred Ninety One Thousand Six Hundred Forty Six and 93/100 (P5,591,646.93). A

copy of the letter is herein attached and marked as Annex “O”. Plaintiffs at that time, did not

know how much is their exact obligation as they have been begging the defendant bank for a fair

accounting of their records;

12. In the meantime, the Bank of Commerce acquired Traders Royal Bank on November

9, 2001 and plaintiffs were again left in a quandary as to whom they will approach;

13. On May 19, 2003, plaintiffs received a letter from now defendant Bank of Commerce

stating that they have to pay their loan of P5,591,646.93 plus additional interest and penalties

within 10 days. A copy of said letter is here attached as Annex “P”;

14. Again, to plaintiffs’ greater surprise, they received a letter dated May 29, 2003 from

the defendant bank’s legal counsel demanding payment of their obligation in the staggering

amount of Eight Million Eight Hundred Seventy Thousand Nine Hundred Seventy Seven and

19/100 (P8,870,977.19) as of May 30, 2003. A copy of said letter is herein attached as Annex

“Q”;
 15. On November 11,2003, defendant bank filed a petition for judicial foreclosure of the

mortgage under Act 3135 covering the remaining mortgaged properties of the plaintiffs

consisting of 95 titles of the lots mentioned hereinbelow, the value of which is more than

sufficient to cover the entire obligation;

16. Considering that plaintiffs’ loan is covered, even when restructured, by real estate

mortgage over several real properties, all these contract are null and void because they are in

violation and/or contrary to the provision of the Usury Law (Act No. 2615, as amended)

particularly Section 2 thereof which is stated as follows:

“Sec. 2. No person or corporation shall directly or indirectly take or

receive in money or other property, real or personal, or chooses in action, a higher
rate of interest or greater sum or value, including commission, premiums, fines
and penalties, for the loan and renewal, thereof or forbearance of money goods, or
credits, where such loan or renewal or forbearances in secured in whole or in part
by the mortgage upon real estate the title to which is duly registered, or by any
document conveying such real estate on the interest therein, than twelve percent
per annum or the maximum rate prescribed by the monetary Board and in the
force at time the loan or renewal thereof or forbearance in granted; provided, that
the rate of interest that may be prescribed by the likewise apply to loans secured
by other types of security or maybe specified by the Monetary Board:

17. In view of the nullity of the contract of loan the accessory contracts of real estate

mortgage and promissory notes are likewise null and void;

18. Likewise void is the subsequent foreclosure sale issued in favor of the defendant

bank;

SECOND CAUSE OF ACTION

19. The extra judicial foreclosure proceeding and public auction sale of the properties of

the plaintiffs did not comply with the provisions of section 3, Act No. 3135, as amended, which

provides:

“Sec. 3. Notice shall be given by posting notices of the sale for not less
than twenty days in at least three public places of the municipality or city where
the property is situated, and if such property is worth more than four hundred
pesos, such notices shall also be published once a week for at least three
consecutive weeks in a newspaper of general circulation in the municipality or
city.”
The failure of the defendant bank to comply with the foreclosure proceedings concerning notice

would render the foreclosure proceedings null and void. Besides, in the publication of the notice

made at Mindoro Bulletin, the amount of obligation of herein plaintiffs was pegged at “as of

June 30, 2002, amount of Php 8,788.910.22, contrary to the defendant’s previous claim of

P5,591,646.19 as of May 19, 2003 and P8,890,977.19 as of May 30, 2003.

THIRD CAUSE OF ACTION

20. When the loans were granted to plaintiffs, the payments made by them were applied

to some other items without their prior consent. Also, the bank charged penalties on interest.

Thus, the computations were made in bad faith, especially since the payments were misapplied.

For these reasons, the extra-judicial foreclosure proceedings should be nullified.

GROUNDS IN SUPPORT OF THE ISSUANCE OF A TEMPORARY

RESTRAINING ORDER and/or WRIT OF PRELIMINARY INJUNCTION

The above allegations are incorporated herein by way of reference, and plaintiffs further

allege:

21. Prior to the filing of this complaint, on August 17, 2004, the defendant Ex-Oficio

Sheriff, RTC of Calapan City, sold at public auction the properties of plaintiffs to defendant

Bank of Commerce, being the highest bidder in the foreclosure sale. Consequently, a certificate

of sale was registered on March 15, 2005 and herein plaintiffs have until March 15, 2006 to

redeem the same;

22. With the filing of the case, it is respectfully submitted that the one year redemption

period was suspended since by questioning the validity of the real estate mortgage and

foreclosure sale, the plaintiffs could not and did not redeem the property because to do so would

be an implied admission of the regularity of the sale and would stop plaintiffs from later

impugning its validity on that ground;

 23. Defendant bank is now threatening to take possession of the said properties and will

subsequently request the defendant Register of Deeds for Calapan City to cancel the titles in the

name of the plaintiffs and to issue new titles in the name of Bank of Commerce after

consolidation of the ownership thereof;

24. Based on the plaintiffs’ cause of action, making the foreclosure proceedings null and

void, it is clear that plaintiffs are entitled to the relief demanded and to restraining the defendant

bank from taking possession and/or consolidating its alleged ownership of the subject properties

and preventing the Registry of Deeds of Calapan City to cancel the titles of the plaintiff and to

issue new titles in the name of Bank of Commerce;

25. The possession by defendant bank and/or consolidation of the alleged ownership of

the Bank of Commerce over the properties would work grave injustice to the plaintiffs since they

will be illegally deprived of ownership, use, income and/or possession of the subject properties;

26. Defendant Bank of Commerce in taking possession of and/or consolidating its

alleged ownership of subject properties, and the defendant register of Deeds in threatening to

cancel the title, are actually doing, threatening or attempting to do, or are procuring or suffering

to be done the above-mentioned acts in gross violation of the rights of the plaintiff and tending to

render the judgment ineffectual, moot and academic, thereby inflicting irreparable damages and

injuries to the plaintiffs and resulting in the fraudulent enrichment of defendant Bank of

Commerce in violating the due process of law; and

27. Plaintiffs are willing and able to post a preliminary injunction bond executed in favor

of defendant Bank of Commerce, in the amount to be fixed by the Honorable Court, to the effect

that plaintiffs will pay defendant bank all damages, which it may sustain by reason of the

injunction if the Honorable Court finally decides that plaintiffs were not entitled thereto.
 PRAYER

WHEREFORE, premises considered, plaintiffs pray:

1. Upon the filing thereof, this Honorable Court forthwith issue a Temporary

Restraining Order in accordance with the Rules of Court prohibiting, stopping and enjoining the

defendant Bank of Commerce from taking possession of and/or consolidating its alleged

ownership over the properties covered by the following titles:

TCT Nos. T-92867, T-92868, T-92869, T-92870, T-92872, T-92877, T-96878, T-

6878, T-96879, T-96881, T-96882, T-96883, T-96884, T-96885, T-96886, T-
96887, T-96888, T-96889, T-96890, T-96899, T-96900, T-96913, T-96914, T-
96949, T-96950, T-96974, T-96975, T-96976, T-96977, T-96978, T-96979, T-
96981, T-96981, T-96982, T-96983, T-96984, T-96985, T-96985, T-96986, T-
96987, T-96988, T-96989, T-96990, T-96991, T-96992, T-96993, T-96994, T-
96995, T-96996, T-96997, T-96998, T-96999, T-97000, T-97001, T-97002, T-
97003, T-97004, T-97005, T-97006, T-97007, T-97008, T-97009, T-97010, T-
97011, T-97012, T-97013, T-97014, T-97015, T-97021, T-97022, T-97023, T-
97024, T-97025, T-97026, T-97027, T-97023, T-97024, T-97025, T-97026, T-
97027, T-107005, T-107006, T-107008, T-107009, T-107009, T-98269, T-92564,
T-92566, T-92568, T-92873, T096867, T-96868, T-96869, T-96870, T-96871, T-
96872, T-96873, T-96874, T-96875, T-96876 and T-96877

and prohibiting, stopping and enjoining the defendant Registry of Deeds for Calapan City from

canceling the above-mentioned titles and issuing new ones in the name of Bank of Commerce;

2. After hearing, this Honorable Court issue a writ of preliminary injunction prohibiting

the commission of the aforementioned acts by defendants during the pendency of this case upon

posting by the plaintiffs of a bond in favor of defendant Bank of Commerce in the amount to be

fixed by the Honorable Court and declaring the same permanent after the trial of this case;

3. Declaring all the aforementioned loan documents, including all the interests,

penalties, attorney’s fee and other charges imposed on plaintiffs’ account null and void or in the

alternative, reducing the interests, penalties, attorney’s fees and other charges at a reasonable

level;

4. Ordering defendant Bank of Commerce to render true and correct accounting and/or

application of payments on plaintiffs’ account;

 5. Holding defendant Bank of Commerce liable to pay plaintiffs the following:

a. P50,000.00 as and for attorney’s fees and P10,000.00 for litigation expenses;
b. P100,000.00 as and by way of moral damages;
c. P100,000.00 for exemplary damages; and
d. Costs of suit.

Plaintiffs further pray for such other remedies just and equitable under the premises.

Makati City for Calapan City, March 13, 2006

JOSE DOMINGO L. TAN

Counsel for Plaintiffs
JAKA Center, 2111 Chino Roces, Avenue, Makati City
Roll of Attorneys No. 41940
IBP No.. 669575, Cavite, 1-10-06
PTR No. 4197499, Makati, 1-12-06

VERIFICATION AND CERTIFICATION

We Spouses Edilberto and Rhoda Ilano, after having been sworn in accordance with law,
hereby depose and say:

1. That we are the plaintiffs in this case;

2. That we have caused the preparation and filing of the above-entitled

complaint;

3. That all allegations therein are true and correct of our own knowledge and
based on the authentic records in our possession;

4. That we hereby certify that we have not commenced any other action or
proceeding involving the same issues and the same parties in the Supreme Court, the Court of
Appeals, or different divisions thereof, or any other tribunal or agency, and to the best of our
knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals
or different divisions thereof, or any other tribunal or agency; that if we should thereafter learn of
a similar action or proceeding pending before any tribunal or agency, we undertake to report the
same to this Honorable Court such fact within five (5) days therefrom.

Edilberto C. Ilano, Jr. Rhoda C. Ilano

Affiant Affiant

SUBSCRIBED AND SWORN to before me this ___ day of __________,2006, affiants

exhibiting to me their CTC Nos. _____________ and _______________ issued on
________________ at _______________.

Doc. No. ____;

Page No. ____;
Book No.____;
Series of 2006.