Republic of the Philippines REGIONAL TRIAL COURT

National Judicial Capital Region Makati City

BEN HOGAN, Plaintiff,

- versus -

ARNOLD PALMER,

Defendant.

x - - - - - - - - - - - - - - - - - x

CIVIL CASE NO. 05-032 For: Judicial Foreclosure of Real Estate Mortgage with Application for Receivership

COMPLAINT PLAINTIFF JACK NICHLAUS, through its counsel, most respectfully states:

I.

PARTIES

1. PLAINTIFF BEN HOGAN (hereinafter referred to as

“Plaintiff”) is of legal age, Filipino, married and a resident of 87 St. Joseph Avenue, San Antonio Village, Makati City. It may be served with subpoena, orders, and other processes of this Honorable Court at undersigned counsel’s address as indicated below.

2. DEFENDANT ARNOLD PALMER (hereinafter

referred to as “Defendant”) is of legal age, Filipino, married and a resident of 22, Bonifacio Street, Poblacion, Makati City, where he may be served with summons and other processes of this Honorable Court.

II.

THE FACTS

3. On May 25, 2010, Defendant approached the Plaintiff at

the Manila Polo Club and invited the latter to invest in the apartment business which the former wanted to put up in his empty lot located at J.P. Rizal St., Makati City. Plaintiff respectfully declined but told the Defendant that he was willing to loan him money to jumpstart the business provided that the land to be used as well as the future improvements therein would be given as collateral.

4. Thus, on June 1, 2010, Defendant executed a promissory

note in the sum of FIVE MILLION PESOS (PhP 5,000,000) in favor of Plaintiff, in the terms and conditions as follows:

FOR VALUE RECEIVED, the undersigned Maker, promises to pay to the order of Ben Hogan, (hereinafter referred to as "Payee"; Payee together with any subsequent holder hereof or any interest herein being hereinafter referred to as "Holder") at 87 St. Joseph Avenue, San Antonio Village, Makati City, or at such other place as the Holder may from time to time designate in writing, without grace, except as may be otherwise expressly provided for herein, the principal sum of FIVE MILLION PESOS (Php 5,000,000), together with interest from the date hereof at a rate of twelve percent (12 %) per annum, on or before June 1, 2013.

xxx A copy of the said Promissory Note is attached hereto, marked

annex “A” and made an integral part of this complaint. 5. To secure payment of the said promissory note, the

Defendant executed a Deed of Mortgage in favor of Plaintiff over the subject parcel of land of which Defendant is the absolute owner, located at J.P. Rizal St., Makati City, covered by Transfer Certificate of Title No. 12345, containing an area of about FIVE HUNDRED

FIFTY SQUARE METERS (550 sqm), more or less, including all the present and future improvements therein.

A copy of the Deed of Mortgage and the Transfer Certificate of Title is attached hereto, marked annex “B” and “C”, respectively, and are made as integral parts of this complaint.

The Deed of Mortgage was recorded in the Registry of Deeds of Baguio City on the 3rd day of June, 2010.

6. Using the loan as capital, Defendant built a five-door

apartment within the 550 square meter property. By the end of 2010, the apartments were fully functional and ready to be rented out.

III.

CAUSE OF ACTION

7. Under the Deed of Mortgage and Promissory Note,

Defendant was obligated to pay the plaintiff the amount of 5,000,000 pesos on or before June 1, 2013. However, Defendant failed to pay the same because of alleged business reverses. Defendant’s failure to pay constitutes default of the terms of payment under the Deed of Mortgage and the Promissory Note.

8. Notwithstanding the Plaintiff’s subsequent oral and written demands, the Defendant still failed to pay the loan, or any part thereof.

9. Hence, because of Defendants’s failure to pay, this action

for Foreclosure of Real Estate Mortgage is in order. Article 2137 of the New Civil Code provides:

The creditor does not acquire the ownership of the real estate for non-payment of the debt within the period agreed upon. Every stipulation to the contrary shall be void.

But the creditor may petition the court for the payment of the debt or the sale of the real property. In this case, the Rules of Court on the foreclosure of mortgages shall apply.

Moving on to the provisions of the Rules of Court, Rule 68 provides for the formalities and procedure for the foreclosure of real estate mortgages. More particularly, Section 2 of Rule 68 states that:

Judgment on foreclosure for payment or sale. – If upon trial in such action the court shall find the facts set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interests and other charges as approved by the court, and costs, and shall render judgment for the sum so found due and order that the same be paid to the court or to the judgment obligee within a period not less than ninety (90) days nor more than one hundred twenty (120) days from the entry of judgment, and that in default of such payment the property shall be sold at public auction to satisfy the judgment.

(Emphasis supplied)

10. Due to the Defendant’s default, Plaintiff was deprived of

the productive use of his money. Plaintiff is thus entitled to the payment of the principal sum of 5,000,000 pesos subject to an interest rate of 12 % per annum. In addition, the whole amount due is also subject to 6 % interest per annum as penalty. Furthermore, Plaintiff is entitled to Attorney’s fees equal to TWO HUNDRED THOUSAND PESOS (Php 200,000) as well as the costs associated with this suit. The foregoing amounts are based on the agreement of both parties as evidenced by the pertinent provisions of the Promissory Note as follows:

xxx

(b) In case the Maker defaults in the payment of the amount due, the unpaid amount shall be subject to an additional 6 % interest per annum as penalty.

xxx (d) Should suit be brought to recover on this Note, or should the same be placed in the hands of an attorney for collection, Maker promises to pay Holder attorney fees equal to TWO HUNDRED THOUSAND PESOS (Php 200,000) and costs incurred in connection therewith. This Note shall be governed and construed in accordance with the laws of the Philippines, and suit hereon may only be brought before the Regional Trial Court of Baguio City, to the exclusion of all other venues.

xxx

IV.

ALLEGATIONS OF FACT IN SUPPORT OF THE

APPLICATION FOR RECEIVERSHIP

11. Plaintiff hereby repleads and incorporates, by way of

reference, all the foregoing allegations in support hereof. 12. After the Defendant’s failure to pay the amount due, the

Plaintiff conducted an ocular survey of the mortgaged property on July 1, 2013. It was then that he personally saw that the Defendant had miserably neglected to take care of the parcel of land and improvements therein, so much so that some of the walls were already ruined by the infestation of termites.

A copy of the photograph of the damaged wall which was taken

last July 1, 2003 is attached hereto, marked Annex “D” and is made an integral part of this Complaint;

13. Upon consultation with the Mines and Geosciences Bureau (MGB) last July 6, 2013, results of the Landslide Assessment and Mapping revealed that the subject parcel of land is in an area which is highly susceptible to landslide. The MGB recommended that

for areas with high susceptibility ratings, the construction of a rip-rap structure is needed in order to prevent further collapse and the highly probable occurrence of landslides.

A copy of the MGB’s Landslide Assessment and Mapping of

the City of Baguio is attached hereto, marked Annex “E” and is made an integral part of this Complaint;

14. On July 7, 2013, the Plaintiff talked again to the

Defendant at the latter’s home with regard to the recommendations of the MGB and the termite infestation. The Defendant categorically stated that he will no longer waste any more of his money for the construction of the rip-rap structure on the property and the eradication of the termite infestation because it will eventually be foreclosed by the Plaintiff. Because of this, the Plaintiff became concerned that further damage to the property might result to its insufficiency to satisfy the mortgage debt.

15. Due to these circumstances, the Plaintiff was prompted to

seek for remedies which can adequately protect his rights under the Mortgage agreement and under the Rules of Court. Rule 59 of the Rules of Court provides:

SECTION 1. Appointment of receiver. – Upon a verified application, one or more receivers of the property subject of the action or proceeding may be appointed by the court where the action is pending, or by the Court of Appeals or by the Supreme Court, or a member thereof, in the following cases:

xxx (b) When it appears in an action by the mortgagee for the foreclosure of a mortgage that the property is in danger of being wasted or dissipated or materially injured, and that its value is probably insufficient to discharge the mortgage debt, or that the parties have so stipulated in the contract of mortgage;

xxx

(Emphasis supplied)

16. The facts of this case clearly show that Defendant-Mortgagor willfully disregarded the maintenance and preservation of the mortgaged property. Such facts necessitate the appointment of a receiver to protect and preserve the interests of the Plaintiff-Mortgagee during the pendency of this case.

17. Furthermore, it is without a doubt that the appointment of

a receiver is the most convenient and feasible means of preserving and administering the subject property before its foreclosure.

18. Unless a receiver is appointed, the property is in danger of being wasted and might not satisfy the obligation secured by the same.

19. Plaintiff is willing and able to post a bond in connection with his application for receivership in such amount as may be fixed by this Honorable Court.

20. In addition to the foregoing, Plaintiff is entitled to moral damages in the amount of 100,000 pesos for the serious anxiety he has suffered as a result of the Defendant’s refusal to safeguard the mortgaged property from possible damage due to landslides. Plaintiff’s anxiety brought about sleepless nights as he was troubled that the security for the loan might become useless by the time he is allowed by the court to proceed with the foreclosure. Furthermore, the Plaintiff is also entitled to exemplary damages in the amount of 50,000 pesos for acting in wanton disregard of the rights of the Mortgagee, particularly because by his own willful acts, he had permitted the impairment of the mortgaged property.

V.

PRAYER

WHEREFORE, premises considered, Plaintiff most respectfully

prays that this Honorable Court, after due notice and hearing, issue a judgment:

1. Appointing a receiver to take possession of the said property during the pendency of this action, upon the filing of a bond by the Plaintiff in such sum as this court may deem sufficient;

2. Ordering Defendant to pay Plaintiff the following: a. The sum of 5,000,000 pesos as the principal amount

loaned by the defendant with interest as stipulated at 12 % per annum;

b. The total amount due subject to an additional 6 % interest per annum as penalty;

c. Attorney’s fees in the amount of 200,000 pesos as agreed upon in the promissory note executed by the parties;

d. Moral damages in the amount of 100,000 pesos; e. Exemplary damages in the amount of 50,000 pesos;

and f. Other costs in connection with this suit.

3. Ordering that in the event payment is not made within the

period prescribed by law, the mortgaged land and the improvements therein shall be foreclosed and sold at a public auction and the proceeds thereof shall be applied in accordance with the dispositions of law.

4. Plaintiff likewise prays for such other relief and remedies

as may be deemed just and equitable by the court.

Makati City, July 15, 2013

DON VICENTE T. MATE III Counsel for Plaintiff 5407 General Luna Street, Poblacion, Makati City PTR No. 1857058/ NCR/ 1-3-2013 IBP No. 886468/MNL III/1-10-2013 ROLL No. 180530 MCLE Comp. No. III-0013/ 05-01-13 Contact No.: 0915-688-0230 Email Add.: dvltmate@gmail.com

VERIFICATION AND CERTIFICATION

I, BEN HOGAN, of legal age, Filipino, married and a resident of 87 St. Joseph Avenue, San Antonio Village, Makati City, after having been duly sworn to in accordance with law, do hereby depose and state, THAT:

1. I am the Plaintiff in the above-entitled case for Judicial Foreclosure of Mortgage and Receivership filed against Arnold Palmer.

2. I have caused the preparation of the foregoing Complaint.

3. I have read the same and know the contents thereof. 4. All the allegations contained therein are true and correct

of my personal knowledge and based on authentic records. 5. I have not commenced any action or filed any claim

involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of my knowledge, no such other action or claim is pending therein; if there is such other pending action or claim, I will provide a complete statement of the present status thereof; and, if I should thereafter learn that the same or similar action or claim has been filed or is pending, I shall report that fact within five (5) days therefrom to the court wherein the aforesaid complaint or initiatory pleading has been filed. IN WITNESS WHEREOF, I have hereunto affixed my signature this 27th day of June 2013 at Makati City.

BEN HOGAN Affiant

SUBSCRIBED AND SWORN to before me on the 10th of June, 2013 at Baguio City, Philippines. Affiant appeared before me with his Community Tax Certificate No. 643526 and presented to me a document entitled “Complaint for Judicial Foreclosure and Receivership,” issued on 23rd day of January 2013 at Makati City, Philippines. Affiant exhibited to me his SSS ID No. 732632, issued on March 3, 2013 at Makati City, as competent evidence of identity. AARON JAMES T. MARTIN Notary Public Commission Serial No. 9473 Until December 31, 2015 Roll No: 163528 IBP No. 9483 – 012/26/13 PTR No. 9932 – 07/21/14 Doc. No. 13; Page No. 21; Book No. 8; Series of 2013.