G.R. No. 176479 ; October 6, 2010
RIZAL COMMERCIAL BANKING CORPORATION, Petitioner, vs. PEDRO P. BUENAVENTURA, Respondent.

FACTS

Respondent Pedro Buenaventura and his wife obtained a loan from petitioner Rizal Commercial Banking Corporation (RCBC), secured by a mortgage on their townhouse. Under the agreement, respondent was to pay fixed monthly amortizations with adjustable interest for five years, and he opened a savings account with RCBC’s Binondo branch from which the bank was authorized to debit payments. On April 19, 1999, respondent received a Notice of Public Auction for the mortgaged property. Despite his demand for cancellation, the notary public proceeded with the sale on May 25, 1999, with RCBC as the highest bidder. Respondent filed a complaint for Annulment of Sale and Damages. The Regional Trial Court (RTC) declared RCBC in default for failing to timely file an Answer and, based on respondent’s evidence, nullified the foreclosure sale and awarded damages.
RCBC appealed. The Court of Appeals (CA) affirmed the nullity of the foreclosure sale but deleted the award of moral and exemplary damages. The CA found the foreclosure premature, holding that respondent had made valid payments and was not in default. It noted that RCBC’s own amortization schedule indicated no balance due after respondent’s last payment on March 27, 2000, and that respondent’s passbooks showed sufficient funds to cover his obligations at the time of foreclosure. RCBC filed this Petition for Review, arguing respondent was in default and the foreclosure was valid.

ISSUE

Whether the Court of Appeals erred in affirming the nullification of the extrajudicial foreclosure sale.

RULING

The Supreme Court denied the petition. The core issue raised by RCBC—questioning the sufficiency of evidence to prove respondent’s default—is a factual question, not a legal one. Factual findings of the trial court, especially when affirmed by the CA, are generally conclusive and binding upon the Supreme Court. The evidence substantiated that respondent was not in default. He complied with his obligation by depositing the monthly amortizations into the designated account. RCBC’s own records, including a computer-generated schedule, showed no unpaid balance as of March 27, 2000. The bank’s claim that the deposited amounts were “not withdrawn” did not equate to non-payment, as respondent’s duty was to make the funds available, which he did. Consequently, the application of the acceleration clause and the subsequent foreclosure were unjustified. The foreclosure sale was therefore correctly declared null and void for being premature. The CA’s deletion of moral and exemplary damages was also proper, as RCBC’s initiation of foreclosure, though erroneous, was not shown to be attended by malice or bad faith given the circumstances.