Rizal Commercial Banking Corporation v. Pedro P. Buenaventura

Summary

RCBC foreclosed on Pedro Buenaventura's mortgaged townhouse in 1999, claiming default on loan payments. Buenaventura sued to annul the foreclosure sale, presenting evidence through passbooks and deposit slips that he had made regular payments and maintained sufficient account balances. The RTC found the foreclosure invalid, declaring it null and void based on evidence that Buenaventura was current on payments, with RCBC's own amortization schedule showing zero balance due by March 2000. The Court of Appeals affirmed but removed damages awards, finding the foreclosure premature since the borrower had paid in full. The Supreme Court upheld both lower courts, applying Article 1176 of the Civil Code's presumption that receipt of later installments without reservation indicates prior installments were paid. The case establishes that foreclosure is only valid when debtor is actually in default, and banks cannot foreclose when borrowers have fulfilled payment obligations, even if payments were made irregularly.