CASE DIGEST : RURAL BANK OF CANDELARIA v. ROMULO BANLUTA GR No. 208254 GAERLAN

 Facts : This case is a Petition for Review on Certiorari seeking to overturn the Court of Appeals’ Amended Decision and Resolution affirming with modification the RTC ruling that nullified the foreclosure sale conducted by the Rural Bank of Candelaria, Zambales, Inc. The case arose when Romulo Banluta claimed he had fully paid a 1993 loan secured by real estate mortgage, but the bank still foreclosed on the property without notice and based on expanded land titles. The RTC ruled that while Banluta owed over ₱4.2 million because the 1999 loan renewal was unpaid, the foreclosure was invalid since the mortgage documents were not sufficiently proven and ambiguous. Both parties appealed, and upon Banluta's partial reconsideration, the CA deleted the order requiring him to pay the computed loan amount, ruling that the promissory note presented by the bank was materially altered and thus lost evidentiary value. With no valid proof of debt and proof of payments presented by Banluta, the CA upheld the nullification of the foreclosure. The bank’s reconsideration was denied, leading to this petition.

ISSUE : WON the CA is correct

HELD : The petition was partly granted. The Court upheld the authority of Manikan, as chairperson and president of the bank, to sign and file the petition without a board resolution, noting his identity was attached and his authority was undisputed. It ruled that the nullity of the real estate mortgage and foreclosure sale could no longer be reopened, as the CA’s earlier decision affirming the RTC’s ruling on this issue had become final. The only remaining issue was whether the CA erred in declaring the September 15, 1999 Promissory Note invalid due to material alteration. The Supreme Court held that this issue could not be raised for the first time on appeal, as it was never properly alleged, argued, or proven before the RTC. Moreover, the respondent admitted his signature on the note, and there was witness testimony confirming its due execution and authenticity. Even assuming alterations existed, the bank could have proven they were authorized had the issue been timely raised. Thus, the CA erred in disregarding the Promissory Note. The Court reinstated the RTC ruling, upholding the loan obligation with 20% interest per annum as stipulated in the Promissory Note up to the finality of the decision, after which legal interest of 6% per annum shall apply until full payment.