Zepeda vs. China Banking Corp Digest

SPS. EXPEDITO ZEPEDA AND ALICE D. ZEPEDA vs. CHINA BANKING CORPORATION G.R. No. 172175

October 9 2!!"

#ACTS$

Petitio Petitioner nerss Spous Spoused ed Zepeda Zepeda obtained obtained a loan loan with with China China Bank Bank secured secured by a real estate mortgage. mortgage. Petitioners Petitioners subsequently subsequently encountered encountered difficultie difficultiess in paying paying their loan obligations obligations hence they requested for restructuring which was allegedly granted by Chinabank. Hence they were surprised when respondent bank e!tra"udicially foreclosed the sub"ect property where it emerged as the highest bidder. #espondent bank was issued a Provisional Certificate of Sale and upon petitioners$ petitioners $ failure to redeem the property ownership was consolidated in its favor. Spouse Spousess Zepeda Zepeda filed filed a compla complaint int for nullifi nullificati cation on of foreclo foreclosur suree proceed proceeding ingss and loan documents with damages against respondent. %ccording to them the foreclosure proceedings should be annulled for failure to comply with the posting and publication requirements. &hey also claimed that they signed the #eal 'state (ortgage and Promissory )ote in blank and were not given a copy and the interest rates thereon were unilaterally fi!ed by the respondent. #espondent bank$s motion to dismiss was denied hence it filed an answer with special affirmative defenses and counterclaim. *t also filed a set of written interrogatories with +, questions. &he trial court denied Chinabank$s affirmative defenses for lack of merit as well as its motion to e!punge the complaint for being premature. %ggrieved %ggrieved respondent respondent bank filed a petition petition for certiorari certiorari under #ule - which was granted  by the Court of %ppeals. *t held that the trial court gravely abused ruling that compelling reasons warrant the dismissal of petitioners$ complaint because they acted in bad faith when they ignored the hearings set by the trial court to determine the veracity of Chinabank$s affirma affirmativ tivee defens defenses/ es/ they failed failed to answer answer Chinab Chinabank ank$s $s written written interro interrogat gatorie ories/ s/ and the complaint states no cause of action. ISS%ES$

a0 1hether the complaint states a cause of action/ and  b0 1hether the complaint should be dismissed for failure of petitioners to answer  respondent$ respondent$ss written interrogatories interrogatories as provided provided for in Section 23c0 #ule +4 of the #ules of  Court. R%LING$ &' &he nature of the cause of action action is determined determined by the facts alleged in the complaint complaint and not the prayer therein.

I( )eter*+(+(, -eter &( +(+t+&tor/ 0e&)+(, t&te & c&3e o4 &ct+o( te tet + & 4oo-$ &)*+tt+(, te tr3t o4 te 4&ct &e,e) c&( te co3rt re()er & 6&+)  3),*e(t +( &ccor)&(ce -+t te 0r&/er8 To be t&e( +(to &cco3(t &re o(/ te *&ter+& &e,&t+o( +( te co*0&+(t: e;tr&(eo3 4&ct &() c+rc3*t&(ce or oter *&tter aliunde &re (ot co(+)ere) .

&hus in this case allegations in the complaint sufficient to establish a cause of action for  nullifying the foreclosure of the mortgaged property &he consequences enumerated in Section 23c0 of #ule +4 would only apply where the b'  party upon whom the written interrogatories is served refuses to answer a particular  question in the set of written interrogatories and despite an order compelling him to answer  the particular question still refuses to obey the order. *n the instant case petitioners refused to answer the whole set of written interrogatories not "ust a particular question. Clearly then respondent bank should have filed a motion based on Section  and not Section 23c0 of #ule +4.