G.R. No. 205741 - People vs. Endaya y Laig

Petitioners Spouses Nestor and Ma. Belen Cabasal obtained a credit line from BPI Family Savings Bank (BPI) to finance their build and sell business.
Using the credit line, they purchased two real properties in 1997 and executed two Mortgage Loan Agreements with BPI:

Petitioners found a buyer, Eloisa Guevarra Co (Eloisa), willing to buy through sale with assumption of mortgage.
They prepared a Deed of Sale with Assumption of Mortgage; Eloisa agreed to pay Php7,850,000.00 down payment and assume a balance of Php4,462,226.00 with BPI.
Nestor inquired for an updated statement of account from respondent Alma De Leon (collection assistant) of BPI.
On 06 July 2000, Nestor and Eloisa visited BPI to effect transfer of mortgage, but respondent rejected the transfer because Eloisa was not a BPI client and assumption of mortgage was prohibited by bank policy and Section 35 of the Mortgage Loan Agreement.
Petitioners claim that respondent’s handling caused the deal to fall through, resulting in loss of expected profit of Php3,387,773.96.
Nestor sent a complaint letter dated 27 July 2000 to BPI; a lawyer’s letter followed on 08 December 2000, stating petitioners would stop amortization payments and requested waiver of interests and charges due to respondent’s negligence. No response was received.

Petitioners defaulted on loan Account No. 0211291311, prompting BPI to foreclose the mortgage.
The property was sold at public auction with BPI as highest bidder; title transferred accordingly after redemption period expired.
Petitioners filed Civil Case No. 01-0014: Damages with Annulment of the Extra-Judicial Foreclosure of TCT No. (35660) 141767 and Injunction.
BPI filed Land Registration Case No. 02-0068: Ex-parte Petition for Writ of Possession.
The two cases were consolidated.

The RTC dismissed the annulment of foreclosure case, upholding the validity of the mortgage and foreclosure procedure.
It granted the writ of possession to BPI.
The RTC held respondent Alma De Leon and BPI liable for damages based on bad faith and negligence under Articles 19 and 20 of the Civil Code for respondent’s wrongful characterization of the mortgage assumption transaction as illegal and failure to assist petitioners properly. BPI was vicariously liable.
Damages awarded to petitioners amounted to Php3,387,773.96 plus interests and attorney’s fees.

The CA affirmed the writ of possession ruling.
However, it reversed the RTC on damages, ruling BPI and respondent were not liable; respondent’s statements were in good faith, based on BPI’s policy prohibiting assumption of mortgage as per Section 35 of the Mortgage Loan Agreement.
The CA explained that although restrictive, BPI’s policy was reasonable and executed in good faith to protect banking prudence.
Petitioners’ Motion for Reconsideration was denied.

The CA erred in disregarding respondent’s negligence and BPI's vicarious liability under Article 20 of the Civil Code.
Alleged breach of contract by respondents justified petitioners’ suspension of loan payments, rendering foreclosure void.

Whether petitioners proved that respondent Alma De Leon and BPI acted in bad faith or negligence to justify damages under Articles 19 and 20 of the Civil Code.
Whether petitioners' suspension of loan payments was justified due to respondent’s alleged negligence and breach of contract, rendering the foreclosure and writ of possession invalid.
Whether the issuance of the writ of possession should be annulled.