G.R. No. 172175

Feb. 18, 2003 - Expedito and Alice Zepeda filed a complaint for nullification of foreclosure proceedings and loan documents with damages against respondent Chinabank. They alleged that on June 28, 1995, they obtained a loan in the amount of Php5,800,000.00 from respondent secured by a Real Estate Mortgage over a parcel of land covered by Transfer Certificate of Title (TCT) No. T-23136.

June 28, 1995 – Spouses Expedito and Alice Zepeda obtained a loan in the amount of Php5,800,000 from respondent China Banking Corp. secured by a Real Estate Mortgage over a parcel of land.

Due to the difficulties encountered by the petitioners in meeting their loan obligations, they requested for restructuring which was allegedly granted by the respondent.

October 9, 2001 – The petitioners were surprised when respondent bank extrajudicially foreclosed the subject property where it emerged as the highest bidder. Spouses contested that foreclosure proceedings should be annulled for failure to comply with the posting and publication requirements, for not providing them a copy of the Real Estate Mortgage and Promissory Note which they signed in blank, and for unilaterally fixing its interest rates.

February 18, 2003 – The petitioners filed a complaint for nullification of foreclosure proceedings and loan documents with damages against the bank.

Spouses Zepeda petitioned that the foreclosure be annulled for failure to comply with posting and publication requirements. They claimed that they signed the Real Estate Mortgage and Promissory Note in blank and were not given a copy and interest rates were fixed unilaterally.

Chinabank requested a motion to dismiss the petition by the Zepedas which was denied. They then filed an answer with special affirmative defenses and counterclaim. They also filed interrogatories with 20 questions.

The Trial Court issued two Orders as follows:

Apr. 1, 2004 Order - denied Chinabank's defense for lack of merit and denied motion to expunge...