G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES ANTONIO and LETICIA BERNARDO, respondents.

July 8, 1996

FACTS

Spouses Antonio and Leticia Bernardo obtained a loan from Metropolitan Bank and Trust Company (Metrobank) secured by a real estate mortgage over their property. They defaulted on the loan. Metrobank extrajudicially foreclosed the mortgage and purchased the property as the highest bidder at the public auction. A certificate of sale was issued and registered. The one-year redemption period expired without the spouses redeeming the property. Metrobank then executed an Affidavit of Consolidation of Ownership and a new title was issued in its name. Subsequently, Metrobank sold the property to a third party. The spouses Bernardo filed a complaint for annulment of the foreclosure sale, alleging that Metrobank failed to send them a notice of the foreclosure sale as required by Act No. 3135 , as amended. The trial court ruled in favor of the spouses, declaring the foreclosure sale null and void. The Court of Appeals affirmed the decision. Metrobank appealed, arguing that the publication and posting of the notice of sale were sufficient and that personal notice to the mortgagors was not required by law.

ISSUE

Whether the extrajudicial foreclosure sale is null and void due to Metrobank’s failure to send personal notice of the sale to the mortgagor-spouses, in addition to the publication and posting requirements under Act No. 3135 .

RULING

NO. The extrajudicial foreclosure sale is valid. The Supreme Court reversed the decisions of the lower courts. The Court held that Act No. 3135 , as amended, which governs extrajudicial foreclosure of real estate mortgages, only requires publication of the notice of sale in a newspaper of general circulation and the posting of the notice in three public places. The law does not require that personal notice be sent to the mortgagor. The absence of personal notice does not affect the validity of the foreclosure sale, provided the statutory requirements of publication and posting are duly complied with. The Court emphasized that the purpose of publication and posting is to give notice to the public, including the mortgagor, and this constitutes sufficient notice. Since Metrobank complied with the publication and posting requirements, the foreclosure sale was conducted in accordance with law and is valid. The petition was granted, and the complaint for annulment of the foreclosure sale was dismissed.