METROBANK v WONG (personal notice; defective publication)

G. R. No. 120859
June 26, 2001
DOCTRINE:
Personal notice to the mortgagor is not necessary, but the parties to
the mortgage contract are not precluded from exacting additional
requirements. The Act only requires (1) the posting of notices of sale
in three public places, and (2) the publication of the same in a
newspaper of general circulation. Personal notice to the mortgagor is
not necessary. Nevertheless, the parties to the mortgage contract are
not precluded from exacting additional requirements.
FACTS:
Mindanao Grains, Inc. (MGI), through its officers, applied for a
CREDIT ACCOMMODATION with METROBANK to finance its rice and
corn warehousing business. As a security, respondent (WONG)
executed a REAL ESTATE MORTGAGE over a parcel of land located in
Zambaonga del Sur. [IMPORTANT!!] In this contract of real
estate, there was a stipulation to the effect that the
MORTGAGEE MUST RECEIVE ALL CORRESPONDENCE RELATIVE
TO THE MORTGAGE (demand, letters, judicial or extrajudicial
action, etc.) in his home address.
MGI defaulted on the payment of the credit accommodation,
which prompted METROBANK to file an application for extrajudicial
foreclosure. Pursuant to such action, a NOTICE OF FORECLOSURE SALE
was published in Pagadian Times, once, for three consecutive weeks.
No notice was posted in the municipality or city where the mortgaged
property was situated.
The President of MGI sought to postpone the scheduled auction
sale. METROBANK agreed, provided that MGI will pay P20,000 on or
before the scheduled sale. The President complied; however, the
SHERIFF proceeded with the auction sale and signed a certificate of
sale in favor of METROBANK as the highest bidder. Its title was
consolidated after the expiration of the redemption period.
Unaware of these facts, WONG applied for a CREDIT
ACCOMMODATION with PCIB in Zamboanga and used the same parcel
of land as security. It was then that he found out that the property was
already foreclosed and no longer in his name.
Aggrieved, WONG filed a complaint before the RTC. During the
pendency of the case, METROBANK sold the lot to YU.

Prepared by Ma. Jillian C. Gandingco1

The Regional Trial Court rendered a decision in favor of the

SPOUSES WONG, which was affirmed by the Court of Appeals.

ISSUES:
(1)Whether or not personal notice to the respondents is a condition
sine qua non to the validity of foreclosure proceedings?
(2)Whether or not METROBANKs non-compliance with the posting
requirement is fatal to the validity of the foreclosure proceedings?
HELD:
(1)NO, but the parties may so stipulate as an additional
requirement in their contract.
Section 3 of Act No. 3135 only requires the following:
o Positing of notices of sale in 3 public places; and,
o Publication of the same in a newspaper of general
circulation.
Generally, PERSONAL NOTICE to the mortgagor is not
necessary.
Nevertheless, the parties to the contract are not precluded
from exacting additional requirements.
In the case at bar, the stipulation in the mortgage contract
sought to protect respondents property. Thus, when
petitioner failed to send the notice of the foreclosure
sale to respondent, the same proceedings are
rendered NULL AND VOID.
(2)

YES.
The Supreme Court has never disposed of the posting
requirement.
Moreover, the publication in the case at bar is defective for
the following reasons:
o It failed to conform with requirement that the notice
must be published once a week for at least three
consecutive weeks in a newspaper of general
circulation; and,
o Substantial errors in the notice of sale published (as in,
the REM adverted to in the published notice is a nonexistent document.
There was also collusion between the SHERIFF and
METROBANK. As well as between METROBANK and YU.
As a consequence of the foregoing, moral damages were
awarded to WONG.

Prepared by Ma. Jillian C. Gandingco2

Prepared by Ma. Jillian C. Gandingco3