G.R. No. 100480 May 1, 1993
BLANCA CONSUELO ROXAS, petitioner, vs. COURT OF APPEALS and RURAL BANK OF DUMALAG, INC., respondents.

FACTS

Petitioner Blanca Consuelo Roxas owned a parcel of land. On December 22, 1969, she executed a special power of attorney appointing her brother, Manuel Roxas, as her attorney-in-fact to apply for an agricultural loan from private respondent Rural Bank of Dumalag, Inc., using the land as collateral. Manuel Roxas obtained a P2,000.00 loan on December 26, 1969, and executed a real estate mortgage over the land. Due to non-payment, the bank foreclosed the mortgage. The land was sold at public auction to the bank on January 7, 1974, for P3,009.37. After the redemption period lapsed, the bank consolidated its ownership. Petitioner filed a complaint for cancellation of foreclosure and annulment of the auction sale, claiming she was never informed by her brother about the loan’s approval, maturity, or the foreclosure. She alleged the bank failed to provide a statement of account despite repeated requests and that the foreclosure did not comply with statutory notice requirements. The Regional Trial Court ruled in favor of the petitioner, declaring the auction sale null and void and allowing redemption. The Court of Appeals reversed this decision, finding substantial compliance with the notice requirements.

ISSUE

Whether the foreclosure and public auction sale were valid despite alleged non-compliance with the statutory publication and notice requirements under Section 5 of Republic Act No. 720, as amended.

RULING

The Supreme Court granted the petition, set aside the decision of the Court of Appeals, and affirmed the trial court’s decision with modification. The Court ruled that the foreclosure and public auction sale were void due to failure to strictly comply with the mandatory publication requirements of Section 5 of R.A. No. 720, as amended by R.A. No. 5939. The law required notices of foreclosure to be posted in at least three conspicuous public places in the municipality and the barrio where the mortgaged land is situated. The sheriff’s certificate of posting showed notices were posted in the municipality of Panay and Roxas City, but not in the barrio where the land was situated. Furthermore, the law required proof of publication by an affidavit of the sheriff, but only a certificate of posting was executed. The Court held that statutory provisions governing publication of notice of mortgage foreclosure sales must be strictly complied with, and even slight deviations invalidate the sale. Consequently, the auction sale was declared null and void. The Court modified the trial court’s decision by ordering petitioner to pay the bank the principal loan amount of P2,000.00 plus stipulated or legal interest from the date the loan was obtained until the date of consignation. The bank was declared entitled to foreclose the mortgage anew, upon due compliance with the publication requirements, if petitioner failed to pay the obligation within sixty days.