G.R. No. 160046 ; November 27, 2009
BANK OF THE PHILIPPINE ISLANDS (Successor-in-interest of Citytrust Banking Corporation), Petitioner, vs. EVANGELINE L. PUZON, Respondent.

FACTS

Respondent Evangeline Puzon obtained a loan from Citytrust Banking Corporation, secured by a real estate mortgage over her property. Upon her default, Citytrust initiated extrajudicial foreclosure. The Notice of Sheriff’s Sale was published in “The Guardian” newspaper for three consecutive weeks and a Certificate of Posting stated it was posted in three conspicuous places in Quezon City. The auction proceeded, and the property was sold to Citytrust Realty Corporation. After the redemption period, title was consolidated in the buyer’s name.
Puzon filed a petition for annulment of the foreclosure, alleging procedural defects. She argued the sheriff violated Act No. 3135 , as amended, regarding the posting and publication of the notice and the venue of the sale. The trial court, while finding Puzon in default, nullified the foreclosure sale due to lack of proof of compliance with statutory posting and publication requirements. The Court of Appeals affirmed this ruling.

ISSUE

Whether the extrajudicial foreclosure sale is valid despite alleged procedural irregularities in the posting and publication of the notice of sale.

RULING

The Supreme Court denied the petition and affirmed the nullity of the foreclosure sale. The legal logic centers on the mandatory and jurisdictional nature of the publication and posting requirements under Act No. 3135 and Presidential Decree No. 1079. For an extrajudicial foreclosure sale to be valid, the notice must be posted for at least twenty days in three public places in the municipality or city where the property is situated, and published once a week for at least three consecutive weeks in a newspaper of general circulation.
The Court found the evidence of compliance insufficient. The Sheriff’s Certificate of Posting merely stated posting was done in three “conspicuous places,” not “public places” as required by law. There was no factual demonstration that these locations were indeed public. Furthermore, the certificate failed to state that the posting was made at least twenty days before the sale. While “The Guardian” was a newspaper of general circulation, the petitioner failed to present the required affidavit of publication and the editor/publisher’s sworn statement attesting to its qualifications under P.D. 1079. These omissions constituted a failure to prove strict adherence to the law. Since these requirements are mandatory to protect the mortgagor’s right to due process and to attract bidders to ensure a fair price, their non-compliance rendered the foreclosure sale void. The mortgagee’s right to foreclose remains, but it must be exercised in strict accordance with the law.