G.R. No. 182735 ; December 4, 2009
SPS. ROGELIO MARCELO & MILAGROS MARCELO, Petitioners, vs. PHILIPPINE COMMERCIAL INTERNATIONAL BANK (PCIB), Respondent.

FACTS

Petitioners Spouses Marcelo obtained several loans from respondent PCIB from 1996 to 1997, executing corresponding promissory notes. To secure these obligations, they constituted a Real Estate Mortgage (REM) on June 3, 1997, over six parcels of land in Bulacan. The REM contract stipulated that PCIB could extrajudicially foreclose the mortgage upon the spouses’ default. The spouses subsequently defaulted on their loan payments. After repeated demands, PCIB initiated extrajudicial foreclosure proceedings.
A Notice of Sheriff’s Sale was issued, posted in public places in Baliuag, Bulacan, and published in The Times Newsweekly, a newspaper of general circulation. Copies were also sent by registered mail. A public auction was conducted on September 15, 1998, where PCIB emerged as the highest bidder. A Certificate of Sale was issued and annotated on the titles. Shortly before the expiration of the redemption period, the spouses filed a complaint seeking nullification of the foreclosure, alleging irregularities in the posting and publication of the notice and claiming PCIB imposed exorbitant interest rates without notice.

ISSUE

Whether the extrajudicial foreclosure of the mortgage and the subsequent auction sale are valid.

RULING

Yes, the foreclosure and auction sale are valid. The Supreme Court affirmed the Court of Appeals’ decision upholding the proceedings. The legal logic centers on compliance with Act No. 3135 , the governing law for extrajudicial foreclosure. The law requires posting of the notice of sale in public places and publication in a newspaper of general circulation for three consecutive weeks. PCIB satisfactorily proved compliance through the Sheriff’s Affidavit of Posting and the newspaper’s Affidavit of Publication. The spouses’ mere denial of receiving the mailed notice is insufficient to overturn the presumption of regularity in the performance of official duty by the sheriff. The purpose of notice is to inform the public and secure bidders to prevent a sacrifice of the property, not merely to give personal notice to the mortgagor. As the objects of the notice requirement were attained, immaterial errors do not invalidate the sale. The Court also found the spouses’ claim regarding interest rates unsubstantiated, as they failed to present clear evidence that the rates were unconscionable or imposed without their conformity as stipulated in the loan documents they signed.