G.R. No. 195272 January 14, 2015
BANK OF THE PHILIPPINE ISLANDS (formerly Prudential Bank), Petitioner, vs. SPOUSES DAVID M. CASTRO and CONSUELO B. CASTRO, Respondents.

FACTS

Respondent Spouses David M. Castro and Consuelo B. Castro obtained two loans from Prudential Bank (petitioner’s predecessor) in 1987: ₱100,000.00 and ₱55,000.00, secured by separate Real Estate Mortgages (REMs). The ₱100,000.00 loan was secured by a REM over the spouses’ Quezon City property. The ₱55,000.00 loan was secured by a REM over two Laguna properties registered in the name of David’s mother, Guellerma Malabanan. The loans remained unpaid. In 1996, Prudential Bank filed petitions for extrajudicial foreclosure. Due to inadvertence, the petition and the resulting Notice of Sheriff’s Sale contained a mix-up: the notice named “Guellerma Malabanan” as the mortgagor and stated the mortgage indebtedness as ₱96,870.20 (the amount related to the Laguna loan), but the property described was the Quezon City property. The Quezon City property was sold at public auction to Prudential Bank. The spouses filed a complaint for Declaration of Nullity of Sheriff’s Certificate of Sale and Damages, arguing the foreclosure was void for lack of proper notice and publication. The Regional Trial Court (RTC) dismissed the complaint, finding the notice sufficient. The Court of Appeals reversed the RTC, ruling that the errors in the notice, particularly the huge discrepancy in the stated indebtedness, constituted a jurisdictional defect invalidating the sale.

ISSUE

Whether the errors in the Notice of Sheriff’s Sale (specifically, the misidentification of the mortgagor and the stated amount of indebtedness) invalidate the notice and render the extrajudicial foreclosure sale void.

RULING

No. The Supreme Court granted the petition, reversed the Court of Appeals, and reinstated the RTC decision dismissing the complaint. The Court held that foreclosure proceedings enjoy a presumption of regularity, and the respondents failed to rebut this presumption. The object of the notice is to inform the public of the nature and condition of the property, and the time, place, and terms of the sale. Immaterial errors and mistakes that do not deter or mislead bidders, depreciate the property’s value, or prevent it from fetching a fair price do not invalidate the notice. In this case, the property (Quezon City) was sufficiently described and identified in the notice. The sale was conducted at the correct place and time. The Court found that the errors were not calculated to mislead bidders or depress the property’s value, as the property was sold for ₱396,000.00, which was more than the actual indebtedness. The Court also noted that David Castro admitted he knew of the foreclosure application for their Quezon City property but did not object or seek clarification before the sale, implying acquiescence. Therefore, the Certificate of Sale was upheld.