G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES FORTUNATO AND VIRGINIA VENERACION, respondents.

July 13, 1994

FACTS

Spouses Fortunato and Virginia Veneracion obtained a loan from Metropolitan Bank and Trust Company (Metrobank) secured by a real estate mortgage over their property. They defaulted on the loan. Metrobank extrajudicially foreclosed the mortgage, and the property was sold at a public auction where Metrobank was the highest bidder. A certificate of sale was issued and registered. The one-year redemption period expired without the spouses redeeming the property. Metrobank then filed an ex parte petition for the issuance of a writ of possession with the Regional Trial Court (RTC), which was granted. The spouses Veneracion filed a motion to quash the writ, arguing that the foreclosure sale was void because the notice of sale was published in a newspaper of general circulation in Metro Manila, not in Bulacan where the property was located, and that the auction took place in Makati, not in Bulacan. The RTC denied the motion and ordered the issuance of the writ. The Court of Appeals reversed the RTC, holding the foreclosure sale null and void due to improper venue of publication and auction. Metrobank appealed to the Supreme Court.

ISSUE

Whether the extrajudicial foreclosure sale is null and void for failure to comply with the venue requirements for publication and auction under Act No. 3135, as amended.

RULING

NO. The extrajudicial foreclosure sale is valid. The Supreme Court reversed the Court of Appeals and reinstated the RTC order granting the writ of possession.

The Court held that while Act No. 3135 requires publication of the notice of sale in a newspaper of general circulation in the municipality or city where the property is situated, and that the sale must be made at the same location, these provisions are merely directory and not jurisdictional. Non-compliance with these venue requirements does not render the foreclosure sale null and void, but merely voidable at the instance of the mortgagor and only if such non-compliance caused material injury.

In this case, the spouses Veneracion failed to prove that they suffered any material injury or prejudice from the publication in Metro Manila or the auction in Makati. The purpose of publicationto give notice to interested partieswas substantially achieved. The spouses were not deprived of the opportunity to participate or redeem, as they were clearly aware of the foreclosure proceedings but chose not to act until after the redemption period had lapsed. The Court emphasized that a writ of possession is a ministerial act issued after the redemption period to place the purchaser in possession of the property, and the mortgagor’s defenses against the validity of the sale are not proper in such summary proceedings. Any question regarding the validity of the sale must be raised in a separate proceeding. Since no such separate action was filed, and no material injury was shown, the foreclosure sale and the consequent right to a writ of possession remained valid.