G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES ANTONIO and LETICIA BERNARDO, respondents.

July 8, 1996

FACTS

Spouses Antonio and Leticia Bernardo 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 purchased the property as the highest bidder at the public auction. The one-year redemption period expired without the spouses redeeming the property. Metrobank then filed a petition for the issuance of a writ of possession with the Regional Trial Court (RTC), which was granted. The spouses Bernardo appealed to the Court of Appeals, arguing that the foreclosure and auction sale were void because they were not personally notified of the foreclosure proceedings. The Court of Appeals set aside the RTC’s order, ruling that the lack of personal notice to the mortgagors rendered the foreclosure sale void. Metrobank elevated the case to the Supreme Court via petition for review.

ISSUE

Whether personal notice to the mortgagors is required for the validity of an extrajudicial foreclosure sale under Act No. 3135, as amended.

RULING

No. The Supreme Court granted Metrobank’s petition and reversed the decision of the Court of Appeals. The Court held that for extrajudicial foreclosure of a real estate mortgage under Act No. 3135, as amended, personal notice to the mortgagor is not required. The law mandates only the posting of notices of sale in three public places and the publication of the notice in a newspaper of general circulation. The requirement in the mortgage contract for the mortgagee to notify the mortgagor of any extrajudicial foreclosure action is merely a contractual stipulation, not a statutory requirement. The breach of such contractual stipulation does not affect the validity of the foreclosure sale, although it may give rise to a claim for damages. Since the statutory requirements of posting and publication were duly complied with by Metrobank, the extrajudicial foreclosure sale was valid. Consequently, Metrobank, as the purchaser at the auction sale, is entitled to a writ of possession as a matter of right upon the expiration of the redemption period without redemption being made.