G.R. No. 82490 September 8, 1994
SEVERINO P. DE GUZMAN, petitioner, vs. HON. COURT OF APPEALS and LORENZO P. BENITEZ, respondents.

FACTS

On July 21, 1982, Severino de Guzman deposited P500,000.00 with Solid Homes and Loan Association, Inc., evidenced by a Certificate of Time Deposit maturing on July 22, 1984. To secure payment, Lorenzo P. Benitez, as an officer of Solid Homes, executed a Deed of Real Estate Mortgage over a parcel of land in Quezon City in favor of de Guzman. The mortgage stipulated that de Guzman’s right to foreclose would accrue only upon the maturity date if no payment was made. On December 1, 1983, Benitez received a notice of Sheriff’s Sale scheduled for December 15, 1983, alleging a violation of the mortgage terms due to non-payment. Benitez filed an action for injunction to prevent the foreclosure. The Regional Trial Court issued a restraining order, halting the sale. Upon the maturity date (July 22, 1984) without payment, de Guzman filed a motion to declare the injunction moot. The trial court granted the motion and lifted the restraining order on August 1, 1984. The foreclosure sale was then reset and conducted on September 19, 1984, with de Guzman as the highest bidder. After Benitez failed to redeem the property, de Guzman consolidated ownership, and a new title was issued in his name. The trial court subsequently dismissed Benitez’s petition for injunction and ordered Benitez to pay de Guzman attorney’s fees and earnest money. On appeal, the Court of Appeals reversed the trial court, declaring the foreclosure proceedings initiated prior to July 22, 1984, null and void.

ISSUE

Whether the extrajudicial foreclosure proceedings and the subsequent sale conducted after the maturity date of the obligation are valid despite the initial premature foreclosure attempt.

RULING

The Supreme Court granted the petition, reversed the decision of the Court of Appeals, and reinstated the decision of the Regional Trial Court. The Court held that while the initial foreclosure sale scheduled prior to the maturity date was premature, it was aborted by the restraining order. The actual foreclosure sale was conducted on September 19, 1984, after the obligation had matured and remained unpaid, and after the restraining order was lifted. The Court found that the requirements under Act No. 3135, as amended, for extrajudicial foreclosure were duly complied with prior to the September 1984 sale: a new notice was sent to the mortgagor, publication was made in a newspaper of general circulation for three consecutive weeks, the sale was conducted as noticed, and a sheriff’s certificate of sale was duly issued and recorded. The failure to file a new petition for extrajudicial foreclosure after the maturity date was not critical, as the primordial requirements of the law were observed.