Personal notice to mortgagor on foreclosure not necessary

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Dear PAO,
My parents mortgaged our house and lot as security for a loan that  they had obtained from a bank. Because of financial difficulties, however, they were not able to pay the loan back. Recently, we found out that the mortgaged property was extra-judicially foreclosed without us being informed. Although my parents can still redeem the property, were the foreclosure proceedings valid despite the fact that my parents were not informed about them?
Lady Ann

Dear Lady Ann,
As can be deduced from your letter, you are questioning the propriety and validity of the extra-judicial foreclosure proceedings that pertain to the real-estate mortgage, which was entered into by your parents and the mortgagee bank. You are in doubt because no personal notice was sent to your parents informing them of the foreclosure proceedings. At first glance, it seems that the foreclosure is invalid as your parents were not informed of the same. Under the law, however, only publication and posting of notice of sale are  required in extra-judicial foreclosure proceedings. Personal notice to the mortgagor is not required as the law is silent about this. Republic Act 3135 as amended by RA 4118 provides:

“Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.”

Clearly, personal notice to the mortgagor is not required in extra-judicial foreclosure of mortgage. This was explained by the Supreme Court in the case of Fortune Motors (Phils.) Inc. vs. Metropolitan Bank and Trust Company (G.R. No. 115068, November 28, 1996) in this wise:


“Settled is the rule that personal notice to the mortgagor in extra-judicial foreclosure proceedings is not necessary. Section 3 of Republic Act  3135 governing extra-judicial foreclosure of real-estate mortgages, as amended by Republic Act 4118, requires only the posting of the notice of sale in three public places and the publication of that notice in a newspaper of general circulation. It is pristine clear from the above provision that the lack of personal notice to the mortgagor, herein petitioner, is not a ground to set aside the foreclosure sale.”

On the other hand, if the parties to the real-estate mortgage agreed that in case of extra-judicial foreclosure sale, the mortgagor shall be informed of the same by the mortgagee, this must be faithfully complied with, otherwise the sale shall be null and void. This was enunciated by the Supreme Court in the case of Global Holiday Ownership Corporation vs. Metropolitan Bank & Trust Company (G.R. No. 184081, June 19, 2009), to wit:
“Thus, we restate: The general rule is that personal notice to the mortgagor in extra-judicial foreclosure proceedings is not necessary, and posting and publication will suffice.

Sec. 3 of Republic Act 3135 governing extra-judicial foreclosure of real-estate mortgages, as amended by Republic Act 4118, requires only posting of the notice of sale in three public places and the publication of that notice in a newspaper of general circulation. The exception is when the parties stipulate that personal notice is additionally required to be given the mortgagor. Failure to abide by the general rule, or its exception, renders the foreclosure proceedings null and void.”

Thus, applying the foregoing, the extra-judicial foreclosure sale mentioned in your letter is valid if the requirements as mandated by law were complied with and that there was no stipulation in the real-estate mortgage specifically directing mortgagee bank to inform your parents of the foreclosure sale. Otherwise, the same is null and void.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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