Gravina v. Court of Appeals
REITERATIONFacts
1. The Antecedents: The petitioners, Spouses Arturo and Zenaida Gravina, originally owned a lot in Tondo, Manila. They mortgaged this property to Daily Savings Loan Association (DLSA) in 1973 to secure loans totaling P109,000.00. Upon failure to settle the obligation, DLSA foreclosed the mortgage on September 10, 1974, and subsequently consolidated ownership. DLSA then sold the property to Mercantile Financing Corporation on January 29, 1976, which in turn sold it to Spouses Alfredo and Lucila Edna Tan on February 25, 1976. 2. Procedural History: On March 3, 1983, the Spouses Tan filed an ejectment complaint against the Gravinas. After an initial decision in favor of the Tans by the Metropolitan Trial Court, the Gravinas appealed to the Regional Trial Court (RTC). The RTC dismissed the ejectment case, ruling that the Tans should have filed an accion reivindicatoria. The Tans then filed a separate action to recover possession in the RTC, which ruled in their favor on November 7, 1986, ordering the Gravinas to vacate. The Gravinas appealed this decision. While the appeal was pending, the Tans filed a motion for execution pending appeal, which the RTC denied. The Tans challenged this denial via a petition for certiorari with the Court of Appeals. The Court of Appeals consolidated the Gravinas' appeal and the Tans' certiorari petition, ultimately affirming the RTC's judgment in the recovery of possession case and dismissing the Tans' petition for certiorari. 3. The Petition: The Gravina spouses are now before the Supreme Court via a petition for review, challenging the Court of Appeals' decision. They raise four main issues concerning the validity of the extrajudicial foreclosure of the mortgage, the public auction sale, the consolidation of title in DLSA's name, and the subsequent sale to the Tans. The core of their argument centers on the alleged lack of notice to them as mortgagors regarding the foreclosure. The Supreme Court notes that the validity of the foreclosure and the notice thereof are factual issues already passed upon by the lower courts, which found that notice was sent and published in accordance with Act No. 3135, which does not require personal notice. The Court also addresses the validity of the sale to the Tans, clarifying they purchased from Mercantile Financing, not DLSA, and that there is no prohibition against a bank selling foreclosed property to an employee, with no proof of collusion presented.
Issue(s)
Whether or not the foreclosure of the mortgage executed by the Daily Savings and Loan Association Inc. was valid. Whether or not the public auction sale by the sheriff was made in accordance with law. Whether or not the consolidation of title in the name of Daily Savings and Loan Association was valid. Whether or not the sale to the mortgagee bank personnel is valid.
Ruling
The petition is denied for lack of merit. The decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the validity of the foreclosure, public auction sale, and consolidation of title: The Court held that the petitioners' contention regarding the invalidity of the extrajudicial foreclosure due to lack of personal notice was untenable. The findings of the trial court, sustained by the Court of Appeals, established that DLSA had sent a letter informing the petitioners of the foreclosure, which they failed to claim. Furthermore, the notice was published in the Evening News, a newspaper of general circulation. The Court reiterated that Section 3 of Act No. 3135 requires only the posting of notices of sale in three public places and publication in a newspaper of general circulation; personal notice is not a mandatory requirement for extrajudicial foreclosure. The Court is bound by the factual findings of the Court of Appeals regarding the notice and publication. The validity of the consolidation of title followed from the valid foreclosure. On the validity of the foreclosure, public auction sale, and consolidation of title: The Court held that the petitioners' contention regarding the invalidity of the extrajudicial foreclosure due to lack of personal notice was untenable. The findings of the trial court, sustained by the Court of Appeals, established that DLSA had sent a letter informing the petitioners of the foreclosure, which they failed to claim. Furthermore, the notice was published in the Evening News, a newspaper of general circulation. The Court reiterated that Section 3 of Act No. 3135 requires only the posting of notices of sale in three public places and publication in a newspaper of general circulation; personal notice is not a mandatory requirement for extrajudicial foreclosure. The Court is bound by the factual findings of the Court of Appeals regarding the notice and publication. The validity of the consolidation of title followed from the valid foreclosure. On the validity of the foreclosure, public auction sale, and consolidation of title: The Court held that the petitioners' contention regarding the invalidity of the extrajudicial foreclosure due to lack of personal notice was untenable. The findings of the trial court, sustained by the Court of Appeals, established that DLSA had sent a letter informing the petitioners of the foreclosure, which they failed to claim. Furthermore, the notice was published in the Evening News, a newspaper of general circulation. The Court reiterated that Section 3 of Act No. 3135 requires only the posting of notices of sale in three public places and publication in a newspaper of general circulation; personal notice is not a mandatory requirement for extrajudicial foreclosure. The Court is bound by the factual findings of the Court of Appeals regarding the notice and publication. The validity of the consolidation of title followed from the valid foreclosure. On the validity of the sale to mortgagee bank personnel: The Court found no merit in the petitioners' claim that the sale of the foreclosed property to Lucila Edna Tan was invalid. Firstly, the Tans purchased the property not from the mortgagee (DLSA) but from Mercantile Financing Corporation. Secondly, there is no prohibition against a bank selling property acquired through foreclosure to its employee. The petitioners' claim of collusion between DLSA and the Tans was not substantiated by sufficient proof, and the appellate court's finding that there was no sufficient proof to sustain this defense was given due weight and not disturbed on appeal. The Court emphasized that it is bound by the factual findings of the Court of Appeals regarding the absence of collusion.
Main Doctrine
Personal notice to mortgagors is not required for the validity of an extrajudicial foreclosure sale under Act No. 3135, as long as the requirements of posting and publication of the notice of sale are complied with. A sale to a third party, even if an employee of the mortgagee, is valid in the absence of proof of collusion.