Tamayo v. Dominguez
REITERATIONFacts
The Antecedents: Gavino Dominguez obtained a P40,000 loan secured by a real estate mortgage on half of his commercial property, with Ricardo Dominguez as co-maker. The loan was due on November 26, 1976. Gavino Dominguez died without repaying the loan. The mortgagee, Community Savings and Loan Association (CSLA), foreclosed the mortgage extrajudicially when the loan matured. CSLA was the highest bidder at the auction sale and subsequently consolidated ownership of the mortgaged half of the property after the redemption period expired. CSLA later offered the heirs of Gavino Dominguez the option to repurchase the property, which they failed to exercise. Consequently, CSLA sold the property to petitioners Virgilio and Lucinda Tamayo. Procedural History: Petitioners filed an action for partition against the respondents (heirs of Gavino Dominguez). The Regional Trial Court (RTC) initially ordered the partition but later reconsidered, nullifying the extrajudicial foreclosure and subsequent sale to the Tamayos. The RTC allowed the respondents to redeem the property from CSLA upon payment of the loan and ordered the Tamayos to pay P5,000 in attorney's fees. The Court of Appeals (CA) affirmed the RTC's revised order but deleted the award of attorney's fees. The Tamayos then filed the present petition for review. The Petition: The petitioners seek review of the Court of Appeals' decision, primarily challenging the finding that CSLA violated the mortgage deed by failing to send notice of the extrajudicial foreclosure and sale to the mortgagor or his heirs. The core issue is whether such notice was required and if it was properly sent. The petitioners argue that the CA erred in affirming the RTC's nullification of the foreclosure sale. The Supreme Court, however, adopts the CA's finding that CSLA failed to comply with the stipulated notice requirement in Section 10 of the mortgage deed and reiterates its policy of not disturbing the factual findings of lower appellate courts.
Issue(s)
Whether the extrajudicial foreclosure proceedings and the subsequent sale of the property to the petitioners were valid, and whether CSLA complied with the notice requirement stipulated in the mortgage deed. Whether the award of attorney's fees was proper.
Ruling
The petition is denied. The decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the validity of the extrajudicial foreclosure and sale, and compliance with the notice requirement: The Court affirmed the CA's finding that CSLA violated the notice requirement stipulated in the mortgage deed. Section 10 of the mortgage contract explicitly stated that all correspondence, including notifications of judicial or extrajudicial actions, should be sent to the mortgagor at the given address. The Court found no evidence that CSLA properly sent notice of the foreclosure proceedings to the deceased mortgagor, Gavino Dominguez, or to his heirs. The reliance on 'Exhibit I' was deemed insufficient as there was no proof of proper receipt by the deceased or his heirs. Therefore, the foreclosure proceedings and the subsequent sale to the petitioners were deemed invalid due to non-compliance with the contractual stipulation. The Court reiterated that while personal notice to the mortgagor in extrajudicial foreclosure proceedings is generally unnecessary unless stipulated, the parties in this case voluntarily agreed to include such a stipulation in Section 10 of the mortgage deed. As this stipulation was not contrary to law, morals, good customs, and public policy, CSLA was bound to comply with it faithfully. The appellate court's finding that no evidence was presented to show proper notice was adopted by the Supreme Court, confirming the violation of the contractual requirement. On the award of attorney's fees: The Court agreed with the CA that the award of attorney's fees in favor of the respondents was improper. The established rule is that the reason for the award of attorney's fees must be stated in the body of the court's decision. If it is only mentioned in the dispositive portion, it shall be disallowed on appeal. Since the trial court did not explain the basis for awarding attorney's fees in its decision, the CA correctly deleted the award.
Main Doctrine
The parties to a mortgage contract are bound by their voluntary agreement on additional stipulations, such as the requirement for personal notice of foreclosure proceedings, provided they are not contrary to law, morals, good customs, and public policy. Failure to comply with such a stipulated notice requirement renders the foreclosure proceedings void.