Tagunicar v. Lorna Express Credit Corp.
REITERATIONFacts
The Antecedents: Spouses Elsa and Emerson Tagunicar obtained a loan of P60,000.00 from Lorna Express Credit Corporation, securing it with a mortgage over two unregistered lots. After failing to make payments, they proposed a restructuring, which the respondent corporation initially agreed to. However, the respondent later refused a P100,000.00 payment offer and instead filed a complaint for a sum of money amounting to P223,057.34. This complaint was dismissed for failure to prosecute. Subsequently, due to the petitioners' continued inability to pay, the loan amount having ballooned to P740,254.87, the respondent initiated an extrajudicial foreclosure proceeding under Act No. 3135. Procedural History: The extrajudicial foreclosure proceedings led to the issuance of a Notice of Auction Sale, scheduled for October 24, 1997. The petitioners filed a petition for prohibition with a prayer for a temporary restraining order and preliminary injunction with the Regional Trial Court (RTC) of Pasig City, seeking to halt the auction sale. They argued that the notice was not published in a newspaper of general circulation and that the sale was scheduled prematurely, violating Section 3 of Act No. 3135. The RTC issued a temporary restraining order but later denied the petition for a preliminary injunction and the subsequent motion for reconsideration. The petitioners then appealed to the Court of Appeals, which affirmed the RTC's decision, finding that the notice of auction sale complied with the publication requirements and that the newspaper used was of general circulation. The Court of Appeals also denied the petitioners' motion for reconsideration. The Petition: The petitioners have filed the instant petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, assailing the decision and resolution of the Court of Appeals. They contend that the appellate court erred in holding that the twenty-day period for the auction sale should be counted from the date of posting of the notices, not from the date of the last publication. Furthermore, they argue that the Court of Appeals erred in disregarding their contention that an auction sale conducted by a Notary Public is void, citing Supreme Court Administrative Order No. 3, and that the foreclosure proceedings were therefore null and void.
Issue(s)
Whether the Court of Appeals erred in holding that the twenty (20) day period for the conduct of the auction sale should be counted from the date the notices were posted in the three (3) conspicuous public places and not from the date of the last publication. Whether the Court of Appeals erred in ignoring and disregarding the arguments of petitioners that the law applicable for extrajudicial foreclosure of a mortgage and auction sale is the Supreme Court Administrative Order No. 3, and thus, the foreclosure proceedings before a notary public is null and void.
Ruling
The petition is DENIED. The assailed Decision dated November 11, 1998 and Resolution dated May 4, 1999 of the Court of Appeals in CA-G.R. SP No. 46378 are AFFIRMED. Costs against petitioners.
Ratio Decidendi
On the first assigned error (counting of the 20-day period): The Court disagreed with the petitioners' contention that the auction sale was void because it was conducted on October 24, 1997, after the first publication on October 4, 1997, and insisted that it should have been held after the third publication on October 18, 1997. The Court emphasized that Section 3 of Act No. 3135, as amended, is clear, explicit, and unequivocal. It mandates that notice shall be given by posting notices for not less than twenty days in at least three public places and, if the property is worth more than four hundred pesos, by publication once a week for at least three consecutive weeks in a newspaper of general circulation. The records showed that the notice of auction sale was posted in three public places and published in Bongga for three consecutive weeks on October 4, 11, and 18, 1997. Therefore, the mandatory requirements of notice and publication were complied with, and the sale conducted on October 24, 1997, was valid. On the second assigned error (validity of auction sale by a Notary Public): The Court found the petitioners' argument that an auction sale conducted by a Notary Public is void, citing Supreme Court Administrative Order No. 3, Series of 1984, to be bereft of merit. The Court pointed to Section 4 of Act No. 3135, as amended, which explicitly states that the sale shall be under the direction of the sheriff, justice of the peace, or a notary public of the municipality. Furthermore, the Court cited Administrative Matter No. 99-10-05-0, which sets forth the procedure in extrajudicial foreclosure of mortgage and clearly indicates that applications for foreclosure under the direction of a notary public are permissible. The Court concluded that a Notary Public is authorized to direct or conduct a public auction sale.
Main Doctrine
Compliance with the notice and publication requirements under Act No. 3135, as amended, is satisfied when the notice of auction sale is posted in public places and published in a newspaper of general circulation for the prescribed period, and the auction sale is conducted by a notary public within the authorized hours.