Philippine National Bank v. Maraya
REITERATIONFacts
The Antecedents: Spouses Gregorio B. Maraya, Jr. and Wenefrida Maraya (spouses Maraya) obtained a loan from Philippine National Bank (PNB) and constituted a real estate mortgage over their property. The spouses Maraya defaulted on their loan obligation. PNB initiated an extrajudicial foreclosure of the mortgaged property without publishing the notice of sale as required by Section 3 of Act No. 3135. PNB emerged as the highest bidder and was awarded the Sheriff's certificate of sale on November 27, 1990. Subsequently, PNB sold the property to Jesus and Diosdada Cerro (spouses Cerro) via a Deed of Absolute Sale on May 11, 1993, after a public bidding. The spouses Maraya were notified of the sale and advised to vacate, which they refused to do, leading to an unlawful detainer case filed by the spouses Cerro. Procedural History: The spouses Maraya filed a complaint for Annulment of Sale and Quieting of Title against PNB and the spouses Cerro before the Regional Trial Court (RTC). The RTC ruled in favor of the spouses Maraya, declaring the extrajudicial foreclosure sale and the subsequent sale to the spouses Cerro void for PNB's failure to comply with the publication requirement of Act No. 3135. The RTC ordered PNB to conduct a proper extrajudicial foreclosure. The Court of Appeals (CA) affirmed the RTC's decision. PNB's motion for reconsideration was denied. The Petition: PNB filed a petition for review on certiorari before the Supreme Court, assailing the CA's decision. PNB argued that the extrajudicial foreclosure sale was valid despite the absence of publication because the spouses Maraya had knowledge of the proceedings and had allegedly abused legal processes.
Issue(s)
Whether the extrajudicial foreclosure sale is valid despite the absence of publication of the notice of sale. Whether the knowledge of the mortgagors of the extrajudicial foreclosure proceedings can cure the defect of non-publication.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, upholding the nullity of the extrajudicial foreclosure sale due to PNB's failure to comply with the mandatory publication requirement of Act No. 3135.
Ratio Decidendi
On the validity of the extrajudicial foreclosure sale despite the absence of publication: The Court reiterated that Section 3 of Act No. 3135 mandates that for properties worth more than four hundred pesos, the notice of sale shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation. In this case, the property had an assessed value of ₱1,800 for the lot and ₱4,500 for the building, clearly exceeding the threshold. The Court emphasized that statutory provisions governing the publication of notice of mortgage foreclosure sales must be strictly complied with, and even slight deviations will invalidate the sale. The purpose of publication is to give the sale reasonably wide publicity so that interested parties may attend. Allowing waiver of this requirement would convert a public auction into a private sale. On whether the knowledge of the mortgagors can cure the defect of non-publication: The Court disagreed with PNB's contention that the failure to publish was excusable because the spouses Maraya had knowledge of the foreclosure proceedings. The Court held that knowledge of the mortgagors does not cure the jurisdictional defect of non-publication. The requirement of publication is a matter of statutory mandate designed to protect the rights of all interested parties by ensuring adequate publicity of the sale. The Court cited Tambunting v. Court of Appeals to underscore that statutory provisions governing publication must be strictly complied with, and failure to do so renders the sale at least voidable. The Court stressed that if the sheriff acts without notice or at a time and place other than that designated in the notice, the sheriff acts without warrant of law. Therefore, the knowledge of the spouses Maraya did not validate the sale conducted in contravention of the mandatory publication rule.
Main Doctrine
The failure to comply with the mandatory requirement of publication of the notice of extrajudicial sale under Act No. 3135 renders the foreclosure sale void, even if the mortgagors had knowledge of the proceedings.