[G.R. No. 120859. January
23, 2002]
METROBANK vs. WONG
Gentlemen:
Quoted hereunder, for your information,
is a resolution of this Court dated JAN 23 2002.
G.R. No. 120859 (Metropolitan
Bank and Trust Company, petitioner vs. Francisco Y. Wong, respondent.)
G.R. No. 120816 (Francisco
Y. Wong, petitioner vs. Metropolitan Bank and Trust Company, and Register of
Deeds for Zamboanga del Sur, respondents.)
On June 26, 2001, we denied the petition for review on
certiorari filed by the Metropolitan Bank and Trust Company (petitioner)
against Francisco Wong (respondent), on two grounds: first, while personal notice to the mortgagor is not necessary
under Act No. 3135, the parties to the mortgage contract are not precluded from
exacting such additional requirement; and second,
the case of Olizon v. Court of Appeals[1],
relied upon by petitioner, has not actually dispensed with the posting
requirement under Section 3 of Act No. 3135.
The pertinent portion of our Decision reads:
“The Act only requires (1) the
posting of notices of sale in three public places, and (2) the
publication of the same in a newspaper of general circulation. Personal notice to the mortgagor is not
necessary. Nevertheless, the parties to the mortgage contract are not
precluded from exacting additional requirements. In this case, petitioner and respondent in entering into a contract of real estate mortgage, agreed inter alia:
‘all
correspondence relative to this mortgage, including demand letters, summonses,
subpoenas, or notifications of any judicial or extra-judicial action shall be
sent to the MORTGAGOR at 40-42 Aldeguer St. Iloilo City, or at the address that
may hereafter be given in writing by the MORTGAGOR to the MORTGAGEE.’
“Precisely, the purpose of the foregoing
stipulation is to apprise respondent of any action which petitioner might take
on the subject property, thus according him the opportunity to safeguard his
rights. When petitioner failed to send
the notice of foreclosure sale to respondent, he committed a contractual breach
sufficient to render the foreclosure sale on November 23, 1981 null and void.
‘The second query must be answered in the
affirmative. An incisive scrutiny of Olizon
shows that this Court has not actually dispensed with the posting requirement
under Section 3 of Act no. 3135, xxx.:
“Obviously, as correctly pointed out by
respondent, what prompted the Court to dispense with the posting requirement is
the “unusual nature of the attendant facts and the peculiarity of
the confluent circumstances” Involved in Olizon. It bears stressing
that in the said case, the
extra-judicial foreclosure sale sought to be annulled was conducted more than
15 years ago, thus, even on the equitable ground of laches, the Olizons’ action
for annulment of foreclosure proceedings and certificate of sale was bound to
fail.”
Petitioner now seeks reconsideration of our Decision. Invoking the case of Cortez v. Intermediate Appellate Court,[2]
petitioner contends that this Court construed a similar stipulation between the
parties therein, regarding the sending of all correspondence to the mortgagor,
as a mere expression of general intent. As such, it may not prevail against the
parties’ specific intent to make Act
No. 3135 (which does not require personal notice of foreclosure) the
controlling law between them.
The Cortez case
finds no application to the case at bar.
Indeed, it cannot provide solace to petitioner’s cause.
First, our Decision is sustained by the much later cases of Grand Farms, Inc. v. Court of Appeals,[3]
and Concepcion v. Court of Appeals.[4]
In these cases where similarly worded stipulations between the parties are
involved, we ruled that while personal notice to the mortgagor is not necessary
under Act No. 3135, nevertheless, the parties to the mortgage contract are not
precluded from exacting additional requirements, such as notice of foreclosure
to the mortgagor. Said stipulations,
not being contrary to law, morals, good customs, public order or public policy,
shall be considered as the law between the contracting parties and shall be
faithfully complied with. In Grand Farms, this Court held:
“While private respondent was constituted
as their attorney-in-fact by petitioners, the inclusion of the aforequoted paragraph
(k) in the mortgage contract nevertheless rendered personal notice to the
latter indispensable. As we stated in
Community Savings & Loan Association, Inc., et al., vs. Court of Appeals,
et al., where he had the occasion to contrue an identical provision:
‘On the other important point that
militates against the petitioner’s first ground for this petition is the fact
that no notice of the foreclosure proceedings was ever sent by CSLA to the
deceased mortgagor Antonio Esguerra or his heirs in spite of an express
stipulation in the mortgage agreement to that effect. Said Real Estate Mortgage provides, in Sec. 10 thereof that:
‘(10) All correspondence relative to this mortgage, including demand
letters, summons, subpoenas, or notifications
of any judicial or extrajudicial actions shall be sent to the Mortgagor at the address given above or at the
address that may hereafter be given in writing by the Mortgagor to the
Mortgagee, and the mere act of sending any correspondence by mail or by
personal delivery to the said address shall
be valid and effective notice the Mortgagor for all legal purposes, xxx.
‘The Court of Appeals, in appreciating
the forgoing provision ruled that it “is an additional stipulation between the
parties. As such, it is the law between
them and as it not contrary to law, morals, good customs and public policy, the
same should be complied with faithfully (Article 1306, New Civil Code of the
Philippines). Thus, while publication
of the foreclosure proceedings in the newspaper of general circulation was
complied with, personal notice is still required, as in the case at bar, when
the same was mutually agreed upon by the parties as additional condition of the
mortgage contract. Failure to comply
with this additional stipulation would render illusory Article 1306 of the New
Civil Code of the Philippines.’
x x x x
x x
“We
do not agree with respondent court that paragraph (k) of the mortgage contract
in question was intended merely to indicate the address to which the communications
stated therein should be sent. This
interpretation is rejected by the very text of said paragraph as above
construed. We do not see any
conceivable reason why the interpretation placed on an identically worded
provision in the mortgage contract involved in Community Savings & Loan Association, Inc. should be adopted
with respect to the same provision involved in the case at bar.
“Xxx. Those mentioned in paragraph (k) are
specific and additional requirements intended for the mortgagors so that, thus
apprised, they may take the necessary legal steps for the protection of their
interests such as the payment of the loan to prevent foreclosure or to
subsequently arrange for redemption of the property foreclosed.
“What private respondent would want is to
have paragraph (k) considered as non-existent and consequently
disregarded. Furthermore, it bears
mention that private respondent having caused the formulation and preparation
of the printed mortgage contract in question, any obscurity that it imputes
thereto or which supposedly appears therein should not favor it as a
contracting party.”
And second, there
exists a crucial distinction between the situation of the parties in Cortez and in the case at bar. Unlike in Cortez where the mortgagor was the borrower of the loan that was
secured by the mortgage, respondent, in the present case, mortgaged his
property merely to accommodate
Mindanao Grains, Inc. (MGI), the actual borrower. In short, respondent was merely an “accommodation
mortgagor.” Not being a party to the
contract of loan between MGI and petitioner, respondent has the right to demand
from the latter a personal notice of foreclosure under the Real Estate
Mortgage.
Also, respondent’s assertion that as a condition precedent
to his execution of the real estate mortgage, the said document must clearly
state (which it does) that his address is 40-42
Aldeguer St., Iloilo City, the place where “all correspondence relative to the mortgage, including demand letters,
summonses, subpoenas, or notifications of any judicial or extra-judicial
actions shall be sent, “clearly shows that the intention of the parties is
that the mortgagee should notify the mortgagor or the other parties concerned
of the foreclosure proceeding. To be
sure, the importance of such personal notice to respondent herein cannot be
overemphasized. In variance with Cortez where the mortgagors were very
much aware of their default, in this case, no such default or knowledge thereof
could be imputed to respondent.
Evidently, what petitioner would like us to do is to
disregard its obligation, under the Real Estate Mortgage, to furnish respondent
with personal notice of foreclosure.
This cannot be done in view of the basic rule in our civil Code that
“obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.”[5]
The rest of
petitioner’s arguments deserve scant consideration, the same being mere rehash
of those raised in the petition which have been fully passed upon in our
Decision.
WHEREFORE, the motion is hereby DENIED with finality.
SO ORDERED.
Very truly yours,
(Sgd.) JULIETA Y. CARREON
Clerk of Court