GSIS Family Bank v. Spouses Lim

FIRST DIVISION

[G.R. No. 233734. November 5, 2018.]

GSIS FAMILY BANK [FORMERLY COMSAVINGS BANK] AND GRACE S. BELVIS, IN HER CAPACITY AS THE EX-OFFICIO SHERIFF OF PASIG CITY, petitioners, vs.SPOUSES TEODORO L. LIM AND LILIA B. LIM, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedNovember 5, 2018which reads as follows:

"G.R. No. 233734 (GSIS Family Bank [formerly COMSAVINGS Bank] and Grace S. Belvis, in her capacity as the Ex-Officio Sheriff of Pasig City vs. Spouses Teodoro L. Lim and Lilia B. Lim)

For review is the assailed Decision 1 dated March 18, 2016 and Resolution 2 dated April 10, 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 100148, which annulled and set aside the Resolution 3 dated November 13, 2012 issued by the Regional Trial Court (RTC) of Pasig City, Branch 67, in Civil Case No. 71047.

In 2003, Marco Polo Medical Systems (Marco Polo) obtained a P15-million loan from petitioner GSIS Family Bank. 4 Respondents Teodoro L. Lim, Marco Polo's President; and his wife, Lilia B. Lim, one of Marco Polo's major stockholders, represented Marco Polo in the loan transaction.

Respondents executed the promissory notes 5 on behalf of Marco Polo and executed a Joint and Solidary Agreement 6 to pay GSIS Family Bank. Respondents also, acting as accommodation mortgagors, entered into a real estate mortgage 7 (REM) with GSIS Family Bank and mortgaged their property located at 81 West Capitol Drive, [K]apitolyo, Pasig City, and covered by TCT No. PT-117005. 8

Marco Polo defaulted on its loan payments. Despite the sending of several demand letters 9 by GSIS Family Bank, Marco Polo and respondents failed to pay.

On July 8, 2005, GSIS Family Bank applied 10 for the extra-judicial foreclosure of the mortgage and the sale was initially scheduled on August 25, 2005. 11 CAIHTE

On August 9, 2005, respondents filed a Petition for the Declaration of Suspension of Payment with the Approval of Proposed Rehabilitation Plan with the RTC of Pasig City, Branch 158. 12 On August 19, 2005, a Stay Order was issued by RTC, Branch 158 directing the suspension of enforcement of claims against Marco Polo. 13

On November 3, 2006, the said petition for declaration of suspension of payment was denied due course by the RTC of Pasig City, Branch 158. 14

The foreclosure sale was then set again on December 14, 2006. 15

On December 6, 2006, respondents filed anew a case for Declaration of Nullity of Mortgage Contract and Application for Extra-judicial Foreclosure with prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction. It was docketed as Civil Case No. 71074-PSG before the RTC of Pasig City, Branch 67. 16

The RTC of Pasig City, Branch 67, issued a temporary restraining order, however, before it could be served, the foreclosure sale was concluded as scheduled on December 14, 2006; and a Certificate of Sale 17 was issued to GSIS Family Bank as the winning bidder.

Trial ensued as regards the case for declaration of nullity of mortgage contract and application for extra-judicial foreclosure. After the presentation of evidence of the respondents, GSIS Family Bank filed a Demurrer to Evidence 18 alleging that the grounds relied upon in their complaint do not justify annulment of the real estate mortgage and foreclosure.

The RTC granted the demurrer and dismissed the complaint in a Resolution dated November 13, 2012, thus:

WHEREFORE, in view of all the foregoing, this case is hereby DISMISSED for insufficiency of evidence.

SO ORDERED. 19

On appeal, the CA reversed the RTC resolution and found, among others, that there was no prior notice to the respondents of the foreclosure sale and that the absence of which, nullified the foreclosure proceedings. Its dispositive portion reads:

WHEREFORE, premises considered, the appeal is GRANTED. The Resolution dated November 13, 2012 of the Regional Trial Court (RTC), Pasig City, Branch 67 in Civil Case No. 71074-PSG is declared ANNULLED and SET ASIDE. The extrajudicial foreclosure proceedings and auction sale conducted by Office of the Clerk of Court & Ex-Officio Sheriff Atty. Grace S. Belvis on December 14, 2006 and the Certificate of Sale dated October 2, 2007 over the mortgaged property covered by TCT No. PT-117005, issued in favor of GSIS Family Bank are declared NULL and VOID. DETACa

SO ORDERED. 20

GSIS Family Bank moved for partial reconsideration asserting that respondents have knowledge of the foreclosure sale; even assuming that it failed to comply with its obligation to notify respondents, there is proof to show that respondents were substantially notified; and that respondents are estopped from impugning the validity of the foreclosure proceedings, foreclosure sale and certificate of sale when they proposed to buy the subject property after the title of the property was consolidated in petitioner's name.

The CA denied the same in the assailed Resolution dated April 10, 2017.

GSIS Family Bank now comes before Us, assailing that the respondents have sufficient information and knowledge of the foreclosure sale; and that their acts prior to and during the foreclosure sale are enough proof that they were duly notified.

Ruling of the Court

The petition has no merit.

We have consistently held that unless the parties stipulate, "personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary" because Section 3 of Act 3135 only requires the posting of the notice of sale in three public places and the publication of that notice in a newspaper of general circulation. 21

Here, paragraph M of the REM entered into by the parties, clearly provides:

M) All correspondence relative to this Mortgage, including demand letters, summons, subpoenas, or notifications of any judicial or extra-judicial 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 correspondence by mail or by personal delivery to the said address shall be valid and effective notice to the Mortgagor for all legal purposes, and the fact that any communication is not actually received by the Mortgagor, or that it has been returned unclaimed to the Mortgagee, or that no person was found at the address given, or that the address is fictitious or cannot be located, shall not excuse or relieve the Mortgagor from the effects of such notice. 22 (Emphasis ours)

Indeed, the GSIS Family Bank sent demand letters to respondents. However, the said demand letters cannot be deemed as substantial compliance to the notice that it ought to have sent to respondents with regard to the foreclosure sale on December 14, 2006. The Court has similarly held in the case of Lim, et al. v. Dev't. Bank of the Phils., 23 where a similarly worded clause was provided for in the REM, that: aDSIHc

In this case, the parties stipulated in paragraph 11 of the Mortgage that:

11. All correspondence relative to this mortgage, including demand letters, summons, subpoenas, or notification of any judicial or extra-judicial action shall be sent to the Mortgagor at xxx or at the address that may hereafter be given in writing by the Mortgagor or the Mortgagee;

However, no notice of the extrajudicial foreclosure was sent by DBP to petitioners about the foreclosure sale scheduled on July 11, 1994. The letters dated January 28, 1994 and March 11, 1994 advising petitioners to immediately pay their obligation to avoid the impending foreclosure of their mortgaged properties are not the notices required in paragraph 11 of the Mortgage. The failure of DBP to comply with their contractual agreement with petitioners, i.e., to send notice, is a breach sufficient to invalidate the foreclosure sale.24 (Citation omitted and emphasis ours)

The contract, the REM in this case, has specifically provided that notice with regard to the extra-judicial foreclosure sale, if any, should be given to the respondents. In Metropolitan Bank v. Wong, 25 it was explained that:

[A] contract is the law between the parties and, that absent any showing that its provisions are wholly or in part contrary to law, morals, good customs, public order, or public policy, it shall be enforced to the letter by the courts. Section 3, Act No. 3135 reads:

"Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality and city."

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: ETHIDa

"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.26 (Citation omitted and emphasis ours)

Clearly, the CA committed no reversible error in holding that the foreclosure proceedings are null and void because of GSIS Family Bank's failure to comply with said contractual obligation.

WHEREFORE, the Petition is DENIED. The Decision dated March 18, 2016 and the Resolution dated April 10, 2017 of the Court of Appeals in CA-G.R. CV No. 100148 are hereby AFFIRMED.

The respondents' compliance with the Resolution dated June 20, 2018, submitting a compact disc of the soft copy of the signed comment on the petition for review on certiorari in PDF file; and the petitioner's reply to the comment on the petition for review on certiorari, are both NOTED.

SO ORDERED." Bersamin, J., designated Acting Chairperson per Special Order No. 2606 dated October 10, 2018; Gesmundo, J., designated additional Member per Special Order No. 2607 dated October 10, 2018; Del Castillo, J. and Gesmundo, J., on official leave.

Very truly yours,

(SGD.) LIBRADA C. BUENADivision Clerk of Court

 

Footnotes

1. Penned by Associate Justice Melchor Q.C. Sadang, concurred in by Associate Justices Celia C. Librea-Leagogo and Amy C. Lazaro-Javier; rollo, pp. 32-42.

2.Id. at 44-45.

3.Id. at 166-180.

4.Id. at 48-49.

5.Id. at 50-54.

6.Id. at 66-67.

7.Id. at 55-59.

8.Id. at 60-62.

9.Id. at 68-71.

10.Id. at 72-74.

11.Id. at 75.

12.Id. at 13.

13.Id.

14. Id. at 86.

15. Id. at 88-89.

16. Id. at 32-33.

17. Id. at 90-92.

18. Id. at 138-162.

19. Id. at 180.

20. Id. at 41.

21. Lim, et al. v. Dev't. Bank of the Phils., 713 Phil. 24, 46-47, (2013).

22. Rollo, p. 56.

23. 713 Phil. 24.

24. Id. at 47.

25. 412 Phil. 207 (2001).

26. Id. at 216-217.