Cesar John de la Serna

Rule 130, Sec. 10

Section 10. Interpretation of a writing according to its legal meaning. — The

language of a writing is to be interpreted according to the legal meaning it bears in the
place of its execution, unless the parties intended otherwise. (8)

Landmark Case

G.R. No. 73678

July 21, 1989 GUILLERMO CORTES and FLORENCIA P. CORTES, petitioners,

vs.

THE INTERMEDIATE APPELLATE COURT, ARSENIO REYES, DEVELOPMENT BANK

OF THE PHILIPPINES and THE SHERIFF OF KALOOKAN CITY, respondents.

Plaintiffs' evidence shows that on June 23, 1959 plaintiffs obtained a loan from defendant DBP in the
sum of P1,700.00 payable in semi-annual installments for ten (10) years or on or before June 23, 1969.
Said loan is evidenced by a promissory note (Exh. A for plaintiff) and was secured by a mortgage (Exh. D)
(should be Exhs. I and F) over a parcel of land covered by TCT No. 67168 of the Registry of Deeds of Rizal
in the name of plaintiffs. The promissory note (Exh. A) states that in case of non-payment of the amount
of said note or any portion of it on demand, when due or any other amount or amounts due on account
of this note the entire obligation shall become due and demandable'. When plaintiffs failed to pay the
installments due on the loan after June 23, 1969 (should be June 23, 1959) and after demand letters
were sent to them, defendants DBP sent to the Sheriff of Kalookan City an Application for Foreclosure of
Real Estate and Chattel Mortgage (Exh. B). Pursuant to the said application, the City Sheriff of Kalookan
prepared the notice of extrajudicial sale of mortgaged properties under Act No. 3135 as amended (Exh.
C) which notice was duly posted. On April 6,1966, the date of the auction sale as stated in the notice, the
property covered by the mortgage was sold to Mr. Arsenio Reyes as the highest bidder thereof.

It is presently argued by petitioners that: (1) the extrajudicial foreclosure is invalid and irregular since
personal notice thereof was not given to them in their proper residence; (2) they should have been
allowed to redeem their property, even after the consolidation of the title thereto in the purchaser's
name, in view of the absence of personal notice to them; (3) the petitioners must be considered the
owners of the new residential house on the property, erected after title to the same had been
consolidated in the purchaser's name; and (4) in case the foreclosure is not valid, petitioners must be
considered builders in good faith, thus entitled to the benefits provided in Article 448 of the Civil Code.

Issue:
Whether or not the notice of extrajudicial foreclosure to the petitioners is required for such is not the
clear intention of the parties.

Held:

No. the sending of "All correspondence relative to this mortgage. . ." to the petitioners may only be
deemed, at the most, as an expression of a general intent. As such, it may not prevail against the parties'
specific intent that Act No. 3135 be the controlling law between them. This is so since "a particular
intent will control a general one that is inconsistent with it." (Rule 130, Sec. 10). It is clear from the Deed
of Mortgage that the Mortgagee Bank (DBP) may, under any 3 of the specific circumstances
enumerated, proceed to "foreclose this mortgage ... extrajudicially under Act No. 3135, as amended." (p.
28, Rollo). Having invoked the said Act, it shall "govern the manner in which the sale and redemption
shall be effected" (Sec. 1, Act 3135). And as already shown earlier Act 3135 does not require personal
notice of the foreclosure sale to the mortgagor. Incidentally, it was found by the trial court that notices
of the foreclosure sale were duly posted and published in accordance with law. As such, petitioners are
in estoppel; they cannot now deny that they were not informed of the said sale.

Recent Case:

G.R. No. 184081 June 19, 2009

GLOBAL HOLIDAY OWNERSHIP CORPORATION, Petitioner, vs. METROPOLITAN BANK & TRUST
COMPANY, Respondent

Global Holiday Ownership Corporation (Global for short) obtained on various dates several loans from x
Metrobank in the total principal amount of P5,700,000.00 secured by a real estate mortgage over a
condominium unit under Condominium Certificate of Title No. 29774 of the Registry of Deeds for Makati
City. Upon default in the payment of the loan, x x x Global requested for a restructuring of its loan in the
total principal amount of P6,375,000.00 as of September 3, 2001. (Metrobank) acceded to its request.

As Global defaulted anew in the payment of its loan, it requested for another restructuring which was
likewise granted by the bank. Global failed to comply with the terms and conditions of the Debt
Settlement Agreement. Despite demands made upon it for payment on December 22, 2005 and May 18,
2006, it still failed and refused to pay (Metrobank) the loans which are all past due.

Thus on May 22, 2006, (Metrobank) requested the Clerk of Court of the RTC of Makati City to cause the
sale at public auction of CCT No. 29774 pursuant to Act 3135 as amended. The sale was scheduled on
July 10, 2006 at 10:00 a.m. per notice of sheriff’s sale. Four (4) days before the date of the auction sale
or on July 6, 2006, x x x Global filed the instant complaint for annulment of extrajudicial foreclosure
proceedings, damages and injunction with application for TRO and/or writ of preliminary injunction

(Metrobank) contends that x x x Global’s claim of not having been notified of the foreclosure
proceedings is debunked by the Certification issued by the Makati Central Post Office dated August 2,
2006 stating that a copy of the notice of sheriff sale was sent to Global and was received by it on June
23, 2006. Moreover, (Metrobank’s) several demand letters to x x x Global urging it to pay its overdue
account with a warning that in case of failure to do, actions to protect the bank’s interests will be
initiated, more than satisfies the requirement of notice. Additionally, (Metrobank) emphasizes that Sec.
14 of the real estate mortgage was already superseded by Sec. 5 of the Debt Settlement Agreement
whereby Global waived its right to be personally notified in case of default.

(Metrobank) argues that no personal notice of the extrajudicial foreclosure is even required as said
proceeding is an action in rem where only notice by publication and posting is necessary to bind the
interested parties, citing Bobanan vs. Court of Appeals, G.R. No. 111654, April 18, 1996. The law itself,
Act No. 3135, does not require personal notice to the mortgagor.

Issue:

Whether or not Metrobank’s failure to serve personal notice upon Global of the foreclosure proceedings
renders the same null and void

Held:

Yes,

All correspondence relative to this mortgage, including demand letters, summonses, subpoenas or
notifications of any judicial or extra-judicial actions shall be sent to the Mortgagor at the address
hereinabove given 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 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 effect of such notice.

"All correspondence relative to this mortgage . . . " to the petitioners may only be deemed, at the most,
as an expression of a general intent. As such, it may not prevail against the parties' specific intent that
Act No. 3135 be the controlling law between them. This is so since "a particular intent will control a
general one that is inconsistent with it." (Rule 130, Sec. 10). It is clear from the Deed of Mortgage that
the Mortgagee Bank (DBP) may, under any of the specific circumstances enumerated, proceed to
"foreclose this mortgage . . . extrajudicially under Act No. 3135, as amended." (p. 28, Rollo). Having
invoked the said Act, it shall "govern the manner in which the sale and redemption shall be effected"
(Sec. 1, Act 3135). And as already shown earlier Act 3135 does not require personal notice of the
foreclosure sale to the mortgagor. Incidentally, it was found by the trial court that notices of the
foreclosure sale were duly posted and published in accordance with law. As such, petitioners are in
estoppel; they cannot now deny that they were not informed of the said sale.

Thus, the general rule is that personal notice to the mortgagor in extrajudicial foreclosure proceedings is
not necessary, and posting and publication will suffice. Sec. 3 of Act 3135 governing extra-judicial
foreclosure of real estate mortgages, as amended by Act 4118, requires only posting of the notice of sale
in three public places and the publication of that notice in a newspaper of general circulation. The
exception is when the parties stipulate that personal notice is additionally required to be given the
mortgagor. Failure to abide by the general rule, or its exception, renders the foreclosure proceedings
null and void.

Global’s right to be furnished with personal notice of the extrajudicial foreclosure proceedings has been
established. Thus, to continue with the extrajudicial sale without proper notice would render the
proceedings null and void; injunction is proper to protect Global’s rights and to prevent unnecessary
injury that would result from the conduct of an irregular sale. It is beyond question that a writ of
preliminary injunction is issued to prevent an extrajudicial foreclosure, upon a clear showing of a
violation of the mortgagor’s unmistakable right.