[G.R. No. 184081. June 19, 2009.

]
GLOBAL HOLIDAY OWNERSHIP CORPORATION, petitioner, vs. METROPOLITAN BANK & TRUST COMPANY, respondent.
YNARES-SANTIAGO, J p:
FACTS: Global Holiday Ownership Corporation obtained on various dates several loans from Metrobank in the total principal amount of
P5,700,000.00 secured by a real estate mortgage over a condominium unit in Makati City. Upon default in the payment of the loan, 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. Hence, a Debt
Settlement Agreement was executed by the parties detailing a schedule of payment of the principal obligation. Global failed to comply with the
terms and conditions. Despite demands made, it still failed and refused to pay the loans which are all past due. 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.
Global filed for annulment of extrajudicial foreclosure proceedings, damages and injunction with application for TRO and/or writ of preliminary
injunction. Respondent judge granted Global's application for TRO then also granted WPI.
Metrobank filed a petition for certiorari arguing that Global is not entitled to injunctive relief because it has not shown that it had a legal right that
must be protected as it was clearly provided in the deed of real estate mortgage and in the Debt Settlement Agreement that the mortgage can be
foreclosed in case of default. (Metrobank) contends that Global's claim of not having been notified of the foreclosure proceedings is
debunked by the Certification issued by the Makati Central Post Office stating that a copy of the notice of sheriff sale was sent to Global and was
received by it. Moreover, Metrobank's several demand letters to Global 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mortgage was already superseded by Sec. 5 of the Debt Settlement Agreement whereby Global waived its right to be personally notified in case of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. The law itself, Act No. 3135, does not require
personal notice to the mortgagor. Only notice by publication and posting are required.
Global avers that after it defaulted in its quarterly payment under the Debt Settlement Agreement, (Metrobank) informed it that its account is being
considered for transfer to a Special Purpose Vehicle under the SPV Act of 2002. Within the period given to signify its conformity to the plan, Global
wrote (Metrobank) on July 4, 2003 informing (Metrobank) that it is amenable to its proposal. However, (Metrobank) decided to proceed with the
extrajudicial foreclosure of the mortgaged property. Global claimed that it has not waived its right to be notified of the foreclosure when it executed
the Debt Settlement Agreement. The statement "without need of demand" in the debt settlement agreement refers to the payment of the
principal and interest, which is different from notice of extrajudicial foreclosure that is required to be given to a mortgagor.
ISSUE: W/n personal notice to the debtor-mortgagor of the extrajudicial foreclosure is not necessary despite the parties' stipulation in their Real
Estate Mortgage contract requiring personal notice thereof
HELD: No. Paragraph 14 of the real estate mortgage contract states that:
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.
This specific provision in the parties' real estate mortgage agreement is the same provision involved in the case of Metropolitan Bank and Trust
Company v. Wong:
The fundamental principle 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:
"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.
In cases subsequent to Wong, we sustained the same principle: that personal notice to the mortgagor in extrajudicial foreclosure
proceedings is not necessary, unless stipulated.
Metrobank claims that Cortes v. Intermediate Appellate Court 16 should be applied in the resolution of the present controversy.
But what is stated in Cortes no longer applies in light of the Court's rulings in Wong and all the subsequent cases, which have been consistent.
Cortes has never been cited in subsequent rulings of the Court, nor has the doctrine therein ever been reiterated. Its doctrinal value has been
diminished by the policy enunciated in Wong and the subsequent cases; that is, that in addition to Section 3 of Act 3135, the parties may stipulate
that personal notice of foreclosure proceedings may be required. Act 3135 remains the controlling law, but the parties may agree, in addition to
posting and publication, to include personal notice to the mortgagor, the non-observance of which renders the foreclosure proceedings null and
void, since the foreclosure proceedings become an illegal attempt by the mortgagee to appropriate the property for itself.
Thus, we restate: 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.