Facts:

In the case of Bank of the Philippine Islands (formerly Prudential Bank) vs. Spouses David M. Castro and Consuelo B. Castro (G.R. No. 195272, January 14, 2015), the dispute arose from two loans that the respondents, Spouses Castro, secured from Prudential Bank in July and August 1987, amounting to P100,000.00 and P55,000.00 respectively. The first loan had a maturity date of January 18, 1988, while the second matured on February 23, 1988. The P100,000.00 loan was backed by a Real Estate Mortgage (REM) on property located in Quezon City, while the P55,000.00 loan was secured by another REM over two parcels of land located in Alaminos, Laguna, owned by the mother of David Castro, Guellerma Malabanan. By April 30, 1996, the loans had remained unpaid, with totals of P290,205.05 for the first loan and P96,870.20 for the second loan.

Prudential Bank filed petitions for the extrajudicial foreclosure of the mortgages. In an unfortunate clerical error, the notice for the foreclosure mist

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Facts:

Background of the Loans and Mortgage

• Spouses David M. Castro and Consuelo B. Castro contracted two loans from Prudential Bank (now Bank of the Philippine Islands) in July and August 1987 for amounts of P100,000.00 and P55,000.00 respectively.
• The P100,000.00 loan was secured by a Real Estate Mortgage (REM) over a property in Quezon City (TCT No. 364277), while the P55,000.00 loan was secured by another REM over two parcels of land in Alaminos, Laguna (TCT Nos. T-2225 and T-2226, registered in the name of David’s mother, Guellerma Malabanan).
• The loans matured on 18 January 1988 and 23 February 1988 respectively, but remained unpaid; by 30 April 1996, the balances had ballooned significantly.

Foreclosure Proceedings and Notice of Sale

• Prudential Bank initiated foreclosure proceedings by filing two separate petitions for foreclosure of the mortgage.
• In the preparation of the petition for extrajudicial foreclosure, a clerical error occurred: the photocopies of the first two pages of the REM covering the Laguna properties were mixed with the last two pages of the REM covering the Quezon City property.
• Consequently, the Notice of Sheriff’s Sale erroneously identified Guellerma Malabanan (represented by her AIF, David M. Castro) as the mortgagor and stated the mortgage indebtedness as P96,870.20 even though the property described was the Quezon City property.
• The public auction of the Quezon City property took place on 26 August 1996, where Prudential Bank emerged as the winning bidder with a bid of P396,000.00.

Allegations and Contentions of the Parties

• Spouses Castro contended that the extrajudicial foreclosure sale was null and void due to lack of proper notice and publication of the sale.
• They argued that the property foreclosed upon was not covered by the REM executed by Guellerma Malabanan, but rather by the REM on the Laguna properties.
• They asserted that the error in naming the mortgagor and specifying a lower mortgage indebtedness misled the public and depreciated the property’s value.
• Prudential Bank maintained that:
• Spouses Castro were aware that the Quezon City property was subject to foreclosure.
• The clerical error was harmless and did not affect the sufficiency of the notice since the object of the notice—to inform the public about the property’s identity, the mortgagor, and the unpaid mortgage—was substantially met.
• The failure of the respondents to notice or object to the error amounted to laches.

Court Proceedings and Decisions

• Regional Trial Court (RTC)
• Ruled in favor of Prudential Bank and dismissed the complaint for nullity of the Sheriff’s Certificate of Sale.
• Found that the published and posted notice provided sufficient information regarding the property, the mortgagor-borrower, and the mortgagee.
• Emphasized that sufficient publicity was given through mandatory newspaper publication and posting.
• Court of Appeals (CA)
• Initially reversed the RTC decision, holding that failure to strictly comply with the statutory notice requirements (specifically, the error in indicating the mortgage indebtedness) constituted a jurisdictional defect.
• In a subsequent resolution on motion for reconsideration, clarified that while the erroneous designation of Guellerma Malabanan as mortgagor did not affect notice validity, the significant discrepancy in the mortgage indebtedness might depreciate the value of the property and thus invalidate the notice.
• Petition for Review on Certiorari
• Filed by the Bank of the Philippine Islands (BPI), the successor-in-interest of Prudential Bank.
• Argued that the Notice of Sheriff’s Sale, despite the clerical errors, sufficiently described and identified the foreclosed property.
• Maintained that the alleged errors were immaterial and did not mislead the public, as evidenced by the winning bid exceeding the stated mortgage indebtedness.

Issue:

Validity of the Notice Issue

• Whether the clerical errors in the Notice of Sheriff’s Sale—specifically the misidentification of the mortgagor and the incorrect amount stated for the mortgage indebtedness—rendered the notice invalid.
• Whether such errors affected the sufficiency of the notice in complying with the statutory requirements for extrajudicial foreclosure sales.

Compliance with Statutory Requirements

• Whether Prudential Bank (and subsequently BPI) complied with the notice and publication provisions as mandated under Act No. 3135.
• Whether the procedures for posting and advertising the foreclosure sale were strictly followed.

Effect on the Foreclosure Sale

• Whether the alleged errors misled prospective bidders or resulted in the depreciation of the property’s value.
• Whether the foreclosing party’s failure to rectify the errors, despite being aware of them, affected the sale's validity.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)