G.R. No. 113721 - Arc-Men Food Industries, Inc. vs. National Labor Relations Commission

On August 23, 1995, and November 13, 1997, Planters Development Bank (Planters Bank) granted loans amounting to P6,500,000.00 and P5,000,000.00 respectively to Lubiya Agro Industrial Corporation (Lubiya).
The loans were secured by real estate mortgages on two parcels of land with improvements in General Santos City, identified by Transfer Certificate of Title Nos. T-55058 and T-55057.
The mortgage contracts were standard contracts of adhesion containing an additional stipulation (Paragraph 12) requiring that all correspondence—including notifications of judicial or extrajudicial actions—be sent directly to the mortgagor.

Lubiya defaulted on its obligations, prompting Planters Bank to send a letter on June 8, 1998 demanding payment and warning of legal action if the default was not remedied.
Owing to Lubiya’s failure to settle the obligation, Planters Bank proceeded with an extrajudicial foreclosure of the secured properties.
A public auction was held on October 6, 1998 in which Planters Bank emerged as the sole and highest bidder.
A Certificate of Sale was issued in favor of the bank, recorded with the Registry of Deeds on November 11, 1998, and following the expiry of the redemption period, title consolidation and issuance in Planters Bank’s name were effected.

On January 23, 2001, Lubiya filed a complaint seeking annulment of the loan agreement, foreclosure proceedings, damages, and attorney’s fees, also requesting a temporary restraining order and injunction against Planters Bank.
Lubiya’s action was grounded on Planters Bank’s failure to comply with its contractual duty to notify it personally about the foreclosure and sale of the mortgaged properties.
In its answer, Planters Bank acknowledged that the loan agreements were contracts of adhesion and admitted that Lubiya did not receive notice of the extrajudicial foreclosure proceedings.
The Regional Trial Court (RTC) granted summary judgment in Lubiya’s favor on March 5, 2008, but erroneously dismissed Lubiya’s complaint by issuing an order of dismissal.
On appeal, the Court of Appeals (CA) reversed the RTC’s decision, upheld the validity of the loan agreements, and declared the extrajudicial foreclosure sale, Certificate of Sale, and subsequent title consolidation null and void.
Planters Bank then sought a petition for Review on Certiorari under Rule 45 of the Rules of Court, contesting the CA ruling.

The mortgage contracts contained Paragraph 12, a provision mandating that any judicial or extrajudicial action, including foreclosure proceedings, be communicated directly to the mortgagor through personal notice or at an address provided.
Planters Bank argued that its June 8, 1998 demand letter—which Lubiya received on June 24, 1998—satisfied the contractual notice requirement, thereby justifying the foreclosure sale.

Whether the failure of Planters Bank to provide personal notice of the extrajudicial foreclosure sale, as stipulated in Paragraph 12 of the mortgage contracts, renders the sale null and void.
Whether the June 8, 1998 demand letter, in lieu of personal notification, was sufficient to comply with the contractual duty to notify Lubiya of judicial or extrajudicial actions under the mortgage contract.