G.R. No. 138592 - Spouses Tagunicar vs. Lorna Express Credit Corp.

On October 19, 1994, petitioners Elsa and Emerson Tagunicar secured a loan of P60,000.00 from respondent Lorna Express Credit Corporation.
As security for the loan, the petitioners executed a deed of mortgage over two unregistered lots with improvements (Lot 14 and Lot 16, Block 175, Zone 4, Upper Bicutan, Taguig, Metro Manila).

Petitioners failed to pay the stipulated monthly installment and later proposed a restructuring scheme, which was accepted by the respondent.
Subsequently, petitioners offered to pay respondent P100,000.00 in cash covering the loan and accrued interest; however, respondent refused to accept this amount.
Respondent initiated a legal action by filing a complaint for a sum of money amounting to P223,057.34 (covering principal and interests) with the Regional Trial Court (RTC) of Makati City, which was dismissed on August 7, 1997 due to respondent’s failure to prosecute.

Due to the petitioners’ inability to settle the increasing loan balance (which had grown to P740,254.87), respondent, through its counsel, filed an application for extrajudicial foreclosure under Act No. 3135, as amended.
On September 29, 1997, a Notice of Auction Sale was issued by the Office of Notary Public Wilfredo T. Albarico.
The notice was posted in three public places in the municipalities of Taguig and Pasig and published once a week for three consecutive weeks (October 4, 11, and 18, 1997) in Bongga, a newspaper of general circulation.

On learning of the impending auction sale set for October 24, 1997 at 10:00 a.m. at the Taguig Municipal Hall, petitioners filed a petition for prohibition with a request for a temporary restraining order and a writ of preliminary injunction in RTC, Branch 68, Pasig City.
On November 5, 1997, the RTC issued a temporary restraining order against the Notary Public and Sheriff Carlos G. Maog.
The petition for a writ of preliminary injunction was heard on November 20, 1997, when the RTC rendered a decision denying the petition.
Petitioners filed a motion for reconsideration, which was subsequently denied in the RTC’s Resolution dated December 8, 1997.

Petitioners elevated the issue by filing a petition for review with the Court of Appeals (CA) to contest the decision dated November 20, 1997 upholding the validity of the extrajudicial foreclosure sale.
On November 11, 1998, the CA affirmed the trial court’s decision, holding that:

The notice of auction sale complied with the publication requirement under Section 3 of Act No. 3135, as amended.
The newspaper Bongga met the criteria as a newspaper of general circulation.

A subsequent motion for reconsideration was denied by the CA in its Resolution dated May 4, 1999.
Petitioners then filed the present petition for review on certiorari before the Supreme Court, raising two primary issues concerning the computation of the notice period and the authority of a Notary Public to conduct the aerial sale.

Whether the Court of Appeals erred in holding that the twenty-day period for conducting the auction sale should be counted from the date the notices were posted at the three public places, rather than from the date of the last publication.

Petitioners argued that because the auction sale was conducted on October 24, 1997 (after the first publication on October 4, 1997), the sale was conducted prematurely.
They insisted that the auction should have been held after the third publication, which occurred on October 18, 1997.

Whether the Court of Appeals erred in disregarding the argument that the extrajudicial foreclosure proceedings conducted by a Notary Public are void.

Petitioners based their argument on Supreme Court Administrative Order No. 3, contending that the law applicable to extrajudicial foreclosure of a mortgage mandates that such proceedings be conducted by designated judicial officers rather than a Notary Public.
They argued that the use of a Notary Public in directing the public auction sale inherently rendered the foreclosure sale void.