Case Digest (G.R. No. 235260)
Facts:
The Commoner Lending Corporation, represented by Ma. Nory Alcala, v. Spouses Voltaire and Ella Villanueva, G.R. No. 235260, August 27, 2020, the Supreme Court First Division, Lopez, J., writing for the Court.
On August 13, 2002, Spouses Voltaire and Ella Villanueva borrowed ₱100,000.00 from The Commoner Lending Corporation (TCLC), payable within one year at 24% interest per annum; as security they executed a real estate mortgage over Lot No. 380‑D. The spouses paid a total of ₱82,680.00 but allegedly left a balance of ₱41,340.00, after which TCLC sent a final demand. When the debt remained unpaid, TCLC applied to the provincial sheriff to foreclose the mortgage.
After notice and publication, an auction was held on December 7, 2004; TCLC was the sole bidder and was issued a certificate of sale on December 14, 2004 (registered January 27, 2005), and thereafter a final deed of sale was executed in favor of TCLC on January 31, 2006. Aggrieved, the spouses filed a complaint in the Regional Trial Court (RTC) as Civil Case No. 7823 seeking annulment of the extrajudicial foreclosure sale, the certificate of sale, and the final deed of sale. They contended that paragraph 3 of the mortgage did not expressly grant TCLC the special power to sell and that the contract effectively created a pactum commissorium by allowing possession without judicial order; they also denied having received proper notice of the foreclosure and its publication.
On March 29, 2012 the RTC dismissed the complaint and upheld the extrajudicial foreclosure, finding no pactum commissorium. The spouses appealed to the Court of Appeals (CA), which on March 27, 2017 reversed the RTC: the CA declared the extrajudicial foreclosure sale, the certificate of sale and the final deed of sale null and void for lack of the special power or authority to sell the mortgaged property, construing paragraph 3 as merely an expression of amenability to extrajudicial foreclosure rather than an express grant of power to sell.
TCLC sought reconsideration in the CA but was denied, and it then filed this Petition for Review on Certiorari under Rule 45 of the Rules of Court. TCLC argued that paragraph 3 appointed it attorney‑in‑fact with authority to take any legal action necessary ...(Subscriber-Only)
Issues:
- Did paragraph 3 of the real estate mortgage constitute a special power to sell authorizing extrajudicial foreclosure and sale of the mortgaged property?
- Were the respondents barred from challenging the extrajudicial foreclosure proceedings by their failure to redeem within one year after issuance of t...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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