Notices in extrajudicial foreclosure of mortgage

Dear PAO,

My uncle disclosed to me that his farmland was sold at a public auction. He mortgaged the land to a lending company, and he failed to pay his loan. The lending company extrajudicially foreclosed the mortgage and auctioned the property. The foreclosure proceedings happened without his knowledge because no notices were sent to him. When he raised the lack of notice to the lending company, the latter allegedly claimed that notice to him is not required. My uncle would like to ask if the lack of personal notice to him would invalidate the foreclosure or sale.

Wilson

Dear Wilson,

In general, the creditor has a cause of action against the debtor for non-payment of the debt. His remedy was reiterated in the case of Pineda v. De Vega, GR 233774, April 10, 2019, where Associate Justice Alfredo Benjamin Caguioa stated:

«For non-payment of a note secured by mortgage, the creditor has a single cause of action against the debtor. This single cause of action consists in the recovery of the credit with execution of the security. In other words, the creditor in his action may make two demands, the payment of the debt and the foreclosure of the mortgage. But both demands arise from the same cause, the non-payment of the debt, and, for that reason, they constitute a single cause of action. Xxx»

Yet, the debtor-mortgagor is still entitled to certain rights prior to the levy on his or her property. This includes notices, which are inherent in legal proceedings as part of due process. In extrajudicial foreclosure of real estate mortgage, the notice requirement is found under Section 3 of Act 3135 or «An Act to Regulate the Sale of Property Under Special Powers Inserted in or Annexed to Real Estate Mortgages,» as amended, viz.:

«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 or city.»

Correlative thereto, AM 99-10-05-0 dated Aug. 7, 2001, known as the