ELSA TAGUNICAR AND EMERSON TAGUNICAR, PETITIONERS, VS. LORNA EXPRESS CREDIT CORP., RESPONDENT.

Tagunicar versus Lorna Express Credit Corp

The Case

This is a petition for review on certiorari brought by the spouses Elsa and Emerson Tagunicar against Lorna Express Credit Corporation, questioning the validity of an extrajudicial foreclosure sale of their mortgaged lots. The spouses had defaulted on a loan secured by a deed of mortgage over two unregistered lots, and when the creditor moved to foreclose, the spouses sought to stop the auction on the ground that the notice and publication requirements of the foreclosure law had not been observed. The case matters because it settles two practical questions every reviewee must know: from what date the twenty-day posting period is counted, and whether a notary public may lawfully conduct a public auction sale.

Procedural History

The spouses filed with the Regional Trial Court of Pasig City a petition for prohibition with a prayer for a temporary restraining order and a writ of preliminary injunction, seeking to enjoin the notary public and the sheriff from proceeding with the auction sale. The trial court issued a temporary restraining order, heard the application for injunction, and in a decision denied the petition for prohibition. The spouses moved for reconsideration, which the trial court denied.

The spouses then went up to the Court of Appeals on a petition for review, assailing the trial court's decision upholding the validity of the extrajudicial foreclosure sale. The Court of Appeals denied the petition and affirmed the trial court, holding that the notice of auction sale complied with the publication requirement and that the newspaper which published the notice was a newspaper of general circulation. The spouses' motion for reconsideration was likewise denied. Hence, the spouses filed with the Supreme Court this petition for review on certiorari.

Facts

On October 19, 1994, the spouses Elsa and Emerson Tagunicar obtained a loan of 60,000 pesos from Lorna Express Credit Corporation. As security, they executed a deed of mortgage over their two unregistered lots with improvements in Upper Bicutan, Taguig, Metro Manila. When the spouses failed to pay the stipulated monthly installment, they proposed a restructuring scheme, to which the corporation agreed.

The spouses later offered to pay 100,000 pesos in cash, corresponding to their loan and accrued interest, but the corporation refused the amount. Instead, it filed a complaint for a sum of money with the Regional Trial Court of Makati City. That complaint was dismissed for failure to prosecute. Meanwhile, the spouses' loan had grown, and the corporation, through counsel, filed with the Office of the Sheriff of Taguig an application for extrajudicial foreclosure under Act Number 3135, as amended.

A notice of auction sale was issued. It was posted at three public places in Taguig and Pasig, and published in a newspaper once a week for three consecutive weeks, on October 4, 11 and 18, 1997, setting the auction sale on October 24, 1997 at the main entrance of the Taguig Municipal Hall. The spouses then filed the petition for prohibition, alleging that the notice was not published in a newspaper of general circulation and that the auction was set not after the third publication but only after the first, in violation of Section 3 of Act Number 3135, as amended.

Issues

• Whether or not the twenty-day period for the conduct of the auction sale should be counted from the date the notices were posted in three conspicuous public places, and not from the date of the last publication.
• Whether or not an extrajudicial foreclosure and auction sale conducted before a notary public is void under Supreme Court Administrative Order Number 3, Series of 1984.

Applicable Provisions

Section 3 of Act Number 3135, as amended, provides:

Section 3. 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.

This is the provision that fixes the posting and publication requirements whose observance the spouses put in issue.

Section 4 of Act Number 3135, as amended, provides:

Section 4. The sale shall be made at public auction, between the hours of nine in the morning and four in the afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary justice of the peace of the municipality in which such sale has to be made, or a notary public of said municipality, who shall be entitled to collect a fee of five pesos for each day of actual work performed, in addition to his expenses.

This is the provision that expressly authorizes a notary public to direct or conduct the public auction.

Ruling

On the first issue, the Court held that the twenty-day period is counted from the posting of the notices, not from the last publication. The Court found the language of Section 3 clear, explicit and unequivocal, admitting no room for interpretation. The records showed that the notice was posted in three public places in Taguig and Pasig, and published once a week for three consecutive weeks, on October 4, 11 and 18, 1997, in a newspaper of general circulation. Thus, the mandatory requirements of notice and publication were complied with.

On the second issue, the Court held that the notary public is authorized to direct or conduct a public auction. Section 4 of Act Number 3135 expressly names the sheriff, the justice of the peace, or a notary public of the municipality as the officer under whose direction the sale shall be made. The Court also cited Administrative Matter Number 99-10-05-0, which sets forth the procedure in extrajudicial foreclosure of mortgage and refers to the public auction being conducted under the direction of the sheriff or a notary public, pursuant to Section 4 of Act Number 3135, as amended. The spouses' argument that the foreclosure before a notary public is void was therefore bereft of merit.

Doctrine

First, under Section 3 of Act Number 3135, as amended, the twenty-day posting requirement and the three-week publication requirement are separate and distinct mandates. The twenty-day period is counted from the date the notices are posted in at least three public places, not from the date of the last publication. Where the law is clear and unequivocal, it admits no room for interpretation.

Second, under Section 4 of Act Number 3135, as amended, a public auction sale in extrajudicial foreclosure may be conducted under the direction of the sheriff, the justice of the peace, or a notary public of the municipality. A notary public is therefore expressly authorized to direct or conduct the auction, and a foreclosure conducted before a notary public is not void on that ground.

Disposition

The petition was denied, the decision and resolution of the Court of Appeals were affirmed, and costs were assessed against the spouses.

Remember This

Memorize this line: the twenty-day period runs from posting, not from the last publication, and a notary public may lawfully direct the public auction under Section 4 of Act Number 3135. Examiners use this case to test the notice and publication requirements of extrajudicial foreclosure and the authority of the notary public to conduct the sale.