GUILLERMO CORTES AND FLORENCIA P. CORTES, PETITIONERS, VS. THE INTERMEDIATE APPELLATE COURT, ARSENIO REYES, DEVELOPMENT BANK OF THE PHILIPPINES AND THE SHERIFF OF KALOOKAN CITY,…

Sought to be reversed in this petition for review is the Decision* of
the then Intermediate Appellate Court (IAC), Fourth Civil Cases Division,
affirming in toto the findings and
conclusions of the then Court of First Instance of Rizal
(Kalookan City).

The following pertinent facts can be culled from the findings of
the respondent court:

“Plaintiffs’ evidence shows
that on June 23, 1959
plaintiffs obtained a loan from defendant DBP in the sum of P1, 700.00 payable in semi-annual installments
for ten (10) years or on or before June 23, 1969.  Said loan is evidenced by a promissory note (Exh. A. for plaintiff) and was secured by a mortgage (Exh. D) (should be Exhs. 1 and F)
over a parcel of land covered by TCT No. 67168 of the Registry of Deeds of Rizal in the name of plaintiffs.  The promissory note (Exh.
A) States that in case of non-payment of the amount of said note or any portion
of it on demand, when due or any other amount or amounts due on account of this
note the entire obligation shall become due and demandable.  When plaintiffs failed to pay the
installments due on the loan after June 23, 1969 (should be June 23, 1959)
and after demand letters were sent to them, defendants DBP sent to the Sheriff
of Kalookan City an
Application for Foreclosure of Real Estate and Chattel Mortgage (Exh. B).  Pursuant to
the said application, the City Sheriff of Kalookan
prepared the notice of extrajudicial sale of mortgaged properties under Act No.
3135 as amended (Exh. C) which notice was duly
posted.  On April 6, 1966,
the date of the auction sale as stated in the notice, the property covered by
the mortgage was sold to Mr. Arsenio Reyes as the
highest bidder thereof.” (pp. 23-24, Rollo)

Additionally, petitioners
allege that in 1968, after the auction sale had become final and after a new title over the property in question had already been issued in Arsenio
Reyes name, they, purportedly without knowledge thereof, constructed a new
house over the said property.  Upon
learning for the first time of the said foreclosure sale (i.e. when they
received a copy of a Writ of Possession
from the City Sheriff of Kalookan), petitioners
filed a complaint dated 11
March 1969 (vide, Record on Appeal, p. 37 Rollo) for
“Declaration of Nullity of Extrajudicial Foreclosure Sale, Reconveyance, etc., with Damages,” In its
Decision dated 31 August 1976, the trial
court dismissed the aforesaid complaint, prompting an appeal by petitioners to the respondent Court, which
court rendered its now questioned decision dated 23 September 1985.

It is presently argued by petitioners that:  (1) the extrajudicial foreclosure is invalid and irregular since personal notice thereof was not
given to them in their proper residence; (2) they should have been allowed to redeem their property, even after the consolidation of the title thereto in the purchaser’s name, in view of the absence of personal notice to them; (3)
the petitioners must be
considered the owners of the new residential house on the property, erected
after title to the same had been consolidated in the purchaser’s name; and (4)
in case the foreclosure is not
valid, petitioners must be considered builders in good faith, thus entitled to the benefits provided in
Article 448 of the Civil Code.

1. The petitioners’ first and second arguments are devoid of
merit.  It has been satisfactorily shown
that petitioners defaulted in the payment of their loan to respondent Development Bank of the Philippines (DBP).  They actually made only two installment
payments.  This justifies the subsequent
foreclosure sale of the land in issue pursuant to Act 3135, as amended.  And
with respect to the requirement of notice, Section 3 of said Act states:

“Sec. 3.  Notice shall be given by posting notices of
the sale for not less than twenty days (20) in at least three (3) 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 or
general circulation in the municipality or city.

It
is crystal clear from the above provision that personal notice to the
mortgagor is not necessary;
only posting and publication, in some cases, are required.

But in pleading their case, petitioners invoke paragraph 10 of the Deed of Mortgage (vide, p. 28 Rollo)
which provides:

“10.  All correspondence relative to this mortgage,
including demand letters, summons, subpoenas, or notification of any judicial
or extrajudicial action, shall be sent to the Mortgagor
at____________ or at the address that may hereafter be given in writing by the
Mortgagor to the Mortgagee.”

While the above stipulation points to a
place (which, notably was clearly
stated) where all correspondence relative to the mortgage are to be
sent, it does not specifically require that personal notice of foreclosure sale
be given to petitioner.  The said paragraph 10 presumes that a specific correspondence
in made but does not definitely require which correspondence must be made.  It would, therefore, be erroneous to say that notice of extrajudicial foreclosure to
the petitioners is required for such is not the clear intention of the parties,
and, thus, may not be pursued.  (Rule 130, Section 10).

But even if the contrary were true, the sending of “All
correspondence relative to this mortgage…” to the peti­tioners may only
be deemed, at the most, as an expression of a general intent.  As such, it may not prevail against the
parties’ specific intent that Act No. 3135 be the controlling law between
them.  This is so since “a
particular intent will control a general one that is inconsistent with
it.” (Rule 130, Sec. 10).  It is clear
from the Deed of Mortgage that the Mortgagee Bank (DBP) may, under any of the
specific circumstances enumerated, proceed to “foreclose this mortgage …. extrajudicially under Act No. 3135, as amended.” (p.
28, Rollo). 
Having invoked the said Act, it shall “govern the manner in which
the sale and redemption shall be effected” (Sec. 1, Act 3135).  And as already shown earlier Act 3135 does
not require personal notice of the
foreclosure sale to the mortgagor. 
Incidentally, it was found by the trial court that notices of the
foreclosure sale were duly posted and published in accordance with law.  As such, petitioners are in estopped; they cannot now deny that they were not informed
of the said sale.

Banking on their premise of
want of personal notice, petitioners now contend that they should be
allowed to redeem the property
foreclosed as We did so permit in
the case of Perez v. PNB (17 SCRA. 833). 
In the first place, however there was
proper notice to petitioners in compliance with Section 3 of RA
3135.  Such is the finding of both the
lower court and the respondent IAC, to which we accord great respect and give much weight and value (Pring v. CA, 138 SCRA 185; Rizal
Cement Co., Inc. v. Villareal, 135 SCRA 575).  And secondly, the case of Perez v. PNB,
supra, could not possibly be applied to the case at bar since the former refers
to a situation where the mortgagor had died, thus necessitating personal notice
to the latter’s heirs for reasons of justice and equity to enable the latter to
pre-empt the foreclosure sale through seasonable payment or
subsequently make a seasonable redemption. 
In this present case, the mortgagor was very much alive when the
foreclosure sale was conducted.  And more
importantly petitioners were very much aware of their default (see IAC Decision, p. 28-29, Rollo)
thus the occurrence of the foreclosure sale depended upon their will.

With regard to
petitioner’s misgiving as to
the alleged discrepancy between the purchase price private respondent paid
(i.e., P2,140.00) and the value of the property, which they estimate to be no
less than P20,000.00, We concur with the respondent Bank’s observations:

“In the first place, the
amount of P20,000.00 is only an arbitrary valuation placed by the petitioners
on the property foreclosed and not supported by any document or evidence to
justify such valuation.

“But even assuming the
correctness of the valuation placed by the petitioners on the property, the
inadequacy of the price at which it was sold at public auction does not
invalidate the foreclose sale.  As said
by this Honorable Court in the case of DBP v. Moll
(43 SCRA 82):

“Where there is a right
to redeem, inadequacy of price is not material because the Judgment debtor may
re-acquire the property or else sell his right to redeem and thus recover any
loss he claims to have suffered by reason
of the price obtained at the execution sale. 
Mere inadequacy of the price obtained at the Sheriff’s sale unless
shocking to the conscience will not be sufficient also to set aside the sale if
there is no showing that, in the event of a regular sale, a better price can be
obtained.  This is based on the theory
that the lesser the price the easier
it will be for the owner to
effect the redemption.” (Comment, p. 41, Rollo)

2.  Petitioners represent that in 1968, after the foreclosure sale
and following the issuance of a new
title to the property in private respondent’s name (as purchaser), they
constructed a new residential house worth at least P6,000.00, being unaware 
of said sale and transfer of ownership.  In the
light of said circumstance petitioners assail the lower court’s decision for
not awarding to them the said new house as owners hereof.  Considering, however, the findings of fact of
the respondent IAC, We are constrained to deny petitioners plea.  Not finding any indiscretion on the part of
respondent IAC, its findings of fact are conclusive upon us (Pring v. CA, supra; Premier Insurance and Surety
Corporation v. IAC, 141 SCRA 423; Vda. de Roxas
v. IAC, 143 SCRA 77; People v. Canada, 144 SCRA 121).  Thus, the IAC said:

“Finally, We find
no merit in plaintiffs’ contention that the lower court erred in not declaring
plaintiff as owner of the new residential house allegedly
erected on the land in 1968 or after the auction sale on April 6,
1966.  There is no evidence that plaintiff
constructed a new house in 1968 on the mortgaged premises other than plaintiffs’ own self-serving testimony.  Plaintiffs did not even declare the said
house for taxation nor pay the taxes thereon.  Neither had plaintiff informed defendant DBP
and/or secured the latter’s consent to the construction of the alleged new
house.  Paragraph 9 of the Mortgage
Contract stipulates that the mortgagor shall not
make any alteration upon or demolish any building
or buildings herein mortgaged without the prior written consent of
the mortgagees.” (IAC Decision, p. 30, Rollo)

In view of what has been said to the proceeding
paragraphs, We find it needless to discuss the third assigned error, except to
say that the option under Art. 448 of the Civil Code, with respect to any other
useful improvements, is given to the owner
of the land (the private respondent), and not to the petitioners, even assuming the latter acted in good
faith.  Note that here, the private respondent has not even acted yet on
his option.

WHEREFORE, considering the above, We hereby DENY the present petition and AFFIRM the ruling of the respondent Intermediate Appellate Court.

SO ORDERED.

Melencio-Herrera, (Chairman),
Padilla, Sarmiento, and
Regalado, JJ.,
concur.

*
Penned by then Associate Justice Abdulwahid Bidin and concurred in by Associate Justices Porfirio V. Sison, Marcelino Veloso, and Ramon Britanico.