G.R. No. L-24016. July 31, 1970.
Spouses Ruiz ("Appellants") executed in favor of Appellee Bank of the Philippine Islands ("BPI") a real estate mortgage covering a parcel of land in Sta. Ana, Manila, as security for a loan of P15,000.00.
At the heart of the controversy is the following stipulation in the contract:
WHEREAS, the [Appellants]... have applied for and ... obtained from [BPI] ... a loan in the sum of P 15,000.00 ... to be amortized at the rate of not less than P300.00... to be effected at the end of each month. Failure to pay two successive monthly amortizations will cause this loan to be automatically due and payable in its entirety. Notwithstanding the foregoing, this loan shall not run for more than 5 years.Upon failure of Appellants to pay 12 successive monthly amortizations despite several demands, BPI asked the Sheriff of Manila to foreclose the mortgage extrajudicially. The Sheriff caused the notice of auction to be published in the "Daily Record."
The Sheriff proceeded to sell the mortgaged property, with the BPI as the highest bidder. Since the mortgagee's bid of P15,173.74 represented the total mortgage debt, the Sheriff did not collect cash but merely applied the same to the amount of the bid.
Appellants then filed with the lower court praying for the annulment of the foreclosure sale, but the same was denied.
1st Issue: W/N the foreclosure sale was premature and therefore illegal
The acceleration clause is valid. All that the stipulation in issue meant is that while monthly amortizations could be as little as P300.00 the loan should anyway be paid within 5 years; and that failure to pay two successive amortizations would render the entire loan due and payable. Consequently, default leaving been committed for twelve months, the foreclosure of the mortgage was not premature.
2nd Issue: W/N the foreclosure sale was null and void for failure to comply with the requirements prescribed by Act 3135.
Re "Daily Record" as a newspaper of general circulation: The party alleging non-compliance with the requisite publication has the burden of proving the same. The appellants did not present evidence to show that the "Daily Record" was not a newspaper of general circulation.
Re Non-payment of cash by BPI as highest bidder: It was not necessary for BPI to pay cash to the sheriff, since the amount of its bid represented the total mortgage debt. It would serve no purpose for the sheriff to go through the ceremony of receiving the money and paying it back to the creditor.