G.R. No.
139479 December 27, 2002
PHILIPPINE NATIONAL BANK, petitioner, vs. NEPOMUCENO PRODUCTIONS, INC., FILM ADVERTISING MEDIA
EXHIBITIONS, INC. (FAME), LUIS NEPOMUCENO, AMPARO NEPOMUCENO, and JESUS NEPOMUCENO, respondents.
AUSTRIA-MARTINEZ, J.:
FACTS: Petitioner PNB extended to respondents a credit line to finance the filming of a movie, secured by mortgages on
respondents’ real and personal properties. Respondents defaulted in their obligation. Petitioner sought foreclosure of the mortgaged
properties. The auction sale was re-scheduled several times until it was scheduled finally at a certain date without need of
republication of the notice of sale, as stipulated in the Agreement to Postpone Sale. The petitioner was the highest bidder. Aggrieved,
respondents filed before the RTC an action for annulment of foreclosure sale and damages with injunction Respondents contended
that the foreclosure sale is null and void because: (1) the obligation is yet to mature as there were negotiations for an additional loan
(2) lack of publication; (3) the purchase price was grossly inadequate and unconscionable; and (4) the foreclosure proceedings were
initiated by petitioner in bad faith. The court a quo ordered the annulment and setting aside of the foreclosure proceedings and
auction sale on the ground that there was lack of publication of the notice of sale. Dissatisfied, petitioner elevated the case before
the CA but it dismissed the petition with regard to the Forbes Park property as the same was already the subject of a Deed of
Reconveyance executed by petitioner in favor of respondents as well as a Compromise Agreement between the same parties. The
CA, however, affirmed the court a quo’s decision. Hence, herein petition for review under Rule 45 of the Rules of Court.
ISSUE: WON the parties to the mortgage can validly waive the posting and publication requirements mandated by Act
No. 3135.
RULING: The Court ruled in the negative.
Act. No. 3135, as amended, governing extrajudicial foreclosure of mortgages on real property is specific with regard to the
posting and publication requirements of the notice of sale, to wit:
Sec. 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."
On this score, it is well settled that what Act No. 3135 requires is: (1) the posting of notices of sale in three public places; and, (2)
the publication of the same in a newspaper of general circulation. Failure to publish the notice of sale constitutes a
jurisdictional defect, which invalidates the sale. Petitioner, however, insists that the posting and publication requirements can
be dispensed with since the parties agreed in writing that the auction sale may proceed without need of re-publication and re-posting
of the notice of sale. Petitioner and respondents have absolutely no right to waive the posting and publication requirements of Act
No. 3135. Although the general rule is that any right or privilege conferred by statute or guaranteed by constitution may be waived,
a waiver in derogation of a statutory right is not favored, and a waiver will be inoperative and void if it infringes on the rights of
others, or would be against public policy or morals and the public interest may be waived. While it is established that rights may be
waived, Article 6 of the Civil Code explicitly provides that such waiver is subject to the condition that it is not contrary to law,
public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.
The principal object of a notice of sale in a foreclosure of mortgage is not so much to notify the mortgagor as to inform the
public generally of the nature and condition of the property to be sold, and of the time, place, and terms of the sale.
Notices are given to secure bidders and prevent a sacrifice of the property. Clearly, the statutory requirements of posting and
publication are mandated, not for the mortgagor’s benefit, but for the public or third persons. In fact, personal notice to the
mortgagor in extrajudicial foreclosure proceedings is not even necessary, unless stipulated. As such, it is imbued with public policy
considerations and any waiver thereon would be inconsistent with the intent and letter of Act No. 3135. Moreover, statutory
provisions governing publication of notice of mortgage foreclosure sales must be strictly complied with and slight
deviations therefrom will invalidate the notice and render the sale at the very least voidable.
