Santiago v. Pioneer Savings and Loan Bank 157 SCRA 100 (1968)

FACTS:

1.      Santiago, is the registered owner of a parcel of land situated at Polo, Valenzuela, Metro Manila, with an area of approximately 39,007 square meters as the disputed property.

2.      She executed a Special Power of Attorney in favor of Construction Resources Corporation of the Philippines (CRCP) to borrow money and make, execute, sign and deliver mortgages of real estate now owned by me and standing in my name and to make, sign, execute and deliver any and all promissory notes necessary in the premises.

3.      CRCP executed a Real Estate Mortgage over the Disputed Property in favor of FINASIA Investment and Finance Corporation to secure a loan of P1 million. The mortgage contract specifically provided that in the event of default in payment, the mortgagee may immediately foreclose the mortgage judicially or extrajudicially.

4.      Real Estate Mortgage by CRCP in favor of FINASIA executed in favor of defendant-appellee, Pioneer Savings & Loan Bank, Inc. (Defendant Bank, for brevity), an "Outright Sale of Receivables without Recourse" including the receivable of P610,752.59 from CRCP.

5.      FINASIA executed a "Supplemental Deed of Assignment" in favor of Defendant Bank confirming and ratifying the assignment in the latter's favor of the receivable of P610,752.59 from CRCP and of the mortgage constituted by CRCP over the disputed property.

6.      CRCP failed to settle its obligation and Defendant Bank opted for extrajudicial foreclosure of the mortgage.

7.      On learning of the intended sale, plaintiff-appellant filed before the Regional Trial Court of Valenzuela, Metro Manila, Branch CLXXII, an action for declaration of nullity of the real estate mortgage with an application for a Writ of Preliminary Injunction

8.      Defendant Bank opposed the application for Preliminary Injunction and asserted its right to extrajudicially foreclose the mortgage on the Disputed Property based on recorded public documents.

9.      RTC granted the petition.

ISSUE: WON the notice of the scheduled sale of the land sent to the agent (CRCP) is also Notice to the principal (Plaintiff Appellant), the land owner.

RULING: YES, the notice is binding. The cases which plaintiff-appellant cites express the general rule when there is no "documentary evidence admitted by stipulation disclosing facts sufficient to defeat the claim." Where, however, such evidence is before the Court and has been stipulated upon, a Court can go "beyond the disclosure in the complaint."

Moreover, the rule is explicit that "rules of procedure are not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure substantial justice."

The evidence on record sufficiently defeats plaintiff-appellant's claim for relief from extrajudicial foreclosure. Her Special Power of Attorney in favor of CRCP specifically included the authority to mortgage the Disputed Property. The Real Estate Mortgage in favor of FINASIA explicitly authorized foreclosure in the event of default. Indeed, foreclosure is but a necessary consequence of non-payment of a mortgage indebtedness. Plaintiff-appellant, therefore, cannot rightfully claim that FINASIA, as the assignee of the mortgagee, cannot extrajudicially foreclose the mortgaged property. A mortgage directly and immediately subjects the property upon which it is imposed to the fulfillment of the obligation for whose security it was constituted.