GOTESCO PROPERTIES, INC. v.
SOLIDBANK CORPORATION (NOW  In 1995, Gotesco obtained from Solidbank a term loan of P300M
METROPOLITAN BANK AND TRUST COMPANY)
G.R. No. 209452 | July 26, 2017 | Leonen J.
(Digested by: Lopez, A.)
Topic: Jurisdictional requirements for a sale under Section 3, Act No. 3135
Petitioner: Gotesco Properties, Inc.
Respondent: Solidbank Corporation (Now Metropolitan Bank And Trust
Company)
Emergency Recit: Gotesco loaned 3M from Solidbank, with a Pampanga
property as mortgage to secure the loan. Gotesco found it difficult to pay
back the loan on time so they offered a restructured plan, but Solidbank
merely informed Gotesco of the decrease in value of its mortgaged property
so it demanded Gotesco to comply with its obligation and replace or add to
the mortgaged property. The demand however was unheeded so a public
auction was held with Solidbank being the winning bidder. Gotesco filed a
case to annul the foreclosure proceedings, arguing that it was not notified of
the default, and that the publication requirement was not met as it was
published in a newspaper circulating in Metro Manila, not in Pampanga, nor
was it pupbllished for 20 days. RTC and CA ruled in favor of Solidbank so
Gotesco went to the SC. SC held in favor of Solidbank, stating that Gotesco
was informed of the default and was then in default as the restructuring
agreement was not accepted. SC also held that the publication requirement
was met as it is not required that the newspaper be circulating only where
the property is located as long as the object of the publication is met, which
is to inform the public of the time and place of the auction, as well as the
nature and condition of the property.
DOCTRINE:
 Section 3 of Act No. 3135 requires that the Notice of Sale be: a)
physically posted in three (3) public places and b) be published once
a week for at least three (3) consecutive weeks in a newspaper of
general circulation in the city where the property is situated. What
was important is not where the newspaper is printed but whether the
newspaper is being circulated in the city where the property is
located.
 The object of a Notice of Sale in an extrajudicial foreclosure
proceeding is to inform the public of the nature and condition of the
property to be sold and the time, place, and terms of the auction
sale. Thus, mistakes or omissions (posting of Notice for only 16
days) that do not impede this objective will not invalidate the Notice
of Sale.
FACTS:
through its President, Mr. Jose Go (Mr. Go), covered by 3
promissory notes. To secure the loan, Gotesco was required to
execute a Mortgage Trust Indenture (Indenture).
 The indenture obligated Gotesco to mortgage several parcels of
land in favor of Solidbank. One of which was a property located in
San Fernando, Pampanga. Gotesco also agreed to "at all times
maintain the Sound Value of the Collateral."
 When the loan was about to mature, Gotesco found it difficult to
meet its obligation due to the 1997 Asian Financial Crisis. So
Gotesco sent a letter to Solidbank proposing to restructure the loan
obligation, extending the payment period to 7 years with a 2 year
grace period.
 But Solidbank informed Gotesco that there was a substantial
reduction in the appraised value of its mortgaged properties and
required Gotesco to replace or add to the mortgaged properties.
However, Gotesco found it unnecessary to address the alleged
deficiency in the collateral.
 So Solidbank sent a demand letter to Gotesco as the loan became
due but Gotesco failed to pay the outstanding obligation. Thus,
Solidbank filed a Petition for the Extrajudicial Foreclosure of the lot
in Pampanga.
 A Notice of Sale was published in Remate (based in Metro Manila)
and posted on August 15, 2000 and a public auction was scheduled
for August 31, 2000. Solidbank won as the highest bidder.
 Gotesco filed a complaint RTC for Annulment of Foreclosure
Proceedings, against Solidbank, assailing the validity of the
foreclosure proceeding claiming that it was premature and without
legal basis and that the jurisdictional requirements prescribed
under Act No. 3135 were not complied with.
 Solidbank answered that it never entered into a restructuring
agreement with Gotesco. Solidbank further claimed that it complied
with the publication and posting requirements.
 Solidbank then filed an Ex-Parte Petition for the Issuance of a Writ
of Possession. The two cases were consolidated.
 RTC: Dismissed Gotesco’s complaint and granted Solidbank’s
petition for the issuance of a Writ of Possession.
 CA: Affirmed the RTC decision. The CA held that there was no
perfected restructuring agreement between the parties because
under Article 1319 of the Civil Code of the Philippines, absolute
acceptance of the offer is necessary before it can be considered a
binding contract. CA also held that Gotesco was actually in default
as it failed to comply with the conditions of the indenture. CA ruled
that the posting and publication requirements were met even though
the notice was published in Remate in Metro Manila since it was still
a newspaper of general circulation.
  Hence, this Petition for Review on Certiorari. Gotesco mainly
argues that it was not in default as it was not sent any notice of
default. Also, it argued that the publication of the Notice was
defective as it should have been published in a newspaper in the
same city or province where the property was located (in
Pampanga).
ISSUE:
 W/N the foreclosure was premature
 W/N the requirements under Section 3 of Act No. 3135 were
complied with
HELD:
 No. The foreclosure was not premature.
o Petitioner defaulted in its obligation twice. First, when it
failed to pay the loan according to the terms of the
promissory note and second, when it failed to provide the
additional collateral demanded by respondent (which was
required by the indenture agreement).
o Also, petitioner never refuted that it defaulted in its payment
of the loan. Petitioner had admitted to proposing the loan
restructuring because of its inability to meet the loan
payments
o The CA also correctly held that there was no perfected
restructuring agreement between the parties. Sending a
proposal for restructuring the agreement is not enough.
There must be proof that respondent expressly accepted
the offer. Without an absolute acceptance, there is no
concurrence of minds.
o Since the loan restructuring which Gotesco proposed was
not accepted, there is no question that petitioner defaulted
on the payment of its loan and petitioner's failure to provide
the additional collateral as stipulated in the indenture
constituted another Event of Default. This gave respondent
enough reason to foreclose the property.
 Yes. The requirements under section 3 of Act No. 3135 were
satisfactorily met.
o Section 3 of Act No. 3135 requires that the Notice of Sale
be:
 physically posted in three (3) public places and
 be published once a week for at least three (3)
consecutive weeks in a newspaper of general
circulation in the city where the property is situated.
o The CA is correct in its ruling. If notices are only published
in newspapers printed in the city where the property is
located, even newspapers that are circulated nationwide will
be disqualified from announcing auction sales outside their
city of publication. This runs contrary to the spirit of the law
which is to attain wide enough publicity so all parties
interested in acquiring the property can be informed of the
upcoming sale.
o Further, the court held that what was important is not where
the newspaper is printed but whether the newspaper is
being circulated in the city where the property is located.
o What the law requires is the publication of the Notice of Sale
in a "newspaper of general circulation," which is defined as
one that is published for the dissemination of local news and
general information; xxx
o Hence, there is clear emphasis on the audience reached by
the paper; the place of printing is not even considered.
o As to Petitioner’s claim that the posting requirement was
defective as the notice of sale was posted less than the
required 20 days, the court held that since this issue was
raised for the first time in its petition for review in the SC.
o Further, such issue is superficial since even though the
notice of sale was posted for only 16 days (less than 4 days
than what the law requires), the object of a Notice of Sale in
an extrajudicial foreclosure proceeding is to inform the
public of the nature and condition of the property to be sold
and the time, place, and terms of the auction sale. Thus,
Mistakes or omissions that do not impede this objective will
not invalidate the Notice of Sale.
o (On failure to receive notice by Gotesco) The SC held that
the argument is without merit as documentary evidence will
generally prevail over testimonial evidence. There is a
return card submitted by Solidbank showing that the deman
letter was received by Gotesco.
WHEREFORE, the petition for review on certiorari is DENIED.
Note: did not include the issue on the propriety of the writ of possession.