ROBERN DEVELOPMENT CORPORATION and RODOLFO M. BERNARDO, JR., vs.

PEOPLE'S LANDLESS ASSOCIATION represented by FLORIDA RAMOS and NARDO LABORA G.R. No. 173622 March 11, 2013 DEL CASTILLO, J.: TOPIC: Essential Elements of a Contract of Sale; stages of contract FACTS: Al-Amanah Islamic Development Bank of the Philippines (Al-Amanah) owned a 2000-square meter lot located in Magtu-od, Davao City. On December 12, 1992, Al-Amanah Davao Branch, thru its officer-in-charge Febe O. Dalig (OIC Dalig), asked some of the members of People's Landless Association (PELA) to desist from building their houses on the lot and to vacate the same, unless they are interested to buy it. The informal settlers thus expressed their interest to buy the lot at P100.00 per square meter, which Al-Amanah turned down for being far below its asking price. 7 Consequently, Al-Amanah reiterated its demand to the informal settlers to vacate the lot.8 In a letter9 dated March 18, 1993, the informal settlers together with other members comprising PELA offered to purchase the lot for P300,000.00, half of which shall be paid as down payment and the remaining half to be paid within one year. In the lower portion of the said letter, AlAmanah made the following annotation:

Note: Subject offer has been acknowledged/received but processing to take effect upon putting up of the partial amt. of P150,000.00 on or before April 15, 1993.
By May 3, 1993, PELA had deposited P150,000.00 as evidenced by four bank receipts.10 For the first three receipts, the bank labelled the payments as "Partial deposit on sale of TCT No. 138914", while it noted the 4th receipt as "Partial/Full payment on deposit on sale of A/asset TCT No. 138914." In the meantime, the PELA members remained in the property and introduced further improvements. On November 29, 1993, Al-Amanah, thru Davao Branch Manager Abraham D. Ututalum-Al Haj, wrote then PELA President Bonifacio Cuizon, Sr. informing him of the Head Offices disapproval of PELAs offer to buy the said 2,000-square meter lot. Subsequently, Al-Amanah sent similarly worded letters,12 all dated December 14, 1993, to 19 PELA members demanding that they vacate the lot. In a letter13 dated December 20, 1993, PELA, through Atty. Pedro S. Castillo, replied that it had already reached an agreement with Al-Amanah regarding the sale of the subject lot based on their offered price. Dear Mr. Ututalum-Al-Haj, Meanwhile, acting on Roberns undated written offer,14 Al-Amanah issued a Recommendation Sheet15 dated December 27, 1993 addressed to its Board Operations Committee, indicating therein that Robern is interested to buy the lot for P400,000.00; that it has already deposited 20% of the offered purchase price; that it is buying the lot on "as is" basis; and, that it is willing to shoulder the relocation of all informal settlers therein. On December 29, 1993, the Head Office informed the Davao Branch Manager that the Board Operations Committee had accepted Roberns offer. 16 Eight days later, Robern was informed of the acceptance. Al-Amanah stressed that it is Roberns responsibility to eject the occupants in the subject lot, if any, as well as the payment of t he remaining amount within 15 days; otherwise, the P80,000.00 deposit shall be forfeited. In a letter18 dated January 13, 1994, Robern expressed to Al-Amanah its uncertainty on the status of the subject lot because PELA made a representation with their office bringing with them copies of official receipts issued by Al-Amanah. Robern also requested for a definite statement from the bank on whether the official receipts being brandished by PELA are genuine or not.

To convince Robern that it has no existing contract with PELA, Al-Amanah furnished it with copies of the Head Offices rejection letter of PELAs bid, the demand letters to vacate, and the proof of consignment of PELAs P150,000.00 deposit to the RTC of Davao City that PELA refused to withdraw.19 Thereafter, on February 2, 1994, it informed Robern that should the latter fail to pay the balance by February 9, 1994, its P80,000.00 deposit will be forfeited and the lot shall be up for sale to other prospective buyers. Meanwhile, Al-Amanah requested for assistance for the removal of the houses not only from the Office of the City Engineer but also from Mayor Rodrigo Duterte. On March 4, 1994, Robern paid the balance of the purchase price. 23 The Deed of Sale24 over the realty was executed and TCT No. T-21298325 was issued in Roberns name the following day. A week later, PELA consigned P150,000.00 in the RTC of Davao City.26 Then on April 14, 1994, it wrote27 Al-Amanah asking the latter to withdraw the amount consigned. Three months later, as its members were already facing eviction and possible demolition of their houses, and in order to protect their rights as vendees, PELA filed a suit for Annulment and Cancellation of Void Deed of Sale against Al-Amanah, its Director Engr. Farouk Carpizo (Engr. Carpizo), OIC Dalig, Robern, and Roberns President and General Ma nager, petitioner Rodolfo Bernardo (Bernardo) before the RTC of Davao City. It insisted that as early as March 1993 it has a perfected contract of sale with Al-Amanah. However, in an apparent act of bad faith and in cahoots with Robern, Al-Amanah proceeded with the sale of the lot despite the prior sale to PELA. Incidentally, the trial court granted PELAs prayer for a TRO. The RTCs grant of injunctive relief was affirmed by the CA when the factual and legal bases for its issuance were questioned before the appellate court. The respondents in the annulment case filed their respective Answers. 33 Al-Amanah and Engr. Carpizo claimed that the bank has every right to sell its lot to any interested buyer with the best offer and thus they chose Robern. They clarified that the P150,000.00 PELA handed to them is not part of the payment but merely a deposit in connection with its offer. They asserted that PELA was properly apprised that its offer to buy was subject to the approval of Al-Amanahs Head Office. They stressed that AlAmanah never entered into a sale with PELA for there was no perfected agreement as to the price since the Head Office rejected. In its August 10, 1999 Decision,35 the RTC dismissed PELAs Complaint. It opined that the March 18, 1993 letter PELA has been relying upon as proof of a perfected contract of sale was a mere offer which was already rejected. Furthermore, the annotation appearing in the bottom part of the said letter could not be construed as an acceptance because the same is a mere acknowledgment of receipt of the letter (not the offer) which will still be subject to processing. The RTC likewise ruled that being a corporation, only Al-Amanahs board of directors can bind the bank with third persons involving the sale of its property. Thus, the purported offer made by Al-Amanahs OIC, who was never conferred authority by the board of directors to sell the lot, cannot bind the bank. In contrast, when the Head Office accepted Roberns offered price, it was duly approved by the board of directors, giving birth to a perfected contract of sale between Al-Amanah and Robern. On appeal, CA reversed the trial courts decision. It ruled that there was already a perfected contract of sale between PELA and Al-Amanah. It held that the annotationon the lower portion of the March 18, 1993 letter could be construed to mean that for Al-Amanah to accept PELAs offer, the sum of P150,000.00 must be first put up receipt by Al-Amanah of the amounts totalling P150,000.00, and the annotation of "deposit on sale of TCT No. 138914," on the receipts it issued explicitly indicated an acceptance of the associations offer to buy. Consequently, the CA invalidated the sale between Robern and Al-Amanah.

Robern and Bernardo filed a Motion for Reconsideration39 which Al-Amanah adopted. The CA, however, was firm in its disposition and thus denied 40 the same. Aggrieved, Robern and Al-Amanah separately filed Petitions for Review on Certiorari before us. However, Al-Amanahs was denied on procedural grounds.41 Al-Amanahs Motion for Reconsideration of the said Resolution of dismissal was denied with finality.42Hence, only the Petition of Robern and Bernardo subsists. ISSUE: whether there was a perfected contract of sale between PELA and Al-Amanah, the resolution of which will decide whether the sale of the lot to Robern should be sustained or not. HELD: No, there is no perfected contract of sale between PELA and Al-Amanah. A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.48 Thus, for a contract of sale to be valid, all of the following essential elements must concur: "a) consent or meeting of the minds; b) determinate subject matter; and c) price certain in money or its equivalent."49 In the case at bench, there is no controversy anent the determinate subject matter, i.e., the 2,000-square meter lot. This leaves us to resolve whether there was a concurrence of the remaining elements. As for the price, fixing it can never be left to the decision of only one of the contracting parties.50 "But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale."51 As regards consent, "when there is merely an offer by one party without acceptance of the other, there is no contract."52 The decision to accept a bidders proposal must be communicated to the bidder.53 However, a binding contract may exist between the parties whose minds have met, although they did not affix their signatures to any written document, 54 as acceptance may be expressed or implied.55 It "can be inferred from the contemporaneous and subsequent acts of the contracting parties."56 Thus, we held: x x x The rule is that except where a formal acceptance is so required, although the acceptance must be affirmatively and clearly made and must be evidenced by some acts or conduct communicated to the offeror, it may be made either in a formal or an informal manner, and may be shown by acts, conduct, or words of the accepting party that clearly manifest a present intention or determination to accept the offer to buy or sell. Thus, acceptance may be shown by the acts, conduct, or words of a party recognizing the existence of the contract of sale. 57 There is no perfected contract of sale between PELA and Al-Amanah for want of consent and agreement on the price. When PELA Secretary Florida Ramos (Ramos) testified, she referred to the March 18, 1993 letter which PELA sent to Al-Amanah as the document supposedly embodying the perfected contract of sale.58 However, we find that the March 18, 1993 letter referred to was merely an offer to buy. Neither can the note written by the bank that "subject offer has been acknowledged/received but processing to take effect upon putting up of the partial amount of P150,000.00 on or before April 15, 1993" be construed as acceptance of PELAs offer to buy. T aken at face value, the annotation simply means that the bank merely acknowledged receipt of PELAs letter -offer. Furthermore, by processing, AlAmanah only meant that it will act on the offer, i.e., it still has to evaluate whether PELAs offer is acceptable. Until and unless Al-Amanah accepts, there is as yet no perfected contract of sale. Notably here, the bank never signified its approval or acceptance of the offer. We cannot agree with the CAs ratiocination that receipt of the amount, coupled with the phrase written on the four receipts as "deposit on sale of TCT No. 138914," signified a tacit acceptance

by Al-Amanah of PELAs offer. For sure, the money PELA gave was not in the concept of an earnest money. Besides, as testified to by then OIC Dalig, it is the usual practice of Al-Amanah to require submission of a bid deposit which is acknowledged by way of bank receipts before it entertains offers. It is thus undisputed, and PELA even acknowledges, that OIC Dalig made it clear that the acceptance of the offer, notwithstanding the deposit, is subject to the approval of the Head Office. Recognizing the corporate nature of the bank and that the power to sell its real properties is lodged in the higher authorities,65 she never falsely represented to the bidders that she has authority to sell the banks property. And regardless of PELAs insistence that she execute a written agreement of the sale, she refused and told PELA to wait for the decision of the Head Office, making it clear that she has no authority to execute any deed of sale. Contracts undergo three stages: "a) negotiation which begins from the time the prospective contracting parties indicate interest in the contract and ends at the moment of their agreement[; b) perfection or birth, x x x which takes place when the parties agree upon all the essential elements of the contract x x x; and c) consummation, which occurs when the parties fulfill or perform the terms agreed upon, culminating in the extinguishment thereof." 66 In the case at bench, the transaction between Al-Amanah and PELA remained in the negotiation stage. The offer never materialized into a perfected sale, for no oral or documentary evidence categorically proves that Al-Amanah expressed amenability to the offered P300,000.00 purchase price. Before the lapse of the 1-year period PELA had set to pay the remaining balance, Al -Amanah expressly rejected its offered purchase price, although it took the latter around seven months to inform the former and this entitled PELA to award of damages.67 Al-Amanahs act of selling the lot to another buyer is the final nail in the coffin of the negotiation with PELA. Clearly, there is no double sale, thus, we find no reason to disturb the consummated sale between Al-Amanah and Robern. CARLOS LIM, CONSOLACION LIM, EDMUNDO LIM,* CARLITO LIM, SHIRLEY LEODADIA DIZON,** AND ARLEEN LIM FERNANDEZ vs. DEVELOPMENT BANK OF THE PHILIPPINES G.R. No. 177050 July 01, 2013 DEL CASTILLO, J.: TOPIC: doctrine of constructive fulfillment of suspensive conditions, FACTS: On November 24, 1969, petitioners Carlos, Consolacion, and Carlito, all surnamed Lim, obtained a loan of P40,000.00 (Lim Account) from respondent Development Bank of the Philippines (DBP) to finance their cattle raising business.4 On the same day, they executed a Promissory Note 5 undertaking to pay the annual amortization with an interest rate of 9% per annum and penalty charge of 11% per annum. On December 30, 1970, petitioners Carlos, Consolacion, Carlito, and Edmundo, all surnamed Lim; Shirley Leodadia Dizon, Arleen Lim Fernandez, Juan S. Chua,6 and Trinidad D. Chua 7 obtained another loan from DBP8 in the amount of P960,000.00 (Diamond L Ranch Account).9 They also executed a Promissory Note,10 promising to pay the loan annually from August 22, 1973 until August 22, 1982 with an interest rate of 12% per annum and a penalty charge of 1/3% per month on the overdue amortization. To secure the loans, petitioners executed a Mortgage 11 in favor of DBP over real properties covered by the following titles registered in the Registry of Deeds for the Province of South Cotabato. Due to violent confrontations between government troops and Muslim rebels in Mindanao from 1972 to 1977, petitioners were forced to abandon their cattle ranch.13 As a result, their business collapsed and they failed to pay the loan amortizations.

In 1978, petitioners made a partial payment in the amount of P902,800.00, leaving an outstanding loan balance of P610,498.30, inclusive of charges and unpaid interest, as of September 30, 1978. In 1989, petitioners, represented by Edmundo Lim (Edmundo), requested from DBP Statements of Account for the "Lim Account" and the "Diamond L Ranch Account."17 Also, claiming to have already paid P902,800.00, Edmundo requested for an amended statement of account. 20 On May 4, 1990, Edmundo made a follow-up on the request for recomputation of the two accounts.21 On May 17, 1990, DBPs General Santos Branch informed Edmundo that the Diamond L Ranch Account amounted to P2,542,285.60 as of May 31, 1990 22 and that the mortgaged properties located at San Isidro, Lagao, General Santos City, had been subjected to Operation Land Transfer under the Comprehensive Agrarian Reform Program (CARP) of the government. 23 Edmundo was also advised to discuss with the Department of Agrarian Reform (DAR) and the Main Office of DBP 24 the matter of the expropriated properties. Edmundo asked DBP how the mortgaged properties were ceded by DAR to other persons without their knowledge.25 No reply was made.26 On April 30, 1991, Edmundo again signified petitioners intention to settle the Diamond L Ranch 27 Account. Again, no reply was made.28 On February 21, 1992, Edmundo received a Notice of Foreclosure scheduled the following day.29 To stop the foreclosure, he was advised by the banks Chief Legal Counsel to pay an interest covering a 60-days period or the amount of P60,000.00 to postpone the foreclosure for 60 days.30 He was also advised to submit a written proposal for the settlement of the loan accounts. 31 In a letter32 dated March 20, 1992, Edmundo proposed the settlement of the accounts through dacion en pago, with the balance to be paid in equal quarterly payments over five years. DBP rejected the proposal and informed Edmundo that unless the accounts are fully settled as soon as possible, the bank will pursue foreclosure proceedings. DBP then sent Edmundo the Statements of Account 34 as of June 15, 1992 which were stamped with the words "Errors & Omissions Excepted/Subject to Audit" indicating the following amounts: (1) Diamond L Ranch: P7,210,990.27 and (2) Lim Account: P187,494.40. On June 11, 1992, Edmundo proposed to pay the principal and the regular interest of the loans in 36 equal monthly installments.35 DBP advised Edmundo to coordinate with Branch Head Bonifacio Tamayo, Jr. (Tamayo).36 Tamayo promised to review the accounts.37 On September 21, 1992, Edmundo received another Notice from the Sheriff that the mortgaged properties would be auctioned.38 Edmundo again paid P30,000.00 as additional interest to postpone the auction.39 But despite payment of P30,000.00, the mortgaged properties were still auctioned with DBP emerging as the highest bidder in the amount of P1,086,867.26.40 The auction sale, however, was later withdrawn by DBP for lack of jurisdiction.41 Thereafter, Tamayo informed Edmundo of the banks new guidel ines for the settlement of outstanding loan accounts under Board Resolution No. 0290-92.42 Based on these guidelines, petitioners outstanding loan obligation was computed at P3,500,000.00 plus.43 Tamayo then proposed that petitioners pay 10% downpayment and the remaining balance in 36 monthly installments. 44 He also informed Edmundo that the bank would immediately prepare the Restructuring Agreement upon receipt of the downpayment and that the conditions for the settlement have been "pre-cleared" with the banks Regional Credit Committee.45 Thus, Edmundo wrote a letter46 on October 30, 1992 manifesting petitioners assent to the proposal. On November 20, 1992, Tamayo informed Edmundo that the proposal was accepted with some minor adjustments and that an initial payment should be made by November 27, 1992. 47

On December 15, 1992, Edmundo paid the downpayment of P362,271.7548 and was asked to wait for the draft Restructuring Agreement. 49 However, on March 16, 1993, Edmundo received a letter 50 from Tamayo informing him that the Regional Credit Committee rejected the proposed Restructuring Agreement; that it required downpayment of 50% of the total obligation; that the remaining balance should be paid within one year; that the interest rate should be non prime or 18.5%, whichever is higher; and that the proposal is effective only for 90 days from March 5, 1993 to June 2, 1993. 51 Edmundo, in a letter52 dated May 28, 1993, asked for the restoration of their previous agreement.53 On June 5, 1993, the bank replied that what have been agreed between Edmundo and the Branch are not final until [the] same has been approved by higher authorities of the Bank and that the Regional Credit Committee did not agree to the terms and conditions as recommended. On July 28, 1993, Edmundo wrote a letter56 of appeal to the Regional Credit Committee. In a 57 letter dated August 16, 1993, Tamayo informed Edmundo that the previous Restructuring Agreement was reconsidered and approved by the Regional Credit Committee subject to the following additional conditions, to wit: 1) Submission of Board Resolution and Secretarys Certificate designating you as authorized representative in behalf of Diamond L Ranch; 2) Payment of March 15 and June 15, 1993 amortizations within 30 days from date hereof; and 3) Submission of SEC registration. Also the letter reminded Edmundo that upon failure on your part to sign and perfect the documents and comply [with] other conditions within (30) days from date of receipt, the approved recommendation shall be deemed CANCELLED. However, no compliance was made by Edmundo.58 On September 21, 1993, Edmundo received Notice that the mortgaged properties were scheduled to be auctioned on that day. 59 To stop the auction sale, Edmundo asked for an extension until November 15, 199360 which was approved subject to additional conditions: 1) This will be the last and final extension to be granted your accounts; and 2) That all amortizations due from March 1993 to November 1993 shall be paid including the additional interest computed at straight 18.5% from date of your receipt of notice of approval, viz: On November 8, 1993, Edmundo sent Tamayo a telegram, which reads:Acknowledge receipt of your Sept. 27 letter. I would like to finalize documentation of restructuring Diamond L Ranch and Carlos Lim Accounts. However, we would need clarification on amortizations due on NTFI means [sic]. I will call x x x your Legal Department at DBP Head Office by Nov. 11. Pls. advise who[m] I should contact. Thank you.62 Receiving no response, Edmundo scheduled a meeting with Tamayo in Manila. 63 During their meeting, Tamayo told Edmundo that he would send the draft of the Restructuring Agreement by courier on November 15, 1993 to the Main Office of DBP in Makati, and that Diamond L Ranch need not submit the Board Resolution, the Secretarys Certificate, and the SEC Registration since it is a single proprietorship.64 On November 24, 1993 and December 3, 1993, Edmundo sent telegrams to Tamayo asking for the draft of the Restructuring Agreement.65 On November 29, 1993, the documents were forwarded to the Legal Services Department of DBP in Makati for the parties signatures. At the same time, Edmundo was required to pay the amount of P1,300,672.75, plus a daily interest of P632.15 starting November 16, 1993 up to the date of actual payment of the said amount.66 On December 19, 1993, Edmundo received the draft of the Restructuring Agreement. 67In a letter68 dated January 6, 1994, Tamayo informed Edmundo that the bank cancelled the Restructuring Agreement due to his failure to comply with the conditions within a reasonable time.\

On January 10, 1994, DBP sent Edmundo a Final Demand Letter asking that he pay the outstanding amount of P6,404,412.92, as of November 16, 1993, exclusive of interest and penalty charges.69 Edmundo, in a letter70 dated January 18, 1994, explained that his lawyer was not able to review the agreement due to the Christmas holidays. Edmundo indicated that he was prepared to pay the first quarterly amortization on March 15, 1994 based on the total obligations of P3,260,445.71, as of December 15, 1992, plus interest.72 Also, he asked about the status of the Restructuring Agreement as well as the computation of the accrued interest and advances 75 but the bank could not provide any definite answer.76 On July 11, 1994, the Ex-Officio Sheriff conducted a public auction sale of the mortgaged properties for the satisfaction of petitioners total obligations in the amount of P5,902,476.34. DBP was the highest bidder in the amount of P3,310,176.55.79In a letter81 dated September 16, 1994, DBP informed Edmundo that their right of redemption over the foreclosed properties would expire on July 28, 1995. On July 28, 1995, petitioners filed before the RTC of General Santos City, a Complaint 83 against DBP for Annulment of Foreclosure and Damages with Prayer for Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order. Petitioners alleged that DBPs acts and omissions prevented them from fulfilling their obligation; thus, they prayed that they be discharged from their obligation and that the foreclosure of the mortgaged properties be declared void. They likewise prayed for actual damages for loss of business opportunities, moral and exemplary damages, attorneys fees, and expenses of litigation.84 RTC issued a Temporary Restraining Order and thereafter granted the writ of preliminary injunction directing DBP to cease and desist from consolidating the titles over petitioners foreclosed properties and from disposing the same. It also directed petitioners to post a bond in the amount of P3,000,000.00. DBP filed its Answer,87 arguing that petitioners have no cause of action;88 that petitioners failed to pay their loan obligation;89 that as mandated by Presidential Decree No. 385, initial foreclosure proceedings were undertaken in 1977 but were aborted because petitioners were able to obtain a restraining order;90 that on December 18, 1990, DBP revived its application for foreclosure but it was again held in abeyance upon petitioners request; 91 that DBP gave petitioners written and verbal demands as well as sufficient time to settle their obligations;92 and that under Act 3135,93 DBP has the right to foreclose the properties.94 Consequently, RTC ruled that petitioners have fully extinguished and discharged their obligation to the [respondent] Bank; and that the foreclosure of [petitioners] mortgaged properties, the sale of the properties under the foreclosure proceedings and the resultant certificate of sale issued by the foreclosing Sheriff by reason of the foreclosure NULL and VOID. On appeal, the CA reversed and set aside the RTC Decision. ISSUES: 1) Whether petitioners obligation was extinguished or discharged? No 2) Whether or not the foreclosure is valid? No HELD: The Petition is partly meritorious. 1)The obligation was not extinguished or discharged. The Promissory Notes subject of the instant case became due and demandable as early as 1972 and 1976. The only reason the mortgaged properties were not foreclosed in 1977 was because of the restraining order from the court. In 1978, petitioners made a partial payment of P902,800.00. No

subsequent payments were made. It was only in 1989 that petitioners tried to negotiate the settlement of their loan obligations. And although DBP could have foreclosed the mortgaged properties, it instead agreed to restructure the loan. In fact, from 1989 to 1994, DBP gave several extensions for petitioners to settle their loans, but they never did, thus, prompting DBP to cancel the Restructuring Agreement. Petitioners, however, insist that DBPs cancellation of the Restructuring Agreement justifies the extinguishment of their loan obligation under the Principle of Constructive Fulfillment found in Article 1186 of the Civil Code. We do not agree. As aptly pointed out by the CA, Article 1186 of the Civil Code, which states that "the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment," does not apply in this case,112 viz: Article 1186 enunciates the doctrine of constructive fulfillment of suspensive conditions, which applies when the following three (3) requisites concur, viz: (1) The condition is suspensive; (2) The obligor actually prevents the fulfillment of the condition; and (3) He acts voluntarily. Suspensive condition is one the happening of which gives rise to the obligation. It will be irrational for any Bank to provide a suspensive condition in the Promissory Note or the Restructuring Agreement that will allow the debtorpromissor to be freed from the duty to pay the loan without paying it. 113 Besides, petitioners have no one to blame but themselves for the cancellation of the Restructuring Agreement. It is significant to point out that when the Regional Credit Committee reconsidered petitioners proposal to restructure the loan, it imposed additional conditions. In fact, when DBPs General Santos Branch forwarded the Restructuring Agreement to the Legal Services Department of DBP in Makati, petitioners were required to pay the amount of P1,300,672.75, plus a daily interest of P632.15 starting November 16, 1993 up to the date of actual payment of the said amount. 114 This, petitioners failed to do. DBP therefore had reason to cancel the Restructuring Agreement. Moreover, since the Restructuring Agreement was cancelled, it could not have novated or extinguished petitioners loan obligation. And in the absence of a perfected Restructuring Agreement, there was no impediment for DBP to exercise its right to foreclose the mortgaged properties. 2)The foreclosure sale is not valid. But while DBP had a right to foreclose the mortgage, we are constrained to nullify the foreclosure sale due to the banks failure to send a notice of foreclosure to petitioners. We have consistently held that unless the parties stipulate, "personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary" 116 because Section 3117 of Act 3135 only requires the posting of the notice of sale in three public places and the publication of that notice in a newspaper of general circulation. In this case, the parties stipulated in paragraph 11 of the Mortgage that: 11. All correspondence relative to this mortgage, including demand letters, summons, subpoenas, or notification of any judicial or extra-judicial action shall be sent to the Mortgagor at xxx or at the address that may hereafter be given in writing by the Mortgagor or the Mortgagee;118 However, no notice of the extrajudicial foreclosure was sent by DBP to petitioners about the foreclosure sale scheduled on July 11, 1994. The letters dated January 28, 1994 and March 11, 1994 advising petitioners to immediately pay their obligation to avoid the impending foreclosure of their mortgaged properties are not the notices required in paragraph 11 of the Mortgage. The failure of DBP to comply with their contractual agreement with petitioners, i.e., to send notice, is a breach sufficient to invalidate the foreclosure sale. In Metropolitan Bank and Trust Company v. Wong, 119 we explained that: x x x a contract is the law between the parties and, that absent any showing that its provisions are wholly or in part contrary to

law, morals, good customs, public order, or public policy, it shall be enforced to the letter by the courts. Section 3, Act No. 3135 reads: 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 and city. The Act only requires (1) the posting of notices of sale in three public places, and (2) the publication of the same in a newspaper of general circulation. Personal notice to the mortgagor is not necessary. Nevertheless, the parties to the mortgage contract are not precluded from exacting additional requirements. In this case, petitioner and respondent in entering into a contract of real estate mortgage, agreed inter alia: all correspondence relative to this mortgage, including demand letters, summonses, subpoenas, or notifications of any judicial or extra-judicial action shall be sent to the MORTGAGOR at 4042 Aldeguer St. Iloilo City, or at the address that may hereafter be given in writing by the MORTGAGOR to the MORTGAGEE. Precisely, the purpose of the foregoing stipulation is to apprise respondent of any action which petitioner might take on the subject property, thus according him the opportunity to safeguard his rights. When petitioner failed to send the notice of foreclosure sale to respondent, he committed a contractual breach sufficient to render the foreclosure sale on November 23, 1981 null and void. 120 (Emphasis supplied)