Philippine Savings Bank v. Co

Summary

This Supreme Court case established that banks must provide personal notice to mortgagors before extrajudicial foreclosure, despite Act No. 3135's silence on this requirement. Josephine Co borrowed P10 million from Philippine Savings Bank, secured by real estate mortgage. When Co defaulted, the bank foreclosed without personal notice, relying on the promissory note's waiver clause. The Regional Trial Court initially dismissed Co's challenge, but the Court of Appeals reversed, finding that a contractual provision requiring correspondence to be sent to Co's address created an obligation for personal notice. The Supreme Court affirmed, significantly reconsidering the Bonnevie doctrine and holding that due process principles and banking industry standards require personal notification. The Court emphasized that banking is imbued with public interest, requiring banks to exercise utmost diligence. This decision strengthens mortgagor protection by mandating personal notice regardless of contractual waivers, marking an important shift in extrajudicial foreclosure jurisprudence toward greater procedural safeguards for borrowers.