G.R. No. 118408 - Abaca Corporation of the Philippines vs. Garcia

The Abaca Corporation of the Philippines (ABACORP), represented by the Board of Liquidators, acted as mortgagee and petitioner.
Martin O. Garcia acted as mortgagor and private respondent.
The Court of Appeals acted as respondent appellate court.

On 25 September 1961, Martin O. Garcia was granted a loan of P25,000.00 by ABACORP.
To secure payment, Garcia executed a promissory note and a real estate mortgage over twenty-six (26) parcels of land in favor of ABACORP.
The mortgage contained stipulations appointing ABACORP (specifically) as attorney-in-fact with authority to foreclose.
The mortgage further provided that Act No. 3135 would be applied, and that foreclosure could be done judicially in accordance with the Rules of Court or extrajudicially in accordance with Act No. 3135, as amended.

Garcia defaulted in his payments.
ABACORP initiated extrajudicial foreclosure proceedings.
The public auction was suspended several times upon Garcia’s request.
Despite accommodations, Garcia still failed to pay.
ABACORP then initiated anew an extrajudicial foreclosure and public auction sale.
ABACORP emerged as the sole and winning bidder.
Before a certificate of sale could be issued in ABACORP’s favor, Garcia filed an action contesting the sale.

Garcia filed a complaint for Annulment of Sale with Injunction and Damages with the Regional Trial Court of Legaspi City, docketed as Civil Case No. 4546.
The Regional Trial Court rendered a Decision dated 29 November 1988.
The Regional Trial Court held that ABACORP or the Board of Liquidators was allowed to proceed with foreclosure proceedings and auction sale of all twenty-six (26) parcels based on the “new balance,” including legal interests, newspaper publication, and sheriff’s fee.
The trial court ordered Garcia to reimburse ABACORP (through the Board of Liquidators) litigation expenses of P30,224.22, representing the travel expenses of different lawyers who came to Legaspi to attend to the case.

Garcia appealed to the Court of Appeals.
The Court of Appeals reversed the trial court decision through a Decision in CA-G.R. No. CV-204104, promulgated 30 June 1994, and also denied reconsideration through a Resolution dated 19 December 1994.
The Court of Appeals ruled to:

Declare the auction sale of the subject properties null and void (the text states “on December 2, 1991” but the pleading indicates a corrected year as “should be 1971”).
Order defendants to desist from ...(Subscriber-Only)

Whether the Court of Appeals correctly applied Sec. 21, Rule 39 of the Revised Rules of Court to an extrajudicial foreclosure sale under the parties’ mortgage and the governing statute.

Whether alleged inadequacy of the bid price was a sufficient ground to nullify the extrajudicial foreclosure sale.

Ruling:

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Ratio:

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Doctrine:

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