Facts:

The case revolves around Bernabe B. Aquino as the plaintiff-appellee and Macondray & Co., Inc. along with other parties as defendants-appellants. The proceedings originate from the Court of First Instance of Pangasinan, where a series of transactions between Aquino and Macondray transpired. Aquino became indebted to Macondray in varying sums over multiple agreements. Subsequently, these debts were consolidated into a single promissory note amounting to P15,585 on May 6, 1935, which Aquino was to pay in five installments. As a guarantee for this note, he mortgaged several properties he had acquired from Macondray.

Upon failure to pay the installments, Macondray initiated an extrajudicial foreclosure on October 9, 1937, which was conducted by the Provincial Sheriff of Pangasinan. Following the auction, which left Aquino with no opportunity to present a counter-bid, the properties were sold to Macondray for P20,043.18. After Aquino failed to redeem the properties within one ye

...

Facts:

Background of the Financial Transactions

• Bernabe B. Aquino incurred various debts to Macondray & Co., Inc. which were consolidated into a single obligation of P15,585 on May 6, 1935.
• On that day, Aquino executed a promissory note payable in five installments, with an interest rate of 12% per annum on the unpaid balance and a stipulated 20% attorney’s fee in case of default; non-payment of any installment rendered the entire amount immediately due.
• The properties involved included lots Aquino had acquired from Macondray in Bayambang, Pangasinan, and in the Singalong Subdivision, Manila.
• Aquino reconveyed these properties to himself on the same day, which were subsequently mortgaged to Macondray as security for the consolidated note.

Foreclosure Proceedings and Extrajudicial Sale

• The mortgage deed contained a clause permitting Macondray to sell the properties extrajudicially in the event of default, pursuant to Act No. 3135.
• Upon Aquino’s default on his installment payments, Macondray proceeded with the extrajudicial foreclosure by employing the services of the Provincial Sheriff of Pangasinan, who delegated the conduct of the public auction to the Deputy Sheriff, Dominador C. Ungson.
• Ungson testified that the notice of the sale was published in the Agno Valley Times and that three notices were mailed to the Chief of Police of Bayambang with instructions to post them at proper public places.
• At the auction held on October 9, 1937, due to the absence of competing bids, the properties were awarded to Macondray for the sum of P20,043.18, as evidenced by the certificate of sale issued by Ungson.
• A final certificate of sale was executed on December 20, 1938, after Aquino failed to redeem the properties within one year from the sale.

Aquino’s Subsequent Communications and Repurchase Attempt

• Prior to the final certificate and after the auction, Aquino sent a letter dated November 25, 1938, in which he:
• Confirmed an arrangement whereby he turned over possession of the Bayambang properties to Macondray, acknowledging their acquisition due to his failure to repurchase within the prescribed period.
• Recognized the absolute ownership of Macondray while reserving an option to repurchase the properties on specific installment terms.
• Aquino reiterated his repurchase offer in a subsequent letter dated June 1, 1945, wherein he:
• Applied for the repurchase of the Bayambang lands acquired by Macondray through foreclosure.
• Provided detailed arrangements regarding the structure of the repayment, timing of the down payment (P5,000), and subsequent installment obligations.
• Indicated that, practically, the outstanding obligation on the foreclosed property was reduced to a lower sum when the sale of the Singalong properties was taken into account.

Petition and Subsequent Litigation

• Approximately four months after the repurchase communication, on September 28, 1945, Aquino filed an amended complaint with the Court of First Instance of Pangasinan.
• In the amended complaint, Aquino prayed for the annulment of the auction sale and an accounting of the proceeds from the lands delivered post-sale, basing his action partly on the contention that the sale had been conducted en masse rather than on a per-lot basis.
• Although Aquino raised minor objections regarding the posting of the required notices and the manner of sale, the trial court’s decision had primarily rested on the alleged defect in posting.

Procedural Developments and Evidence Presented

• The parties submitted a detailed stipulation of facts (pages 93 to 103 of the printed record on appeal) covering the entire series of transactions and events leading to the foreclosure and subsequent repurchase offer.
• The evidence included testimonies regarding the proper publication of notices and the execution of the extrajudicial sale, as well as documentary evidence of the two letters from Aquino confirming and reiterating the repurchase offer.
• The record showed that prior to the sale, all procedural steps—such as publication and posting of notices—had been observed, with the understanding that any defect would be remedied by Aquino’s subsequent actions.

Issue:

Validity and Effect of Defects in Notice Requirements

• Whether the alleged failure or defect in posting the required public notices before the auction sale affected the validity of the extrajudicial foreclosure process.
• Whether the instructions given to the Chief of Police and the subsequent posting of the notices satisfy statutory requirements.

Perfection of the Contract of Purchase and Sale

• Whether Aquino’s letter dated November 25, 1938, accepting the auction sale and proposing repurchase terms, constituted a perfected and executory contract between the parties.
• The legal effect of Aquino’s later communication, including the June 1, 1945 letter, in reinforcing the contract despite the prior auction sale.

Objectivity of Auction Sale Proceedings

• Whether the sale “en masse” as opposed to per individual lot violated any legal (or procedural) rights of the mortgaged debtor.
• Whether the pricing of the auctioned properties, though raised as unconscionable by Aquino, was valid given the market conditions and alternative options available to him.

Corporate Capacity to Acquire and Hold Real Estate

• Whether Macondray & Co., Inc., under the Corporation Law, possessed the legal capacity to acquire and hold real estate, as raised by Aquino in his defenses.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)