G.R. No. 236572 - Security Bank Corp. vs. Spouses Martel

Petitioner, Security Bank Corporation, and respondent spouses entered into a credit agreement.
On August 26, 1994, respondent spouses executed a Real Estate Mortgage (REM) contract in petitioner’s favor, securing a loan of ₱10,000,000.00 over the respondent spouses’ residential property.
The property, located at No. 8, Farol St., Urdaneta Village, Makati City, was registered under Transfer Certificate of Title (TCT) No. (288267) 146489.

Between April 12, 1995 and March 22, 1999, the respondent spouses executed five additional REM contracts over the same property to secure further extensions of credit, culminating in an aggregate principal obligation of ₱26,700,000.00.
From September 14, 2001 to October 5, 2001, respondent spouses executed four promissory notes covering ₱25,000,000.00 of their indebtedness.

Following their default on the loan obligations, petitioner initiated extra-judicial foreclosure proceedings based on a demand letter dated May 15, 2002, which detailed an outstanding obligation of ₱33,009,745.43 (exclusive of additional charges).
A Notice of Sheriff’s Sale was issued on July 31, 2002, scheduling the auction for September 6, 2002 with the mortgage debt computed at ₱34,645,909.44 as of June 30, 2002.

On September 5, 2002, respondent spouses wrote a letter to request a postponement of the auction to September 23, 2002, “without the need of republication.” Their request was granted.
The same type of request was made again on September 23, 2002, asking to move the auction to October 8, 2002; the request was granted once more.
A third letter on October 8, 2002 requested a further postponement to October 23, 2002, again without republication; this request was similarly granted.
As a result, on October 23, 2002, the auction sale was conducted by the RTC’s Clerk of Court and Ex-Officio Sheriff, with petitioner emerging as the highest bidder for ₱25,303,072.21.
A Certificate of Sale was issued on November 15, 2002, and the sale was later annotated on the property’s TCT on November 18, 2002.

On November 11, 2003, respondent spouses filed a Complaint seeking the nullification of the foreclosure sale, invalidation of the executed promissory notes, and damages.
Grounds cited included the alleged prematurity of the foreclosure, bad faith, exorbitant interest rates, irregularities in the promissory notes’ execution, and non-compliance with publication requirements for the auction.
Alternatively, respondent spouses sought a determination from the RTC on the proper redemption amount within a reasonable period.

On November 19, 2003, petitioner executed an Affidavit of Consolidation to consolidate its title over the property, alleging respondent spouses’ failure to redeem the auctioned property in time.
Consequently, TCT No. 146489 (registered in respondent spouses’ name) was cancelled and a new title, TCT No. 219694, was issued in petitioner’s name; petitioner was then placed in possession of the property.

On April 14, 2004, petitioner filed its Answer, arguing full compliance with posting and publication requirements, acknowledgment by respondent spouses regarding the auction’s rescheduling, and affirming that the disputed promissory notes were knowingly executed by respondent spouses.
The RTC rendered a Decision on August 5, 2014, which, among other things, nullified the auction sale held on October 23, 2002, and directed respondent spouses to pay additional fees to cover certain deficiencies, while also ordering a new auction sale in compliance with legal requirements.
On December 22, 2014, the RTC reversed this Decision, dismissing the respondent spouses’ Complaint entirely, based on its finding that the respondents’ own admissions regarding the letter-requests constituted judicial admissions enjoining them from contesting the validity of the auction sale.

On appeal, the Court of Appeals (CA) reversed the RTC’s December 22, 2014 Order and reinstated its earlier August 5, 2014 Decision, ruling that the foreclosure sale was void due to failure to comply with the publication requirement for the rescheduled auction date.
Respondent spouses had also raised an issue about the insufficiency of docket fees, arguing that their complaint—which simultaneously sought nullification of the foreclosure and recovery of title—required a higher fee payment.
Petitioner contested this, arguing that respondent spouses did not make the appropriate fee payment within the prescribed period, thus invalidating the trial court’s jurisdiction over the complaint.
The present petition for review on certiorari was filed, with petitioner emphasizing that the respondent spouses are estopped from questioning the auction sale’s validity, given that they themselves had actively requested postponements without republication.

Whether respondent spouses are estopped from contesting the validity of the auction sale of the mortgaged property since they repeatedly requested the rescheduling of the sale without requiring republication.
The impact of their letter-requests and subsequent judicial admissions on their ability to later nullify the sale.

Whether the failure by respondent spouses to pay the complete docket fees at the time of filing the complaint vitiated the trial court’s jurisdiction over their action.
Whether the trial court’s allowance for belated payment of the correct fee within the prescriptive period was proper under the rules of court and applicable prescription laws.

Whether the respondent spouses’ complaint constitutes a real action for recovery of title (subject to a 30-year prescription period) as opposed to a mere action to nullify foreclosure proceedings.
The legal implications of characterizing the complaint as a real action under the applicable provisions of the Rules of Court and the Civil Code.