Case Summary (G.R. No. 199149)
Factual Background
Epifanio De La Cruz and his siblings mortgaged two parcels of land located in Bulacan to PNB to secure three promissory notes maturing on November 10, 1958. A controversy arose regarding the date of execution of the third promissory note, which was alleged by the plaintiff to be June 30, 1961, but determined by the court to be a clerical error, with the true date being June 30, 1958. Following alleged default, PNB initiated extrajudicial foreclosure proceedings under Act No. 3135, culminating in the auction of the properties on October 20, 1961, which the bank won. The final deed of sale was executed and registered. PNB later sold the property to third parties. Plaintiff sought reconveyance on grounds of invalid foreclosure and improper sale processes.
Legal Issues Presented
- Validity of the extrajudicial foreclosure given alleged discrepancies in promissory note dates.
- Whether the foreclosure petition was prematurely filed based on the mortgage documentation.
- Compliance with statutory publication requirements under Section 3 of Act No. 3135, as amended.
- Legality of the auction sale, issuance of Certificate of Sale, Final Deed of Sale, and consolidation of ownership to the bank.
- Whether attorney’s fees and damages should be awarded due to improper foreclosure procedure.
Foreclosure and Promissory Note Dates
The trial court resolved the issue concerning the questionable date of the third promissory note as a clerical error pursuant to Section 7, Rule 130 of the Rules of Court. The court found that the foreclosure was legally proper and not premature, as the mortgage secured the promissory notes which had matured and remained unpaid.
Mortgage and Power of Attorney Validity
It was affirmed that the original mortgage and the subsequent foreclosure petition, although based on the original mortgage document only, were sufficient to legally foreclose on the collateral following the debtor’s default, and the power of attorney authorizing the mortgage was duly registered and annotated on the Torrens titles.
Publication of Notices of Sale Requirements
Publication under Section 3 of Act No. 3135 mandates that foreclosure sale notices must be posted in at least three public places for not less than twenty days and published once a week for at least three consecutive weeks in a newspaper of general circulation in the area where the property is located.
The bank published notices on March 28, April 11, and April 12, 1969. The court held that because the second and third publications fell too close together (April 11 and 12) and did not meet the requirement of weekly intervals spanning three consecutive weeks, this rendered the publication defective. Specifically, the law requires distinct seven-day intervals between publications, constituting three consecutive weeks. The court rejected the petitioner’s argument that the publication schedule was compliant, emphasizing that a "week" consists of seven consecutive days and that the days of publication must fall respectively within separate weeks counted from the date of first publication.
Effect of Publication Defect on Foreclosure Sale
The Court of Appeals concluded, supported by Supreme Court doctrine, that non-compliance with the strict statutory requirements of publication constitutes a jurisdictional defect and renders the foreclosure sale absolutely void. Since the highest bidder at the auction was the bank itself, the auction sale as well as the Certificate of Sale, Final Deed of Sale, and Affidavit of Consolidation were declared void and without legal effect.
Attorney’s Fees and Damages
Due to the petitioner’s failure to strictly comply with the legal requirements under Act No. 3135, the bank was found liable to pay reasonable attorney's fees to the respondent as a recompense for the expenses incurred in protecting his interest.
Intervention by Third Parties
The spouses Conrado and Marina De Vera inte
Case Syllabus (G.R. No. 199149)
Background and Nature of the Case
- The case involves a dispute over the extrajudicial foreclosure of two mortgaged parcels of land located in Bunlo, Bocaue, Bulacan.
- The plaintiff, Epifanio de la Cruz, sought reconveyance of the two parcels and damages, alleging unlawful foreclosure by the Philippine National Bank (PNB).
- The parcels were mortgaged by de la Cruz, with powers granted by his siblings Delfin and Maria through special power of attorney.
- Three promissory notes guaranteed by the mortgage had maturity dates in November 1958. A disputed date on the third promissory note was clarified as a clerical error, affirming validity.
- Foreclosure proceedings were initiated by PNB under Act No. 3135, as amended by Act No. 4118, resulting in a sheriff's sale where PNB was the highest bidder.
- The final deed of sale was executed and registered, followed by a conditional sale to third parties, spouses Conrado and Marina de Vera.
- The trial court dismissed plaintiff’s complaint, and plaintiff appealed, raising multiple errors mainly concerning date discrepancies, procedural propriety, and compliance with notice publication requirements.
Legal Issue: Compliance with Publication Requirements Under Act No. 3135, as Amended
- Section 3 of Act No. 3135, as amended by Act No. 4118, requires notice of sale in extrajudicial foreclosure proceedings be posted for at least twenty days in public places and published once a week for at least three consecutive weeks in a newspaper of general circulation.
- The notices of sale were published on March 28, April 11, and April 12, 1969 in the "Daily Record".
- The Court of Appeals held the publication was non-compliant because:
- The three notices were not published once weekly for three consecutive weeks as mandated.
- March 28 was the first publication (Friday), April 11 (Friday) the second, and April 12 (Saturday) the third publication; the second and third publications fell too close together, not respecting the required weekly interval.
- The petitioner bank’s argument that the third publication fell within the third week after the first publication was rejected.
- The interpretation of “week” under Article 13 of the New Civil Code and related jurisprudence establishes that a week is a period of seven consecutive days.
- The publication on April 11 was the first day of the third week, thus failing to constitute a second weekly publication.
- The Supreme Court emphasized strict compliance wit