FIRST DIVISION
ALFREDO M. OUANO,
Petitioner,
G.R.
No.
129279
March 4, 2003
-versus-
COURT OF APPEALS,
AND HEIRS OF
JULIETA M. OUANO,
Respondents.
D E C I S I O N
AZCUNA,
J.:chanroblesvirtuallawlibrary
Before us is a petition
for review on certiorari
against the decision and resolution of the
Court
of Appeals on CA-GR CV No. 33499[1]
affirming the decision of the Regional Trial Court of Cebu, Branch 19,
in Civil Case No. CEB-596, which set aside the extrajudicial
foreclosure
proceedings involving respondents' properties.
From the documentary
evidence and the Stipulation of Facts[2]
filed by the parties before the Regional Trial Court of Cebu, the facts
of the case are, as follows:
On June 8, 1977, respondent
Julieta M. Ouano (Julieta), now deceased, obtained a loan from the
Philippine
National Bank (PNB) in the amount of P104,280.00. As security for said
loan, she executed a real estate mortgage over two parcels of land
located
at Opao, Mandaue City.[3]
She defaulted on her obligation. On September 29, 1980, PNB filed a
petition
for extrajudicial foreclosure with the City Sheriff of Mandaue City.chanrobles virtuallaw libraryred
On November 4, 1980,
the sheriff prepared a notice of sale setting the date of public
auction
of the two parcels of land on December 5, 1980 at 9:00 a.m. to 4:00 p.m.[4]
He caused the notice to be published in the Cebu Daily Times, a
newspaper
of general circulation in Mandaue City, in its issues of November 13,
20
and 27, 1980.[5]
He likewise posted copies thereof in public places in Mandaue City and
in the place where the properties are located.[6]
However, the sale as
scheduled and published did not take place as the parties, on four
separate
dates, executed Agreements to Postpone Sale (Agreements).[7]
These Agreements were addressed to the sheriff, requesting the latter
to
defer the auction sale to another date at the same time and place,
"without
any further republication of the Notice." The first of the four
pro-forma
Agreements reads, as follows:
AGREEMENT
TO
POSTPONE SALE
Provincial Sheriff
Mandaue City
Sir:
In accordance with
this
agreement of the parties in the above named case, it is respectfully
requested
that the auction sale of the properties of the mortgagor, scheduled to
take place on December 5, 1980 at 9:00 o'clock in the morning at Office
of the City Sheriff of Mandaue City be postponed to February 5, 1981,
at
the same time and place, without any further republication of the
notice
of sale as required by law. [ talics supplied]
Cebu City,
December
11,1980.
PHILIPPINE NATIONAL BANK
(Mortgagee)
By:
_____________________
(Sgd.) F.B. Briones
Cebu Branch
Branch Attorney
____________________
(Sgd.) JULIETA M. OUANO
(Mortgagor)
Address: Opao, Mandaue City
On December 3, 1980,
two days prior to the date of the sale as published, the parties
executed
and filed with the sheriff the Agreement to Postpone Sale moving the
date
of sale from December 5, 1980 to February 5, 1981.[8]
On February 5, 1981, however, no sale occurred.cralaw:red
Eight days later, on
February 13, 1981, the parties executed and filed for the second time a
similar agreement moving the date of sale to February 28, 1981.[9]
Again, on February 28, 1981, no sale occurred.chanrobles virtuallaw libraryred
Ten days later, on March
10, 1981, the parties executed and filed for the third time a similar
agreement
moving the date of sale to March 30, 1981.[10]
No sale occurred on this date.cralaw:red
On March 30, 1981, the
parties executed for the fourth time a similar agreement moving the
date
of sale to May 29, 1981.[11]
This agreement was filed with the sheriff on April 30, 1981.cralaw:red
In all these postponements,
no new notice of sale was issued, nor was there any republication or
reposting
of notice for the rescheduled dates.cralaw:red
Finally, on May 29,
1981, the sheriff conducted the auction sale, awarding the two parcels
of land to PNB, the only bidder. He executed a Certificate of
Sale
certifying the sale for and in consideration of P195, 510.50.[12]
As Julieta failed to
redeem the properties within the one year period from registration of
sale,
PNB consolidated its title on February 12, 1983.[13]
On February 23 of the same year, it conveyed the properties to herein
petitioner
Alfredo Ouano, the brother of Julieta, under a Deed of Promise to Sell
payable in five years.[14]
On March 28, 1983, Julieta
sent demand letters to PNB and petitioner, pointing out irregularities
in the foreclosure sale.[15]
On April 18, 1983, Julieta filed a complaint with the Regional Trial
Court
(RTC) of Cebu for the nullification of the May 29, 1981 foreclosure
sale.[16]
Petitioner filed a motion for leave to intervene in said case, and
filed
his Answer in Intervention to protect his rights over the properties.[17]
While the case was pending,
on February 25, 1986, PNB executed a Deed of Sale in favor of
petitioner.[18]
The Register of Deeds of Mandaue City accordingly cancelled the TCTs in
PNB's name and issued in lieu thereof TCTs in the name of petitioner
over
the two parcels of land.[19]
On January 29, 1990,
the Regional Trial Court of Cebu rendered a decision in favor of
Julieta,
holding that the lack of republication rendered the foreclosure sale
void.
The dispositive portion of said decision states:chanrobles virtuallaw libraryred
WHEREFORE, judgment
is hereby rendered,
1. declaring as
null and void:
a) the auction
sale by the City Sheriff of Mandaue City on May 29, 1981 over the
aforesaid
properties of plaintiff Julieta Ouano;
b) the Certificate
of Sale (Exhibit K) issued by the City Sheriff of Mandaue City on May
29,
1981, in favor of the Philippine National Bank;
c) the Deed of
Sale (Exhibit L) executed by PNB to itself;
d) the Deed of
Promise to Sell (Exhibit O) executed by PNB on February 23, 1983 in
favor
of Alfredo Ouano
e) the Deed of
Sale (Exhibit 24) executed by PNB on February 5, 1986 in favor of
Alfredo
Ouano;
f) TCT No. 17929
(Exhibit M) and TCT No. 17930 (Exhibit N) in the name of PNB;
g) TCT No. 21982
(Exhibit 21) and TCT No. 21987 (Exhibit 22) in the name of Alfredo
Ouano;
2. ordering the
Register of Deeds of Mandaue City to cancel the aforementioned titles
(TCT
Nos. 17929 and 17930, as well as TCT Nos. 21982 and 21987), and to
reinstate
TCT Nos. 15724 (5033) and 24377 (6876) in the name of Julieta Ouano;
3. ordering the
City Sheriff of Mandaue City to conduct a new auction sale strictly
complying
with the requirements for publication and posting as required by Act
3135,
as amended by Act 4118;
4. ordering PNB
to return to Alfredo Ouano all amounts the latter has paid to the said
bank;
5. ordering Alfredo
Ouano to vacate the premises in question and turn them over to Julieta
Ouano;
6. ordering PNB
to pay the plaintiff the sum equivalent to 10% of the market value of
the
properties in question as indicated in Tax Declaration Nos. 01134 and
00510,
as attorney's fees, and to pay the costs.chanrobles virtuallaw libraryred
SO ORDERED.[20]
Not satisfied, PNB and
petitioner brought the case to the Court of Appeals.[21]
In its decision dated February 17, 1997, said court affirmed the trial
court's ruling on the same ground that there was no compliance with the
mandatory requirements of posting and publication of notice of sale.[22]
Petitioner filed a motion for reconsideration, which was denied for
lack
of merit by the same court on April 15, 1997.[23]
PNB and petitioner filed
their own petitions for review on certiorari before us. PNB's petition
however was dismissed on July 21, 1997 for being filed out of time and
for lack of certification of non-forum-shopping.[24]
The petition herein remaining is the one filed by petitioner.cralaw:red
Petitioner assigns the
following errors:
I.
RESPONDENT COURT OF
APPEALS ERRED IN SUSTAINING THE FINDING OF THE LOWER COURT THAT THE
POSTPONED
AUCTION SALE OF SUBJECT PROPERTIES HELD ON MAY 29, 1981 UPON WRITTEN
AGREEMENT
OF THE PARTIES WAS NULL AND VOID FOR LACK OF PUBLICATION OF NOTICE OF
SALE
ON THE SAID DATE ALTHOUGH THE REQUIREMENTS OF PUBLICATION OF NOTICE OF
SALE ON THE ORIGINALLY INTENDED DATE [WERE] FULLY COMPLIED WITH.
II.
RESPONDENT COURT OF
APPEALS ERRED IN HOLDING THAT THE PROVISION OF SEC. 24, RULE 39 OF THE
RULES OF COURT WHICH ALLOWS THE SHERIFF TO ADJOURN ANY SALE UPON
EXECUTION
TO ANY DATE AGREED UPON BY THE PARTIES IS NOT APPLICABLE TO THIS CASE.
III.
RESPONDENT COURT OF
APPEALS ERRED IN HOLDING THAT JULIETA M. OUANO IS NOT ESTOPPED FROM
CHALLENGING
THE VALIDITY OF THE AUCTION SALE SINCE THE SALE WAS REPEATEDLY
POSTPONED
UPON HER REQUEST AND WRITTEN AGREEMENT[S] THAT THERE WOULD BE NO
REPUBLICATION
OF THE NOTICE OF SALE.
IV
RESPONDENT COURT OF
APPEALS ERRED IN AFFIRMING THE DECISION OF THE LOWER COURT ALTHOUGH
JULIETA
M. OUANO FILED HER COMPLAINT AFTER ALMOST TWO YEARS FROM THE DATE OF
THE
AUCTION SALE.[25]
The main issue before
us is whether or not the requirements of Act No. 3135 were complied
with
in the May 29, 1981 foreclosure sale.cralaw:red
The governing law for
extrajudicial foreclosures is Act No. 3135 as amended by Act No. 4118.
The provision relevant to this case is Section 3, which provides:
SEC. 3. Notice shall
be given by posting notices of the sale for not less than twenty (20)
days
in at least three public places of the municipality or city where the
property
is situated, and if such property is worth more than four hundred
pesos,
such notice shall also be published once a week for at least three
consecutive
weeks in a newspaper of general circulation in the municipality of city.cralaw:red
It is a well-settled
rule that statutory provisions governing publication of notice of
mortgage
foreclosure sales must be strictly complied with, and that even slight
deviations therefrom will invalidate the notice and render the sale at
least voidable.[26]
In a number of cases, we have consistently held that failure to
advertise
a mortgage foreclosure sale in compliance with statutory requirements
constitutes
a jurisdictional defect invalidating the sale.[27]
Consequently, such defect renders the sale absolutely void and no title
passes.[28]
Petitioner, however,
insists that there was substantial compliance with the publication
requirement,
considering that prior publication and posting of the notice of the
first
date were made.cralaw:red
In Tambunting v. Court
of Appeals,[29]
we held that republication in the manner prescribed by Act No. 3135 is
necessary for the validity of a postponed extrajudicial foreclosure
sale.
Thus we stated:
Where required by the
statute or by the terms of the foreclosure decree, public notice of the
place and time of the mortgage foreclosure sale must be given, a
statute
requiring it being held applicable to subsequent sales as well as to
the
first advertised sale of the property. [underscoring supplied].cralaw:red
Petitioner further contends
that republication may be waived voluntarily by the parties.[30]
This argument has no
basis in law. The issue of whether republication may be waived is not
novel,
as we have passed upon the same query in Philippine National Bank v.
Nepomuceno
Productions Inc,.[31]
Petitioner therein sought extrajudicial foreclosure of respondent's
mortgaged
properties with the Sheriff's Office of Pasig, Rizal. Initially
scheduled
on August 12, 1976, the auction sale was re-scheduled several times
without
republication of the notice of sale, as stipulated in their Agreements
to Postpone Sale. Finally, the auction sale proceeded on December 20,
1976,
with petitioner as the highest bidder. Aggrieved, respondents sued to
nullify
the foreclosure sale. The trial court declared the sale void for
non-compliance
with Act No. 3135. This decision was affirmed in toto by the Court of
Appeals.
Upholding the conclusions of the trial and appellate court, we
categorically
held:chanrobles virtuallaw libraryred
Petitioner and respondents
have absolutely no right to waive the posting and publication
requirements
of Act No. 3135.cralaw:red
In People v. Donato,
the Court expounded on what rights and privileges may be waived, viz.:
xxx
xxx
xxx
[T]he principle is recognized
that everyone has a right to waive, and agree to waive, the advantage
of
a law or rule made solely for the benefit and protection of the
individual
in his private capacity, if it can be dispensed with and relinquished
without
infringing on any public right, and without detriment to the community
at large.cralaw:red
xxx
xxx
xxx
Although the general
rule is that any right or privilege conferred by statute or guaranteed
by constitution may be waived, a waiver in derogation of a statutory
right
is not favored, and a waiver will be inoperative and void if it
infringes
on the rights of others, or would be against public policy or morals
and
the public interest may be waived.cralaw:red
xxx
xxx
xxx
The principal object
of a notice of sale in a foreclosure of mortgage is not so much to
notify
the mortgagor as to inform the public generally of the nature and
condition
of the property to be sold, and of the time, place, and terms of the
sale.
Notices are given to secure bidders and prevent a sacrifice of the
property.
Clearly, the statutory requirements of posting and publication are
mandated,
not for the mortgagor's benefit, but for the public or third persons.
In
fact, personal notice to the mortgagor in extrajudicial foreclosure
proceedings
is not even necessary, unless stipulated. As such, it is imbued with
public
policy considerations and any waiver thereon would be inconsistent with
the intent and letter of Act No. 3135.cralaw:red
Publication, therefore,
is required to give the foreclosure sale a reasonably wide publicity
such
that those interested might attend the public sale.[32]
To allow the parties to waive this jurisdictional requirement would
result
in converting into a private sale what ought to be a public auction.chanrobles virtuallaw libraryred
Moreover, assuming arguendo
that the written waivers are valid, we find noticeable flaws that would
nevertheless invalidate the foreclosure proceedings. First, the
Agreements,
as worded, only waived "further republication of the notice of sale."
Nothing
in the Agreements indicates that the parties likewise
dispensed
with the reposting of the notices of sale. As there was no
reposting
of notice of the May 29, 1981 sale, the foreclosure fell short of the
requirements
of Act No. 3135. Second, we observe that the Agreements were executed
and
filed with the sheriff several days after each rescheduled date. As
stated
in the facts, the first agreement was timely filed, two days prior to
the
originally scheduled sale on December 5, 1980. The second agreement,
however,
was executed and filed eight days after the rescheduled sale on
February
5, 1981. The third agreement was executed and filed ten days after the
rescheduled sale on February 28, 1981. The fourth agreement was timely
executed, but was filed with the sheriff one month after the
rescheduled
sale on March 30, 1981. On the rescheduled dates, therefore, no public
sale occurred, nor was there any request to postpone filed with the
sheriff,
except for the first one. In short, the Agreements are clearly
defective
for having been belatedly executed and filed with the sheriff. The
party
who may be said to be at fault for this failure, and who should bear
the
consequences, is no other than PNB, the mortgagee in the case at bar.
It
is the mortgagee who causes the mortgaged property to be sold, and the
date of sale is fixed upon his instruction.[33]
We have held that the mortgagee's right to foreclose a mortgage must be
exercised according to the clear mandate of the law. Every requirement
of the law must be complied with, lest the valid exercise of the right
would end.[34]
PNB's inaction on the scheduled date of sale and belated filing of
requests
to postpone may be deemed as an abandonment of the petition to
foreclose
it filed with the sheriff. Consequently, its right to foreclose the
mortgage
based on said petition lapsed.cralaw:red
In a vain attempt to
uphold the validity of the aforesaid waiver, petitioner asserts that
the
Court of Appeals should have applied Rule 39, Section 24 of the Rules
of
Court, which allows adjournment of execution sales by agreement of the
parties. The said provision provides:
Sec. 24. Adjournment
of Sale - By written consent of debtor and creditor, the officer may
adjourn
any sale upon execution to any date agreed upon in writing by the
parties.
Without such agreement, he may adjourn the sale from day to day, if it
becomes necessary to do so for lack of time to complete the sale on the
day fixed in the notice.[35]
Petitioner submits that
the language of the abovecited provision implies that the written
request
of the parties suffices to authorize the sheriff to reset the sale
without
republication or reposting.[36]
At the outset, distinction
should be made of the three different kinds of sales under the law,
namely:
an ordinary execution sale, a judicial foreclosure sale, and an
extrajudicial
foreclosure sale. An ordinary execution sale is governed by the
pertinent
provisions of Rule 39 of the Rules of Court. Rule 68 of the Rules of
Court
applies in cases of judicial foreclosure sale. On the other hand, Act
No.
3135, as amended by Act No. 4118 otherwise known as "An Act to Regulate
the Sale of Property under Special Powers Inserted in or Annexed to
Real
Estate Mortgages" applies in cases of extrajudicial foreclosure sale. A
different set of law applies to each class of sale mentioned.[37]
The cited provision in the Rules of Court hence does not apply to an
extrajudicial
foreclosure sale.chanrobles virtuallaw libraryred
Moreover, even assuming
that the aforecited provision applies, all it authorizes is the
adjournment
of the execution sale by agreement of the parties. Nowhere does it
state
that republication and reposting of notice for the postponed sale may
be
waived. Thus, it cannot, by any means, sanction the waiver in the case
at bar.cralaw:red
Next, petitioner maintains
that Julieta's act of requesting the postponement and repeatedly
signing
the Agreements had placed her under estoppel, barring her from
challenging
the lack of publication of the auction sale.[38]
We rule otherwise. Julieta
did request for the postponement of the foreclosure sale to extend the
period to settle her obligation.[39]
However, the records do not show that she requested the postponement
without
need of republication and reposting of notice of sale. In Nepomuceno,[40]
we held:
xxx To request postponement
of the sale is one thing; to request it without need of compliance with
the statutory requirements is another. Respondents, therefore, did not
commit any act that would have estopped them from questioning the
validity
of the foreclosure sale for non-compliance with Act No. 3135. xxxchanrobles virtuallaw libraryred
In addition, we observe
herein that the Agreements prepared by the counsel of PNB were in
standard
forms of the bank, labeled as "Legal Form No. 41." The Nepomuceno[41]
case likewise involved an "Agreement to Postpone Sale" that was in a
ready-made
form, and the only participation of respondents therein was to affix or
"adhere" their signatures thereto. We there held that said agreement
partakes
of the nature of a contract of adhesion, i.e., one in which one of the
contracting parties imposes a ready-made form of contract which the
other
party may accept or reject, but cannot modify. One party prepares the
stipulation
in the contract, while the other party merely affixes his signature or
his "adhesion" thereto, giving no room for negotiation, and depriving
the
latter of the opportunity to bargain on equal footing.[42]
As such, their terms are construed strictly against the party who
drafted
it.[43]
More importantly, the
waiver being void for being contrary to the express mandate of Act No.
3135, such cannot be ratified by estoppel.[44]
Estoppel cannot give validity to an act that is prohibited by law or
one
that is against public policy.[45]
Neither can the defense of illegality be waived.[46]
Petitioner, moreover,
makes much of the fact that Julieta filed her complaint with the trial
court after almost two years from the May 29, 1981 auction sale, thus
arguing
that the delayed filing was a clear case of laches.[47]
Laches is the failure
or neglect, for an unreasonable and unexplained length of time, to do
that
which by exercising due diligence, could or should have been done
earlier.[48]
In the case at bar, Julieta only realized the defect in the foreclosure
sale upon conferring with her counsel who discovered the irregularity.[49]
Thus, on March 25, 1983, Julieta filed her adverse claim with the
Registrar
of Deeds.[50]
Three days after, she sent demand letters to PNB and petitioner.[51]
Soon after they replied on April 6 and 7, 1983,[52]
she promptly sued to nullify the foreclosure sale in the Regional Trial
Court of Mandaue City on April 20, 1983.[53]
She likewise filed a suit for forcible entry against petitioner in the
Municipal Trial Court of Mandaue City.[54]
Considering all these, we find the delay of almost two years not
unreasonable.
Julieta cannot be guilty of laches. Her prompt actions upon discovering
her cause of action negate the claim that she has abandoned her right
to
claim the properties. Besides, this defense lacks merit in light of the
Civil Code stating that an action or defense for the declaration of the
inexistence of a contract does not prescribe.[55]
WHEREFORE, premises
considered, the Decision dated February 17, 1997 in CA-G.R. CV No.
33499
and the Resolution therein dated April 15, 1997 are AFFIRMED. No costs.cralaw:red
SO ORDERED.cralaw:red
Vitug and Carpio, JJ.,
concur.
Davide, Jr., C.J.,
(Chairman), no part, former counsel of a party in another case.
Ynares-Santiago, J.,
on leave.cralaw:red
____________________________
Endnotes:
[1]
Entitled: "Julieta M. Ouano v. Philippine National Bank and Alfredo
Ouano,"
rollo, pp. 20-29.
[2]
RTC Records, pp. 132-136.
[3]
Id., p. 6.chanrobles virtuallaw libraryred
[4]
Id., p. 191.
[5]
Id., p. 192.
[6]
Id., p. 133.
[7]
Rollo, pp. 74-77.
[8]
Id., p. 74.chanrobles virtuallaw libraryred
[9]
Id., p. 75.chanrobles virtuallaw libraryred
[10]
Id., p. 76.
[11]
Id., p. 77.
[12]
Id., pp. 78-79.
[13]
Id., p. 199.
[14]
Id., pp. 174-178.
[15]
Id., pp. 185-189.
[16]
RTC Records, p. 1.
[17]
Id., pp. 79-84.
[18]
Rollo, pp. 179-180.
[19]
Id., pp. 181-184.
[20]
RTC Records, pp. 454-455.
[21]
Julieta Ouano died while the case was pending with the appellate court,
see CA rollo, p.52.
[22]
See note 1, supra.chanrobles virtuallaw libraryred
[23]
Rollo, p. 40.
[24]
Id., p. 165.
[25]
Id., pp. 203-204.
[26]
PNB v. Nepomuceno Productions Inc. et. al, G.R. No. 139479, December
27,
2002; San Jose v. CA, 225 SCRA 450 (1993); Tambunting v. CA 167 SCRA 16
(1988); Jalandoni v. Ledesma, 64 Phil. 1058, (1937).chanrobles virtuallaw libraryred
[27]
PNB v. Nepomuceno Productions Inc. et. al., supra; DBP v.
Aguirre,
G.R. No. 144877, September 7, 2001; Bohanan v. CA, 256 SCRA 355 (1996);
Olizon v. CA. 236 SCRA 148 (1994); San Jose v. CA, supra; Masantol
Rural
Bank v. CA, 204 SCRA 752 (1991).
[28]
Borja v. Addison, 14 Phil. 895 (1922) citing Campomanes v. Bartolome
and
German & Co. 38 Phil. 808 (1918).
[29]
Supra.chanrobles virtuallaw libraryred
[30]
Rollo, p. 207chanrobles virtuallaw libraryred
[31]
Supra.chanrobles virtuallaw libraryred
[32]
Olizon v. CA, supra.chanrobles virtuallaw libraryred
[33]
L.F. Lang v. Prov. Sheriff of Surigao, 93 Phil. 661 (1953).
[34]
Metropolitan Bank and Trust Company v. Wong, G.R. No. 120859, June 26,
2001.
[35]
RULES OF COURT (1964).
[36]
Rollo, p. 13.chanrobles virtuallaw libraryred
[37]
Fiestan v. CA, 185 SCRA 751 (1990).
[38]
Rollo, pp. 20-21.chanrobles virtuallaw libraryred
[39]
Id., p. 42.chanrobles virtuallaw libraryred
[40]
Supra.chanrobles virtuallaw libraryred
[41]
Id.chanrobles virtuallaw libraryred
[42]
Citing Polotan, Sr., v. CA, 296 SCRA 247 (1998).
[43]
Citing BPI Express Card Corp. v. Olalia, G.R. No. 131086, December 14,
2001.
[44]
NEW CIVIL CODE, Art. 1409.chanrobles virtuallaw libraryred
[45]
Auyong Hian v. CA, 59 SCRA 110 (1974).
[46]
See note 44, supra.chanrobles virtuallaw libraryred
[47]
Rollo, p. 219.chanrobles virtuallaw libraryred
[48]
Benito v. Saquitan-Ruiz, G.R. No. 149906, December 26, 2002 citing De
Vera
v. CA, 305 SCRA 624 (1999).
[49]
Rollo, pp. 185-189.chanrobles virtuallaw libraryred
[50]
Id., p. 181.
[51]
Id., pp. 185-189.
[52]
RTC Records, p. 135.
[53]
See note 16, supra.
[54]
RTC Records, p.136.
[55]
NEW CIVIL CODE, Art. 1410. |