Sempio v. Court of Appeals
REITERATIONFacts
The Antecedents: Spouses Bernardo and Genoveva Sempio mortgaged a parcel of land to the Development Bank of the Philippines (DBP) to secure a loan. Upon default, DBP foreclosed the mortgage extrajudicially. The Sempio spouses filed a complaint seeking to annul the foreclosure, reconvey the title, and claim damages, alleging that DBP failed to comply with the notice, posting, and publication requirements of Act No. 3135, and that the auction sale was conducted in an improper location and by the wrong sheriff. Procedural History: The Sempio spouses filed their complaint on March 8, 1990. After the death of Bernardo Sempio, his heirs were substituted. The Regional Trial Court (RTC) declared DBP in default due to repeated failures of its counsel to appear at scheduled pre-trial conferences. Although DBP's motion to set aside the default order was granted, its counsel again failed to appear for the presentation of evidence. Consequently, the RTC rendered a decision in favor of the Sempio spouses, declaring the foreclosure null and void and ordering DBP to release the mortgage upon payment of the outstanding loan balance, with attorney's fees. DBP then filed a Petition for Certiorari, Prohibition, and Mandamus with the Court of Appeals (CA), which initially denied the petition but later granted DBP's motion for reconsideration, reversing its earlier decision. The Petition: Genoveva Ligot Sempio and the heirs of Bernardo Sempio filed the instant petition for review on certiorari, arguing that the Court of Appeals erred in reversing its earlier ruling that certiorari would not lie if appeal was available. They contend that the RTC did not commit an error of jurisdiction or grave abuse of discretion, and that DBP had a plain, speedy, and adequate remedy of appeal which it failed to pursue. The petitioners also argue that the CA erred in finding that DBP had meritorious defenses and that the foreclosure sale was invalid due to violations of Act No. 3135 and the mortgage contract regarding the location and sheriff conducting the sale. The Supreme Court affirmed the RTC decision, modifying only the interest rate on the outstanding loan.
Issue(s)
Whether the Court of Appeals erred in reversing its earlier ruling and allowing a petition for certiorari when the remedy of appeal was still available. Whether the extrajudicial foreclosure and auction sale were null and void for non-compliance with Act No. 3135 and the mortgage contract. Whether the trial court committed grave abuse of discretion in its proceedings.
Ruling
The Supreme Court reversed the Court of Appeals, affirming the decision of the Regional Trial Court with a modification regarding the interest rate. The Court held that the extrajudicial foreclosure and auction sale were null and void due to violations of Act No. 3135 and the mortgage contract. It also ruled that the Court of Appeals erred in granting certiorari when appeal was still available to DBP.
Ratio Decidendi
On the availability of certiorari: The Court reiterated that a petition for certiorari under Rule 65 requires the absence of an appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law. In this case, DBP filed its petition for certiorari after its motion for reconsideration was denied, but its period to appeal had not yet lapsed. Therefore, appeal was still available, and certiorari was an improper remedy. The Court emphasized that certiorari cannot be used as a substitute for a lost or lapsed remedy of appeal, especially when occasioned by one's own neglect or error in choosing remedies. DBP's contention of denial of due process was also dismissed as the trial court had afforded it several opportunities to present its case. On the validity of the foreclosure and auction sale: The Court found that the extrajudicial foreclosure and auction sale were null and void for several reasons. Firstly, the mortgage contract stipulated that the auction sale should take place in the city or capital of the province where the mortgaged property is situated. The property was in San Miguel, Bulacan, but the auction sale was conducted in Baliuag, Bulacan, violating this stipulation and Section 2 of Act No. 3135. Secondly, Section 4 of Act No. 3135 requires the sale to be under the direction of the sheriff of the province where the property is situated. Here, the sale was conducted by the Provincial Sheriff of Nueva Ecija, not Bulacan, which is a clear violation of the law and the principle that a sheriff cannot act outside his territorial jurisdiction. The Court cited Macondary and Co. v. Coleto to support this point. The Court also noted that the trial court's conclusion that the Sempio spouses were not aware of the proceedings was supported by evidence of their continued payments, which were accepted by the bank. On the alleged grave abuse of discretion by the trial court: The Court found no grave abuse of discretion on the part of the trial court. Instead, it noted that the trial court had shown tremendous tolerance by acceding to multiple postponements of the pre-trial conference to accommodate DBP and its counsel. The repeated failures of DBP's counsel to appear were met with indifference and lethargy, not with abuse of discretion by the court. The court's decision to declare DBP in default was a consequence of these failures, and the subsequent lifting of the default order demonstrated the court's liberality. The Court concluded that the trial court was too lenient and did not act capriciously or whimsically.
Main Doctrine
The failure to comply with the mandatory requirements of Act No. 3135 regarding notice, posting, and publication, as well as the stipulation in the mortgage contract regarding the situs of the auction sale and the direction of the sheriff, renders the extrajudicial foreclosure and subsequent sale null and void. Furthermore, a petition for certiorari under Rule 65 is not a substitute for the lost remedy of appeal, especially when the loss is due to the petitioner's own neglect.