Cristobal v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Petitioners Renato and Marcelina Cristobal, engaged in buying and selling palay, obtained two loans from respondent Rural Bank of Malolos. The first loan of P30,000.00 was secured by a mortgage on a parcel of land covered by TCT No. T-64721. The second loan of P70,000.00 was secured by a mortgage on four parcels of land covered by TCT Nos. T-235811, T-174185, T-146185, and T-174186. Petitioners failed to pay both obligations when they fell due. Consequently, the bank initiated extrajudicial foreclosure proceedings on both mortgaged properties. The bank emerged as the highest bidder in the subsequent auction sales, and after the redemption periods expired, titles to the properties were consolidated in the bank's name, with new transfer certificates of title being issued. 2. Procedural History: On November 29, 1984, petitioners filed a complaint before the Regional Trial Court (RTC) of Malolos, Branch 72, seeking the annulment of the extrajudicial foreclosure sales, the sale of the properties at public auction, and the reconveyance of the properties, along with damages. The RTC initially issued a writ of preliminary injunction. After trial, the RTC rendered a decision on April 21, 1992, annulling the foreclosure sales and ordering the reconveyance of the properties to the petitioners, along with attorney's fees and costs. The RTC also made the preliminary injunction permanent and ordered the cancellation of the titles in the bank's name and the issuance of new titles in the petitioners' names, while requiring petitioners to pay the bank the outstanding loan amounts. The respondent bank appealed this decision to the Court of Appeals (CA). The CA, in its Decision dated September 16, 1994, reversed the RTC's judgment, setting aside the annulment of the foreclosure and reconveyance. Petitioners' motion for reconsideration was denied by the CA in a Resolution dated May 18, 1995. 3. The Petition: This case is before the Supreme Court on a petition for review on certiorari filed by Renato and Marcelina Cristobal. They seek to reverse and set aside the decision and resolution of the Court of Appeals. Petitioners assign as errors the CA's findings that the bank substantially complied with the publication requirement under Act No. 3135, that the CA relied solely on the testimony of the bank's witness, and that publication in the Mabuhay newspaper constituted substantial compliance. The core issue revolves around whether the CA erred in concluding that the bank sufficiently complied with the notice and publication requirements of Act No. 3135 for extrajudicial foreclosure sales, particularly concerning the posting and publication of the notice of sale and the admissibility of evidence regarding these procedures.
Issue(s)
Whether the Court of Appeals erred in holding that the private respondent substantially complied with the publication requirement under Act No. 3135. Whether the Court of Appeals erred in relying solely on the testimony of the private respondent's witness. Whether the Court of Appeals erred in holding that publication in the Mabuhay newspaper substantially complies with the law.
Ruling
The petition is dismissed, and the decision of the Court of Appeals is affirmed. The extrajudicial foreclosure of the mortgages and the subsequent sale of the properties are deemed valid.
Ratio Decidendi
On the issue of substantial compliance with publication requirements: The Court held that non-compliance with notice and publication requirements in extrajudicial foreclosure sales is a factual issue, but exceptions exist when findings of lower courts conflict or when non-compliance constitutes a jurisdictional defect. In this case, the Court found that the publication in the Mabuhay newspaper, which is generally circulated in the Province of Bulacan, constituted substantial compliance with Section 3 of Act No. 3135. The submission of affidavits of publication and newspaper clippings further supported this finding. The Court reiterated the ruling in Olizon vs. Court of Appeals that publication in a newspaper of general circulation alone is more than sufficient compliance with the notice-posting requirements. On the reliance on the testimony of the bank's witness: The Court addressed the petitioners' claim that the testimony of Pedro Agustin was hearsay. While acknowledging that hearsay evidence generally has no probative value, the Court noted that the non-presentation of a certificate of posting does not necessarily affect the intrinsic validity of the foreclosure sale, citing Bohanan vs. Court of Appeals. Furthermore, the Court emphasized that the burden of establishing the absence of a requisite lies with the party alleging it, and petitioners failed to present convincing evidence to rebut the presumption of regularity in the performance of official duties by the sheriff. The bank's explanation for the unavailability of the sheriff and records due to the elapsed time was also considered. On whether publication in Mabuhay newspaper constitutes substantial compliance: The Court affirmed the CA's finding that publication in the Mabuhay newspaper was substantial compliance. The records showed that the notice of sale was published in this newspaper, which has general circulation in the province. Affidavits of publication and newspaper clippings were presented as evidence. The Court reiterated its stance that such publication is more than sufficient compliance with the notice-posting requirements of Act No. 3135, thus, the CA did not err in its conclusion.
Main Doctrine
Non-compliance with the requirements of notice and publication in an extrajudicial foreclosure sale can invalidate the sale, but substantial compliance may suffice, and the presumption of regularity in the performance of official duty by the sheriff can be relied upon in the absence of convincing evidence to the contrary. The burden of proving non-compliance rests on the party alleging it.