Ardiente v. Provincial Sheriff
REITERATIONFacts
The Antecedents: Spouses Rustico and Asuncion Ardiente obtained a P100,000.00 loan from Peninsula Development Bank (the bank), secured by a real estate mortgage over several parcels of land. They later obtained an additional loan of P46,000.00, amending the mortgage. Due to an accident involving a mini-bus purchased with the loan proceeds, the Ardientes failed to meet their obligations. The bank extra-judicially foreclosed the mortgage, and the properties were sold at public auction to the bank as the highest bidder. The Ardientes were notified by letter that they had one year from November 11, 1983, to redeem the foreclosed mortgage. Procedural History: Two days before the redemption period expired, the Ardientes filed a complaint for Annulment of Auction Sale with Preliminary Injunction and Damages, alleging violation of the mortgage and lack of notice of the extra-judicial foreclosure sale. The bank, in its Answer, admitted the allegations regarding the notice letter but asserted that petitioners were duly notified and that there was sufficient notice and publication. The complaint was amended to include the ground of grossly inadequate purchase price. The Regional Trial Court (RTC) declared the foreclosure and sale null and void for failure of the bank to present documentary evidence of publication. The Court of Appeals reversed the RTC decision, holding that the issue of lack of posting and publication was not raised in the pleadings and thus could not be the basis for the judgment. The Petition: The Ardiente spouses filed a petition for review, arguing that the Court of Appeals erred in holding that the issue of lack of posting and publication was not raised, and in reversing the RTC decision.
Issue(s)
Whether the Court of Appeals erred in holding that the issue of lack of posting and publication of the notice of foreclosure sale was not raised in the pleadings and therefore could not be the basis for the RTC's decision. Whether the Court of Appeals erred in reversing the RTC's decision and dismissing the petitioners' complaint. Whether the Court of Appeals erred in not awarding attorney's fees and litigation expenses.
Ruling
The petition is DISMISSED. The decision of the Court of Appeals is AFFIRMED.
Ratio Decidendi
On the issue of lack of posting and publication of notice: The Supreme Court held that the issue of lack of posting and publication of the notice of foreclosure sale cannot be raised for the first time on appeal. While the petitioners' complaint alleged lack of notice, it primarily focused on the lack of personal notice to the mortgagors, which is not a necessary requirement in extra-judicial foreclosure under Act 3135. The Court noted that the bank, in its Answer, affirmatively pleaded compliance with notice and publication requirements. However, the petitioners failed to refute this defense in their Reply or present evidence to disprove it during the trial. The Court distinguished this case from Tambunting v. Court of Appeals, where the lack of publication was explicitly raised in a supplemental complaint. The Court reiterated the principle that issues not raised in the pleadings or during the trial cannot be considered on appeal, even if the opposing party's affirmative defense touches upon the same subject matter. The presumption of regularity in the performance of official duty by the sheriff and compliance by the bank with legal requirements would therefore suffice in the absence of a properly raised issue and supporting evidence. On the reversal of the RTC decision and dismissal of the complaint: The Court affirmed the Court of Appeals' ruling that the RTC erred in declaring the foreclosure null and void based on a ground not properly raised in the pleadings. The RTC's reliance on the Tambunting case was deemed misplaced because the factual context, particularly the timely raising of the issue of publication, differed significantly. The Court emphasized that the purpose of pleadings is to inform the opposing party of the claims against them, allowing them to prepare their defense. Since the issue of lack of publication was not pleaded, the bank was not compelled to present evidence to prove compliance, and the presumption of regularity would apply. Therefore, the reversal by the Court of Appeals was justified. On the award of attorney's fees and litigation expenses: The Court found no reversible error in the Court of Appeals' decision, which implicitly meant the denial of attorney's fees and litigation expenses. Since the foreclosure sale was upheld, the petitioners were not entitled to damages or expenses arising from its alleged invalidity. The Court's dismissal of the petition meant that the adverse judgment against the petitioners on these claims would stand.
Main Doctrine
The issue of lack of publication of notice in an extra-judicial foreclosure sale cannot be raised for the first time on appeal if it was not alleged in the complaint and not tried during the proceedings, despite the respondent bank's affirmative defense of compliance with statutory requirements.