Social Security System v. Marawi-Marantao General Hospital
REITERATIONFacts
The Antecedents: Marawi-Marantao General Hospital, Inc. (MMGHI) obtained a loan from the Social Security System (SSS) secured by a mortgage on its property. MMGHI defaulted, and SSS extrajudicially foreclosed the mortgage, with SSS being the highest bidder at the public auction on March 8, 1991. The sheriff's certificate of sale was registered on October 16, 1991. In October 1992, MMGHI, through Atty. Macapanton K. Mangondato, negotiated with SSS for repurchase and was given a period until December 21, 1992, to repurchase the property. Atty. Mangondato paid P200,000.00 as partial payment on November 6, 1992. On December 10, 1996, the Social Security Commission (SSC) approved Atty. Mangondato's offer to repurchase for P2.7 million, with a down payment of P2 million and the balance payable in 24 monthly installments. A Deed of Conditional Sale was executed on January 16, 1997. On February 17, 1997, Atty. Mangondato issued a PNB Check for P500,000.00, completing the P2.7 million payment. Procedural History: On March 20, 1997, the SSC issued Resolution No. 224-s.97 declaring the conditional sale a nullity due to alleged lack of full disclosure, violation of bidding procedures, non-compliance with signatory requirements, and title not being consolidated in SSS's name. SSS directed the return of the P2.2 million paid by Atty. Mangondato. MMGHI and Atty. Mangondato filed a complaint for specific performance and damages against SSS. The RTC ruled in favor of MMGHI and Atty. Mangondato, ordering SSS to execute an Absolute Deed of Sale and awarding damages. The Court of Appeals affirmed with modification, deleting the awards for damages, attorney's fees, and costs. The Petition: The Republic of the Philippines, represented by SSS, filed a petition for review, arguing that the deed of conditional sale was void as redemption was made after the expiration of the redemption period and that Atty. Sison exceeded his authority in signing the deed alone, violating office procedures and the requirement for public bidding.
Issue(s)
Whether the Deed of Conditional Sale is valid despite the alleged expiration of the redemption period. Whether Atty. Godofredo S. Sison, as Senior Deputy Administrator, had the authority to sign the Deed of Conditional Sale alone. Whether the SSS ratified the Deed of Conditional Sale by accepting the full payment.
Ruling
The petition is denied. The Court affirmed the Court of Appeals' decision, holding that the Deed of Conditional Sale is valid and that the SSS is obligated to execute a Deed of Absolute Sale in favor of MMGHI and Atty. Mangondato.
Ratio Decidendi
On the validity of the Deed of Conditional Sale despite the expired redemption period: The Court ruled that the SSC's approval of Atty. Mangondato's proposal to repurchase the property, even after the original redemption period had expired, constituted a waiver or extension of that period. The Court cited Development Bank of the Philippines v. West Negros College, Inc. and Ramirez v. Court of Appeals, emphasizing that statutory periods of redemption can be extended by agreement of the parties and that accepting the redemption price after the statutory period, without objection, signifies a waiver of that period. The Court also noted that the expiration of the redemption period was not among the grounds cited in SSC Resolution No. 224-s.97 for declaring the sale a nullity, suggesting it was a belated argument. The policy of the law is to aid, rather than defeat, the right of redemption, and public bidding is not a condition for redemption. On the authority of Atty. Sison to sign the Deed of Conditional Sale: The Court found the argument regarding Atty. Sison's lack of authority flimsy. It noted that MMGHI and Atty. Mangondato could not be expected to know internal office procedures regarding signatory requirements. More importantly, the Court examined SSC Resolution No. 207-s.91 and found that under certain conditions, the Senior Deputy Administrator could sign contracts alone, especially when the amount involved was not over P5 million. The Court applied the presumption of regularity in the performance of official duties in favor of Atty. Sison, stating that the Republic failed to present clear and convincing evidence to rebut this presumption. The Court highlighted that Atty. Sison had consistently represented SSS in the redemption negotiations, creating a reasonable expectation of his authority. On the ratification of the Deed of Conditional Sale: The Court held that even if Atty. Sison had lacked authority, the SSS ratified the Deed of Conditional Sale by accepting the full payment of P2.7 million. Citing Tacalinar v. Corro, the Court explained that collecting the purchase price after a sale executed without authority constitutes ratification and a waiver of the right to avoid the contract. The Court reiterated the principle of obligatoriness of contracts, stating that obligations arising from contracts have the force of law between the parties and must be complied with in good faith. The nature of the transaction was identified as a contract to sell, where the seller binds himself to sell the property exclusively to the buyer upon fulfillment of the condition (full payment), and upon full payment, the seller is obligated to execute a Deed of Absolute Sale.
Main Doctrine
The Social Security Commission (SSC), by approving Atty. Mangondato's proposal to repurchase the foreclosed property after the redemption period had expired, is deemed to have waived or extended the original redemption period. Furthermore, the SSS ratified the Deed of Conditional Sale by accepting the full payment of the purchase price, rendering the contract valid and binding.