Caubang v. Crisologo
REITERATIONFacts
The Antecedents: Spouses Jesus and Nanette Crisologo obtained two loans from PDCP Development Bank Inc. (PDCP Bank), totaling ₱1,700,000.00, secured by a mortgage on their property. The spouses defaulted on their loan payments. PDCP Bank recommended foreclosure, and on March 20, 1998, filed a Petition for Extrajudicial Foreclosure of Mortgage. Petitioner Atty. Leo N. Caubang, as Notary Public, prepared the Notices of Sale and caused their posting in three public places and publication in the Oriental Daily Examiner. On July 15, 1998, Caubang conducted the auction sale where PDCP Bank was the sole bidder, with a bid of ₱1,331,460.00, leaving a deficiency of ₱2,207,349.97. The Spouses Crisologo filed a Complaint for Nullity of Extrajudicial Foreclosure and Auction Sale and Damages against PDCP Bank and Caubang. Procedural History: The Regional Trial Court (RTC) of Davao City, Branch 12, declared the extrajudicial foreclosure sale null and void for failure to comply with the publication requirement. The RTC ordered the cancellation of the Certificate of Sale and the reinstatement of the original title in the name of Nannette B. Crisologo. The Spouses Crisologo appealed to the Court of Appeals (CA), seeking modification for moral and exemplary damages, attorney's fees, and costs of suit. The CA affirmed the nullity of the sale but modified the dispositive portion to order Atty. Caubang to pay the spouses ₱41,500.00 as attorney's fees and ₱30,248.50 as litigation expenses. Caubang's motion for reconsideration was denied. The Petition: Atty. Caubang filed a Petition for Review under Rule 45 of the Rules of Court, assailing the CA's ruling on the publication of the notices, contending it was based on assumptions and speculations.
Issue(s)
Whether the extrajudicial foreclosure sale is null and void due to non-compliance with the publication requirement under Act No. 3135. Whether Atty. Caubang is liable for attorney's fees and litigation expenses.
Ruling
The petition is denied. The Decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the nullity of the extrajudicial foreclosure sale: The Court affirmed the ruling of the CA that the extrajudicial foreclosure sale was null and void for failure to comply with the publication requirement under Section 3 of Act No. 3135. This section mandates that if the property is worth more than four hundred pesos, the notice of sale shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city. The Court found that Atty. Caubang failed to inquire whether the Oriental Daily Examiner was indeed a newspaper of general circulation, and it was shown that it was not accredited to publish legal notices and had no paying subscribers. The principal object of a notice of sale in foreclosure is to inform the public of the sale to secure bidders and prevent a sacrifice of the property. Statutory provisions governing publication must be strictly complied with, and slight deviations will invalidate the sale. Failure to advertise in compliance with statutory requirements constitutes a jurisdictional defect that vitiates the sale. On the liability for attorney's fees and litigation expenses: The Court held that Atty. Caubang is liable for the spouses' claim for litigation expenses and attorney's fees. This is because it was Caubang who caused the improper publication of the notices, which in turn compelled the Spouses Crisologo to litigate to protect their interest in the property. The CA correctly held Caubang liable for these expenses incurred by the respondents in seeking the declaration of nullity of the auction sale.
Main Doctrine
Failure to strictly comply with the publication requirement under Act No. 3135, specifically the publication of the notice of sale in a newspaper of general circulation, renders the extrajudicial foreclosure sale null and void. The party responsible for the improper publication may be held liable for attorney's fees and litigation expenses.