Bautista v. Premiere Development Bank
REITERATIONFacts
The Antecedents: Spouses Flavio and Zenaida Bautista obtained a P500,000.00 loan from Premiere Development Bank, secured by a real estate mortgage on their property. The loan agreement stipulated a floating interest rate, monthly amortizations, and penalties for default and pre-termination. The bank collected payments through automatic debit from the Bautistas' savings account. The Bautistas failed to fully settle their obligation, leading to the bank's initiation of foreclosure proceedings. Procedural History: The initial extrajudicial foreclosure sale was scheduled for November 17, 1995, but was postponed at the Bautistas' request. A subsequent notice of sale was issued for January 15, 2002, which was published and posted. However, this sale did not proceed as the bank's representative did not appear. The sale was rescheduled to February 18, 2002. Despite the lack of republication and reposting of the notice for this rescheduled sale, the sheriff conducted the foreclosure on February 18, 2002, with Premiere Bank as the sole bidder. The Bautistas attempted to redeem the property by tendering P401,820.00, which the bank refused, claiming a total outstanding obligation of P2,062,254.26. The bank then consolidated ownership, and a new title was issued in its name. The Bautistas filed a complaint to annul the foreclosure sale, which was dismissed by the Regional Trial Court. The Court of Appeals affirmed the RTC's decision. The Petition: The Bautistas filed a petition for review on certiorari with the Supreme Court, assailing the Court of Appeals' decision. They argued that the extrajudicial foreclosure sale was void ab initio due to the failure to comply with the mandatory publication and posting requirements of Act No. 3135 for the rescheduled sale. They also contended that they were not estopped from challenging the sale by their attempt to redeem the property and that their loan obligation had been settled. The petition specifically raised questions of law regarding the validity of the foreclosure sale despite non-compliance with statutory notice requirements and the applicability of estoppel in such cases.
Issue(s)
Whether or not the CA erred in declaring that the extrajudicial foreclosure sale was valid despite the failure to publish and post the notice of the rescheduled foreclosure sale. Whether or not the petitioners were estopped from impugning the foreclosure sale by their effort to redeem the property. Whether or not the loan obligation had already been fully settled by the petitioners.
Ruling
The Supreme Court PARTIALLY GRANTED the petition for review on certiorari. It declared the foreclosure sale held on February 18, 2002, and the subsequent issuance of TCT No. 452198 in the name of Premiere Development Bank as NULL AND VOID. It directed the Register of Deeds of Marikina City to cancel TCT No. 452198 and reinstate TCT No. 150668 in the name of the petitioners. The Court also ordered the respondents to comply with the requirements of posting and publication for the extrajudicial foreclosure sale. The issue regarding the settlement of the loan obligation was disallowed as it involved a question of fact not reviewable in a petition for review on certiorari.
Ratio Decidendi
On the validity of the extrajudicial foreclosure sale: The Supreme Court held that the extrajudicial foreclosure sale conducted on February 18, 2002, was void ab initio due to the failure to comply with the mandatory and jurisdictional requirements of posting and publication of the notice of the rescheduled sale as mandated by Act No. 3135. The Court clarified that the requirements of posting and publication are not for the benefit of the mortgagor but for the public and third persons, aiming to ensure wide publicity and prevent a sacrifice of the property. Therefore, these requirements cannot be waived by the parties, as doing so would be inconsistent with the letter and intent of Act No. 3135 and would undermine public policy considerations. The Court distinguished the present case from Perez v. Court of Appeals, finding its reliance by the CA misplaced because the defects in Perez did not involve the failure to publish or post a postponed sale, unlike in the present case. The Court emphasized that statutory provisions governing the publication of notice of mortgage foreclosure sales must be strictly complied with, and even slight deviations can render the sale voidable, if not void. The presumption of regularity in the performance of official duties by the sheriff cannot excuse non-compliance with these mandatory and jurisdictional requirements. On estoppel: The Supreme Court disagreed with the CA's finding that the petitioners were estopped from assailing the foreclosure sale by their act of redeeming the property. The Court reiterated that the requirements of posting and publication under Act No. 3135 are mandatory and jurisdictional, and cannot be waived by the parties. Therefore, any act of redemption or attempt to redeem the property cannot serve as a waiver of these fundamental procedural defects. The Court cited Philippine National Bank v. Nepomuceno Productions, Inc., stating that the principal object of the notice of sale is to secure bidders and prevent a sacrifice of the property, and these statutory requirements are imbued with public policy considerations. Thus, the petitioners' attempt to redeem the property, even without reservation, did not validate a sale that was fundamentally flawed due to non-compliance with statutory mandates. On the settlement of the loan obligation: The Supreme Court disallowed the appeal on the issue of whether the loan obligation had been fully settled. The Court explained that this was a factual matter, as the parties had conflicting claims regarding the outstanding balance and the amount tendered for redemption. Under Rule 45 of the Rules of Court, the Supreme Court is limited to reviewing questions of law and is not a trier of facts. Therefore, the Court could not resolve the dispute concerning the exact amount of the petitioners' liability.
Main Doctrine
The publication and posting of the notice of a rescheduled extrajudicial foreclosure sale are mandatory and jurisdictional requirements under Act No. 3135. Failure to comply with these requirements renders the foreclosure sale void ab initio, and such compliance cannot be waived by the parties as it is based on public policy considerations for the benefit of the public and third persons.