PNB vs CAG.R. No.

98382May 17, 1993

Facts:
Two parcels of land under the common names of
therespondent Epifanio dela Cruz, his brother and sisterwere
mortgaged to the Petitioner Philippine NationalBank. The lots
were mortgaged to guarantee the bythree promissory notes.
The first two were not paid bythe respondent. The third is
disputed by the respondentwho claims that the correct date is
June 30, 1961;however, in the bank records, the note was
reallyexecuted on June 30, 1958.PNB presented under Act
No. 3135 a foreclosurepetition of the mortgaged lots. The lots
were sold orauctioned off with PNB as the highest bidder. A
FinalDeed of Sale and a Certificate of Sale was executed
infavor of the petitioner. The final Deed of Sale wasregistered
in Registry of Property. Inasmuch as therespondent did not
buy back the lots from PNB, PNBsold on the same in a "Deed
of Conditional Sale". TheNotices of Sale of foreclosed
properties were publishedon March 28, April 11 and April 12,
1969 in anewspaper.Respondent brought a complaint for the
reconveyanceof the lands, which the petitioner allegedly
unlawfullyforeclosed. The petitioner states on the other hand
thatthe extrajudicial foreclosure, consolidation of ownership,
and subsequent sale were all valid. The CFI rendered its
Decision; the complaint against thepetitioner was
dismissed.Unsatisfied with the judgment, respondent
interposedan appeal that the lower court erred in holding
thatthere was a valid compliance in regard to the
requiredpublication under Sec. 3 of Act. 3135.Respondent
court reversed the judgment appealed fromby declaring void,
inter alia, the auction sale of theforeclosed pieces of realty,
the final deed of sale, andthe consolidation of ownership.
Hence, the petition withSC for certiorari and intervention.
Issue:
WON the required publication of The Notices of Sale onthe
foreclosed properties under Sec. 3 of Act 3135 wascomplied.
Ruling:
No. The first date falls on a Friday while the second andthird
dates are on a Friday and Saturday, respectively.Section 3 of
Act No. 3135 requires that the notice of auction sale shall be
"published once a week for at leastthree consecutive weeks".
Evidently, petitioner bankfailed to comply with this legal
requirement. TheSupreme Court held that: The rule is that
statutory provisions governingpublication of notice of
mortgage foreclosure sales mustbe strictly complied with, and
those even slightdeviations therefrom will invalidate the notice
andrender the sale at least voidable.

WHEREFORE, the petitions for certiorari andintervention are hereby dismissed and the decision of
the Court of Appeals is hereby affirmed in toto..
G.R. No. 98382 May 17, 1993

PHILIPPINE NATIONAL BANK, petitioner,

vs.
THE COURT OF APPEALS and EPIFANIO DE LA CRUZ, respondents.

Santiago, Jr., Vidad, Corpus & Associates for petitioner.

Pedro R. Lazo for spouses-intervenors.

Rosendo G. Tansinsin, Jr. for private respondent.

MELO, J.:

The notices of sale under Section 3 of Act No. 3135, as amended by Act No. 4118, on extra-
judicial foreclosure of real estate mortgage are required to be posted for not less than twenty
days in at least three public places of the municipality or city where the property is situated, and if
such property is worth more than four hundred pesos, such notices shall also be published once
a week for at least three consecutive weeks in a newspaper of general circulation in the
municipality or city.

Respondent court, through Justice Filemon Mendoza with whom Justices Campos, Jr. and
Aldecoa, Jr. concurred, construed the publication of the notices on March 28, April 11 and l2,
1969 as a fatal announcement and reversed the judgment appealed from by declaring void, inter
alia, the auction sale of the foreclosed pieces of realty, the final deed of sale, and the
consolidation of ownership (p. 27, Rollo).

Hence, the petition at bar, premised on the following backdrop lifted from the text of the
challenged decision:

The facts of the case as related by the trial court are, as follows:

This is a verified complaint brought by the plaintiff for the

reconveyance to him (and resultant damages) of two (2) parcels
of land mortgaged by him to the defendant Philippine National
Bank (Manila), which the defendant allegedly unlawfully
foreclosed. The defendant then consolidated ownership unto
itself, and subsequently sold the parcels to third parties. The
amended Answer of the defendant states on the other hand that
the extrajudicial foreclosure, consolidation of ownership, and
subsequent sale to the third parties were all valid, the bank
therefore counterclaims for damages and other equitable
remedies.

xxx xxx xxx

From the evidence and exhibits presented by both parties, the

Court is of the opinion that the following facts have been proved:
Two lots, located at Bunlo, Bocaue, Bulacan (the first covered by
Torrens Certificate No. 16743 and possessed of an area of
approximately 3,109 square meters: the second covered by
Torrens Certificate No. 5787, possessed of an area of around 610
square meters, and upon which stood a residential-commercial
 building were mortgaged to the defendant Philippine National
Bank. The lots were under the common names of the plaintiff
(Epifanio dela Cruz), his brother (Delfin) and his sister (Maria).
The mortgage was made possible because of the grant by the
latter two to the former of a special power of attorney to mortgage
the lots to the defendant. The lots were mortgaged to guarantee
the following promissory notes:

(1) a promissory note for Pl2,000.00, dated September 2, 1958, and payable
within 69 days (date of maturity — Nov. l0, 1958);

(2) a promissory note for P4,000.00, dated September 22, 1958, and payable
within 49 days (date of maturity — Nov. 10, 1958);

(3) a promissory note for P4,000.00, dated June 30, 1.9581 and payable within
120 days (date of maturity — Nov. 10, 1958) See also Annex C of the complaint
itself).

[1 This date of June 30, 1958 is disputed by the plaintiff who claims that the
correct date is June 30, 1961, which is the date actually mentioned in the
promissory note. It is however difficult to believe the plaintiff's contention since if it
were true and correct, this would mean that nearly three (3) years elapsed
between the second and the third promissory note; that at the time the third note
was executed, the first two had not yet been paid by the plaintiff despite the fact
that the first two were supposed to be payable within 69 and 49 days
respectively. This state of affairs would have necessitated the renewal of said two
promissory notes. No such renewal was proved, nor was the renewal ever
alleged. Finally, and this is very significant: the third mentioned promissory note
states that the maturity date is Nov. 10, 1958. Now then, how could the loan have
been contracted on June 30, 1961? It will be observed that in the bank records,
the third mentioned promissory note was really executed on June 30, 1958
(See Exhs. 9 and 9-A). The Court is therefore inclined to believe that the date
"June 30, 1961" was a mere clerical error and hat the true and correct date is
June 1958. However, even assuming that the true and correct date is June 30,
1961, the fact still remains that the first two promissory notes had been
guaranteed by the mortgage of the two lots, and therefore, it
was legal and proper to foreclose on the lots for failure to pay said two
promissory notes.

On September 6, 1961, Atty. Ramon de los Reyes of the bank (PNB) presented
under Act No. 3135 a foreclosure petition of the two mortgaged lots before the
Sheriff's Office at Malolos, Bulacan; accordingly, the two lots were sold or
auctioned off on October 20, 1961 with the defendant PNB as the highest bidder
for P28,908.46. On March 7, 1963, Sheriff Leopoldo Palad executed a Final Deed
of Sale, in response to a letter-request by the Manager of the PNB (Malolos
Branch). On January 15, 1963 a Certificate of Sale in favor of the defendant was
executed by Sheriff Palad. The final Deed of Sale was registered in the Bulacan
Registry of Property on March 19, 1963. Inasmuch as the plaintiff did not
volunteer to buy back from the PNB the two lots, the PNB sold on June 4, 1970
the same to spouses Conrado de Vera and Marina de Vera in a "Deed of
Conditional Sale". (Decision, pp.3-5; Amended Record on Appeal, pp. 96-98).

After due consideration of the evidence, the CFI on January 22, 1978 rendered
its Decision, the dispositive portion of which reads:
 WHEREFORE, PREMISES CONSIDERED, the instant complaint
against the defendant Philippine National Bank is hereby ordered
DISMISSED, with costs against the plaintiff. The Counterclaim
against the plaintiff is likewise DISMISSED, for the Court does not
believe that the complaint had been made in bad faith.

SO ORDERED. (Decision, p. B.; Amended Record on Appeal, p.

100)

Not satisfied with the judgment, plaintiff interposed the present appeal assigning
as errors the following:

I.

THE LOWER COURT ERRED IN HOLDING IN FOOTNOTE I OF ITS DECISION

THAT IT IS THEREFORE INCLINED TO BELIEVE THAT THE DATE "JUNE 30,
1962" WAS A MERE CLERICAL ERROR AND THAT THE TRUE AND
CORRECT DATE IS JUNE 30, 1958. IT ALSO ERRED IN HOLDING IN THE
SAME FOOTNOTE I THAT "HOWEVER, EVEN ASSUMING THAT THE TRUE
AND CORRECT DATE IS JUNE 30, 1961, THE FACT STILL REMAINS THAT
THE FIRST TWO PROMISSORY NOTES HAD BEEN GUARANTEED BY THE
MORTGAGE OF THE TWO LOTS, AND THEREFORE, IT WAS LEGAL AND
PROPER TO FORECLOSE ON THE LOTS FOR FAILURE TO PAY SAID TWO
PROMISSORY NOTES". (page 115, Amended Record on Appeal)

II.

THE LOWER COURT ERRED IN NOT HOLDING THAT THE PETITION FOR
EXTRAJUDICIAL FORECLOSURE WAS PREMATURELY FILED AND IS A
MERE SCRAP OF PAPER BECAUSE IT MERELY FORECLOSED THE
ORIGINAL AND NOT THE AMENDED MORTGAGE.

III.

THE LOWER COURT ERRED IN HOLDING THAT "IT IS CLEAR THAT THE
AUCTION SALE WAS NOT PREMATURE". (page 117, Amended Record on
Appeal)

IV.

THE LOWER COURT ERRED IN HOLDING THAT "SUFFICE IT TO STATE

THAT ACTUALLY THE POWER OF ATTORNEY GIVEN TO THE PNB WAS
EMBODIED IN THE REAL ESTATE MORTGAGE (EXB. 10) WHICH WAS
REGISTERED IN THE REGISTRY OF PROPERTY OF BULACAN AND WAS
ANNOTATED ON THE TWO TORRENS CERTIFICATES INVOLVED" (page
118, Amended Record on Appeal).

V.

THE LOWER COURT ERRED IN HOLDING THAT "THE NOTICES REQUIRED

UNDER SEC. 3 OF ACT NO. 3135 WERE ALL COMPLIED WITH" AND "THAT
THE DAILY RECORD . . . IS A NEWSPAPER OF GENERAL CIRCULATION
(pages 117-118, Amended Record on Appeal).

VI.
 THE LOWER COURT ERRED IN NOT DECLARING THE CERTIFICATE OF
SALE, FINAL DEED OF SALE AND AFFIDAVIT OF CONSOLIDATION, NULL
AND VOID.

VII.

THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO

RECONVEY TO PLAINTIFF THE PARCELS OF LAND COVERED BY T.C.T.
NOS. 40712 AND 40713 OF BULACAN (page 8, Amended Record on Appeal)

VIII.

THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO PAY TO

PLAINTIFF REASONABLE AMOUNTS OF MORAL AND EXEMPLARY
DAMAGES AND ATTORNEY'S FEES (page 8. Amended Record on Appeal).

IX.

THE LOWER COURT ERRED IN DISMISSING THE INSTANT COMPLAINT

AGAINST THE PHILIPPINE NATIONAL BANK WITH COSTS AGAINST THE
PLAINTIFF. (page 118, Amended Record on Appeal)." (Brief for Plaintiff-
Appellant, pp. 1-4) (pp. 17-21, Rollo)

With reference to the pertinent issue at hand, respondent court opined:

The Notices of Sale of appellant's foreclosed properties were published on March

228, April 11 and April 12, 1969 issues of the newspaper "Daily Record"
(Amended Record on Appeal, p. 108). The date March 28, 1969 falls on a Friday
while the dates April 11 and 12, 1969 are on a Friday and Saturday, respectively.
Section 3 of Act No. 3135 requires that the notice of auction sale shall be
"published once a week for at least three consecutive weeks". Evidently,
defendant-appellee bank failed to comly with this legal requirement. The
Supreme Court has held that:

The rule is that statutory provisions governing publication of

notice of mortgage foreclosure sales must be strictly complied
with, and that even slight deviations therefrom will invalidate the
notice and render the sale at least voidable (Jalandoni vs.
Ledesma, 64 Phil. l058. G.R. No. 42589, August 1937 and
October 29, 1937). Interpreting Sec. 457 of the Code of Civil
Procedure (reproduced in Sec. 18(c) of Rule 39, Rules of Court
and in Sec. 3 of Act No. 3135) in Campomanes vs.
Bartolome and German & Co. (38 Phil. 808, G.R. No. 1309,
October 18, 1918), this Court held that if a sheriff sells without
notice prescribed by the Code of Civil Procedure induced thereto
by the judgment creditor, and the purchaser at the sale is the
judgment creditor, the sale is absolutely void and no title passes.
This is regarded as the settled doctrine in this jurisdiction
whatever the rule may be elsewhere (Boria vs. Addison, 14 Phil.
895, G.R. No. 18010, June 21, 1922).

. . . It has been held that failure to advertise a mortgage

foreclosure sale in compliance with statutory requirements
constitutes a jurisdictional defect invalidating the sale and that a
substantial error or omission in a notice of sale will render the
notice insufticient and vitiate the sale (59 C.J.S. 1314).
 (Tambunting vs. Court of Appeals, L-48278, November 8, 1988;
167 SCRA 16, 23-24).

In view of the admission of defendant-appellee in its pleading showing that there

was no compliance of the notice prescribed in Section 3 of Act No. 3135, as
amended by Act 4118, with respect to the notice of sale of the foreclosed real
properties in this case, we have no choice but to declare the auction sale as
absolutely void in view of the fact that the highest bidder and purchaser in said
auction sale was defendant-appellee bank. Consequently, the Certificate of Sale,
the Final Deed of Sale and Affidavit of Consolidation are likewise of no legal
efffect. (pp. 24-25, Rollo)

Before we focus our attention on the subject of whether or not there was valid compliance in
regard to the required publication, we shall briefly discuss the other observations of respondent
court vis-a-vis herein private respondent's ascriptions raised with the appellate court when his
suit for reconveyance was dismissed by the court of origin even as private respondent does not
impugn the remarks of respondent court along this line.

Although respondent court acknowledged that there was an ambiguity on the date of execution of
the third promissory note (June 30, 1961) and the date of maturity thereof (October 28, 1958), it
was nonetheless established that the bank introduced sufficient proof to show that the
discrepancy was a mere clerical error pursuant to Section 7, Rule l30 of the Rules of Court.
Anent the second disputation aired by private respondent, the appellate court observed that
inasmuch as the original as well as the subsequent mortgage were foreclosed only after private
respondent's default, the procedure pursued by herein petitioner in foreclosing the collaterals
was thus appropriate albeit the petition therefor contained only a copy of the original mortgage.

It was only on the aspect of publication of the notices of sale under Act No. 3135, as amended,
and attorney's fees where herein private respondent scored points which eliminated in the
reversal of the trial court's decision. Respondent court was of the impression that herein
petitioner failed to comply with the legal requirement and the sale effected thereafter must be
adjudged invalid following the ruling of this Court in Tambunting vs. Court of Appeals (167 SCRA
16 [1988]); p. 8, Decision, p. 24, Rollo). In view of petitioner's so-called indifference to the rules
set forth under Act No. 3135, as amended, respondent court expressly authorized private
respondent to recover attorney's fees because he was compelled to incur expenses to protect his
interest.

Immediately upon the submission of a supplemental petition, the spouses Conrado and Marina
De Vera filed a petition in intervention claiming that the two parcels of land involved herein were
sold to them on June 4, 1970 by petitioner for which transfer certificates of title were issued in
their favor (p. 40, Rollo). On the other hand, private respondent pressed the idea that the alleged
intervenors have no more interest in the disputed lots in view of the sale effected by them to
Teresa Castillo, Aquilino and Antonio dela Cruz in 1990 (pp. 105-106, Rollo).

On March 9, 1992, the Court resolved to give due course to the petition and required the parties
to submit their respective memoranda (p. 110, Rollo).

Now, in support of the theory on adherence to the conditions spelled in the preliminary portion of
this discourse, the pronouncement of this Court in Bonnevie vs. Court of Appeals (125 SCRA
[1983]; p. 135, Rollo) is sought to be utilized to press the point that the notice need not be
published for three full weeks. According to petitioner, there is no breach of the proviso since
after the first publication on March 28, 1969, the second notice was published on April 11, 1969
(the last day of the second week), while the third publication on April 12, 1969 was announced on
the first day of the third week. Petitioner thus concludes that there was no violation from the mere
happenstance that the third publication was made only a day after the second publication since it
is enough that the second publication be made on any day within the second week and the third
publication, on any day within the third week. Moreover, in its bid to rectify its admission in
judicio, petitioner asseverates that said admission alluded to refers only to the dates of
publications, not that there was non-compliance with the publication requirement.

Private respondent, on the other hand, views the legal question from a different perspective. He
believes that the period between each publication must never be less than seven consecutive
days (p. 4, Memorandum; p. 124, Rollo).

We are not convinced by petitioner's submissions because the disquisition in support thereof
rests on the erroneous impression that the day on which the first publication was made, or on
March 28, 1969, should be excluded pursuant to the third paragraph of Article 17 of the New Civil
Code.

It must be conceded that Article 17 is completely silent as to the definition of what is a "week".
In Concepcion vs. Zandueta (36 O.G. 3139 [1938]; Moreno, Philippine Law Dictionary, Second
Ed., 1972, p. 660), this term was interpreted to mean as a period of time consisting of seven
consecutive days — a definition which dovetails with the ruling in E.M. Derby and Co. vs. City of
Modesto, et al. (38 Pac. Rep. 900 [1984]; 1 Paras, Civil Code of the Philippines Annotated,
Twelfth Ed., 1989, p. 88; 1 Tolentino, Commentaries and Jurisprudence on th Civil Code, 1990,
p. 46). Following the interpretation in Derby as to the publication of an ordinance for "at least two
weeks" in some newspaper that:

. . . here there is no date or event suggesting the exclusion of the first day's
publication from the computation, and the cases above cited take this case out of
the rule stated in Section 12, Code Civ. Proc. which excludes the first day and
includes the last;

the publication effected on April 11, 1969 cannot be construed as sufficient

advertisement for the second week because the period for the first week should be
reckoned from March 28, 1969 until April 3, 1969 while the second week should be
counted from April 4, 1969 until April 10, 1969. It is clear that the announcement on April
11, 1969 was both theoretically and physically accomplished during the first day of the
third week and cannot thus be equated with compliance in law. Indeed, where the word is
used simply as a measure of duration of time and without reference to the calendar, it
means a period of seven consecutive days without regard to the day of the week on
which it begins (1 Tolentino, supra at p. 467 citing Derby).

Certainly, it would have been absurd to exclude March 28, 1969 as reckoning point in line with
the third paragraph of Article 13 of the New Civil Code, for the purpose of counting the first week
of publication as to the last day thereof fall on April 4, 1969 because this will have the effect of
extending the first week by another day. This incongruous repercussion could not have been the
unwritten intention of the lawmakers when Act No. 3135 was enacted. Verily, inclusion of the first
day of publication is in keeping with the computation in Bonnevie vs. Court of Appeals (125
SCRA 122 [1983]) where this Court had occasion to pronounce, through Justice Guerrero, that
the publication of notice on June 30, July 7 and July 14, 1968 satisfied the publication
requirement under Act No. 3135. Respondent court cannot, therefore, be faulted for holding that
there was no compliance with the strict requirements of publication independently of the so-
called admission in judicio.

WHEREFORE, the petitions for certiorari and intervention are hereby dismissed and the decision
of the Court of Appeals dated April 17, 1991 is hereby affirmed in toto.

SO ORDERED.