412 Phil. 207
“WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered sentencing defendant Metropolitan Bank and Trust Company to pay plaintiff the following amounts:
- Ten Million, Five Hundred Thousand (P10,500,000.00) Pesos representing the fair market value of the property as of the promulgation of this decision, with interest of twenty four (24%) percent per annum thereof until fully paid;
- Moral damages of Two million (P2,000,000.00) Pesos;
- Exemplary damages of Ten million (P10,000,000.00) Pesos;
- Attorney’s fee of Two Hundred Thousand (P200,000.00) Pesos, plus Five Hundred (P500.00) Pesos for every hearing or court proceeding actually attended by plaintiff’s counsel; and
- Costs of suit.
No monetary judgment can be rendered against defendant Register of Deeds of Zamboanga del Sur in view of the absence of monetary claim in the complaint.
Defendant bank’s counterclaim is hereby DISMISSED for lack of merit.
"WHEREFORE, the judgment appealed from is hereby MODIFIED, directing the appellant to pay appellees the following amounts:
- Four Million (P4,000,000.00) Pesos representing the fair market value of the subject property;
- Moral damages of Five Hundred Thousand (P500,000.00) Pesos;
- Exemplary damages of One Million (P1,000,000.00) Pesos;
- Attorney's fees of Two Hundred Thousand (P200,000.00) Pesos, plus Five Hundred (P500.00) Pesos for every hearing or court proceeding actually attended by plaintiff's counsel; and
- Costs of suit.
THE RESPONDENT COURT OF APPEALS ERRED IN RULING THAT THE FORECLOSURE SALE CONDUCTED ON NOVEMBER 23, 1981 WAS LEGALLY INFIRM FOR NON – COMPLIANCE WITH THE STATUTORY REQUIREMENTS OF POSTING AND PUBLICATION AS PROVIDED FOR IN ACT 3135, AS AMENDED.
THE RESPONDENT COURT OF APPEALS ERRED IN AWARDING DAMAGES AND ATTORNEY’S FEES TO RESPONDENT WONG.
“Se. 3. Notice shall be given by posting notices of the sale 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 notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality and city.”
“all correspondence relative to this mortgage, including demand letters, summonses, subpoenas, or notifications of any judicial or extra-judicial action shall be sent to the MORTGAGOR at 40-42 Aldeguer St. Iloilo City, or at the address that may hereafter be given in writing by the MORTGAGOR to the MORTGAGEE.”
“Neither can the supposed failure of respondent bank to comply with the posting requirement as provided under the aforesaid Section 3, under the factual ambiance and circumstances which obtained in this case, be considered a sufficient ground for annulling the aforementioned sale. We are not unaware of the rulings in some cases that, under normal situations, the statutory provisions governing publication of notice of extra-judicial foreclosure sales must be strictly complied with and that failure to publish the notice of auction sale as required by the statute constitutes a jurisdictional defect which invalidates the sale. However, the unusual nature of the attendant facts and the peculiarity of the confluent circumstances involved in this case require that we rule otherwise.
Petitioners' cited authority on the requisite publication of notices is not so all-embracing as to deny justified exceptions thereto under appropriate situations. x x x
x x x
Furthermore, unlike the situation in previous cases where the foreclosure sales were annulled by reason of failure to comply with the notice requirement under Section 3 of Act No. 3135, as amended, what is allegedly lacking here is the posting of the notice in three public places, and not the publication thereof in a newspaper of general circulation.
We take judicial notice of the fact that newspaper publications have more far-reaching effects than posting on bulletin boards in public places. There is a greater probability that an announcement or notice published in a newspaper of general circulation, which is distributed nationwide, shall have a readership of more people than that posted in a public bulletin board, no matter how strategic its location may be, which caters only to a limited few. Hence, the publication of the notice of sale in the newspaper of general circulation alone is more than sufficient compliance with the notice-posting requirement of the law. By such publication, a reasonably wide publicity had been effected such that those interested might attend the public sale, and the purpose of the law had been thereby subserved.”(Underlining added)
“As maybe noted, the published notice bespeaks of a Deed of Mortgage allegedly executed by Mindanao Grains, Inc., signed by Faustino Go, Francisco Y. Wong, Wensceslao Buenaventura and Betty C. Wong on May 9, 1978 in favor of defendant bank. The evidence, however showed that plaintiff never executed a Real Estate Mortgage (REM) on May 9, 1978. Neither plaintiff had executed any REM whereby his co-mortgagors are MGI, Faustino Go, Wensceslao Buenaventura and his wife Betty C. Wong. What plaintiff had actually executed were two REMS dated January 18, 1977 and March 23, 1977 respectively. In other words the REM adverted to in the published notice is a non-existent document, for there was no REM of the property in question actually executed and dated May 9, 1978.
The contention of defendant bank that the erroneous date of the REM as published in the Pagadian Times was merely a clerical error would not cure the fatal defect and invalidity of that published notice. No further evidence was shown that the glaring error was corrected in the subsequent notice of publication. The court is in accord with the argument of the plaintiff that the order in the date of the REM published in the Pagadian Times is not a harmless error. It did not give proper notice to the public the correct nature of the REM which cover the properties being sold at public auction. Considering the sizable amount of the properties being sold, over half a million pesos, a very big amount to businessmen based in the Province of Zamboanga del Sur, nobody would dare to buy such properties without first carefully scrutinizing the pertinent documents, foremost of which is the REM allegedly violated by the plaintiff-mortgagor which gave rise to the foreclosure proceedings. Simply stated, serious prospective bidders just backed off upon knowing the non-existence of that REM published in the Pagadian Times. For who would participate in the auction sale of the properties covered by REMS which are non-existing? It is not surprising, therefore, to note that the defendant bank was the winning bidder, for the reason that it was the lone bidder.
“x x x We are not unaware of the rulings in same cases that, under normal situations, the statutory provisions governing publication of notice of extrajudicial foreclosure sales must be strictly complied with and that failure to publish the notice of auction sale as required by the statute constitutes a jurisdictional defect which invalidates the sale. However, the unusual nature of the attendant facts and the peculiarity of the confluent circumstances involved in this case require that we rule otherwise.”
While the law recognizes the right of a bank to foreclose a mortgage upon the mortgagor’s failure to pay his obligation, it is imperative that such right be exercised according to its clear mandate. Each and every requirement of the law must be complied with, lest, the valid exercise of the right would end. It must be remembered that the exercise of a right ends when the right disappears, and it disappears when it is abused especially to the prejudice of others.
Anent the award of moral damages, both the trial court and the Court of Appeals found that petitioner acted in bad faith in extra-judicially foreclosing the real estate mortgage and in selling the mortgaged property during the pendency of the case in the trial court. To be sure, petitioner bank’s bad faith caused serious anxiety, mental anguish and wounded feelings to its client, respondent herein. He is thus entitled to moral damages.
The Court of Appeals made a commendable ratiocination on the fact that petitioner acted in bad faith, thus:
“There is no dispute that during the pendency of the reconveyance case, appellant sold the subject property to one Betty Yu. In this regard, the trial court’s observation is worth mentioning:‘Conversely,defendant bank’s most eloquent manifestation of bad faith, deception, and fraud is its sale of the mortgaged property subject of the reconveyance action while this case was already under trial. That sale was without leave of court nor the knowledge of the plaintiff. At the stage of the court proceedings when the defendants were in the process of presenting their evidence, defendant bank sold the property in litigation to Betty Yu of Molave, Zamboanga del Sur on August 8, 1984 (Exhibits FF, FF-1,FF-2 & FF-3). Accordingly, the title of defendant bank was cancelled and a new title, TCT No. T-19,350, was issued in the name of Betty Ong Yu (Exhibits HH & HH-1). The transfer of ownership over the mortgaged property to the third person (Betty Ong Yu) who is not a party in this case rendered moot and academic the reconveyance aspect of this case, clearly to the prejudice of the plaintiff.’
Appellant’s contention that there was no need for them to secure leave of court for the sale of the property because there was no notice of lis pendens annotated in the title of appellant nor was there a restraining order issued by the court enjoining them from conveying or transferring the property deserves scant consideration.
A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over the said property does so at his own risk, or that he gambles on the result of the litigation over said property (People vs. Regional Trial Court of Manila, 178 SCRA 299). The absence of a notice of lis pendens on the title of the appellant will not save the day for the appellant. The latter and the Register of Deeds are being sued with regard to the property. x x x.
Note too that no less than the deputy Register of Deeds Ramon Balinton refused to register the property subject matter of the controversy because of the pending case as evidenced by the letter addressed to the Register of Deeds. Even when directed by the Register of Deeds Pedro Jamero, he made a handwritten annotation in the document which reads: “Register per instruction of the Acting register of deeds this 31st day of August 1984.” The manner by which appellant deprived appellee of his property through irregular foreclosure proceedings and its well-orchestrated scheme to frustrate reconveyance of the property by selling the same to a third person during the pendency of the case entitles appellee to moral damages.