480 Phil. 348
CARPIO MORALES, J.:
As the following allegation in paragraph 15 of the Complaint shows, the Ardiente spouses capitalized on the alleged lack of notice to them of the “judicial foreclosure auction sale.”
- On two (2) legal grounds, therefore, namely, (a) that it was the defendant, not herein petitioners, who had violated the Real Estate Mortgage and Amended Real Estate Mortgage, and (b) that the requisite of notifying the mortgagors of the intended extra-judicial foreclosure sale was not duly complied with - the FORECLOSURE SALE should be annulled, which had supposedly taken place on November 11, 1983 in the Office of the Provincial Sheriff situated in the courthouse building, National Trial Court, Lucena City wherein the alleged highest bidder was the defendant for the satisfaction of petitioners’ alleged indebtedness of P247,279.14;[6] (Underscoring in the original; emphasis supplied)
On the above-quoted allegations in paragraphs 15 and 16 of the Complaint, the bank, in its Answer with Counterclaim, alleged:
- And, the unkindest cut of all came up when, without first having been duly notified of an intended extra-judicial foreclosure auction sale, petitioners received a letter from the defendant, under date of February 24, 1984, informing them that “the one (1) year period within which to exercise their right to redeem the foreclosed properties commenced to run on November 11, 1983 to November 11, 1984” (a Xerox copy of which is hereto attached as Annex “A” and made an integral part hereof).[7] (Underscoring supplied)
To the Answer the spouses Ardiente filed a Reply and Answer to Counterclaim.[10]x x x
15) Answering respondent admits the allegations contained in paragraph 15 of the petition, with the explanations and qualifications, that petitioners were duly notified of the extra-judicial foreclosure and public auction sale. There was sufficient notice and publication served to all concern[ed] of said public auction sale of the properties offered as collaterals.[8] (Underscoring supplied)
(16) Answering respondent specifically denies the allegations contained in paragraph [16] of the petition. The truth of the matter is that the petitioners have violated the terms and conditions of Real Estate Mortgage, Amended Real Estate Mortgage and that respondent has complied with the requisites of Art. 3135 as amended in relation to the application [for] extra-judicial proceeding of collaterals.”[9] (Underscoring supplied)
[I]t is maintained that there was notice, coupled with a publication of Notice of Public Auction Sale in a newspaper of general circulations (sic) supported by publishers’ affidavit attached to the record in the Office of the Provincial Sheriff of Quezon at Calauag, Quezon. Personal notice was sent to the plaintiffs. However, said requirements in the extra-judicial foreclosure is dispensed with, in accordance with the decision of the Supreme Court in the case of -By Decision of August 12, 1994,[13] the trial court, noting the absence of documentary evidence showing strict compliance with the statutory requirements on publication of notice of extra-judicial foreclosure of mortgage, declared the extra-judicial foreclosure and the sale of the mortgaged properties null and void. Thus, the trial court discoursed:BONNEVIE V. COURT OF APPEALS, 125 SCRA 122 (1983)Such phrase “once a week for at least 3 consecutive weeks”, as interpreted in “BASA vs. MERCADO” (61 Phil. 632) does not mean that the notice should be published for 3 full weeks.[12] (Emphasis and underscoring supplied)
In extra-judicial foreclosure, Act No. 3135 personal notice on the mortgagor is not necessary. Section 3 thereof reads:
Sec. 3 – Notice shall be given by posting notices of the sale for not less than twenty (20) days in at least three (3) public places of the municipality or city where the property is situated, and if such property is worth more than P400.00, such notice shall also be published once a week for at least 3 consecutive weeks in a newspaper of general circulation in the municipality or city.
Respondent Bank maintained that it filed an extra-judicial foreclosure with the Provincial Sheriff of Quezon. After due notice and publication, these properties were sold at Public Auction Sale where a corresponding Certificate of Sale (Exh. 5) was issued in its name dated November 11, 1983, as the sole bidder (Memorandum for the Defendants, p.4). On page 7 of said Memorandum, it contended that there was notice, coupled with a publication of Notice of Public Auction Sale in a newspaper of general circulation supported by publisher’s affidavit attached to the record in the Office of the Provincial Sheriff of Quezon at Calauag, Quezon. Personal notice was sent to petitioners. (Record, pp. 358 & 361, Memorandum For the Defendants, pages 4 & 7). Despite these allegations on record, no documentary exhibits of such publication of notice of public auction sale in a newspaper of general circulations supported by publisher’s affidavit were ever submitted by respondent Bank. Considering that petitioners are clearly attacking the validity of the public auction sale for which respondent Bank was the sole bidder, said documentary exhibits should have been presented in court and not merely alleged to be attached to the record in the Office of the Provincial Sheriff of Quezon at Calauag, Quezon. The clear fact remains that these documents were not submitted to form part of the records of this case. No such proof of publication exists in the records. In the case of Tambunting vs. Court of Appeals (167 SCRA 17), the Hon. Supreme Court stressed that “failure to present proof of posting and publication rebuts the presumption of compliance with official duty”. To show compliance, the published notices and certificate of posting by the sheriff of the notice of sale on November 11, 1983 should have been presented.Accordingly, the trial court disposed as follows:
Therefore, in the absence of convincing proof that the statutory provisions governing publication of notice of mortgage foreclosure sales have been strictly complied with, this Court has no other recourse except to declare as null and void the sale in favor of judgment creditor, made by respondent Sheriff on November 12, 1983, awarding the properties in question to respondent Bank, and for which, the titles in the name of petitioner-spouses were already cancelled and registered in its name. This Court also finds that petitioners are entitled to and deserving the reliefs prayed for.[14] (Emphasis and underscoring supplied),
WHEREFORE, judgment is hereby rendered, in favor of petitioners, and against the respondents, as follows:The Defendants bank et al. thus appealed to the Court of Appeals upon the following assigned errors:(1) Declaring as null and void the extrajudicial foreclosure and sale conducted by respondent Provincial Sheriff of Quezon;
(2) Declaring as null and void all transactions/proceedings held subsequent thereto such as the execution of the final deed of sale and issuance of title to and in the name of respondent Bank;
(3) Ordering the respondent Register of Deeds of Quezon to re-issue a new Transfer Certificate of Title to and in the name of petitioners in lieu of the former titles which had been deemed cancelled by virtue of the issuance of the titles which had been deemed cancelled by virtue of the issuance of the titles which had been issued in favor of respondent Corporation; and
(4) Ordering all respondents, jointly and severally, to pay unto herein petitioners, the sum of P15,000, for attorney’s fees and litigation expenses of P10,000.
Costs against defendants.
SO ORDERED.[15]
By Decision of January 29, 2001,[17] the Court of Appeals reversed the decision of the trial court after finding the argument of the defendant-appellants bank et al. that the lack of required notice and publication of the extra-judicial foreclosure of mortgage was not averred in the complaint, hence, cannot be the basis of an adverse judgment. Explaining its reversal of the decision, the Court of Appeals held:[I.]
THE LOWER COURT ERRED IN FINDING AND CONCLUDING THAT THERE WAS ABSENCE OF CONVINCING PROOF THAT THE STATUTORY PROVISIONS GOVERNING PUBLICATION OF NOTICE OF MORTGAGE FORECLOSURE SALE HAVE BEEN STRICTLY COMPLIED WITH.
[II.]
THE COURT A QUO ERRED IN DECLARING NULLAND VOID THE EXTRAJUDICIAL FORECLOSURE AND SALE CONDUCTED BY RESPONDENT PROVINCIAL SHERIFF OF QUEZON, AND ALL TRANSACTIONS/PROCEEDINGS HELD SUBSEQUENT THERETO SUCH AS THE EXECUTION OF THE FINAL DEED OF SALE AND ISSUANCE OF TITLE TO AND IN THE NAME OF RESPONDENT BANK.
[III.]
THE LOWER COURT ERRED IN ORDERING THE RRESPONDENT REGISTER OF DEEDS OF QUEZON TO REISSUE A NEW TRANSFER CERTIFICATE OF TITLE TO AND IN THE NAME OF PETITIONERS IN LIEU OF THE FORMER TITLES WHICH HAD BEEN DEEMED CANCELLED BY VIRTUE OF THE ISSUANCE OF THE TITLES WHICH HAD BEEN ISSUED IN FAVOR OF RESPONDENT CORPORATION.
[IV.]
THE TRIAL COURT ERRED IN AWARDING TO PLAINTIFFS-APPELLEES’ ATTORNEY’S FEES ABD LITIGATION EXPENSES.[16] (Underscoring supplied)
It is axiomatic that the complaint should inform the defendant of all the material facts on which the plaintiff relies to support his demand; it should state the theory of a cause of action which forms the bases of the plaintiff’s claim of liability. The office, purpose or function of the complaint is to inform the defendant clearly and definitely of the claims made against him so that he may be prepared to meet the issues at the trial. Otherwise stated, if the wrong or omission of the defendant is not alleged in the complaint, then the defendant would be precluded from presenting evidence to refute the imputation of such wrong or present justification for the alleged omission. In this case, even perfunctory reading of the Petition and the Amended Petition, readily reveals the absence of any averment relating to the required posting and publication of the notice of foreclosure sale. Understandably then, the defendant-appellant Bank saw no need to present the Sheriff’s Certification of Posting and the newspaper where the notice was published as well as the publisher’s affidavit. Clearly, the presumption that the Provincial Sheriff of Quezon has discharged his official duty in a regular manner and that the defendant-appellant Bank complied with the requirements under the law will suffice. And while it may be true that the Supreme Court said, in the case of Tambunting v. Court of Appeals and relied upon by the trial court, that the presumption of compliance with official duty is rebutted by the failure to present proof of posting and publication of the notice of sale, such may be applied only when these omissions are alleged and raised by the party in the complaint.Hence, the present petition for review filed by the Ardiente spouses proferring the following:
The result would have been different if evidence of these issues were raised during the trial of the case with the acquiescence of the parties. Then, the rule on the amendment of the petition to conform to or authorize presentation of evidence may be applied, thus:
Sec. 5. Amendment to conform to or authorize presentation of evidence.- When issues not raised in the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgments but failure to amend does not affect the result of the trial of these issues. x x x
As earlier stated however, the issue of lack of posting and publication was not even discussed nor even touched in the testimony of plaintiff-appellee Rustico Ardiente. His testimony is limited only to his receipt of a letter from the bank that their properties have been foreclosed and that they have one year to redeem the same. The plaintiffs-appellees only imputed to the defendant-appellant Bank its omission to give them personal notice of the foreclosure sale. However, it is jurisprudentially settled that personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary. Hence, lack of personal notice to the mortgagors is not a ground to set aside the foreclosure sale. Ergo, the trial court erred in declaring the foreclosure null and void based on a ground not raised in the pleadings nor tried before it.[18] (Underscoring in the original; emphasis supplied)
The spouses Ardientes (hereinafter referred to as petitioners) argue that paragraph 15 of their Complaint and paragraph 16 of the Amended Complaint show that they were “attacking the validity of the extra-judicial sale”; that the impleading of the sheriff demonstrates that they are “questioning the validity and legality of his performance of officially duty”; that the bank was sufficiently informed of their “cause of action, theory of their case and relief being sought” as shown by the bank’s allegations in paragraphs 15 and 16 of its Answer; and that in fact in the bank’s Special and Affirmative Defenses, particularly paragraph 25 thereof which reads:REASONS WARRANTING REVIEW
I.
RESPON[ENT] COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT SINCE THE PETITIONER’S IN THEIR PETITION AND IN THEIR AMENDED PETITION DID NOT MENTION THE ABSENCE OF THE REQUIRED POSTING AND PUBLICATION OF THE NOTICE OF FORECLOSURE SALE, THERE IS NO NEED FOR THE DEFENDANT APPELLANT BANK TO PRESENT THE SHERIFF CERTIFICATION OF POSTING AND THE NEWSPAPER WHERE THE NOTICE WAS PUBLISHED AS WELL AS THE PUBLISHER’S AFFIDAVIT TO PROVE THE VALIDITY OF THE FORECLOSURE SALE.
II.
RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE TRIAL COURT’S DECISION AND DISMISSING PETITIONER’S COMPLAINT.
III.
RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT AWARDING ATTORNEY’S FEES AND LITIGATION EXPENSES TO THE PLAINTIFFS-APPELLEES.[19]
25) That answering respondent as well as the Office of Provincial Sheriff fully compl[ied] [with] the requirements of law under Act 3135 as amended, more specifically with regards to notices of the public auction sale as well as the extra-judicial foreclosure application in accordance with the law.[20],an issue was tendered, the nature of which affirmative defense-answer called for the presentation of evidence, they citing Benavides v. Alabastro,[21] but the bank did not present “proof of proper compliance with Act 3135, “AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL ESTATE MORTAGES,: as to posting and publication of notices of public auction sale.
Indeed, as correctly held by the respondent Court, the issue of lack of publication of the notice of foreclosure of the mortgage was raised only on appeal. Petitioner does not represent that he directly attacked in his complaint in Civil Case No. 8920 the validity of the foreclosure because of such lack of notice. His own Statement of the Facts and of the Case in the instant petition makes no reference to such lack o notice as one, or even just as a basis for any, of his causes of action in the complaint. He sought the cancellation of the contract of mortgage because he allegedly never received the amounts indicated in the promissory notes. Of course, nullity of the mortgage due to absence of consideration is leagues apart form the nullity of the foreclosure of a mortgage because of non-publication of the notice of foreclosure.
Additionally, petitioner presented no evidence before the trial court to prove the absence of publication of the notice despite the fact that private respondents, in their Answer, squarely pleaded as a defense the foreclosure sale and petitioner’s receipt of the “notice of the sale which was published in a newspaper of general circulation.” That the lack of publication of the notice of foreclosure was never raised in issue by petitioner and that it is not within the issues framed by the parties in the trial court are then too obvious. (Emphasis and underscoring supplied)[27]