BERNABE B. AQUINO, PLAINTIFF AND APPELLEE, VS. MACONDRAY & CO., INC., ET AL., DEFENDANTS AND APPELLANTS.

This is an appeal from a decision of the Court of First Instance of
Pangasinan, the dispositive part of which reads as follows:

“(a) Declaring the certificate of sale, dated October 11, 1937 and
the final deed of sale, dated December 20, 1938, to be null and void and did not
transmit any right or title to the defendant corporation, Macondray &
Co.;

“(b) Ordering the defendant Macondray & Co., to render an
accounting to the mortgage debtor, the plaintiff herein, of the products of. the
forty (40) lots in question in Bayambang, Pangasinan, from the time of its
occupancy on November 25, 1938 up to the actual return of said properties of the
plaintiff;

“(c) Ordering defendant to restore the possession of the plaintiff,
Bernabe B. Aquino, to the said lots in question as mortgage-debtor;

“(d) Declaring that the deed of mortgage dated May 6, 1935, is
subsisting and in force which may be foreclosed at the instance of the defendant
corporation as mortgage-creditor for having its terms violated; and

“(e) Directing the Register of Deeds of Pangasinan to cancel the
Sheriff’s certificate of sale and the Sheriff’s final sale from the original
certificates of title of the forty (40) lots of the plaintiff at Bayambang,
Pangasinan.

“No cost in this instance.

“So ordered.”

The parties submitted to the court below a stipulation of facts which is
found on pages 93 to 103 of the printed record on appeal. On account of its
length, we do not reproduce it here.

In addition to the stipulation, the parties introduced some evidence with
regard to the posting of notices of the sale at public auction.

The essential facts of the case may be briefly stated as follows:

Through a series of transactions on different dates and in various ways,
which are set forth in the stipulation of facts, the plaintiff-appellee, Bernabe
B. Aquino, became indebted to the defendant-appellant, Macondray & Co.,
Inc., in various sums. Upon agreement of the parties these sums were
consolidated on May 6, 1935 in the single amount of P15,585. On said date,
Aquino signed a promissory note for this amount, payable in five instalments of
P3,117 each, commencing on June 30, 1936, with interest at the rate of 12 per
cent per annum on the unpaid balance, and stipulated 20 per cent attorney’s fees
in case of default. The non-payment of any of the instalments at the time due
would make the whole amount payable forthwith. The lots which Aquino had
acquired from Macondray, some situated in Bayambang, Pangasinan and some in the
Singalong Subdivision, Manila, the price of which constituted the greater part
of the above mentioned amount of P15,585 were reconveyed by the Company to
Aquino on said date and then they were mortgaged by Aquino to Macondray to
guarantee the payment of the promissory note for 15,585, above stated. The
mortgage deed contained a clause authorizing Macondray to sell extrajudicially
said properties in case of default, in accordance with the provisions of Act No.
3135. As Aquino failed to pay any of the instalments, Macondray proceeded to
sell extrajudicially the mortgaged properties by availing itself of the services
of the Provincial Sheriff of Pangasinan, Guillermo Soriano. The Provincial
Sheriff entrusted his functions with regard to the public auction to the Deputy
Sheriff, Dominador C. Ungson.

At the trial in the court below Ungson testified that the notice of the
public auction was published in the Agno Valley Times, a newspaper of general
circulation in the Province of Pangasinan, and he sent three notices by mail to
the Chief of Police of Bayambang with instructions to post them at the three
proper places in accordance with law. Ungson issued a certificate of sale which
reads as follows:

“CERTIFICATE OF SALE

“This is to certify that by virtue of the extrajudicial foreclosure of Real
Estate Mortgage presented by Macondray & Co., Inc., subject to the
provisions of sections 464 and 466 of the Code of Civil Procedure in relation to
Act 3135 of the Philippine Legislature and in accordance with the notice of sale
issued on September 6, 1937, which was posted in three public places in the
municipality of Bayambang, Pangasinan, and published once a week, for three
consecutive weeks in the Agno Valley Times, which is a newspaper of general
circulation in this province, the following parcels of land were sold at public
auction on October 9, 1937, in front of the Municipal Building of Bayambang,
Pangasinan, by the undersigned Deputy Provincial Sheriff of Pangasinan, and same
were adjudicated to Macondray & Co., Inc., a domestic corporation existing
under and by virtue of the laws of the Philippines, with principal office at
Manila, P. I., for the total amount of Twenty thousand forty three pesos and
eighteen centavos P20,043.18) Philippine currency, to wit: * * * (pp. 46, 47,
Record on Appeal).

Before the date set for the sale at public auction, Ungson had received from
Macondray a letter bidding for the lots in the total sum of P20,043.18
specifying the amount for each lot. As at the hour set for the sale on October
9, 1937 nobody was present to offer any other bid, the mortgaged properties were
awarded by him to Macondray.

As Aquino failed to redeem the properties within one year after the sale,
Ungson executed a final certificate of sale on December 20, 1938.

But before that date, or on November 25, 1938, more than one year after the
sale at public auction, which took place on October 9, 1937, Aquino addressed a
letter to Macondray which reads as follows:

“MANILA, November 25, 1938

“Messrs. Macondray & Co., Inc.
Manila

“Gentlemen:

“I hereby confirm arrangement made with you today whereby I turn over to you
immediately the possession of the Bayambang, Pangasinan, property of about four
hundred five hectares, which has been the object of an extra judicial
foreclosure against me. Not having repurchased it within the period of one year.
I hereby recognize that you are now the absolute owner thereof. However, you
granted me the privilege to repurchase it together with the four Singalong lots
which were also foreclosed, by paying the whole; amount of the purchase prices
with interest at the rate of 12 per cent per annum from date of foreclosure
sales, in addition to the taxes and expenses paid by you plus 12 per cent
interest from date of payment, the same to,be payable as follows: P5,000 on or
before January 31, 1939, and the balance on or before June 30, 1939. After
making the payment of P5,000, you are to turn over to 4me the possession of all
the above mentioned properties, and a proper deed of sale will be made after
completing the full amount agreed upon. If, however, I shall fail to pay any of
the installments herein agreed, I shall lose forever any right thereto and any
payment made shall be forfeited to you. You may keep at your option the present
laborers and fishermen working on the Bayambang property under the same terms
and conditions made with me, but they will account to you direct without my
intervention for their actions in the premises.

“Please confirm the above by signing at the bottom hereof.

 

Yours very truly.
(Sgd.) Bernabe B. Aquino

“Confirmed:
Macondray & Co., Inc.

(Sgd.) Carlos Young,
General Manager.’

It will be noticed that the above letter was confirmed by Macondray through
its General Manager, Carlos Young, and so it constituted, a formal and perfected
written contract of purchase and sale with Macondray as vendor and Aquino as
vendee.

Aquino made no attempt to pay any installment of the price agreed upon for
the lots which he expressly recognized in said letter to belong to Macondray.
But on June 1, 1945, that is, almost seven years after the perfection of the
contract of purchase and sale, when conditions and prices had greatly changed,
Aquino wrote to Macondray another letter which reads as follows:

Manila, P. I.
June 1, 1945

“Mr. Carlos Young,
President, Macondray & Co., Inc.
Manila.

Sir:

“Permit me to apply for the repurchase of the land in Bayambang, Pangasinan,
which the Macondray & Co., Inc., had acquired from me in the month of
December, 1938, in consequence of extra-judicial foreclosure proceedings for
failure on my part to pay the indebtedness I then owed the Company and secured
by a mortgage on said land.

“The land contains some 400 hectares and consists of 40 continuous and
adjoining lots of the Bayambang Cadastre, being lota Nos. 71, 72, 73, 75, 76,
77, 78, 79, 88, 89, 90, 91, 92, 93, 94, 95-(2), 96, 97, 98, 99, 100, 101,
102-(l), 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 116, 117, 118,
119, 120, and 166. Twenty-two of these lots, to wit, lots 5, 90, 92, 93, 96, 97,
98, 99, 100, 101, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119,
and 120, are covered by Original Certificate of Title No. 50866, issued in my
name in February, 1937; while the balance of eighteen lots being lots Nos. 71,
72, 73, 75, 76, 77, 78, 79, 88, 89, 91, 94, 95-(2), 102-(l), 105, 106, 107, and
166 are still without certificate of title.

“Due to the lapse now of a considerable length of time since the taking place
of the transactions which led finally to your acquisition of the land; I am
taking the liberty to relate as far as I can remember the circumstances
surrounding said transactions, in the hope of refreshing your memory regarding
same.

“Sometime prior to the year 1933, I entered into a contract for the purchase
from you of four lots in the “Singalong Subdivision”, and signed and executed in
your favor, in lieu of cash down payment a promissory note for the amount of
P300 payable on a certain date I do not now recall. The total cost price of the
four lots was around P7,000 payable in installments through a stated number of
years.

“On my failure to redeem the promissory note for P300, action was brought on
the note in the Municipal Court of Manila in February, 1933, being Civil Case
No. 77757 of said Court. Opportunely, preliminary attachment was sued out on
four of the lots above enumerated, to wit, lots Nos. 90, 93, 110 and 111.

“In the meantime, I became guarantor for a customer of Macondray & Co.,
Inc., by the name of Jose Tiongson who owed your Company the amount of
P1,686.03, this being the sum total of his indebtedness for flour taken from the
Company plus the sum of about P1,000 which advanced to Wise & Co. for
Tiongson’s indebtedness to the latter Company, the payment of which I had
guaranteed to the said Wise & Co.

“To secure the payment of the stated indebtedness of P1,686.03, I executed on
March 30, 1935, a mortgage in favor of Macondray & Co., Inc., on lots Nos.
111, 112 and 113.

“Shortly previous to the execution of the last mentioned mortgage of March
20, 1935, I entered into a transaction with you whereby, to secure the payment
not only of the judgment in Civil Case No. 77757 but also the entire cost price
of the four lots in the ‘Singalong Subdivision’, I executed on March 15, 1933,
in your favor a mortgage on lots Nos. 90, 93 and 110, guaranteeing the payment
of the total sum of p7,636.74 pesos. The four Singalong lots were thus
considered paid, and transfer certificates of title covering the said lots were
then issued to me.

“In September, 1933, action was filed in the Court of First Instance of
Pangasinan, being Civil Case No. 6605, to collect from me the amount of
P7,636.74, cost price of the four Singalong lots, payment of which was secured
by the mortgage of March 15, 1933, already referred to. Then, in January, 1935,
in addition to lots Nos. 90, 93 and 110 covered by the mortgage of March 15,
1933, sixteen other lots, to wit, lots Nos. 92, 96, 97, 98, 99, 100, 101, 108,
109, 114, 115, 116, 117, 118, 119, and 120, were also attached to satisfy the
judgment in Civil Case No. 6605.

“In October, 1933, Civil Case No. 6649 was filed in the Court of First
Instance of Pangasinan, to collect from me the sum of PI ,686.03, total amount
to Tiongson’s indebtedness secured by the mortgage in March 20, 1933, on lots
Nos. 111, 112 and 113.

“The combined result of the three collection cases above referred to was
that, by January, 1935, as a consequence of the non-payment of the judgments in
the said cases, all the twenty-two lots covered by my Certificate of Title No.
50865 fell into the hands of the Macondray & Co., Inc.

“At this juncture, I approached the Company with a proposition for the
novation of my obligations, whereby in consideration of being given an extension
of time until October, 1937, to pay the accumulated amounts constituting my
unpaid obligations, I offered to give as additional security the four Singalong
lots transferred to me after the execution of the mortgage of March 15, 1935,
and also the remaining eighteen unencumbered lots of my land in Bayambang. The
proposition was agreeable to the Company, consequently on May 6, 1935, the
following transactions were entered into.

“The twenty-two lots covered by Original Certificate of Title No. 50866 were
sold back to me in two separate documents: one for the sum of P2,507.32
representing the total sum of Tiongson’s indebtedness together with accumulated
interests; another for the sum of P7,600 representing the total price of the
four Singalong lots. On the same day, May 6, 1935, I executed a public
instrument mortgaging to Macondray & Co., Inc. the twenty-two lots sold back
to me, as well as the eighteen remaining lots of my land not yet covered by
Torrens Title, and also the four Singalong lots, thereby securing the payment in
October, 1937, of the sum of P15,585 representing the combined total of the
Tiongson indebtedness together with the unpaid price of the four Singalong lots,
plus estimated interests and cash payments made by the Company for land
taxes.

“On failure to payment of the above amount in October, 1937, the mortgage of
May 6, 1935, was extra judicially forclosed, the final total of indebtedness and
obligations covered by the foreclosure amounting up to P20,043.15, which sum
includes the original obligation of P15,585 together with vested interests
thereon, plus attorney’s fees and notarial costs. Failure on my part to
repurchase the foreclosed properties within the period of one year vested in the
Company absolute title over the forty lots of my land in Bayambang, and reverted
to the Company the four Singalong lots as well.

“However, on my application, you gave me an opportunity to repurchase the
Bayambang land together with the four Singalong lots on terms and conditions
appearing in a document dated November 25, 1938, which is hereunder copied
verbatim, to wit.—

(Reproduction of his dated November 25, 1938 here, which is already
transcribed above.)

(Reproduction of his letter dated November 25, 1938 here, which is already
tanscribed above.)

“I was, however, in such bad financial straits at the time that I was unable
to avail myself of the privilege of repurchasing the properties in the manner
granted to me in the above quoted agreement.

“Subsequently, the Company sold to a buyer the four Singalong lots, but kept
the Bayambang lands, which the Company owns and holds until the present.

“Mr. Young, I now appeal to the same benignity of which you had given
abundant evidence in my previous dealings with you regarding the Bayambang
lands, to give me another chance to repurchase the Bayambang lands on
installment basis, the installments to be payable within the same length of
periods you granted to me in the agreement of November 25, 1938, above
transcribed. I fondly hope, Sir, that you will not find it difficult to do me
this kindness which, I assure you, will bind me obliged to you for all time by
the bonds of eternal gratitude.

“I propose, then, to repurchase the Bayambang property in the amount of
P20,000, which I hope you would take as adequate and reasonable, in view of the
fact that, although this sum is practically the same amount for which the
mortgage of May 6, 1935, was finally foreclosed, this amount included the unpaid
price of the four Singalong lots totalling around P7,000 of which, however, the
Company became fully reimbursed when the said four lots were sold after their
reversion to the Company in consequence of the foreclosure.

“Thus, in effected and for all practical purposes, of the amount of P20,000
covered by the extrajudicial foreclosure, only the sum of 13 or 14 thousand
pesos remained as the unpaid credit debited to the foreclosure of the Bayambang
property.

“Adhering to the terms of payment fixed in the agreement of Nov. 25, 1938, I
offer to make the first down payment of P5,000 two months from the date of your
agreeing to resell, which is the same length of time you agreed to give me
within which to make the first down payment of P5,000 agreed in the document
above referred to. The balance of P15,000, I promise to pay five months after
making the first down payment of P5.000, which is practically the same length of
time you gave me within which to pay the balance of the repurchase price agreed
upon in the document of November 25, 1938, several times referred to above.

“After making the first payment of P5,000,1 promise to be allowed to have the
possession of the Bayambang property, on the condition that if I shall fail to
pay the balance of the repurchase price in the manner agreed upon, the first
payment of P5,800 shall be forfeited to the Company.

“I am submitting to your consideration, Mr. Young, this offer of repurchase
hoping that, out of the bountifulness of your good feelings, you will see your
way to doing me an act of immense kindness by permitting the repurchase on the
terms and conditions above submitted, for which I am reiterating to you Sir, my
lasting obligations.

“Yours very sincerely,
(Sgd.) “Bernabe B.
Aquino”

About four months later, or on September 28, 1945, Aquino filed an amended
complaint with the Court of First Instance of Pangasinan in which he prayed for
the annulment of the sale at public auction and for an accounting of the
products of the land from Macondray to which he had voluntarily delivered the
lots after the sale. In said amended complaint he did not allege the non-posting
of the notices but based his action on the ground that the Sheriff sold the lots
en masse, and not separately. But the decision of the lower court in
annulling the sale was based on the alleged failure to post the notices.

It should be noted that Ungson sent notices of sale to the Chief of Police of
Bayambang with instructions to post them at the proper places. In the ordinary
course of events the notices must have been received by the Chief of Police who,
in compliance with his duties, must have posted them at three proper places.

Ungson received the bid of Macondray for each parcel of land to be sold. He
did not call bids at the place and hour set for the sale because nobody appeared
to offer bids and it would have been useless to call for bidders.

Whatever defects might have existed in the sale at public auction they were
wiped out by the letter of Aquino of November 25, 1938, above-quoted, in which
he recognized the ownership of Macondray acquired through the auction sale, and
made an offer to repurchase the properties. This offer having been accepted by
Macondray, the contract of purchase and sale between Macondray as vendor and
Aquino as purchaser, became perfected and executory. The offer contained in said
letter was reiterated by Aquino by its reproduction in the other letter dated
June 1, 1945. If any contract of purchase and sale can be perfected, this one,
without doubt, became perfected and executory. The perfection of this contract
puts an end to all other questions raised by Aquino with regard to the auction
sale However, Aquino did not make any attempt to comply with the terms of said
letter of November 25, 1938.

We will now consider certain minor objections of Aquino. He says that the
price for which the properties were foreclosed is unconscionable. This cannot be
so for the reason that Aquino could have mortgaged those properties to a bank or
sold them to any other person in order to pay his mortgaged indebtedness to
Macondray. For this purpose he had more than sufficient time; but the fact that
he made no such effort or did not succeed in selling the properties to any other
person or entity for a higher price shows that the amount for which they were
sold at public auction was not unconscionable.

With regard to the objection that the lots were sold en masse and
not piece by piece, it should be considered that Macondray offered a price for
each lot. Furthermore, the mortgage obligation is indivisible; that is, it could
not be divided among the different lots.

Aquino cannot contend with success that when he made the offer to repurchase
the properties in his letters of November 25, 1938 and June 1, 1945, he has not
aware of the alleged defects in the notices. This is unbelievable for he is,
according to the stipulation of facts, “58 years old, married to Fe Morales,
Filipino citizen and resident of Mangaldan, Pangasinan, passed the bar
examination as attorney and counselor of law in 1916, having engaged in the
practice of his profession from that time until he was elected Provincial
Governor of Pangasinan, and served his full term of office in 1928 to 1931; he
resumed the practice of law after the expiration of his term of office until he
was appointed Judge of the Court of First Instance in 1947”. If he did not know
of the existence of the alleged defects, ordinary prudence and self-interest
would have prompted him to make the inquiry.

As to the contention that Macondray under the Corporation Law could not
acquire and hold real estate, Aquino is not the proper party to raise such
question. That question would be incumbent upon the Government.

In view of the foregoing, the judgment appealed from is reversed, with costs
against the appellee. It is so ordered.

Paras, C. J., Reyes, A., Bautista Angelo, Labrador, Concepcion, and
Reyes, J.B.L., JJ., concur.