BLANCA CONSUELO ROXAS, PETITIONER, VS. COURT OF APPEALS AND RURAL BANK OF DUMALAG, RESPONDENTS.

This is a petition for review on certiorari seeking reversal
of the decision of public respondent Court of Appeals in CA-G.R. CV No. 21140,
dated May 23, 1991,^[1]
which set aside the decision of the Regional Trial Court of Roxas City, Sixth
Judicial Region, Branch 18, in Civil Case No. V-4543, dated January 20, 1989.

The antecedent facts are, as follows:

Petitioner Blanca Consuelo Roxas is the owner of a parcel of land
(Lot No. 3108) located at Tanza Norte, Panay, Capiz, containing an area of
14.7238 hectares and covered by Tax Declaration No. 5129. On December 22, 1969, she executed a special
power of attorney appointing her brother, the late Manuel Roxas, as her
attorney-in-fact for the purpose of applying for an agricultural loan with
private respondent Rural Bank of Dumalag, Inc. using said land as collateral. Armed with said special power of attorney,
Manuel Roxas applied for, was granted and received an agricultural loan in the
amount of P2,000.00 from private respondent on December 26, 1969. As security for the loan, he executed the
corresponding real estate mortgage over the subject land.

On October 24, 1973, private respondent foreclosed the real
estate mortgage for failure to pay the loan on maturity. On January 7, 1974, the subject land was
sold at public auction to private respondent, being the highest bidder for
P3,009.37. For failure to exercise the
right of redemption, private respondent consolidated its ownership over the
subject land. On October 4, 1982,
possession thereof was taken from Jennifer Roxas, daughter of Manuel Roxas, and
delivered by the sheriff to private respondent.

On September 2, 1981, petitioner filed a complaint for
cancellation of foreclosure of mortgage and annulment of auction sale against
private respondent before the Regional Trial Court of Roxas City, docketed as
Civil Case No. V-4543.

In her complaint, petitioner claimed that Manuel Roxas never
informed her about the approval of the loan. When the loan matured, she did not receive any demand for payment from
private respondent nor was there any information from Manuel Roxas about the
maturity of the loan. The foreclosure
did not comply with the requirement of giving written notices to all possible
redemptioners, neither did Manuel Roxas inform her about the foreclosure. In 1974, she learned of the foreclosure from
a certain Rosario Pelobello. In that
same year, she went to private respondent to inquire about the status of her loan, that is, the amount of
her total account and for that matter, she asked for a statement of
account. Her request was refused or
ignored. After repeated requests
therefor went unheeded, she consulted her lawyer, who sent a letter to private
respondent, requesting for said statement of account. On May 10, 1981, she wrote another letter to private respondent,
reiterating her previous request. Private respondent finally replied, informing petitioner that it already
foreclosed the subject land and it can no longer be redeemed since the
redemption period has expired on March 6, 1975. Petitioner was able to obtain her statement of account only on
August 19, 1981. She consigned with the
trial court the amount of P4,194.50 as redemption price of the subject land.

Refuting the claims of petitioner, private respondent contended
in its answer that petitioner never cared about the payment of her loan
although she knew of the status of her account; that she was duly notified of
the foreclosure and public auction sale since notice to Manuel Roxas, her
agent, was notice to the principal; that the sheriff duly posted copies of the
notice of foreclosure sale in conspicuous public places before the actual
auction sale; and that she acted negligently in not taking steps to redeem the
subject land.

On January 20, 1989, the trial court rendered judgment in favor
of petitioner. The dispositive portion
of its decision reads:

“WHEREFORE, a decision is rendered declaring:

1. As null and void the
public auction sale of Lot 3108 mortgaged by plaintiff Consuelo D. Roxas thru
her attorney-in-fact Manuel D. Roxas in favor of the defendant Rural Bank of
Dumalag, (Capiz) Inc. conducted by the Provincial Sheriff Ex-Officio of Capiz on January 7,
1974, and all proceedings connected therewith, or related to the sale at public
auction of Lot 3108 situated at
Tanza Norte, Panay, Capiz, including the cancellation of the Certificate of Public Auction;

2. Allowing plaintiff
Consuelo D. Roxas to redeem the land from the defendant Rural Bank of Dumalag
(Capiz) Inc., for the amount of P4,194.50 as consigned by plaintiff with this
court;

3. Ordering defendant
Rural Bank to reconvey the mortgaged premises to plaintiff Consuelo D. Roxas or
her representative;

4. Costs against the
defendants.

SO ORDERED.”^[2]

The trial court ratiocinated that private respondent failed to
give notice of foreclosure to petitioner as owner of the property and there was
no compliance with the requirements of Section 5 of Republic Act No. 720,^[3]
as amended by Republic Act No. 5939, the pertinent portion of which, provides:

“The foreclosure of mortgages covering loans granted by rural
banks shall be exempt from the publication in newspapers now required by law
where the total amount of the loan, including interests due and unpaid, does
not exceed three thousand pesos. It
shall be sufficient publication in such cases if the notices of foreclosure are
posted in at least three of the most conspicuous public places in the municipality
and barrio where the land mortgaged is situated during the period of sixty
days immediately preceding the public auction. Proof of publication as required herein shall be accomplished by
affidavit of the sheriff or officer conducting the foreclosure sale and shall
be attached with the records of the case: x x x.” (underscoring supplied)

The notices of foreclosure were posted in
the municipality where the subject land was located and in Roxas City, but not
in the barrio. Moreover, there was no
affidavit of the sheriff who conducted the sale, attached to the records of the
case.

On elevating the matter to the Court of Appeals, said court
reversed the decision of the trial court.^[4] According
to the appellate court, Section 5 of R.A. No. 720 does not require personal
notification to the mortgagor in case of foreclosure and there was substantial
compliance with the requirements of said law.

Hence, the present petition seeking reversal by petitioner of
respondent court’s decision and raising as issues whether or not respondent
court acted correctly:

1) in reversing the decision of the trial court, despite failure
to post notices in the barrio where the land lies;

2) in not allowing redemption or recovery of the land on
equitable, if not legal ground; and

3) in not passing upon the
issue of gross inadequacy of price.

Elaborating on these issues, petitioner asserts that the failure to
post the notice in the barrio where the mortgaged property is situated rendered
the foreclosure and sale by public auction void. She invokes Our ruling in the case of Tambunting, et al. v.
Court of Appeals, et al.,^[5] which
held that the statutory provisions governing publication of notice of mortgage
foreclosure sales must be
strictly complied with, and that a slight deviation therefrom will invalidate
the notice and render the sale voidable. If recovery cannot be had under the strict provision of law, it must be
allowed under the liberal consideration of
equity in view of the special circumstances in this case: first,
private respondent admitted that it was always its practice of notifying
mortgagors of the maturity of their loans, yet, in the case of petitioner, it
did not do so; second, despite earlier requests, private respondent gave the
statement of account only in 1981; third, even after the supposed foreclosure
of the land in 1974, private respondent allowed petitioner to have possession
thereof, paying the taxes in her name until 1982, when private respondent
started to demand possession. The price
paid by private respondent was only P3,009.37 while the total area of the
subject land is more than fourteen hectares and a fishpond at the time of the
sale in 1974.

The decision of respondent court is set aside.

The basic issue in this
petition is easy to resolve by referring
to Our previous decisions.

It is settled doctrine
that failure to publish notice of auction sale as required by the
statute constitutes a jurisdictional defect which invalidates the sale.^[6]
Even slight deviations therefrom are not allowed.^[7]

Section 5 of R.A. No.
720, as amended by R.A. No.
5939, provides that notices of foreclosure should be posted in at least
three (3) of the most conspicuous public places in the municipality and
barrio where the land mortgaged is situated.

In the case at bar, the
Certificate of Posting which was executed by the sheriff states that he posted three
(3) copies of the notice of public auction sale in three (3) conspicuous public places in the municipality of Panay,
where the subject land was situated and in like manner in Roxas City,
where the public auction sale took
place.^[8]
It is beyond dispute that there was a
failure to publish the notices of auction sale as required by law. Section 5 provides further that proof of
publication shall be accomplished by an affidavit of the sheriff or officer
conducting the foreclosure sale. In
this case, the sheriff executed a certificate of posting, which is not the
affidavit required by law. The rationale behind this is simple: an affidavit is a sworn statement in writing
whereas a certificate is merely a statement in writing. Strict compliance with the aforementioned
provision is mandated. We, therefore,
cannot sustain the view of respondent court that there was substantial
compliance with Section 5 of R.A. No. 720, as amended, with respect to the
affidavit of posting by the
sheriff and the non-posting of the required notice in the barrio where the land
mortgaged is situated. Instead, We declare the foreclosure and public auction
sale of the subject land void.

With the conclusion thus
reached, We find it unnecessary to resolve the other issues raised by
petitioner.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated
May 23, 1991 is SET ASIDE. The decision
of the trial court is AFFIRMED, subject to the MODIFICATION that paragraphs 2
and 3 are deleted. In lieu
thereof: 2) petitioner is required to
pay forthwith private respondent the principal amount of her loan which is
P2,000.00 plus interest thereon at the rate stipulated upon or in the absence
thereof, at the legal rate per annum computed from the date the than was
obtained until the date of consignation with the trial court; 3) declaring
private respondent as entitled, in case of failure of petitioner to pay in full
her obligation with interest as aforementioned within sixty (60) days from
notice hereof, to foreclose its mortgage on Lot No. 3108, after due compliance
with the publication requirements of Section 5 of R.A. No. 720, as amended by R.A. No. 5939, at a public auction
sale.

SO ORDERED.

Narvasa, C.J., (Chairman), Padilla, and Regalado, JJ., concur.

^[1]
Penned by Associate Justice Regina G. Ordoñez-Benitez with the concurrence of
Associate Justices Jose A.R. Melo and Emeterio C. Cui.

^[2]
RTC decision, pp. 8-9.

^[3]
An Act Providing for the Creation, Organization and Operation of Rural Banks,
and for other purposes.

^[4]
Rollo, p. 27.

^[5]
G.R. No. L-48278, 167 SCRA 16 (1988).

^[6]
Masantol Rural Bank, Inc. v. Court of Appeals, et al., G.R. No. 97132,
204 SCRA 752 (1991), citing Borja v. Addison, 44 Phil. 895 and
Campomanes v. Bartolome and Germann & Co., 38 Phil. 808.

^[7]
Tambunting, et al. v. Court of Appeals, et al., supra.

^[8]
Exhibit “6”.