SILVESTRE PINGOL AND RIZALINA REYES, PLAINTIFFS AND APPELLEES, VS. AMADO C. TIGNO, ET AL., DEFENDANTS AND APPELLANTS.

Appellant spouses Amado C. Tigno and Flora M. Tigno appeal from an
order of the Court of First Instance of Manila (in Civil Case No.
30773) confirming the sale in a foreclosure suit of a second mortgage,
of their parcel of land covered by T.C.T. No. 9586, subject to a first
mortgage in favor of the Rehabilitation Finance Corporation, as first
mortgage of the same property, assigning as errors allegedly committed
by the lower court, the following: 1. The lower court erred in failing
to consider that the appellee failed to deny under oath the allegations
of usury interposed by the appellants and in equally failing to
consider that because of such omission, the appellees were deemed to
have admitted said allegation. 2. The lower court erred in requiring
evidence to be presented on the question of usury when, as aforestated,
the allegations of usury had already been deemed admitted by the
appellees. 3. Assuming arquendo that the lower court was
correct in requiring evidence on the question of usury despite
appellees’ admission, the lower court erred nevertheless in allowing
counsel for the appellants to waive his clients’ defense without their
consent and authority. 4. The lower court erred in sentencing the
appellants to pay to the appellees the inequitable and unconscionable
amount of 25% of the amount due as attorney’s fees and in sentencing
the appellants to pay the costs of suit. 5. The lower court erred in
confirming the sale conducted by the City Sheriff of Manila by its
order of February 27, 1958 despite the clear showing that the price
paid by the appellees was grossly inadequate.

It is not
disputed that under the terms of the promissory note and the deed of
second mortgage executed by the Tignos in favor of the appellee-spouses
Silvestre Pingol and Rizalina Reyes-Pingol, the Tignos obligated
themselves to repay the loan of P6,000.00 obtained from the former on
July 28, 1955 three months from said date with interest at the rate of
1% per month until fully paid, plus a sum equivalent to 25% of the
amount due for attorney’s fees, as well as all expenses and judicial
costs, in case collection through an attorney or court action is made
necessary. On complaint of the Pingols because of the failure of the
Tignos to settle the obligation after it had become due, and after the
trial in the course of which counsel for defendant mortgagors waived
his right to present evidence to substantiate their only defense of
usury, the trial court, on May 28, 1957, rendered judgment requiring
defendants Tignos to pay the plaintiffs or deposit in court within 90
days from notice of the decision, the total sum of P9,159.00,
representing the principal obligation of P6,000.00; P1,140.00 as
interest thereon at 1% per month from July 28, 1955; P1,785 as 25%
attorney’s fees; P200.00 as litigation expenses; and P34.00 for costs.
The usury-charge was dismissed for lack of evidence.

No
appeal was taken from this decision, notice of which was served on
defendants’ counsel on June 6, 1957. Defendants having failed to
satisfy the judgment within the 90-day period, on motion of the
plaintiffs and upon order of the court, the mortgaged property was sold
in public auction by the Sheriff of Manila on December 13, 1957 in the
presence of counsel for plaintiffs and defendant Amado C. Tigno, and
awarded to plaintiffs as the highest bidders for F9,365.00, subject to
the first and superior lien of the Rehabilitation Finance Corporation.
The corresponding certificate of sale was issued by the Sheriff on the
same date, December 13, 1957.

On January 4, 1958, plaintiffs
filed a motion for the confirmation of the sale. This was opposed by
defendants Tigno, represented by a new counsel claiming that the house
and lot subject of the second mortgage and sold at public auction for
only P9,159.00 (should be P9,365.00) was appraised by the Government
lending institutions at around P30,000.00; that it was actually held by
the Rehabilitation Finance Corporation, as first mortgagee, for
P19,500.00, indicating that the property could be sold at a much higher
price. Contending that the price for which it was sold was so
inadequate as to shock judicial sensibilities, defendants prayed for
the cancellation of the said sale.

The motion for
confirmation was thereafter heard, on which occasion plaintiffs offered
evidence to prove that the land and the building, should it be painted
and the toilet fixtures installed, was appraised by the Government
Service Insurance System (GSIS) at only P32,500.00. They also presented
proof of their offer to the Rehabilitation Finance Corporation to
assume defendants obligation which already amounted to P22,019.41, as
of February 18, 1958. Upon the other hand, defendants presented Mr. C.
S. Gonzales, a real estate broker, who testified that the property was
worth from P60,000.00 to P65,000.00. The court, taking into account the
fact that aside from their bid of P9,365.00, plaintiffs would also and
did in fact assume defendants’ obligation to the Rehabilitation Finance
Corporation in the sum of P22,019.41, or a total of P31,178.41, and
finding the same not inadequate as to shock judicial sensibilities,
confirmed the sale. Their motion for reconstruction having been denied,
defendants interposed the present appeal.

As will be noted,
the first four assignments of error refer to or assail the judgment on
the merits. However, since no appeal therefrom has been interposed and
the same has already become final, it is now too late to raise the
questions posed in these assignments: Hence, the only issue to be
determined in this appeal is whether the lower court erred in
confirming the sale at public auction of the property involved in this
case.

In assailing the order of confirmation, appellants
claim that the sum of P9,365.00 for which the mortgaged property was
awarded to the appellees Pingol, is so inadequate compared to its
supposed real value that it is shocking to judicial sensibilities. It
must be remembered, however, that the second mortgage in favor of
appellees was made subject to the first and superior lien of the
Rehabilitation Finance Corporation. It is for this reason that aside
from their bid, appellees offered to assume, and in fact started
paying, appellants’ obligation to the said lending institution. When
appellees proposed to buy the property for P9,365.00, “recognizing the
senior and first lien of the RFC”, they actually bound themselves to
pay an additional P22,019.41, plus whatever interest or charges that
may still accrue in the meantime. True it may be, that Mr. C. S.
Gonzales placed its market value between P60,000.00 and P65,000.00. Yet
such appraisal cannot be treated with conclusiveness and finality,
because as testified to by said witness, he has not sold any real
property in the vicinity where the property involved herein is
situated. But even granting arguendo that the property actually
commands such price, the bid received during the public sale plus the
lien in favor of the first mortgagee that must be assumed, is certainly
not so grossly inadequate or disproportionate to it3 actual market
value as to shock the minds of impartial men, especially if we take
note of the fact that appellants’ indebtedness to the Rehabilitation
Finance Corporation assumed by the appellees, is earning a daily
interest of P3,5873. By reason of the foregoing, and there being no
allegation that fraud, accident, mutual mistake, breach of trust or
misconduct on the part of the purchaser attended the sale, we find no
reason to interfere with the action taken by the lower court.^[1]

Wherefore, the appealed order confirming the sale of the property at
public auction is hereby affirmed, with costs against the
defendants-appellants. So ordered.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, and Gutierrez David, JJ., concur.

Reyes, J.B.L., and Endencia, JJ., on leave, took no part.

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^[1] Phil. National Bank vs. Gonzales, 45 Phil., 698.