PHILIPPINE NATIONAL BANK, PETITIONER, VS. THE COURT OF APPEALS AND EPIFANIO DE LA CRUZ, RESPONDENTS.

The notices of sale under Section 3 of Act No. 3135, as amended by
Act No. 4118, on extra-judicial foreclosure of real estate mortgage are
required to be posted 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 notices shall also be
published once a week for at least three consecutive weeks in a newspaper of
general circulation in the municipality or city.

Respondent court, through Justice Filemon Mendoza with whom
Justices Campos, Jr. and Aldecoa, Jr. concurred, construed the publication of
the notices on March 28, April 11 and 12, 1969 as a fatal announcement and
reversed the judgment appealed from by declaring void, inter alia,
the auction sale of the foreclosed pieces of realty, the final deed of sale,
and the consolidation of ownership (p. 27, Rollo).

Hence, the petition at bar, premised on the following backdrop
lifted from the text of the challenged decision:

The facts of the case as related by the trial court are, as
follows:

“This is a verified complaint brought by the plaintiff for the
reconveyance to him (and resultant damages) of two (2) parcels of land
mortgaged by him to the defendant Philippine National Bank (Manila), which the
defendant allegedly unlawfully foreclosed. The defendant then consolidated ownership unto itself, and subsequently
sold the parcels to third parties. The
amended Answer of the defendant states on the other hand that the extrajudicial
foreclosure, consolidation of ownership, and subsequent sale to the third
parties were all valid, the bank therefore counterclaims for damages and other
equitable remedies.

x x x

From the evidence and exhibits presented by both parties, the Court
is of the opinion that the following facts have been proved: Two lots, located at Bunlo, Bocaue, Bulacan
(the first covered by Torrens Certificate No. 16743 and possessed of an area of approximately 3,109 square
meters: the second covered by Torrens
Certificate No. 5787, possessed of an area of around 610 square meters, and upon
which stood a residential-commercial building were mortgaged to the defendant
Philippine National Bank. The lots were
under the common names of the
plaintiff (Epifanio dela Cruz), his brother (Delfin) and his sister
(Maria). The mortgage was made possible
because of the grant by the latter two to the former of a special power of
attorney to mortgage the lots to the defendant. The lots were mortgaged to guarantee the following promissory
notes:

(1) a promissory note
for P12,000.00, dated September 2, 1958, and payable within 69 days (date of
maturity – Nov. 10, 1958);

(2) a promissory note
for P4,000.00, dated September 22, 1958, and payable within 49 days (date of
maturity – Nov. 10, 1958);

(3) a promissory note
for P4,000.00, dated June 30, 1958 1/ and payable within 120 days (date of
maturity-Nov. 10, 1958) See also Annex C of
the complaint itself).

[1/ This date of June 30,
1958 is disputed by the plaintiff who claims that the correct date is June 30,
1961, which is the date actually mentioned in the promissory note. It is however difficult to believe the
plaintiff’s contention since if it were true and correct, this would mean that
nearly three (3) years elapsed between the second and the third promissory note;
that at the time the third note was executed, the first two had not yet been
paid by the plaintiff despite the fact that the first two were supposed to be
payable within 69 and 49 days respectively. This state of affairs would have necessitated the renewal of said two
promissory notes. No such renewal was
proved, nor was the renewal ever alleged. Finally, and this is very significant: the third mentioned promissory note states that the maturity date is Nov.
10, 1958. Now, then, how
could the loan have been contracted on June 30, 1961? It will be observed that in the bank records, the third mentioned
promissory note was really executed on June 30, 1958 (See Exhs. 9 and
9-A). The Court is therefore inclined
to believe that the date “June 30, 1961” was a mere clerical
error and that the true and correct date is June 30, 1958. However, even assuming that the true and
correct date is June 30, 1961, the fact still remains that the first two
promissory notes had been guaranteed by the mortgage of the two lots, and
therefore, it was legal and proper to foreclose on the lots for
failure to pay said two promissory notes.]

On September 6,
1961, Atty. Ramon de los Reyes of the
bank (PNB) presented under Act No. 3135 a foreclosure petition of the two mortgaged
lots before the Sheriff’s Office at Malolos, Bulacan; accordingly, the two lots
were sold or auctioned off on October 20, 1961 with the defendant PNB as the
highest bidder for P28,908.46. On March 7, 1963, Sheriff Leopoldo Palad executed a Final Deed of Sale, in
response to a letter-request by the Manager of the PNB (Malolos Branch). On January 15, 1963, a Certificate of Sale
in favor of the defendant was executed by Sheriff Palad. The final Deed of Sale was registered in the
Bulacan Registry of Property on March 19, 1963. Inasmuch as the plaintiff did not volunteer to buy back from the
PNB the two lots, the PNB sold on June 4, 1970 the same to spouses Conrado de
Vera and Marina de Vera in a “Deed of Conditional Sale”. (Decision, pp. 3-5; Amended Record on
Appeal, pp. 96-98).

After due consideration of the evidence, the CFI on January 22,
1978 rendered its Decision, the dispositive portion of which reads:

“WHEREFORE, PREMISES CONSI­DERED, the instant complaint
against the defendant Philippine National Bank is hereby ordered DISMISSED,
with costs against the plaintiff. The
counterclaim against the plaintiff is likewise DISMISSED, for the Court does
not believe that the complaint had been made in bad faith.

SO ORDERED.” (Decision, p. 8; Amended Record on Appeal, p.
100)

Not satisfied with the judgment, plaintiff interposed the present
appeal assigning as errors the following:

“I

THE LOWER COURT ERRED IN HOLDING IN FOOTNOTE 1 OF ITS DECISION THAT
IT IS THEREFORE INCLINED TO BELIEVE THAT THE DATE “JUNE 30, 1962” WAS
A MERE CLERICAL ERROR AND THAT THE TRUE AND CORRECT DATE IS JUNE 30, 1958. IT ALSO ERRED IN HOLDING IN THE SAME
FOOTNOTE 1 THAT “HOWEVER, EVEN ASSUMING THAT THE TRUE AND CORRECT DATE IS
JUNE 30, 1961, THE FACT STILL REMAINS THAT THE FIRST TWO PROMISSORY NOTES HAD
BEEN GUARANTEED BY THE MORTGAGE OF THE TWO LOTS, AND THEREFORE, IT WAS LEGAL
AND PROPER TO FORECLOSE ON THE LOTS FOR FAILURE TO PAY SAID TWO PROMISSORY
NOTES”. (page 115, Amended Record
on Appeal)

II

THE LOWER COURT ERRED IN NOT HOLDING THAT THE PETITION FOR EXTRAJUDICIAL
FORECLOSURE WAS PREMATURELY FILED AND IS A MERE SCRAP OF PAPER BECAUSE IT
MERELY FORECLOSED THE ORIGINAL AND NOT THE AMENDED MORTGAGE.

III

THE LOWER COURT ERRED IN HOLDING THAT “IT IS CLEAR THAT THE
AUCTION SALE WAS NOT PREMATURE”. (page 117, Amended Record on Appeal)

IV

THE LOWER COURT ERRED IN HOLDING THAT “SUFFICE IT TO STATE
THAT ACTUALLY THE POWER OF ATTORNEY GIVEN TO THE PNB WAS EMBODIED IN THE REAL
ESTATE MORTGAGE (EXB. 10) WHICH WAS REGISTERED IN THE REGISTRY OF PROPERTY OF
BULACAN AND WAS ANNOTATED ON THE TWO TORRENS CERTIFICATES INVOLVED” (page
118, Amended Record on Appeal).

V

THE LOWER COURT ERRED IN HOLDING THAT “THE NOTICES REQUIRED
UNDER SEC. 3 OF ACT NO. 3135 WERE ALL COMPLIED WITH” AND “THAT THE
DAILY RECORD x x x IS A NEWSPAPER OF GENERAL CIRCULATION (pages 117-118, Amended Record on Appeal).

VI

THE LOWER COURT ERRED IN NOT DECLARING THE CERTIFICATE OF SALE,
FINAL DEED OF SALE AND AFFIDAVIT OF CONSOLIDATION, NULL AND VOID.

VII

THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO RECONVEY TO
PLAINTIFF THE PARCELS OF LAND COVERED BY T.C.T. NOS. 40712 AND 40713 OF BULACAN
(page 8, Amended Record on Appeal)

VIII

THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO PAY TO PLAINTIFF
REASONABLE AMOUNTS OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES (page 8,
Amended Record on Appeal).

IX

THE LOWER COURT ERRED IN DISMISSING THE INSTANT COMPLAINT AGAINST
THE PHILIPPINE NATIONAL BANK, WITH COSTS AGAINST THE PLAINTIFF. (page 118, Amended Record on Appeal).”
(Brief for Plaintiff-Appellant, pp. 1-4) (pp. 17-21, Rollo)

With reference to the pertinent issue at hand, respondent court
opined:

The Notices of Sale of appellant’s foreclosed properties were
published on March 28, April 11 and April 12, 1969 issues of the newspaper
“Daily Record” (Amended
Record on Appeal, p. 108). The date
March 28, 1969 falls on a Friday while the dates April 11 and 12, 1969 are on a
Friday and Saturday, respectively. Section 3 of Act No. 3135 requires that the notice of auction sale shall
be “published once a week for at least three consecutive weeks”. Evidently, defendant-appellee bank failed to
comply with this legal requirement. The
Supreme Court has held that:

“The rule is that statutory provisions governing publication
of notice of mortgage foreclosure sales must be strictly complied with, and
that even slight deviations therefrom will invalidate the notice and render the
sale at least voidable (Jalandoni vs. Ledesma, 64 Phil. 1058, G.R. No. 42589,
August 31, 1937 and October 29, 1937). Interpreting Sec. 457 of the Code of Civil Procedure (reproduced in Sec.
18(c) of Rule 39, Rules of Court and in Sec. 3 of Act No. 3135) in Campomanes
vs. Bartolome and German & Co.
(38 Phil. 808, G.R. No. 1309, October 18, 1918), this Court held that if a
sheriff sells without the notice prescribed by the Code of Civil Procedure
induced thereto by the judgment creditor, and the purchaser at the sale is the
judgment creditor, the sale is absolutely void and no title passes. This is regarded as the settled doctrine in
this jurisdiction whatever the rule may be elsewhere (Borja vs. Addison, 14
Phil. 895, G.R. No. 18010, June 21, 1922).

x x x. It has been held
that failure to advertise a mortgage foreclosure sale in compliance with
statutory requirements constitutes a
jurisdictional defect invalidating the sale and that a substantial error or
omission in a notice of sale will render the notice insufficient and
vitiate the sale (59 C.J.S. 1314).” (Tambunting vs. Court
of Appeals, L-48278, November 8, 1988; 167 SCRA 16, 23-24).

In view of the admission of defendant-appellee in its pleading
showing that there was no compliance of the notice prescribed in Section 3 of
Act No. 3135, as amended by Act 4118, with respect to the notice of sale of the
foreclosed real properties in this case, we have no choice but to declare the
auction sale as absolutely void in view
of the fact that the highest bidder and purchaser in said auction sale
was defendant-appellee bank. Consequently, the Certificate of Sale, the Final Deed of Sale and
Affidavit of Consolidation are likewise of no legal efffect. (pp. 24-25, Rollo)

Before we focus our attention on the subject of whether or not
there was valid compliance in regard to the required publication, we shall
briefly discuss the other observations of respondent court vis-a-vis
herein private respondent’s ascriptions raised with the appellate court when
his suit for reconveyance was dismissed by the court of origin even as private
respondent does not impugn the remarks of respondent court along this line.

Although respondent court acknowledged that there was an
ambiguity on the date of execution of the
third promissory note (June 30, 1961) and the date of maturity thereof (October
28, 1958), it was nonetheless established that the bank introduced sufficient proof
to show that the discrepancy was a mere clerical error pursuant to Section 7,
Rule 130 of the Rules of Court. Anent
the second disputation aired by private respondent, the appellate court
observed that inasmuch as the original as well as the subsequent mortgage were
foreclosed only after private respondent’s default, the procedure pursued by
herein petitioner in foreclosing the collaterals was thus appropriate albeit
the petition therefor contained only a copy of the original mortgage.

It was only on the aspect of publication of the notices of sale
under Act No. 3135, as amended, and attorney’s fees where herein private
respondent scored points which culminated in the reversal of the trial court’s
decision. Respondent court was of the
impression that herein petitioner failed to comply with the legal requirement
and the sale effected thereafter must be adjudged invalid following the ruling
of this Court in Tambunting vs. Court of Appeals (167 SCRA 16 [1988]); p. 8, Decision, p. 24,
Rollo). In view of petitioner’s so-called indifference to the rules set forth under Act No.
3135, as amended, respondent court expressly authorized private respondent to
recover attorney’s fees because he was compelled to incur expenses to protect
his interest.

Immediately upon the submission of a supplemental petition, the
spouses Conrado and Marina De Vera filed a petition in intervention, claiming
that the two parcels of land involved herein were sold to them on June 4, 1970
by petitioner for which transfer certificates of title were issued in their
favor (p. 40, Rollo). On the other
hand, private respondent pressed the idea that the alleged intervenors have no
more interest in the disputed lots in view of the sale effected by them to
Teresa Castillo, Aquilino and Antonio dela Cruz in 1990 (pp. 105-106, Rollo).

On March 9, 1992, the Court resolved to give due course to the
petition and required the parties to submit their respective memoranda (p. 110,
Rollo).

Now, in support of the theory on adherence to the conditions spelled
in the preliminary portion of this discourse, the pronouncement of this Court
in Bonnevie vs. Court of
Appeals (125 SCRA 122 [1983]; p. 135, Rollo)
is sought to be utilized to press the point that the notice need not be
published for three full weeks. According to petitioner, there is no breach of the proviso since after the first publication on March 28, 1969, the second
notice was published on April 11, 1969 (the last day of the second week), while
the third publication on April 12, 1969 was announced on the first day of the
third week. Petitioner thus concludes
that there was no violation from the mere happenstance that the third
publication was made only a day after the second publication since it is enough that the second publication be made on any day within the
second week, and the third publication, on any day within the third week. Moreover, in its bid to rectify its
admission in judicio, petitioner asseverates that said admission
alluded to refers only to the dates of publications, not that there was non­-compliance
with the publication requirement.

Private respondent, on
the other hand, views the legal question from a different perspective. He believes that the period between each
publication must never be less than seven consecutive days (p. 4, Memorandum;
p. 124, Rollo)

We are not convinced   by
petitioner’s submissions because the disquisition in support thereof rests on
the erroneous impression that the day on which the first publication was made, or
on March 28, 1969, should be excluded pursuant to the third paragraph of
Article 13 of the New Civil Code.

It must be conceded that Article 13 is completely silent as to
the definition of what is a “week”. In Concepcion vs. Zandueta (36 O.G. 3139 [1938]; Moreno,
Philippine Law Dictionary, Second Ed., 1972, p. 660), this term was interpreted
to mean as a period of time consisting of seven consecutive days – a definition
which dovetails with the ruling in E.M. Derby and Co.
vs. City of Modesto, et al. (38 Pac.
Rep. 900 [1984]; 1 Paras, Civil Code of the Philippines Annotated, Twelfth Ed., 1989, p.
88; 1 Tolentino, Commentaries and Jurisprudence on the Civil
Code, 1990, p. 46). Following the interpretation in Derby
as to the publication of an ordinance for “at least two weeks” in
some newspaper that:

. . . here there is no date or event suggesting the exclusion of
the first day’s publication from the
computation, and the cases above cited take this case out of the rule stated in Section 12, Code
Civ. Proc. which excludes the first day and includes the last;

the publication effected on April 11, 1969 cannot be construed as sufficient
advertisement for the second week
because the period for the first week
should be reckoned from March 28, 1969 until April 3, 1969 while the
second week should be counted from April 4, 1969 until April 10, 1969. It is clear that the announcement on April
11, 1969 was both theoretically and physically accomplished during the first
day of the third week and cannot thus be equated with compliance in law. Indeed, where the word is used simply as a
measure of duration of time and without reference to the calendar, it means a
period of seven consecutive days without regard to the day of the week on which
it begins (1 Tolentino, supra at p. 467 citing Derby).

Certainly, it would have been absurd to exclude March 28, 1969 as
reckoning point, in line with the third paragraph of Article 13 of the New
Civil Code, for the purpose of counting the first week of publication as to
make the last day thereof fall on April 4, 1969 because this will have the
effect of extending the first week by another day. This incongruous repercussion could not have been the unwritten
intention of the lawmakers when Act No. 3135 was enacted. Verily, inclusion of the first day of
publication is in keeping with the computation in Bonnevie vs. Court
of Appeals (125 SCRA 122 [1983]) where this Court had occasion to
pronounce, through Justice Guerrero, that the publication of notice on June 30,
July 7 and July 14, 1968 satisfied the publication requirement under Act No.
3135. Respondent court cannot,
therefore, be faulted for holding that there was no compliance with the strict
requirements of publication independently of the so-called admission in judicio.

WHEREFORE, the petitions for certiorari and
intervention are hereby dismissed and the decision of the Court of Appeals
dated April 17, 1991 is hereby affirmed in toto.

SO ORDERED.

Feliciano, (Chairman), Bidin, Davide, Jr., and Romero, JJ., concur.