SUPREME COURT REPORTS ANNOTATED VOLUME 749 4/1/20, 3:45 AM

G.R. No. 174581. February 4, 2015.*

ATTY. LEO N. CAUBANG, petitioner, vs. JESUS G.

CRISOLOGO and NANETTE B. CRISOLOGO,
respondents.

Remedial Law; Special Proceedings; Extrajudicial Foreclosure

of Mortgage; Failure to advertise a mortgage foreclosure sale in
compliance with the statutory requirements constitutes a
jurisdictional defect, and any substantial error in a notice of sale
will render the notice insufficient and will consequently vitiate the
sale.·The principal object of a notice of sale in a foreclosure of
mortgage is not so much to notify the mortgagor as to inform the
public generally of the nature and condition of the property to be
sold, and of the time, place, and terms of the sale. Notices are given
to secure bidders and prevent a sacrifice of the property. Therefore,
statutory provisions governing publication of notice of mortgage
foreclosure sales must be strictly complied with and slight
deviations therefrom will invalidate the notice and render the sale,
at the very least, voidable. Certainly, the statutory requirements of
posting and publication are mandated and imbued with public
policy considerations. Failure to advertise a mortgage foreclosure
sale in compliance with the statutory requirements constitutes a
jurisdictional defect, and any substantial error in a notice of sale
will render the notice insufficient and will consequently vitiate the
sale.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Jenette Marie B. Crisologo-Sanchez for respondents.

PERALTA, J.:

For the CourtÊs resolution is a Petition for Review under

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Rule 45 of the Rules of Court which petitioner Atty. Leo N.

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* THIRD DIVISION.

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564 SUPREME COURT REPORTS ANNOTATED

Caubang vs. Crisologo

Caubang filed, questioning the Decision1 of the Court of

Appeals (CA), dated May 22, 2006, and its Resolution2
dated August 16, 2006 in C.A.-G.R. CV No. 68365. The CA
affirmed the Decision3 of the Regional Trial Court (RTC) of
Davao City, Branch 12, dated August 1, 2000, with
modifications, in Civil Case No. 27168-99.
The facts, as gathered from the records, are as follows:
On December 17, 1993, respondents spouses Jesus and
Nannette Crisologo (the Spouses Crisologo) obtained an
Express Loan in the amount of P200,000.00 from PDCP
Development Bank, Inc. (PDCP Bank). On January 26,
1994, the Spouses Crisologo acquired another loan from the
same bank, this time a Term Loan of P1,500,000.00 covered
by a Loan Agreement. As security for both loans, the
spouses mortgaged their property covered by Transfer
Certificate of Title (TCT) No. T-181103. Upon release of the
Term Loan, they were given two (2) promissory notes, for
the amount of P500,000.00 on February 9, 1994 and
P1,000,000.00 on February 21, 1994.
Under the promissory notes, the Spouses Crisologo
agreed to pay the principal amount of the loan over a
period of three (3) years in twelve (12) equal quarterly
amortizations. Although they were able to pay the Express
Loan, starting August 22, 1994, however, or after payment
of the first few installments on the other loans, the spouses
defaulted in the amortizations. Despite several demands
made by the bank, the spouses still failed to pay.
On May 31, 1996, the spouses received a detailed
breakdown of their outstanding obligation. Finding the
charges to be excessive, they wrote a letter to the bank
proposing to pay their loan in full with a request that the

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interest and penalty

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1 Penned by Associate Justice Teresita Dy-Liacco Flores, with

Associate Justices Rodrigo F. Lim, Jr. and Ramon R. Garcia, concurring;
Rollo, pp. 14-28.
2 Id., at pp. 35-36.
3 Penned by Judge Paul T. Arcangel; id., at pp. 37-45.

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Caubang vs. Crisologo

charges be waived. The manager of PDCP Bank, Davao

Branch, advised them to deposit their P1,500,000.00
obligation as manifestation of their intent to pay the loan.
As a counter-offer, the spouses agreed to deposit the
amount but on the condition that the bank should first
return to them the title over the mortgaged property. The
bank did not reply until July 7, 1997, where they sent a
letter denying the spousesÊ counter-offer and demanding
payment of the loan already amounting to P2,822,469.90.
By October 20, 1997, the debt had ballooned to
P3,041,287.00. For failure to settle the account, the Davao
branch of the bank recommended the foreclosure of the
mortgage to its head office. On March 20, 1998, PDCP
Bank filed a Petition for the Extrajudicial Foreclosure of
the Mortgage.
On June 8, 1998, petitioner Leo Caubang, as Notary
Public, prepared the Notices of Sale, announcing the
foreclosure of the real estate mortgage and the sale of the
mortgaged property at public auction on July 15, 1998. He
caused the posting of said notices in three (3) public places:
the Barangay Hall of Matina, City Hall of Davao, and
Bangkerohan Public Market. Publication was, likewise,
made in the Oriental Daily Examiner, one of the local
newspapers in Davao City.
On July 15, 1998, Caubang conducted the auction sale of
the mortgaged property, with the bank as the only bidder.
The bank bidded for P1,331,460.00, leaving a deficiency of

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P2,207,349.97. Thereafter, a Certificate of Sale in favor of

the bank was issued.
Later, the Spouses Crisologo were surprised to learn
that their mortgaged property had already been sold to the
bank. Thus, they filed a Complaint for Nullity of
Extrajudicial Foreclosure and Auction Sale and Damages
against PDCP Bank and Caubang.
On August 1, 2000, the Davao RTC rendered a Decision
nullifying the extrajudicial foreclosure of the real estate
mortgage for failure to comply with the publication
requirement, the dispositive portion of which reads:

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566 SUPREME COURT REPORTS ANNOTATED

Caubang vs. Crisologo

WHEREFORE, judgment is hereby rendered:

1. Declaring the Extra-Judicial Foreclosure sale of plaintiffsÊ
property, covered by TCT No. T-181103, null and void.
2. Ordering the Register of Deeds for the City of Davao to
cancel Entry No. 113255 on TCT No. T-181103, the entry relative to
the Certificate of Sale executed by Atty. Leo Caubang on August 5,
1998, and if a new title has been issued to defendant PDCP, to
cancel the same, and to reinstate TCT No. T-181103 in the name of
Nannette B. Crisologo, of legal age, Filipino, married to Jesus
Crisologo, and a resident of Davao City, Philippines.
All the other claims of the parties are disallowed.
No pronouncement as to costs.
SO ORDERED.4

The Spouses Crisologo appealed before the CA, seeking a

partial modification of the RTC Decision, insofar as their
claims for moral and exemplary damages, attorneyÊs fees,
and costs of suit were concerned. On May 22, 2006, the
appellate court modified the decretal portion to read:

WHEREFORE, judgment is hereby rendered:

1. Declaring the Extra-Judicial Foreclosure sale of plaintiffsÊ
property, covered by TCT # T-181103, null and void.
2. Ordering the Register of Deeds for the City of Davao to

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SUPREME COURT REPORTS ANNOTATED VOLUME 749 4/1/20, 3:45 AM

cancel Entry No. T-181103, the entry relative to the Certificate of

Sale executed by Atty. Leo Caubang on August 5, 1998, and if a new
title has been issued to defendant PDCP, to cancel the same, and to
reinstate TCT No. T-181103 in the name of Nannette B. Crisologo,
of legal age, Filipino, married to Jesus Crisologo, and a resident of
Davao City, Philippines; and

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4 Rollo, p. 45.

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Caubang vs. Crisologo

3. Atty. Caubang is ordered to pay appellants the sum of

P41,500.00 as attorneyÊs fees and P30,248.50 as litigation expenses.
All other claims of the parties are disallowed.
SO ORDERED.5

Caubang filed a Motion for Reconsideration, but the

same was denied. Hence, he filed the present petition.
Caubang mainly assails the CAÊs ruling on the
publication of the notices in the Oriental Daily Examiner.
He firmly contends that the CAÊs finding was based on
assumptions and speculations.
The petition lacks merit.
Under Section 3 of Act No. 3135:6

Section 3. Notice of sale; posting; when publication required.·

Notice shall be given by posting notices of the sale 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.7

Caubang never made an effort to inquire as to whether

the Oriental Daily Examiner was indeed a newspaper of

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general circulation, as required by law. It was shown that

the Oriental Daily Examiner is not even on the list of
newspapers accredited to publish legal notices, as recorded
in the Davao RTCÊs Office of the Clerk of Court. It also has
no paying subs-

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5 Id., at p. 27.
6 Entitled An Act to Regulate the Sale of Property Under Special
Powers Inserted in or Annexed to Real-Estate Mortgages.
7 Emphasis ours.

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568 SUPREME COURT REPORTS ANNOTATED

Caubang vs. Crisologo

cribers and it would only publish whenever there are

customers. Since there was no proper publication of the
notice of sale, the Spouses Crisologo, as well as the rest of
the general public, were never informed that the
mortgaged property was about to be foreclosed and
auctioned. As a result, PDCP Bank became the sole bidder.
This allowed the bank to bid for a very low price
(P1,331,460.00) and go after the spouses for a bigger
amount as deficiency.
The principal object of a notice of sale in a foreclosure of
mortgage is not so much to notify the mortgagor as to
inform the public generally of the nature and condition of
the property to be sold, and of the time, place, and terms of
the sale. Notices are given to secure bidders and prevent a
sacrifice of the property. Therefore, statutory provisions
governing publication of notice of mortgage foreclosure
sales must be strictly complied with and slight deviations
therefrom will invalidate the notice and render the sale, at
the very least, voidable. Certainly, the statutory
requirements of posting and publication are mandated and
imbued with public policy considerations. Failure to
advertise a mortgage foreclosure sale in compliance with
the statutory requirements constitutes a jurisdictional
defect, and any substantial error in a notice of sale will

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render the notice insufficient and will consequently vitiate

the sale.8
Since it was Caubang who caused the improper
publication of the notices which, in turn, compelled the
Spouses Crisologo to litigate and incur expenses involving
the declaration of nullity of the auction sale for the
protection of their interest on the property, the CA aptly
held that Caubang shall be the one liable for the spousesÊ
claim for litigation expenses and attorneyÊs fees.
WHEREFORE, the petition is DENIED. The Decision
of the Court of Appeals, dated May 22, 2006, and its
Resolution

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8 PNB v. Nepomuceno Productions, Inc., 442 Phil. 635, 664; 394 SCRA
405, 412 (2002).

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Caubang vs. Crisologo

dated August 16, 2006, in C.A.-G.R. CV No. 68365, are

hereby AFFIRMED.
SO ORDERED.

Velasco, Jr. (Chairperson), Villarama, Jr., Reyes and

Jardeleza, JJ., concur.

Petition denied, judgment and resolution affirmed.

Notes.·Purchaser at an extrajudicial foreclosure sale

has a right to the possession of the property even during
the one-year redemption period provided the purchaser
files an indemnity bond. After the lapse of the said period
with no redemption having been made, that right becomes
absolute and may be demanded by the purchaser even
without the posting of the bond. (Cu Lai Chu vs. Laqui, 612
SCRA 227 [2010])
The well-settled rule is that in the extrajudicial
foreclosure of real estate mortgages under Act No. 3135 (as

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amended), the issuance of a writ of possession is

ministerial upon the court after the foreclosure sale and
during the redemption period when the court may issue the
order for a writ of possession upon the mere filing of an ex
parte motion and the approval of the corresponding bond.
(Cabling vs. Lumapas, 726 SCRA 628 [2014])
··o0o··

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