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Petitioners vs. vs. Respondents Guadiz & Jimenez Salvador A. Navarro
Petitioners vs. vs. Respondents Guadiz & Jimenez Salvador A. Navarro
SYLLABUS
DECISION
PADILLA , J : p
On 16 December 1959, private respondents, spouses Damaso R. Cruz and Monica Andres
(hereafter, the Cruzes) obtained a loan from petitioners, spouses Antonio and Aurora
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Tambunting (hereafter, the Tambuntings) in the amount of P3,600.00. The Tambuntings
are engaged in the lending-pawnshop business using the name and style "Agencia de
Tambunting", with co-petitioner Jose P. Tambunting as Manager. The loan was evidenced
by a promissory note executed by the Cruzes, payable within four (4) months from 16
December 1959, with interest at 12% per annum. As security for payment of the loan, a
Deed of Real Estate Mortgage was executed by the Cruzes in favor of the Tambuntings
over a parcel of land belonging to the Cruzes, covered by Transfer Certificate of Title No.
59433, Register of Deeds of Rizal.
Due to debtors' failure to pay the loan obligation at maturity, a petition for extrajudicial
foreclosure of mortgage was filed by the creditors on 17 March 1967. On 4 July 1967, a
notice of sheriffs sale was posted announcing an auction sale on 2 August 1967 at 10:00
o'clock in the morning. As shown by the affidavit of publication, the notice of sale was
published in the Rizal Chronicle, a newspaper of general circulation in Rizal province, on 12,
19, and 26 July 1967.
On 2 August 1967, the Cruzes instituted an action against the Tambuntings for annulment
of mortgage and damages with prayer for a writ of preliminary injunction before the Court
of First Instance of Rizal, Branch 6-Pasig (docketed as Civil Case No. 10180). On the same
day, a temporary restraining order was issued by the court enjoining herein petitioners
from proceeding with the scheduled sale and to suspend the same until further orders
from the court.
When the temporary restraining order was dissolved on 1 September 1967, the proposed
sale was moved to 20 October 1967. Postings of sheriff's notice of sale were made on 15
September 1967 with a re-publication of said notice in the Rizal Chronicle on 27
September, 4 & 11 October, 1967. However, on 19 October 1967, petitioners were again
directed by the court to hold the scheduled sale in abeyance due to a motion for
reconsideration filed by the Cruzes in regard to the lifting of the temporary restraining
order.
Upon denial of the Cruzes' motion for reconsideration, petitioners published in the Rizal
Chronicle on 20 December 1967, the sheriffs notice of scheduled sale on 26 January 1968.
On 26 January 1968, the Cruzes thru counsel wrote the Provincial Sheriff of Rizal asking
that the auction sale set for that day (26 January 1968) be postponed to some other date
considering that there was no compliance with the notices required by law. On the same
date, the Cruzes again thru counsel sent the sheriff a notice of lis pendens informing the
latter that Civil Case No. 10180 had been filed by them for the annulment of the mortgage,
upon the foreclosure of which the sale was to be conducted, and that such action affects
title to the property.
The mortgage property was nonetheless sold at public auction on 26 January 1968 to
Aurora Tambunting and Antonio Tambunting for P9,400.00. Thereafter, mortgagee-vendee
Antonio Tambunting sold and transferred his 1/2 share in the property to his wife Aurora
Tambunting. On 31 January 1969, Aurora Tambunting executed an Affidavit of
Consolidation of Title, for the issuance of a new title in her name.
On 31 January 1969, Transfer Certificate of Title No. 239717-Rizal was issued in the name
of Aurora Tambunting, married to Antonio Tambunting. Aurora Tambunting then
transferred the property to Tambunting Realty Corporation which obtained Transfer
Certificate of Title No. 270972-Rizal in its name.
(a) Declaring the Real Estate Mortgage (Exhibit 'A' and '3') as well as the
Promissory Note for P4,600.00 [sic] Exhibit `1') valid until fully paid as hereunder
provided,
(b) Declaring without force and effect the Certificate dated April 25, 1963
(Exhibit `B') insofar as it states that the capital was increased from P3,000.00 [sic]
to P5,000.00;
(c) Ordering the plaintiffs to pay the defendants Aurora Tambunting and
Antonio Tambunting the sum of P3,600.00 plus 12% per annum from April 25,
1963 until the obligation shall have been duly paid; (as amended);
(e) Declaring as null and void the Deed of Sale (Exhibit 'L-2'), Affidavit of
Consolidation (Exhibit 'L-3'), Transfer Certificate of Title No. 239713 (Exhibit `L-4'),
Absolute Deed of Sale (Exhibit (`L-5'), Transfer Certificate of Title No. 270972
(Exhibit 'L-6'), and ordering the Register of Deeds to reinstate the Transfer
Certificate of Title No. 59433 in the name of the plaintiffs giving it therefore all
force and effect as though it had not been cancelled. . . .
"SO ORDERED." 1
The Tambuntings filed a motion for reconsideration, while the Cruzes filed an opposition
and moved for partial reconsideration, insisting on automatic nullity of the Real Estate
Mortgage due to alleged full payment of the obligation as of 25 April 1963 and claiming
reimbursement of all proceeds by way of rentals received by the Tambuntings during the
pendency of the case.
The trial court modified par. (c) of the dispositive part of its judgment and ordered the
Cruzes to pay the Tambuntings P3,600.00 plus 12% interest per annum from 25 April 1963
until the obligation is fully paid. The rest of the dispositive part of the judgment remained.
Before the Court of Appeals in CA-G.R. No. 57714-R, the Tambuntings questioned the trial
court's ruling voiding the foreclosure sale. Affirming the judgment of the Court of First
Instance, the Court of Appeals in a decision * promulgated on 13 December 1977,
reasoned that the petitioners deviated from the posting and publication requirements of
law, which rendered the notice of sale ineffective and voided the auction sale of 26 January
1968.
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On 23 January 1978, the Cruzes filed in the same CA-G.R. No. 57714-R a "petition for
accounting of fruits and application of the same against amount of judgment with
restraining order" to restrain the Tambuntings from continuing to collect rentals from
tenants of the property in question, to render an accounting of rentals received, and to
apply collected rentals to satisfy the judgment rendered against them, and to turn over to
them the excess rentals. They also sought to suspend the running of interest on the
P3,600.00 principal of the loan until the final accounting is submitted by the Tambuntings
and necessary application (offset of accounts) has been made. 2
Finding the Cruzes' petition meritorious, the same was granted by the Court of Appeals in a
resolution ** promulgated 2 May 1978, except for the suspension of interest on the
P3,600.00 loan, which was denied.
The Tambuntings also filed a Motion for Reconsideration of the 13 December 1977
decision but it was denied for lack of merit in the same resolution of 2 May 1978. 3
One issue of a newspaper of general circulation is not substantial compliance with the
required publication of once (1) a week for at least three (3) consecutive weeks 8
Petitioners claim the publisher's affidavit of publication is merely a customary proof,
hence, it should not be considered as the sole evidence of publication. This may be so in
the presence of equally convincing evidence. In the case at bar, however, there is no such
other proof of publication. To show compliance, the published notices and certificate of
posting by the sheriff of the notice of sale of 26 January 1968 should have been
presented. They do not appear in the record. Neither can the sale be considered as an
adjournment of an earlier sale under Sec. 24 of Rule 39 of the Rules of Court. 9 As correctly
posed by the Court of Appeals, why was there one (1) publication of the notice of sale
scheduled on 26 January 1968? 1 0 The presumption of compliance with official duty 1 1
has been rebutted by the failure to present proof of posting and publication of the notice
of sale of 26 January 1968.
There being no reversible error in the Court of Appeals ruling on this issue, we have no
choice but to affirm the declared nullity of the mortgage foreclosure sale in question, for
lack of compliance with the mandatory requirements of law in the matter of posting and
publication of notice of sale.
At this juncture, it should be carefully stressed that, while the foreclosure or auction sale of
26 January 1968 is null and void, the real estate mortgage as well as the Cruzes' loan
obligation to the Tambuntings remain valid and effective as ruled in the decisions of the
trial court and the Court of Appeals.
As to the second issue, the Court notes that private respondents, the Cruzes, have
repeatedly sought the refund and reimbursement of money collected and received as
rentals by the Tambuntings from the property in question from January 1969 until its
actual return to them (private respondents). 1 2 Was the appellate court, however, the
proper forum for respondent's aforesaid petition for accounting of fruits, etc.?
We hold that it was and the Court of Appeals resolution of 2 May 1978 is in accordance
with law.
Private respondents' petition for accounting, etc. 1 3 did not really seek a modification of
the judgments of the trial court and the Court of Appeals. The remedy sought (accounting
and offsetting of accounts) was a direct clear-cut consequence of an equally clear-cut
decision which, in effect, held that the Cruzes were never divested of their ownership over
the property in question. In other words, the accounting sought and granted is merely an
incident of the declared respondents' right of ownership under the Civil Code. 1 4
As to petitioners' claim that it was erroneous for the appellate court to grant said petition
for accounting, etc. because an appellee (like the private respondents) who is not at the
same time an appellant cannot seek a modification of the trial court's judgment, 1 5 the rule
indeed is found in Section 7, Rule 51 of the Rules of Court stating that —
"SEC. 7. Questions that may be decided. — No error which does not affect the
jurisdiction over the subject matter will be considered unless stated in the
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assignment of errors and properly argued in the brief, save as the court, at its
option, may notice plain errors not specified, and also clerical errors." 1 6
But, as already stated, the private respondents' petition for accounting, etc. was merely a
direct consequence of the Court of Appeals decision which affirmed the trial court's
judgment declaring them as not having lost their ownership over the disputed property. If
the respondents had been precluded from filing said petition for accounting, etc. in the
Court of Appeals, they would have had to file a separate action which could only result in a
multiplicity of suits.
Moreover, said petition for accounting, etc. is based on the rationale underlying a related
rule in the Rules of Court. Sec. 34, Rule 39 of the Rules of Court provides:
"SEC. 34. Rents and profits pending redemption. Statement thereof and credit
thereof on redemption. — The purchaser, from the time of the sale until a
redemption, and a redemptioner, from the time of his redemption until another
redemption, is entitled to receive the rents of the property sold or the value of the
use and occupation thereof when such property is in the possession of a tenant.
But when any such rents and profits have been received by the judgment creditor
or purchaser, or by a redemptioner, or by the assignee of either of them, from
property thus sold preceding such redemption, the amounts of such rents and
profits shall be a credit upon the redemption money to be paid; and, if a later
redemptioner or the judgment debtor, before the expiration of the time allowed for
such redemption demands in writing of such creditor, purchaser, or prior
redemptioner, or his assigns, a written and verified statement of the amounts of
the rents and profits thus received, the period of redemption is extended five (5)
days after such demand is complied with and such sworn statement given to
such later redemptioner or debtor. If such statement is not so given within one (1)
month from and after such demand, such redemptioner or debtor may bring an
action to compel an accounting and disclosure of such rents and profits, and until
fifteen (15) days from and after the final determination of such action, the right of
redemption is extended to such redemptioner or debtor."
What clearly appears from this provision is the right of the debtor to demand for an
accounting of the rents and profits received by a creditor during the period of redemption.
Thus, while the Rules of Court allow the purchaser in an execution sale to receive the
rentals if the purchased property is occupied by tenants, he is, however, accountable to the
judgment debtor or mortgagor, as the case may be, for the amounts so received and the
same will be duly credited against the redemption price when said debtor or mortgagor
effects the redemption. 1 7
Consequently, the principle applies in the instant case that issues though not specifically
raised in the pleadings in the appellate court, may, in the interest of justice, be properly
considered by said court in deciding a case, if they are questions raised in the trial court
and are matters of record having some bearing on the issue submitted which the parties
failed to raise or the lower court ignored. 1 8
WHEREFORE, the petition is DENIED. The decision and resolution of the Court of Appeals
dated 13 December 1977 and 2 May 1978 in CA-G.R. No. 57714-R are hereby AFFIRMED.
With costs against petitioners.
SO ORDERED.
Melencio-Herrera, Paras, Sarmiento and Regalado, JJ., concur.
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Footnotes
* Ponente: Justice Luis B. Reyes; concurring: Justices Mariano V. Agcaoili and Hugo E.
Gutierrez, Jr.
2. Id. at 71.
** Ponente: Justice Luis B. Reyes: concurring: Justices Samuel F. Reyes and Hugo E.
Gutierrez, Jr.
3. Id. at 63.
4. Jalandoni v. Ledesma, 64 Phil. 1058, G.R. No. 42589, August 31, 1937 and October 2.9,
1937.
5. 38 Phil. 808, G R. No. 13809, October 18, 1918.
6. Borja v. Addison, 44 Phil. 895, G.R. No. 18010, June 21, 1922.
7. 59 C.J.S. 1314.
8. Rollo at 21.
9. Rule 39, Sec. 24. Adjournment of sale. — By written consent of debtor and creditor, the
officer may adjourn any sale upon execution to any date agreed upon in writing by the
parties. Without such agreement he may adjourn the sale from day to day, if it becomes
necessary to do so for lack of time to complete the sale on the fixed day in the notice.
10. Rollo at 19.