In the extrajudicial foreclosure sale of a real estate mortgage, notice of sale shall be given by posting it for not less than 20 days in at least three public places of the municipality or city where the property is located and by publishing it once a week for three consecutive weeks, in a newspaper of general circulation in said municipality or city if the property is worth more than P400,000. Lack of said notice renders the sale void. This is the ruling in this case of the spouses Diony and Carrie (couple).
The case involved the couple’s land situated in Caloocan City which they mortgaged with a bank (PSB) to secure a loan of P3,082,000 which was foreclosed by the latter when they defaulted in the payment of the loan.
The foreclosure sale was conducted on March 29, 1996 by the Deputy Sheriff of the Regional Trial Court in Caloocan after he allegedly posted the notice of sale in three conspicuous places therein and caused its publication in the newspaper Ang Pinoy. In the sale, the PSB emerged as the highest bidder for P3 million. Consequently a certificate of sale was issued in its favor.
Claiming that the extrajudicial foreclosure was void for non-compliance with the publication requirement since Ang Pinoy was not a newspaper of general circulation in Caloocan, the couple filed with the RTC a complaint for the annulment thereof.
After trial the RTC ruled that there was sufficient compliance with the statutory publication requirement. The RTC excluded the affidavit of publication presented as evidence by PSB where it is indicated that Ang Pinoy is a newspaper of general circulation printed and published in Manila. The RTC said that this is hearsay evidence because the affiant was not presented at the witness stand. So it simply relied on the positive testimony of the Deputy Sheriff that he caused the publication of the Notice of Sale on the presumption of regularity in the performance of duty, as against the proof presented by the couple consisting of the testimony of a newsstand owner who testified that he sells newspaper in Quezon City and that he is unaware of the Ang Pinoy newspaper because he is not selling the same and he had not heard of it. The RTC ruled that such testimony of the newsstand owner can never lead to the conclusion that such publication does not exist.
The couple appealed this ruling to the Court of Appeals (CA). After obtaining a report from the executive judge of the RTC Caloocan that Ang Pinoy is not an accredited periodical in Caloocan and so it could not be categorically declared that it is a newspaper of general circulation at present or in 1995-1996, the CA concluded that Ang Pinoy is not a newspaper of general circulation in Caloocan. Thus it ruled that the extrajudicial foreclosure is void for non-compliance with the requirement of publication of the notice of sale in a newspaper of general circulation. Was the CA correct?
Yes. It is true that the party alleging non-compliance with the requisite publication has the burden of proving the same and that testimony of the newsstand owner presented by the couple in this regard is unreliable. Nevertheless negative allegations need not be proved even if essential to one’s cause of action or defense if they constitute a denial of the existence of a document the custody of which belongs to the other party.
In this case, PSB could have easily produced the affidavit of publication and other competent evidence (such as the published notices) to refute the couple’s allegations. The affidavit of publication executed by the account officer of the newspaper is prima facie proof that the newspaper is generally circulated in the place where the properties are located. Here the affidavit of publication, although formally offered by PSB was excluded by the RTC for being hearsay. PSB never challenged said exclusion. Instead it relied solely on the testimony of the Deputy Sheriff which however does not clearly and convincingly prove that the bank complied with the mandatory requirement of publication. His testimony reveals that he had no personal knowledge of the actual publication of the notice.
The invocation of presumption of regularity in the performance of duty by the Deputy Sheriff is misplaced. While posting of notice is the Deputy Sheriff’s official function, the actual publication of the notice cannot be considered as such since this concerns the publisher’s business. The Deputy Sheriff is incompetent to prove that the notice of sale was actually published in a newspaper of general circulation.
Moreover Ang Pinoy is a newspaper of general circulation in Manila not in Caloocan City where the mortgaged property is located, as indicated in the excluded affidavit of publication. This is contrary to the requirement of the law (Section 3, Act 3135).
The goal of publication is to achieve a reasonable wide publicity for purposes of securing bidders and preventing a sacrifice sale of the property. Since the bank failed to establish its compliance with the publication requirement, the extrajudicial foreclosure and sale of the real estate mortgage of the couple are void (Phil. Savings bank vs. Spouses Geronimo, G.R 170241, April 19, 2010).
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