ACTIVE WOOD PRODUCTS CO., INC., vs. HON.
COURT OF APPEALS, STATE INVESTMENT March 20, 1981: Another agreement was executed to move the date of sale to May 29,
HOUSE, INC., and ATTY. VICTORINO P. EVANGELISTA, Ex-Officio, Sheriff of Malolos,
Bulacan
G.R. No. 86603 | February 5, 1990 | Sarmiento, J.
EMERGENCY RECIT:
Julieta Ouana obtained a loan from PNB, which is secured by a real estate mortgage over two
properties. Julieta defaulted which prompted PNB to file an extrajudicial foreclosure of the said
properties. Sheriff issued a notice of sale for the date of the public auction, which was published in
Cebu Daily Times and posted in public places of Mandaue. Parties executed (4) agreements to
postpone the auction sale and move it to a later date. None of these sales took place, and no new
notices were filed, nor republication or reposting of the notice for the rescheduled dates. Finally, an
auction was conducted by the sheriff and awarded the same to PNB for being the only bidder. PNB
then conveyed the properties to Alfredo under a Deed of Promise to Sell payable for 5 years, after
Julieta failed to redeem the same. Julieta sent demand letters to PNB and Alfredo for the
irregularities of the transactions. Julieta filed a complaint in the RTC which was granted and
affirmed by the CA. SC held that the posting of notice and republication are mandatory
requirements pursuant to Act No. 3135. These requirements cannot be waived by the parties for
these serve as noices to third parties. SC affirmed the decision of both the RTC and CA Julieta
wins.
DOCTRINE/S:
PARTIES CANNOT WAIVE POSTING AND PUBLICTION REQUIREMENTS:
Although the general rule is that any right or privilege conferred by statute or guaranteed by
constitution may be waived, a waiver in derogation of a statutory right is not favored, and a
waiver will be inoperative and void if it infringes on the rights of others, or would be against
public policy or morals and the public interest may be waived.
PURPOSE OF NOTICE AND PUBLICATION:
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.
Publication, therefore, is required to give the foreclosure sale a reasonably wide publicity
such that those interested might attend the public sale.
FACTS:
June 8, 1977: Julieta Ouano (deceased), obtained a loan from PNB for the amount of
P104,280.00, secured by a real estate mortgage over two parcels of land in Opao,
Mandaue City.
Julieta defaulted which prompted PNB to file a petition for extrajudicial foreclosure with
the City Sheriff of Mandaue.
November 4, 1980: Sheriff prepared a notice of sale setting the date of public auction on
December 5, 1980. 9:00AM 4:00PM.
o It was published in Cebu Daily Times, which was a newspaper of general
circulation in the area for their November 13, 20, and 27, 1980 issues.
o Copies were also posted in public places of Mandaue and in the place where
the said properties are located.
Sale did not take place because of the Agreements to Postpone Sale executed by the
parties.
o The agreement requested for the defer of the auction sale at a later date with
the same time and place, without republication of the Notice.
December 3, 1980: Parties executed and filed the said agreement to move the date of
sale to February 5, 1981, but no sale took place.
February 13, 1981: Another agreement was executed and filed to move the sale to
February 28, 1981, but no sale again took place.
March 10, 1981: Third agreement to move the date of sale to March 30, 1981 was
executed but again, no sale took plae.
1981 which was filed with the sheriff on April 30, 1981.
o No new notice of sale, nor republication or reposting of notice for the
rescheduled dates.
May 29, 1981: The auction ale was conducted by the sheriff, which led to the awarding
of the lands to PNB, which was the only bidder, for P195,510.50.
PNB consolidated its title after Julietas failure to redeem the properties after one year
from the registration of the sale.
February 23, 1981: the properties were conveyed to Alfredo Ouano (petitioner) under a
Deed of Promise to Sell payable in five years.
March 28, 1983: Demand letters were sent by Julieta to PNB and Alfredo for the
irregularities of the foreclosure sale.
April 18, 1983: Julieta filed a complaint with the RTC of Cebu for the nullification of the
May 21, 1981 sale.
Alfredo filed a motion for leave to intervene in the case and filed his Answer in
Intervention to protect his rights over the properties.
February 25, 2986: While the case was pending, PNB eecuted a Deed of Sale in favor of
Alfredo, which prompted the Register of Deeds to cancel the TCT in the name of PNB
and issue a new one in the name of Alfredo.
January 29, 1990: RTC rendered a decision in favor of Julieta declaring the foreclosure
sale void for failure to republis the said notice.
CA: Affirmed the ruling of the RTC on the ground that there as no compliance with the
mandatory requirements of posting and publication of the notice of sale.
MR filed by Alfredo was denied.
Hence, this petition.
ISSUE/S:
1. Whether or not the requirements of Act No. 3135 were complied with in the May 29,
1981 foreclosure sale NO.
HELD:
Section 3 of Act No. 3135 as amended by Act No. 4118, which governs for the
extrajudicial foreclosure provides:
SEC. 3. Notice shall be given by posting notices of the sale for not less than twenty
(20) 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 notice
shall also be published once a week for at least three consecutive weeks in a
newspaper of general circulation in the municipality of city.
It is a well-settled rule 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.
PETITIONER: THERE WAS SUBSTANTIAL COMPLIANCE WITH THE PUBLICATION
REQUIREMENT BECAUSE THERE WERE PRIOR PUBLICATION AND POSTING OF NOTICE.
It was held in numerous cases that republication in the manner prescribed by Act No.
3135 is necessary for the validity of a postponed extrajudicial foreclosure sale.
PETITIONER: REPUBLICATION MAY BE WAIVED VOLUNTARILY BY THE PARTIES
The said argument has no basis in law. It was declared by the trial court that the sale is
considered void for non-compliance with Act No. 3135.
PETITIONER AND RESPONDENTS HAVE ABSOLUTELY NO RIGHT TO WAIVE THE
POSTING AND PUBLICATION REQUIREMENTS OF ACT NO. 3135.
Although the general rule is that any right or privilege conferred by statute or guaranteed
by constitution may be waived, a waiver in derogation of a statutory right is not favored, and a
waiver will be inoperative and void if it infringes on the rights of others, or would be against
public policy or morals and the public interest may be waived.
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. Clearly, the statutory requirements of posting and
publication are mandated, not for the mortgagors benefit, but for the public or third persons. In fact,
personal notice to the mortgagor in extrajudicial foreclosure proceedings is not even necessary,
unless stipulated. As such, it is imbued with public policy considerations and any waiver thereon
would be inconsistent with the intent and letter of Act No. 3135.

Publication, therefore, is required to give the foreclosure sale a reasonably wide

publicity such that those interested might attend the public sale. To allow the parties to waive
this jurisdictional requirement would result in converting into a private sale what ought to be a
public auction.

In a vain attempt to uphold the validity of the aforesaid waiver, petitioner asserts that the Court of
Appeals should have applied Rule 39, Section 24 of the Rules of Court, which allows adjournment
of execution sales by agreement of the parties.

At the outset, distinction should be made of the three different kinds of sales under the
law, namely: an ordinary execution sale, a judicial foreclosure sale, and an extrajudicial foreclosure
sale. An ordinary execution sale is governed by the pertinent provisions of Rule 39 of the Rules of
Court. Rule 68 of the Rules of Court applies in cases of judicial foreclosure sale. On the other
hand, Act No. 3135, as amended by Act No. 4118 otherwise known as An Act to Regulate the Sale
of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages applies in
cases of extrajudicial foreclosure sale. A different set of law applies to each class of sale
mentioned. The cited provision in the Rules of Court hence does not apply to an extrajudicial
foreclosure sale.

The court also held that the said waiver is void for being contrary to the express mandate of Act
No. 3135, which cannot be ratified by estoppel. Estoppel cannot give validity to an act which is
prohibited by law or one that is against public policy. Neither can it be used as a defense for
illegality to be waived.

WHEREFORE, premises considered, the Decision dated February 17, 1997 in CA-G.R. CV
No. 33499 and the Resolution therein dated April 15, 1997 are AFFIRMED. No costs.
SO ORDERED.