G.R. NO. 180458 - DEVELOPMENT BANK OF THE PHILIPPINES, VS. FAMILY FOODS MANUFACTURING CO. LTD., AND SPOUSES JULIANCO AND CATALINA CENTENO.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, DBP filed a petition for extrajudicial foreclosure of mortgage with the Office of the Clerk of Court of the Regional Trial Court (RTC) of Laguna. A notice of sale, setting the auction sale on August 20, 1990, was issued and was published in The Barangay on July 19, August 5 and August 12, 1990. As scheduled, the sale proceeded, and the properties were awarded to DBP as the highest bidder. A certificate of sale was issued and was registered with the Register of Deeds. On January 10, 1991, before the redemption period expired, FAMILY FOODS entered into a contract of lease over the foreclosed properties with DBP for agreed monthly rentals of P12,000.00. Spouses Centeno paid P24,000.00 as advanced rentals, but refused to pay the succeeding rentals. They, likewise, failed to redeem the foreclosed properties; hence, DBP consolidated its title over the same. On March 3, 1994, spouses Centeno filed a suit for Annulment of Sale with Prayer for Issuance of a Writ of Injunction and/or Restraining Order . [3] They admitted obtaining loans in the amount of P940,000.00 from DBP, but claimed that they made substantial payments amounting to P773,466.59. DBP, however, imposed interest and other charges in excess of those provided in the promissory note and in the real estate and chattel mortgages, thus, unnecessarily increasing their outstanding obligation. Spouses Centeno further claimed that the foreclosure was void, because the notice of public action was not published in a newspaper of general circulation, as required by law. The Barangay , the newspaper where the notice of auction sale was published, they asserted, was not a newspaper of general circulation in Laguna. The certificate of posting issued by the Sheriff was, likewise, defective, as it was not in affidavit form or under oath, as required by Act No. 3135. Finally, spouses Centeno prayed for the issuance of a restraining order to enjoin DBP from taking possession of the property pending adjudication of the case. DBP filed its answer [4] asserting lack of cause of action, as a defense. It averred that the foreclosure proceeding was valid and in accordance with law, arguing that it was not flawed by lack of notice or publication. FAMILY FOODS and spouses Centeno were duly notified of the scheduled auction sale. The notices of foreclosure sale were posted and published, as required by law. DBP further averred that respondents were estopped from questioning the foreclosure proceeding, because respondents already entered into a contract of lease with DBP. In so doing, respondents acknowledged DBP's ownership of the subject properties, thereby admitting the validity of the foreclosure proceeding. It added that respondents, as tenants, could not deny the DPB's title over the property, citing Sec. 4 (b), Rule 31 of the Rules of Court. In due course and after hearing, the RTC rendered a decision [5] on January 30, 2003, dismissing the complaint. It rejected respondents' assertion that the notic