G.R. No. 115953 October 28, 1996
GENOVEVA LIGOT SEMPIO and HEIRS OF BERNARDO SEMPIO, petitioners, vs. COURT OF APPEALS and DEVELOPMENT BANK OF THE PHILIPPINES, respondents.

FACTS

The spouses Sempio mortgaged their Bulacan property to DBP to secure a loan. Upon default, DBP extrajudicially foreclosed the mortgage. The Sempio spouses filed a complaint for annulment, alleging the foreclosure was void for non-compliance with Act No. 3135 and the mortgage contract. They specifically contended the auction was held in Baliuag, Bulacan, not the provincial capital as stipulated, and was supervised by the Sheriff of Nueva Ecija, not Bulacan. After DBP’s counsel repeatedly failed to appear at pre-trial and hearing settings despite due notice and his own requests for postponements, the trial court declared DBP in default and allowed ex parte presentation of evidence.

ISSUE

Whether the extrajudicial foreclosure sale was null and void due to violations of the mortgage contract and statutory requirements under Act No. 3135 .

RULING

Yes, the foreclosure was null and void. The Supreme Court affirmed the trial court’s decision. The legal logic is twofold. First, the mortgage contract stipulated the auction sale shall be in the city or capital of the province where the property is situated. Conducting the sale in Baliuag, not the capital, violated this specific agreement, which constitutes the law between the parties. Second, Act No. 3135 mandates that the sale be under the direction of the sheriff of the province where the property is located. The sale conducted by the Sheriff of Nueva Ecija over a Bulacan property was a clear violation of this jurisdictional requirement, rendering the sale void. The Court upheld the trial court’s finding of default against DBP due to its counsel’s unjustified repeated absences, which warranted the ex parte proceedings. The Sempio spouses were ordered to pay their remaining loan obligation with stipulated interest, and DBP was ordered to reconvey the title upon payment.