G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES FORTUNATO M. ABRENICA AND LYDIA ABRENICA, respondents.

July 2, 1992

FACTS

Spouses Fortunato and Lydia Abrenica obtained a loan from Metropolitan Bank and Trust Company (Metrobank) secured by a real estate mortgage over their property. They defaulted. Metrobank extrajudicially foreclosed the mortgage. At the public auction, Metrobank was the highest bidder. The spouses failed to redeem the property within the one-year redemption period. Metrobank then executed an Affidavit of Consolidation of Ownership and a new title was issued in its name. Subsequently, Metrobank sold the property to a third party. The Abrenica spouses filed a complaint for annulment of the foreclosure sale, arguing that Metrobank failed to comply with the posting requirement under Act No. 3135 , as amended. The trial court ruled in favor of the spouses, declaring the foreclosure sale null and void. The Court of Appeals affirmed the decision. Metrobank appealed, arguing that the issue of non-compliance with posting requirements was raised for the first time on appeal and that the spouses were estopped from questioning the sale after the redemption period had lapsed.

ISSUE

Whether the Abrenica spouses are estopped from questioning the validity of the extrajudicial foreclosure sale after the expiration of the redemption period and after title has been consolidated in the name of the mortgagee-purchaser.

RULING

No, the spouses are not estopped. The Supreme Court affirmed the decision of the Court of Appeals. The nullity of the foreclosure sale, due to non-compliance with the mandatory posting requirements of Act No. 3135 , is a jurisdictional defect. Such defect renders the sale void *ab initio* (from the beginning). A void sale can be assailed at any time, and the right to redeem never arises from a void sale. The defense of prescription or estoppel does not apply to void contracts or proceedings. The one-year redemption period presupposes a valid foreclosure sale. Since the sale was null and void for lack of statutory compliance, the consolidation of title and subsequent sale to a third party conferred no valid title. The action to annul a void contract does not prescribe.