G.R. No. 217716 & G.R. No. 217857. September 17, 2018
LIFESTYLE REDEFINED REALTY CORPORATION AND EVELYN S. BARTE, PETITIONERS, VS. HEIRS OF DENNIS A. UVAS, RESPONDENTS. [G.R. NO. 217857] RIZAL COMMERCIAL BANKING CORPORATION, PETITIONER, VS. HEIRS OF DENNIS A. UVAS, LIFESTYLE REDEFINED REALTY CORPORATION AND EVELYN BARTE, RESPONDENTS.

FACTS

Spouses Dennis and Nimfa Uvas, through U-Bex Integrated Resources, Inc., obtained loans from Rizal Commercial Banking Corporation (RCBC) secured by a real estate mortgage over a property in Malate, Manila. After default, RCBC initiated extrajudicial foreclosure. The notice of sale scheduled the auction for October 8, 2003. However, upon Nimfa Uvas’s request to find a buyer, the sale was postponed to November 24, 2003, without republication of the notice. RCBC emerged as the highest bidder, consolidated title, and later sold the property to Lifestyle Redefined Realty Corporation and Evelyn Barte, who were former lessees of the Uvas spouses.
The Heirs of Dennis Uvas filed a complaint to annul the foreclosure sale, arguing it was void due to lack of valid notice and publication. They contended that the auction held on November 24, 2003, was invalid because the published notice specified October 8, 2003, and no republication was made for the new date. They also claimed RCBC sent notices to an incorrect address. RCBC defended the sale’s validity, asserting Nimfa Uvas requested the postponement and agreed to waive republication. Lifestyle and Barte claimed they were buyers in good faith without knowledge of the title’s alleged defects.

ISSUE

Whether the extrajudicial foreclosure sale and the subsequent sale to Lifestyle and Barte are valid.

RULING

The Supreme Court affirmed the lower courts’ decisions declaring the foreclosure sale null and void. The legal logic rests on the mandatory nature of publication requirements for extrajudicial foreclosure under Act No. 3135. The Court held that the statutory notice requirements are indispensable for the validity of the sale. The notice of sale must specify the exact date, time, and place of the auction. Postponing the sale to a date not contained in the published notice, without republication, renders the subsequent sale void. The agreement between RCBC and Nimfa Uvas to waive republication cannot override this mandatory statutory rule designed to protect the mortgagor and invite competitive bidding.
Consequently, all titles derived from the void foreclosure sale, including RCBC’s title and the subsequent title of Lifestyle and Barte, are also void. Lifestyle and Barte cannot be considered purchasers in good faith. Good faith requires a valid title from the transferor; one cannot acquire a better right than what the predecessor-in-interest possesses. Since RCBC’s title was void from the beginning, it could not transmit any valid ownership. Furthermore, the Court noted that Lifestyle and Barte, as former lessees of the property, were not entirely unaware of the circumstances surrounding the foreclosure. The foreclosure sale and all subsequent transactions were annulled, and the property was ordered reconveyed to the Heirs of Dennis Uvas upon payment of the loan obligation.