G.R. No. 48797 ; July 30, 1943
Fua Cam Lu, plaintiff-appellee, vs. Yap Fauco and Yap Singco, defendants-appellants.

FACTS

The plaintiff-appellee, Fua Cam Lu, obtained a money judgment against the defendants-appellants, Yap Fauco and Yap Singco, in Civil Case No. 42125 of the Court of First Instance of Manila. To satisfy this judgment, a parcel of land belonging to the appellants in Donsol, Sorsogon, was levied upon. The provincial sheriff duly posted and published a notice of public auction sale set for December 12, 1933. However, on December 16, 1933, before the sale, the parties entered into a mortgage agreement. This agreement stipulated that the judgment obligation was reduced to P1,200, payable in installments, secured by a mortgage on a camarin (warehouse) on the levied land, and included provisions for attorney’s fees and a discount. Consequently, the advertised sale did not proceed. Subsequently, on March 31, 1934, an alias writ of execution was issued. The provincial sheriff, without publishing a new notice, sold the land at public auction on May 28, 1934, to the appellee. A final deed was executed on June 13, 1935. In 1939, the appellee filed an action to recover possession of the land after the appellants refused to recognize his title. The appellants defended on two grounds: (1) the mortgage agreement novated and extinguished the original judgment obligation, and (2) the sheriff’s sale was void for lack of the required publication of notice.

ISSUE

1. Whether the mortgage agreement executed by the parties novated and extinguished the original judgment obligation.
2. Whether the sheriff’s sale of the land on May 28, 1934, was valid despite the lack of a new publication of notice.

RULING

The Supreme Court REVERSED the judgment of the lower court.
1. On Novation: The Court held that the mortgage agreement novated the original judgment obligation. Although the agreement did not expressly cancel the old obligation, novation was implied due to the incompatibility between the two obligations. The judgment was for P1,538.04 payable immediately, without attorney’s fees and unsecured. In contrast, the new obligation was for P1,200 payable in installments, included a stipulation for attorney’s fees, and was secured by a mortgage. The recital in the mortgage that it was a settlement (“en forma de transaccion“) of the judgment indicated an intent to extinguish it. Therefore, the appellants’ liability under the original judgment was extinguished.
2. On Validity of the Sheriff’s Sale: The Court ruled the sheriff’s sale was void. The sale on May 28, 1934, was conducted under an alias writ of execution, not as a mere adjournment of the sale originally set for December 12, 1933. The appellee’s own evidence and admission established that no new notice was published for the May 28 sale. The legal presumption of regularity in the performance of official duty was rebutted by this admission. Since the law (Section 460 of Act No. 190 ) required a new publication for a sale under a new writ, and there was no written agreement between the parties to adjourn the original sale date, the statutory requirement was not met, rendering the sale null and void.
DISPOSITION:
The appealed judgment was reversed. The defendants-appellants were declared the owners of the land in question and absolved from the complaint. Costs were imposed on the plaintiff-appellee.
SEPARATE OPINION:
Justice Moran dissented.
* On novation, he argued that the mortgage agreement did not extinguish the judgment but merely provided a new method and more time for payment, citing the precedent of Zapanta vs. De Rotaeche. The agreement ratified the judgment obligation, and a default merely remitted the creditor to his original rights under the judgment.
* On the sheriff’s sale, he contended that the issue of lack of publication was not raised in the pleadings and no evidence was adduced on it by the parties. Therefore, the legal presumption of regularity of official action should stand, and the sale should be presumed valid. He voted to affirm the trial court’s judgment.