GR L 66936; (December, 1986) (Digest)
G.R. No. L-66936 December 12, 1986
RURAL BANK OF SAN MATEO, INC., petitioner, vs. HON. INTERMEDIATE APPELLATE COURT, RENATO S. MERCADO, BENJAMIN V. SANIDAD, SANTOS L. PILOTIN AND MARIANO MANUEL, respondents.
FACTS
Petitioner Rural Bank of San Mateo filed a petition for the extrajudicial foreclosure of a real estate mortgage constituted by Mariano Manuel over a parcel of land. The mortgagor also had a separate chattel mortgage with the bank covering a hand tractor. The total obligation secured by both mortgages amounted to P41,594.56. The sheriff published a notice of sale for the foreclosure of the real estate mortgage only. At the public auction, the bank, through its representative, submitted a bid of P41,594.56, explicitly stating it was for the “lot and machinery.” Private respondent Santos L. Pilotin submitted a bid of P10,000.00 for the lot alone. The sheriff awarded the property to Pilotin, considering the bank’s higher bid as “lost and unprevailing” because it was for both the lot and machinery, whereas the auction was for the foreclosed land only.
The bank filed an action for annulment of the auction sale. The trial court ruled in favor of the bank, setting aside the sale to Pilotin. The Intermediate Appellate Court reversed the trial court’s decision, prompting the bank to elevate the case to the Supreme Court via petition for review.
ISSUE
Whether the respondent sheriff acted correctly in rejecting the bank’s bid for being incompatible with the terms of the published notice of sale.
RULING
The Supreme Court denied the petition and affirmed the decision of the Intermediate Appellate Court. The legal logic is anchored on the strict adherence to the published notice of sale and the sheriff’s ministerial duties under Act No. 3135 , as amended. The notice explicitly announced the sale of the mortgaged land only, not the machinery covered by a separate chattel mortgage. The bank’s composite bid for “lot and machinery” was therefore non-conforming. The sheriff had no legal duty to postpone the sale or seek clarification from the bank’s representative, who was present and could have amended the bid. Accepting the bank’s bid would have unlawfully expanded the scope of the sale to include a chattel not subject to that foreclosure proceeding, exposing the sheriff to a demand for delivery of an asset he had no authority to sell.
The Court further held that the sheriff is not the agent of the mortgagee-bank during the auction. His role is governed by statute, and he must execute the sale strictly according to the published terms. The bank’s prerogative was limited to initiating the foreclosure; it could not, through an irregular bid, alter the nature of the auction. The findings of the appellate court that the bid was indivisible and properly rejected were factual conclusions supported by evidence and thus binding. The sheriff correctly awarded the property to the highest complying bidder, Pilotin.