REPUBLIC OF THE PHILIPPINES

1

REPUBLIC OF THE PHILIPPINES

REGIONAL TRIAL COURT

SECOND JUDICIAL REGION

BRANCH ____, CAUAYAN CITY

SPS. EDUARDO P. GACULA AND JOSEFA B. GACULA,

Plaintiffs,

-versus-

CIVIL CASE NO. _________

For: Declaration of Nullity of

Foreclosure of Mortgage and

Certificate of Sale, etc.

DEVELOPMENT BANK OF THE PHILIPPINES (head office and ilagan branch), Registry of deeds for isabela, NOTARY PUBLIC FRANCISCO MARALLAG,

Defendants.

x----------------------------------------------------x

COMPLAINT

Plaintiffs, through counsel, respectfully state:

1) Plaintiffs Spouses Eduardo P. Gacula and Josefa Bartolome Gacula are residents of No. 229, Rizal St., Calaocan, Isabela. Plaintiffs are represented in this case by the undersigned counsel and may be served with legal and court processes through the latters address as stated below.

2) Defendant Development Bank of the Philippines (DBP) is a financial institution with branch office address in Ilagan, Isabela and head office address at Sen. Gil Puyat Ave. corner Makati Avenue, Makati City. DBP may be served with legal and court processes through any of addresses given above.

3) Defendant Registry of Deeds for Isabela (the RD) is the repository of, among others, land titles in the province of Isabela, with office address at the Provincial Capitol, Ilagan, Isabela. The RD may be served with legal and court processes through the address given above.4) Defendant Notary Public Francisco Marallag of Ilagan, Isabela (the Notary Public), handled the foreclosure of the Property in 1991. The Notary Public may be served with legal and court processes in his office in Ilagan, Isabela.

5) Plaintiffs are the owners of an agricultural land with an area of thirty-one thousand seven hundred thirty seven (31,737) square meters situated in Bgry. Salvacion, Alicia, Isabela and previously covered by Transfer Certificate of Title No. T-48796 (TCT No. 48796) duly-issued by the Registry of Deeds of Isabela, which land is more particularly described and quoted from TCT No. 48796 as follows (the Property):

A PARCEL OF LAND (Lot D, of the subdivision plan LRC Psd-121628, being a portion of the land described on plan H-217548, LRC Rec. No. H. Pat.), situated in the Barrio of Salvacion, Municipality of Alicia, Province of Isabela. Bounded on the NE., points 5-6 by Ambrosio Simon; on the NE., points 6-7 by Lot C; points 7-8 by Lot B, of the subdivision plan; on the SE., points 8-1 by Victorio Respicio; points 1-4 by Macario Andaya; and on the W., points 4-5 by Lot E, of the subdivision plan. Beginning at a point marked 1 on plan, being N. 15-42E., 5518.38m. from MBM Echague Cadastre, thence

S.84-03W., 200.02m. to point 2; S.83-44W., 200.67m to point 3;

S.83-56W., 124.32m. to point 4; N. 2-53E., 152.93m to point 5;

S.55-11E., 124.64m. to point 6; N.89-55E., 238.01m to point 7;

S.89-54E., 179.32m. to point 8; S.11-21W., 27.00m to point of beginning. Containing an area of THIRTY ONE THOUSAND SEVEN HUNDRED THIRTY SEVEN (31,737) SQUARE METRS, more or less. All points referred to are indicated on the plan and are marked on the ground as follows: Points 1-3 & 6 by Old BL and the rest by PS All Cyl. Conc. Mons., 15x-60cms.; bearings true; Decl, 0 deg. 55E.; Date of Original Survey, May 22, 1946 and that of the Subdivision Survey, Feb. 12, 1970.

Emphasis ours.

6) On March 3, 1977, Plaintiffs executed a real estate mortgage (the Mortgage) on the Property in favor of DBP to secure a loan in the amount of Pesos: Thirty-nine thousand five (P39,500.00), Philippine currency, (the Loan).

7) Plaintiffs were not furnished with a copy of the Mortgage and the Loan documents which are all in the possession of DBP. However, the Mortgage was registered or annotated on the dorsal portion of TCT No. 48796 as Entry No. 2829.

8) Thereafter, without proper and due demand to pay the Loan and worse, without proper and due notice to the Plaintiffs, the Property was allegedly foreclosed and sold at public auction on September 9, 1991 in favor of DBP. This is evidenced by the Certificate of Sale on file with the RD and registered or annotated on the dorsal portion of TCT No. 48796 as Entry No. 4311. Curiously, the purported Certificate of Sale was registered with the RD only on October 6, 2010.

9) In particular, the Certificate of Sale as well as the Notice of Sale which was the basis for the Certificate of Sale incompletely and erroneously described the Property as follows:

TRANSFER CERTIFICATE OF TITLE NO. T-48796 ISABELA

A parcel of land (Lot D of the subdv. Plan (LRC) Psd-321628, being a portion of the land described on plan H-217548, LRC Rec. No. H. Pat.), situated at Salvacion, Alicia, Isabela, containing an area of 31,737 SQUARE METERS, more or less with improvements thereon. Bounded on the NE., by property of Ambrocio Simon; on the NE., by Lot C and Lot B; on the SE., by property of Victoria Respicio; and Macario M. Andaya; and on the W., by Lot E. Covered by T/D No. A-3468, assessed at P4,870.00.

Emphasis ours.

10) Notwithstanding the obvious incomplete and erroneous description of the Property in the Certificate of Sale and Notice of Sale which actually rendered the foreclosure null and void, Plaintiffs, through counsel, still offered in utmost good faith to just purchase back the Property through their letter, dated October 1, 2011. The letter reads:

October 1, 2011

Development Bank of the Philippines

Makati City

Attention:Mr. Francisco Del Rosario

President

Re:

Account of Sps. Eduardo P. Gacula and Josefa B. Gacula

re: Agricultural Land located in Bgy. Salvacion, Alicia, Isabela

(the Property)

Sir/Madam:

We write in behalf of our clients, Sps. Eduardo P. Gacula and Josefa B. Gacula, relative to the Property.

Our clients were informed about the supposed foreclosure of the Property although they are unaware of the circumstances that led to the said foreclosure including compliance to the pertinent requirements and procedures under the law.

However, we were informed by our clients who are both retired government workers of their sincere intention to settle the loan on the Property with the help of their children and relatives. Please note that our clients now rely primarily on the agricultural produce from the Property although the recent heavy typhoons that hit and continue to hit hard the province have indeed practically drained their retirement savings. Our clients predicament is even aggravated by the recent strong typhoons Pedring and Quiel - that directly hit the province of Isabela.

Our clients wish to offer the amount of Pesos: Two Hundred Fifty Thousand (P250,000.00) for the settlement of their loan through twenty five (25) equal monthly amortizations or the amount of P10,000.00 per month. They are confident they can raise the said amount monthly through the help of their children and relatives and at the same time sustain, at least, their decent living.

We trust your good office would take note of our clients predicament and hope their offer would merit your kind consideration and approval.

Thank you and best regards.

Very truly yours,

Basilio C. Almazan, Jr.

For the Firm

cc:

Ms. Lourdes Anne E. Liao

Senior Asst. Vice President

11) However, in their letter, dated October 7, 2011, which they sent through registered mail DBP simply replied, among others, as follows:

Please be informed that we are constrained to act on the offer, being way below the Banks P804,210.49 total claim (as of attached October 6, 2011 statement). Likewise, it shall be noted that validity of the redemption period for the DBP-foreclosed property covered by TCT No. T-48796 has of late expired on October 6, 2011, triggering hence title consolidation in the Banks name for proper disposal thereof.

Altogether and consistent with Bank policy on acquired asset disposal, the property shall first be offered in a public bidding on cash basis, for which a minimum price is established, and thereafter published in two (2) leading broadsheets on nationwide circulation. We shall be set to render due notice of the public bidding schedule once finalized.

12) Plaintiffs were terribly shocked with DBPs letter and were completely at a loss at how their P39,500.00 loan ballooned to P804,210.49.

13) On September 21, 2012, DBP published in the Philippine Star and Philippine Daily Inquirer an Invitation to Bid for various properties including the Property, the bidding for which Property was scheduled on October 5, 2012. It was then that Plaintiffs found that the Property is now registered in the name of DBP under TCT No. T-398938.

14) Hence, this action.

CAUSES OF ACTION

15) Plaintiffs replead and reproduce the foregoing averments insofar as they may be material and relevant.16) The foreclosure of the Property and Certificate of Sale should be declared a nullity.

17) Firstly, it bears stressing that Plaintiffs never actually received any demand from DBP for the payment of the Loan. Hence, this want of demand readily renders the foreclosure premature. In fact, there is strong need for this Honorable Court to order DBP to render an accounting and explain why and how Plaintiffs P39,500.00 loan suddenly ballooned to an utterly obscene amount of P804,210.49.

18) Secondly, Plaintiffs never knew and never actually received the purported Notice of Sale involving their Property. In fact, to date, Plaintiffs have not received any copy of the said Notice of Sale and their attempts to secure a copy of the said Notice of Sale and/or Affidavit of Publication from the RD and/or the Regional Trial Court of Ilagan and Regional Trial Court of Cauayan have been unsuccessful and rendered futile.

19) More, the incomplete and erroneous description of the Property in the Certificate of Sale and purported Notice of Sale the contents of which were the basis for the Certificate of Sale, actually rendered the foreclosure null and void.

20) In the case of Cesar San Jose and Margarita Batongbakal vs. Court of Appeals, et al., G.R. No. 106953, August 19, 1993, the Honorable Supreme Court held: The provision of Act No. 3135 as amended by Act No. 4118 relevant to the issues in this case is Section 3 which states:

Sec. 3. Notice shall be given by posting notices of sale for not less that twenty (20) days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.

In Tambunting v. Court of Appeals, the Court stressed that the statutory provisions governing publication of notice of mortgage foreclosure sales must be strictly complied with, and that even the slightest deviations therefrom will invalidate the notice. In the case at bar, the Notice of Sheriff's sale referred to the property covered by TCT No. T-169705. This was the notice actually published in "The New Record" as shown by the Affidavit of Publication executed by the Business Manager of the aforementioned publication. The trial court and the Court of Appeals upheld the validity of the Notice based on the theory that although the property to be sold pursuant to the foreclosure of mortgage was indeed covered by TCT No. T-159703 and not by TCT No. T-169705, the technical description, however, in the notice was the actual and correct technical description of the property. Both the trial court and the Court of Appeals held that the discrepancy in the title number was "purely a typographical error" which "did not render null and void the public auction sale held by the Sheriff. The number of the transfer certificate as an identification of real property is not controlling. What controls is the technical description." We disagree and consequently we reverse the decision of the Court of Appeals.

In the Tambunting case, this Court stated that the failure to advertise a mortgage foreclosure sale in compliance with statutory requirements constitutes a jurisdictional defect invalidating the sale and that a substantial error or omission in a notice of sale will render the notice insufficient and vitiate the sale.

The notice of Sheriff's Sale, in this case, did not state the correct number of the transfer certificate of title of the property to be sold. This is a substantial and fatal error which resulted in invalidating the entire Notice. That the correct technical description appeared on the Notice does not constitute substantial compliance with the statutory requirements. The purpose of the publication of the Notice of Sheriff's Sale is to inform all interested parties of the date, time and place of the foreclosure sale of the real property subject thereof. Logically, this not only requires that the correct date, time and place of the foreclosure sale appear in the notice but also that any and all interested parties be able to determine that what is about to be sold at the foreclosure sale is the real property in which they have an interest.

The Court is not unaware of the fact that the majority of the population do not have the necessary knowledge to be able to understand the technical descriptions in certificates of title. It is to be noted and stressed that the Notice is not meant only for individuals with the training to understand technical descriptions of property but also for the layman with an interest in the property to be sold, who normally relies on the number of the certificate of title. To hold that the publication of the correct technical description, with an incorrect title number, of the property to be sold constitutes substantial compliance would certainly defeat the purpose of the Notice. This is not to say that a correct statement of the title number but with an incorrect technical description in the notice of sale constitutes a valid notice of sale. The Notice of Sheriff's Sale, to be valid, must contain the correct title number and the correct technical description of the property to be sold.

Emphasis ours.

21) In particular, the utterly erroneous description of the Property in the Certificate of Sale and Notice of Sale as Lot D of the subdv. Plan (LRC) Psd-321628 instead of Lot D, of the subdivision plan LRC Psd-121628 renders the foreclosure null and void.

22) Equally telling is the procedural shortcut committed made in the Certificate of Sale and Notice of Sale which merely described the Property as -

TRANSFER CERTIFICATE OF TITLE NO. T-48796 ISABELA

A parcel of land (Lot D of the subdv. Plan (LRC) Psd-321628, being a portion of the land described on plan H-217548, LRC Rec. No. H. Pat.), situated at Salvacion, Alicia, Isabela, containing an area of 31,737 SQUARE METERS, more or less with improvements thereon. Bounded on the NE., by property of Ambrocio Simon; on the NE., by Lot C and Lot B; on the SE., by property of Victoria Respicio; and Macario M. Andaya; and on the W., by Lot E. Covered by T/D No. A-3468, assessed at P4,870.00.

instead of -A PARCEL OF LAND (Lot D, of the subdivision plan LRC Psd-121628, being a portion of the land described on plan H-217548, LRC Rec. No. H. Pat.), situated in the Barrio of Salvacion, Municipality of Alicia, Province of Isabela. Bounded on the NE., points 5-6 by Ambrosio Simon; on the NE., points 6-7 by Lot C; points 7-8 by Lot B, of the subdivision plan; on the SE., points 8-1 by Victorio Respicio; points 1-4 by Macario Andaya; and on the W., points 4-5 by Lot E, of the subdivision plan. Beginning at a point marked 1 on plan, being N. 15-42E., 5518.38m. from MBM Echague Cadastre, thence

S.84-03W., 200.02m. to point 2; S.83-44W., 200.67m to point 3;

S.83-56W., 124.32m. to point 4; N. 2-53E., 152.93m to point 5;

S.55-11E., 124.64m. to point 6; N.89-55E., 238.01m to point 7;

S.89-54E., 179.32m. to point 8; S.11-21W., 27.00m to point of beginning. Containing an area of THIRTY ONE THOUSAND SEVEN HUNDRED THIRTY SEVEN (31,737) SQUARE METRS, more or less. All points referred to are indicated on the plan and are marked on the ground as follows: Points 1-3 & 6 by Old BL and the rest by PS All Cyl. Conc. Mons., 15x-60cms.; bearings true; Decl, 0 deg. 55E.; Date of Original Survey, May 22, 1946 and that of the Subdivision Survey, Feb. 12, 1970.

23) In fact, even assuming for the sake of argument that there was due compliance with foreclosure proceedings, it should be stressed further that the incomplete and erroneous description of the Property in the Certificate of Sale render the registration of the said Certificate of Sale defective and thus void. 24) Accordingly, due to the defective registration of the Certificate of Sale which rendered it void, Plaintiffs right to redeem is deemed to have not even started as of date.

25) As a result of the foreclosure of the Property which has a market value of P836,620.00 per tax declaration, Plaintiffs suffered and continue to suffer actual damages in the amount of P100,000.00, exclusive of interest, penalties, costs and 20% attorneys fees.

26) Due to the foreclosure of the Property, Plaintiffs experienced sleepless nights and besmirched reputation for which DBP should be order to pay moral damages in the amount of P 50,000.00.27) To set an example for the public good and to serve as deterrent to the commission of similar acts by DBP, DBP should be sentenced to pay exemplary damages in the amount of P 50,000.00.

28) Further, Plaintiffs were constrained to engage the services of counsel to enforce its rights. Hence, they should be reimbursed for the amount of P 50,000.00 as and by way of attorneys fees plus P 5,000.00 appearance fees for every hearing, and 20% of the amount being collected.

ALLEGATIONS IN SUPPORT OF PLAINTIFFS

PRAYER FOR TEMPORARY RESTRAINNG ORDER AND/OR PRELIMINARY INJUNCTION29) Plaintiffs further replead the foregoing averments insofar as they may be relevant and material hereunder.30) Notwithstanding the want of legal demand by DBP to Plaintiffs for the payment of the Loan and the clear and absolute nullity of the foreclosure sale of Plaintiffs Property and of the Certificate of Sale, coupled with the fact that Plaintiffs even offered to redeem the Property in good faith, DBP has been unlawfully disposing the Property as shown by the Invitation to Bid it published and bidding it scheduled on October 5, 2012.31) DBP is now actually performing acts in violation of the rights and prejudicial to the interest of Plaintiffs.32) Plaintiffs are entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission and/or the continuance of the acts complained of.33) The commission and/or the continuance of the acts complained of during the litigation would certainly work injustice to the Plaintiffs.34) DBP is doing, or are attempting to do, or are procuring or suffering to be done, some acts probably, if not certainly, in violation of the rights of Plaintiffs respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.35) Plaintiffs are able and willing to execute or post a bond in favor of DBP or any party restrained/enjoined in an amount to be fixed by this Honorable Court for the issuance of the writ of preliminary injunction and/or temporary restraining order. The bond shall be conditioned to pay DBP or any party restrained/enjoined, all damages that they may sustain by reason of the injunction and/or restraining order, should this Honorable Court finally decide that the Plaintiffs are not entitled thereto.36) As to each items of the relief to be granted, great injury will be inflicted upon the herein Plaintiffs by the denial of the writ of preliminary injunction and/or temporary restraining order than will be inflicted upon DBP by the granting thereof.37) In view of the extreme urgency of the matter as the Plaintiff will suffer grave injustice and irreparable damage or injury before the application for the writ of preliminary injunction could be heard on notice, the issuance of a Temporary Restraining Order is proper.PRAYER

WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court that:

1) Due to the extreme urgency of the matter involved, a 20-day Temporary Restraining Order be issued upon the filing of this Complaint to restrain Defendant Development Bank of the Philippines, their assigns and/or successors-in-interest and all persons acting under them from unlawfully disposing and possessing any portion of the Property, and from unlawfully representing themselves as true and lawful owners of the Property;

2) The 20-day Temporary Restraining Order be converted to a Preliminary Injunction and after further hearing, to make the Injunction PERMANENT;3) After trial on the merits, the foreclosure proceedings and the Certificate of Sale involving the Property be declared null and void;

4) Transfer Certificate of Title No. T-398938 in the name of Development Bank of the Philippines be declared null and void and cancelled and Transfer Certificate of Title No. T-48796 in the name of Josefa Bartolome Gacula, married to Eduardo P. Gacula, be reinstated;

5) Defendant Development Bank of the Philippines be directed to render proper and true accounting of Plaintiffs obligation;

6) Defendant Development Bank of the Philippines be directed to pay Plaintiffs actual damages in the amount of P100,000.00, moral damages in the amount of P50,000.00, exemplary damages in the amount of P 50,000.00, attorneys fees in the amount of P50,000.00 and the costs of this suit.

Plaintiffs also pray for other just and equitable reliefs.

Cainta, Rizal for Cauayan City.

October 1, 2012BASILIO C. ALMAZAN, JR.Counsel for the Plaintiffs

No. 17 Tyler St., Filinvest East

Cainta, Rizal

PTR No. A-1453982, Jan. 10, 2012, Taguig CityIBP Lifetime No. 06320, Jan. 10, 2007, Isabela

Roll No. 42543

Admitted to the Bar in 1997

MCLE Compliance No. III-0014328Issued on April 26, 2010

VERIFICATION AND CERTIFICATIONWe, Sps. Eduardo P. Gacula and Josefa Bartolome Gacula, after having been duly sworn to in accordance with law, hereby depose and state that:

1) We are the Plaintiffs in this case.

2) We have caused the preparation of the foregoing Complaint; we have read the same and the allegations therein are true and correct of our own personal knowledge or based on authentic records.

3) We certify that we have not commenced any other action or proceedings involving the same issues in the Supreme Court, Court of Appeals or any tribunal and agency; that to the best of our knowledge no such action or proceeding is pending in the Supreme Court, Court of Appeals or divisions thereof or any tribunal or agency; if there is such other pending action or claim a complete statement of the present status thereof shall be made; if we should learn that a similar action or proceeding has been filed or is pending before the Supreme Court, Court of Appeals or divisions thereof or any tribunal or agency, we undertake to promptly inform aforesaid Court or tribunal and agency of the fact within five (5) days therefrom to this Court.

Eduardo P. GaculaJosefa Bartolome Gacula

SUBSCRIBED AND SWORN to before me, this __th day of October 2012, affiants exhibiting to me their Government IDs as follows:

Governemnt ID No.

Eduardo P. Gacula

Josefa Bartolome Gacula

Doc. No. __

Page No. __

Book No.__

Series of 2012 ANNEX A, Certified True Copy of Transfer Certificate of Title No. T-48796 registered in the name of Josefa Bartolome, married to Eduardo Gacula

Please see Entry No. 2829 on dorsal portion of TCT No. 48796

ANNEX B, Certificate of Sale

ANNEX C, Letter dated October 1, 2011

ANNEX D, letter dated October 6, 2011 from DBP

ANNEX E, Invitation to Bid by DBP

718