Fortune Motors (Phils.) Inc. v. Metropolitan Bank and Trust Company
REITERATIONFacts
The Antecedents: Fortune Motors (Phils.) Inc. (petitioner) obtained several loans from Metropolitan Bank and Trust Company (respondent bank), totaling P34,150,000.00. To secure these obligations, petitioner mortgaged certain real estate in favor of the bank. Due to financial difficulties, petitioner failed to pay the loans upon maturity. Consequently, respondent bank initiated extrajudicial foreclosure proceedings on the mortgaged property. Procedural History: The extrajudicial foreclosure sale was conducted, and the mortgaged property was sold to the respondent bank as the highest bidder for P47,899,264.91. Petitioner failed to redeem the property within the statutory period, leading to the consolidation of titles in the bank's name. Subsequently, petitioner filed a complaint with the Regional Trial Court (RTC) of Makati City, seeking to annul the extrajudicial foreclosure. The RTC rendered judgment annulling the foreclosure. Upon appeal by the respondent bank, the Court of Appeals reversed the RTC's decision. A subsequent motion for reconsideration filed by the petitioner was denied by the Court of Appeals. The Petition: Aggrieved by the Court of Appeals' decision, petitioner filed a petition for review before this Court. The petition raises several issues, primarily challenging the validity of the publication of the notice of extrajudicial foreclosure, arguing that the newspaper used was not of general circulation and that the notices were not duly received by the petitioner. Petitioner also assails alleged irregularities in the bidding, posting, and sale of the property, and contends that the Court of Appeals' decision was based on presumption. The core of the petition revolves around whether the foreclosure proceedings substantially complied with the requirements of Act No. 3135 and Presidential Decree No. 1079.
Issue(s)
Whether the publication of the notice of extrajudicial foreclosure was valid. Whether the notices of extrajudicial foreclosure and sale were duly received by the petitioner. Whether there were irregularities in the bidding, posting, publication, and sale of the mortgaged property. Whether the Court of Appeals erred in rendering a judgment based on presumption.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, upholding the validity of the extrajudicial foreclosure proceedings.
Ratio Decidendi
On the validity of the publication of the notice of extrajudicial foreclosure: The Court held that there was sufficient compliance with the requirements for publication in a newspaper of general circulation. The affidavit of publication executed by the publisher of "The New Record" constituted prima facie evidence of compliance. The Court clarified that a newspaper need not have the largest circulation, but must be published for the dissemination of local news and general information, have a bona fide subscription list, and be published at regular intervals. The contention that "The New Record" was not of general circulation due to its limited reach in Makati was dismissed, referencing the ruling in Bonnevie v. Court of Appeals. The Court also noted that P.D. No. 1079 and Act 3135 do not require the newspaper to be a daily publication, nor do they mandate the largest circulation. The petitioner's claim of not finding the newspaper was deemed unsubstantiated, especially since they looked for "Daily Record" instead of "New Record". On the due receipt of notices: The Court reiterated the settled rule that personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary under Section 3 of Act No. 3135. The law only requires posting and publication. The petitioner's claim of non-receipt of mailed notices was dismissed, as the return card indicated receipt. The Court found that the signature on the registry return card, despite being a dot with strokes, was sufficient to acknowledge receipt, and any discrepancy in the xerox copy was a mere misprint, not a forgery, as per the trial court's observation. On irregularities in bidding, posting, publication, and sale: The Court found no merit in the contention that the posting of notices in the Sheriff's Office, Assessor's Office, and Register of Deeds were not conspicuous public places. These offices are considered public places where interested parties congregate. The law, Act 3135, does not require posting on the mortgaged property itself, only in three public places in the city or municipality where the property is situated. The Court also found no irregularities in the bidding or sale process based on the presented evidence. On the Court of Appeals' reliance on presumption: The Court disagreed with the petitioner's assertion that the CA's decision was based solely on presumption. The records showed that the requirements of Act No. 3135 on extrajudicial foreclosure had been duly complied with by the Sheriff. The presumption of regularity in the performance of official functions was applied, but it was supported by evidence of compliance with the legal requirements.
Main Doctrine
Compliance with the statutory requirements for publication and posting of notices in extrajudicial foreclosure proceedings is essential for the validity of the sale. Personal notice to the mortgagor is not required, and substantial compliance with procedural rules, such as the proper designation of public places for posting and the use of a newspaper of general circulation, validates the foreclosure.