Metropolitan Bank v. Peñafiel
REITERATIONFacts
The Antecedents: Respondents Erlinda and Romeo Peñafiel mortgaged two parcels of land in Mandaluyong City in favor of petitioner Metropolitan Bank and Trust Company, Inc. (Petitioner). The spouses defaulted on their loan obligation. Petitioner initiated an extrajudicial foreclosure proceeding under Act No. 3135. The Notice of Sale was published in 'Maharlika Pilipinas' on August 5, 12, and 19, 1999, and posted in three conspicuous places in Mandaluyong City. The public auction was held on September 7, 1999, where Petitioner emerged as the sole and highest bidder. Procedural History: Respondents filed a Complaint praying for the declaration of nullity of the extrajudicial foreclosure sale. The Regional Trial Court (RTC) ruled in favor of Petitioner, declaring the foreclosure sale valid. On appeal, the Court of Appeals (CA) reversed the RTC Decision, nullifying the foreclosure sale on the ground that the publication of the notice of sale did not comply with the requirement of being in a newspaper of general circulation in Mandaluyong City. The CA denied Petitioner's motion for reconsideration. The Petition: Petitioner filed a petition for review on certiorari, questioning the CA's ruling on the publication requirement and its finding that 'Maharlika Pilipinas' is not a newspaper of general circulation in Mandaluyong City.
Issue(s)
Whether the Court of Appeals erred in applying the provisions on the publication of judicial notices under Section 1 of P.D. No. 1079 to the extrajudicial foreclosure of mortgage by a notary public. Whether the Court of Appeals erred in ruling that 'Maharlika Pilipinas' is not a newspaper of general circulation in Mandaluyong City. Whether the Court of Appeals erred in reversing and setting aside the RTC Decision and declaring the extrajudicial foreclosure sale null and void.
Ruling
The petition is DENIED. The Court of Appeals Decision dated July 29, 2005 and Resolution dated July 31, 2006 are AFFIRMED.
Ratio Decidendi
On the issue of applying P.D. No. 1079: The Court clarified that the CA did not err in citing Fortune Motors (Phils.) Inc. v. Metropolitan Bank and Trust Company. The CA merely used the case to emphasize the importance of the newspaper being in general circulation in the place where the properties are located, not to literally apply P.D. No. 1079. The Court stressed that there is no distinction in the publication requirement for extrajudicial foreclosure sales conducted by a sheriff or a notary public; the crucial element remains general circulation in the location of the property. On whether 'Maharlika Pilipinas' is a newspaper of general circulation in Mandaluyong City: The Court held in the negative. While Petitioner argued that the newspaper had a bona fide subscription list and was published at regular intervals, and presented an Affidavit of Publication, these were insufficient. The publisher's testimony revealed that the newspaper was not offered to the public in general and that there were no subscribers in Mandaluyong City. Furthermore, the publisher admitted they "do not just offer it to anybody," indicating a lack of general availability to the public in the city where the property was located. The certification from the Mandaluyong City Business Permit and Licensing Office that 'Maharlika Pilipinas' had no business permit there further supported this conclusion. On the validity of the extrajudicial foreclosure sale: The Court affirmed the CA's ruling that the foreclosure sale was null and void. The failure to comply with the publication requirement under Section 3 of Act No. 3135, specifically the requirement that the newspaper be of general circulation in the city where the property is situated, renders the foreclosure sale invalid. The purpose of the notice is to ensure wide publicity and secure bidders, which would not be achieved if the publication is not in a newspaper accessible to the general public in the relevant locality. The affidavit of publication did not state that the newspaper was circulated in Mandaluyong City, which is a crucial omission under Section 3 of Act No. 3135.
Main Doctrine
For an extrajudicial foreclosure sale under Act No. 3135, the publication of the notice of sale must be in a newspaper of general circulation in the municipality or city where the property is located. The mere accreditation of a newspaper by an Executive Judge or an affidavit of publication is not determinative of its status as a newspaper of general circulation in the specific locality.