RPRP Ventures Management & Development Corporation v. Guadiz
REITERATIONFacts
The Antecedents: RPRP Ventures Management & Development Corporation (petitioner) obtained a loan of P43,000,000.00 from Metropolitan Bank and Trust Company (Metrobank) on September 26, 1997, secured by a real estate mortgage over a property in Makati City. By September 20, 1999, the outstanding loan balance had increased to P62,619,460.33. Petitioner defaulted on its payment obligations, prompting Metrobank to initiate extrajudicial foreclosure proceedings through Notary Public Atty. Enriqueto Magpantay. A Notice of Sale was published, and the foreclosure auction was scheduled for December 9, 1999, where Metrobank emerged as the highest bidder. Procedural History: Following the foreclosure sale, petitioner filed a Complaint with the Regional Trial Court (RTC) of Makati City, Branch 147, seeking the annulment of the extrajudicial foreclosure sale and the real estate mortgage contract. Petitioner argued that the foreclosure was void due to improper publication of the Notice of Sale, the newspaper's lack of general circulation, and non-payment of required filing fees. The RTC denied petitioner's application for a preliminary injunction. Petitioner then filed a Petition for Certiorari with the Court of Appeals (CA), which was initially dismissed as time-barred but later reinstated. The CA ultimately denied the petition, affirming the RTC's decision. Petitioner's subsequent motion for reconsideration was also denied, leading to the present petition. The Petition: Petitioner seeks review on certiorari under Rule 45 of the Rules of Court to nullify the CA's decision and resolution. The petition argues that the CA erred in upholding the extrajudicial foreclosure, particularly concerning the applicability of certain rules on publication and filing fees. Petitioner contends that the foreclosure sale was invalid because the publication of the Notice of Sale in the Challenger News was not done by raffle as required by P.D. 1079, and that the newspaper was not of general circulation. Furthermore, petitioner asserts that Metrobank should have paid filing fees under Section 7(c) of Rule 141. The petition also raises issues regarding the accuracy of the loan computation and the alleged premature foreclosure. The Supreme Court, however, found the petition unmeritorious, affirming the CA's ruling that the foreclosure was valid and that the procedural requirements were met, or were inapplicable to the circumstances of the case.
Issue(s)
Whether the extrajudicial foreclosure sale conducted by a notary public was null and void due to alleged violations of P.D. 1079 regarding publication by raffle and the newspaper's circulation. Whether the foreclosure sale was invalid due to Metrobank's alleged failure to pay filing fees under Section 7(c), Rule 141 of the Rules of Court. Whether petitioner was in default at the time of the extrajudicial foreclosure, considering its disputes over the loan computation and requests for deferment and restructuring. Whether the Court of Appeals erred in applying the ruling in China Banking Corporation v. Court of Appeals to the present case.
Ruling
The petition is denied. The Decision of the Court of Appeals dated September 4, 2001, and its Resolution dated January 17, 2002, are affirmed in toto.
Ratio Decidendi
On the validity of the extrajudicial foreclosure sale and publication requirements: The Court held that the publication of a notice of sale in an extrajudicial foreclosure of a real estate mortgage conducted by a notary public is governed by Act No. 3135, as amended. Presidential Decree No. 1079, as amended, which mandates publication by raffle, applies only to judicial notices or those issued by an Ex-Officio Sheriff or Clerk of Court. Therefore, the publication in Challenger News, even without a raffle, did not invalidate the foreclosure sale. Furthermore, Administrative Matter No. 99-10-05-0, which requires the raffling of all notices of public auction in all extrajudicial foreclosures of mortgage and the payment of filing fees, was issued on December 14, 1999, and took effect on January 15, 2000. Since Metrobank filed its petition for extrajudicial foreclosure on October 29, 1999, the said administrative matter was not yet in effect and thus not applicable to the case. On the payment of filing fees: The Court clarified that Section 7(c), Rule 141 of the Rules of Court, which requires the payment of docket fees for petitions for extrajudicial foreclosure, pertains to petitions filed before the Office of the Ex-Officio Sheriff. As the foreclosure in this case was conducted by a notary public, Section 7(c), Rule 141 was inapplicable. The Court reiterated that the filing fees requirement under Rule 141 applies to petitions filed with the Clerk of Court acting as Ex-Officio Sheriff, not to extrajudicial foreclosures conducted by a notary public. On whether petitioner was in default: The Court found that petitioner's numerous requests for deferment of payments and loan restructuring, without actually paying the amounts due, clearly indicated its inability to settle its obligation. The Court noted that even after Metrobank offered to restructure the loan and eventually abandoned the charge for penalty on interest, petitioner was still unable to pay its entire obligation. Therefore, petitioner was indeed in default when the extrajudicial foreclosure was initiated, validating Metrobank's right to foreclose. On the applicability of China Banking Corporation v. Court of Appeals: The Court found the petitioner's argument that the China Banking Corporation case was inapplicable to be without merit. While the factual dissimilarities might exist, the core principle that foreclosure is valid when debtors are in default was applicable. The Court pointed out that the petitioner's own complaint filed with the lower court contained allegations that clearly acknowledged its default, such as repeated requests for deferments and proposals for loan restructuring, which are indicative of an inability to pay. The Court emphasized that the essence of a real estate mortgage is the security for the payment of an obligation, and when the obligation is not paid when due, the mortgagee has the right to foreclose.
Main Doctrine
The publication of a notice of sale in an extrajudicial foreclosure of a real estate mortgage conducted by a notary public is governed by Act No. 3135, as amended, and not by Presidential Decree No. 1079, as amended, which applies to judicial notices or those issued by an Ex-Officio Sheriff or Clerk of Court. Furthermore, Administrative Matter No. 99-10-05-0, requiring raffling of notices and payment of filing fees, was not yet effective at the time of the filing of the petition for extrajudicial foreclosure.