Ong v. Premier Development Bank
REITERATIONFacts
The Antecedents: Spouses Victor and Grace Ong, acting as Director and Treasurer of Kenlene Laboratories, Inc., obtained a loan of ₱10,000,000.00 from Premier Development Bank (PDB). The loan was secured by a real estate mortgage over their residential property. Spouses Ong executed a promissory note obligating them to pay the loan with interest at 31% per annum by September 27, 1997. Due to failure to pay monthly amortizations, PDB initiated extra-judicial foreclosure proceedings under Act No. 3135. A Notice of Sheriff's Sale was issued, and after several postponements at the request of Spouses Ong, the mortgaged property was sold to PDB on July 22, 1993, for ₱18,914,349.37. A certificate of sale was issued and annotated on the title. Within the redemption period, PDB filed a petition for a writ of possession, which was granted by the RTC. Spouses Ong's motion for reconsideration was denied. They then filed a petition for prohibition and preliminary injunction with the Court of Appeals (CA) to enjoin the foreclosure sale and the implementation of the writ of possession, which was dismissed by the CA. This dismissal was affirmed by the Supreme Court upon review. Procedural History: On July 19, 1994, Spouses Ong filed an action for annulment of the extra-judicial foreclosure before the Regional Trial Court (RTC), alleging non-compliance with Act No. 3135, specifically the failure to post the notice of sale in public places and the alleged lack of general circulation of the newspaper 'Alppa Times' where the notice was published. They also claimed over-computation of interests and penalties. PDB countered that the foreclosure proceedings were regular and complied with the law. The RTC dismissed the complaint, finding that Spouses Ong voluntarily entered into a valid loan contract, defaulted in their payments, and that the foreclosure proceedings were regular. The RTC noted that Spouses Ong did not question the foreclosure during the writ of possession proceedings and that the affidavit of publication and certification from the Clerk of Court regarding 'Alppa Times' were sufficient. The CA affirmed the RTC's decision, holding that PDB complied with the notice requirements, the publication had sufficient publicity, and Spouses Ong failed to discharge the burden of proving non-compliance. The CA also found 'Alppa Times' to be a newspaper of general circulation and that Spouses Ong failed to prove errors in the loan computation. The Petition: Spouses Ong filed a petition for review on certiorari with the Supreme Court, raising the sole issue of whether the CA erred in sustaining the validity of the extra-judicial foreclosure proceedings.
Issue(s)
Whether the Court of Appeals erred in sustaining the validity of the extra-judicial foreclosure proceedings. Whether there was compliance with the notice and publication requirements under Act No. 3135. Whether 'Alppa Times' was a newspaper of general circulation. Whether the proper party executed the certificate of sale. Whether the respondent bank's petition for foreclosure specified the amount sought to be liquidated. Whether the respondent bank's computation of the obligation was in accordance with the promissory notes.
Ruling
The petition is DENIED. The Court of Appeals did not err in sustaining the validity of the extra-judicial foreclosure proceedings.
Ratio Decidendi
On the Issue of Validity of Extra-Judicial Foreclosure Proceedings: The Court held that the issue of whether the legal requirements for a valid foreclosure sale under Act No. 3135 were followed is a question of fact. Such factual findings by the RTC and CA are generally binding and conclusive upon the Supreme Court, unless exceptions apply. In this case, the RTC and CA found that the foreclosure proceedings enjoyed the presumption of regularity in the absence of contrary evidence. The burden of proof rests upon Spouses Ong to present sufficient evidence to overcome this presumption, which they failed to do. Their allegations of non-compliance were unsubstantiated, while PDB presented authenticated documents such as an Affidavit of Publication, Certification from the Office of the Clerk of Court, Notice of Sheriff's Sale, and Certificate of Posting, all proving the regularity of the proceedings. On Compliance with Notice and Publication Requirements: The Court affirmed the findings of the lower courts that PDB complied with the notice requirements under Act No. 3135. The CA noted that the primary objective of the notice of sale was satisfied through sufficient publicity via newspaper publication, which has a far-reaching effect. The RTC also found that the Notice of Sale was posted in a conspicuous place within the Municipal Hall of San Juan, and the presumption of regularity in the sheriff's duty prevailed. Spouses Ong failed to present convincing evidence of non-compliance with the posting requirement. On 'Alppa Times' as a Newspaper of General Circulation: The RTC found that 'Alppa Times' was duly accredited as a publisher of notices of sheriff's sale by the Office of the Clerk of Court. Spouses Ong's self-serving statement that it was not a newspaper of general circulation could not prevail over the certification issued by the Clerk of Court. The CA further reasoned that it was sufficient that the newspaper was published for the dissemination of local news and general information, had a bona fide subscription list, and was published at regular intervals. The newspaper dealer and vendor presented by Spouses Ong were not considered expert witnesses competent to declare otherwise. On the Proper Party Executing the Certificate of Sale: While not explicitly detailed in the ratio, the Court's affirmation of the lower courts' decisions implies that the proper parties executed the necessary documents, including the certificate of sale, in accordance with law and procedure. The documents presented by PDB, which were given credence by the RTC and CA, supported the regularity of the foreclosure process. On Specification of Amount in Petition for Foreclosure: The Court agreed with the lower courts that Spouses Ong defaulted on their loan obligations, warranting the foreclosure. The loan documents presented by PDB, including promissory notes and the real estate mortgage, proved the existence of the debt and the default. The issue of whether the petition for foreclosure specified the exact amount to be liquidated was implicitly resolved by the affirmation of the foreclosure's validity, as the underlying obligation was established. On Computation of Loan Obligation: The Court found no error in PDB's computation of Spouses Ong's total loan obligation. The presented loan documents confirmed that Spouses Ong owed PDB a sum of money and failed to settle the obligation. The petitioners' default justified the bank's exercise of its rights under the loan and mortgage contracts. Spouses Ong failed to prove any error in the computation.
Main Doctrine
The burden of proof to show non-compliance with the statutory requisites for extra-judicial foreclosure sale rests upon the mortgagor who alleges such non-compliance. In the absence of sufficient evidence to overcome the presumption of regularity in the performance of official duty, the foreclosure proceedings are considered valid.