Fortune Motors v. Metropolitan Bank

G.R. No. 115068 (November 28, 1996)

SC upheld Metropolitan Bank's foreclosure; ruled public notice sufficient, personal notice not required.

Facts:

Fortune Motors (Phils.) Inc. (petitioner) obtained several loans from Metropolitan Bank and Trust Company (respondent) totaling P34,150,000.00, secured by a mortgage on certain real estate. Due to financial difficulties, the petitioner defaulted on the loans, prompting the bank to initiate extrajudicial foreclosure proceedings. The foreclosure was conducted by Senior Deputy Sheriff Pablo Y. Sy, who posted notices of the sale in three public places in Makati and published the notice in "The New Record," a newspaper. The property was sold at public auction to the bank for P47,899,264.91. The petitioner failed to redeem the property within the one-year redemption period, leading to the consolidation of the titles in the bank's name.

Subsequently, the petitioner filed a complaint to annul the extrajudicial foreclosure, which the trial court initially granted. However, the Court of Appeals reversed this decision, leading the petitioner to appeal to the Supreme Court.

Legal Issues:

  1. Was the publication of the notice of extrajudicial foreclosure valid?
  2. Were the notices of extrajudicial foreclosure and sale duly received by the petitioner?
  3. Were there irregularities in the bidding, posting, publication, and sale of the property?
  4. Did the Court of Appeals err in rendering a judgment based on presumptions?

Arguments:

Petitioner’s Arguments:

  • The newspaper "The New Record" did not qualify as a newspaper of general circulation, as its reach was minimal compared to the population of Makati.
  • The publication did not meet the legal requirements since it was not a daily newspaper and was published outside Makati.
  • The notices of foreclosure were not personally received, which should invalidate the foreclosure.
  • The posting of notices in the Sheriff’s Office, Assessor’s Office, and Register of Deeds did not constitute compliance with the law regarding public places.

Respondent’s Arguments:

  • The publication in "The New Record" complied with the legal requirements for a newspaper of general circulation, as evidenced by the affidavit of publication.
  • Personal notice to the mortgagor is not required under the law; posting and publication suffice.
  • The places where the notices were posted are recognized public places where interested parties would look for such notices.
  • The presumption of regularity in the performance of official duties supports the validity of the foreclosure process.

Court’s Decision and Legal Reasoning:

The Supreme Court affirmed the decision of the Court of Appeals, ruling that the publication of the notice of extrajudicial foreclosure was valid. The Court held that the newspaper met the criteria for general circulation, as it was published regularly and had a bona fide subscription list. The Court also noted that the law does not require the newspaper to be a daily publication or to have the largest circulation.

Regarding the notices, the Court ruled that personal notice was not necessary, and the mailing of the notice, evidenced by the registry return card, indicated that the petitioner had received the notice. The Court found that the posting of notices in the designated public places was sufficient under the law, and the locations chosen were appropriate for the purpose of informing the public.

The Court also dismissed the petitioner’s claims of irregularities in the bidding and sale process, emphasizing that the requirements of the law had been substantially complied with.

Significant Legal Principles Established:

  • A newspaper qualifies as one of general circulation if it is regularly published and has a bona fide subscription list, regardless of its daily status or circulation size.
  • Personal notice to the mortgagor in extrajudicial foreclosure proceedings is not required; compliance with posting and publication suffices.
  • The presumption of regularity applies to the performance of official duties by public officers involved in the foreclosure process.