Fortune Motors (Phils.) Inc. vs. Metropolitan Bank and Trust Company

An extrajudicial foreclosure sale is valid where the notice of sale was published in a newspaper of general circulation, posted in at least three public places of the municipality or city where the property is situated, and the mortgagor was not personally notified, as Act 3135 does not require personal notice to the mortgagor.

Fortune Motors (Phils.) Inc. was a corporate borrower that obtained a series of loans from Metropolitan Bank and Trust Company between 1982 and 1983, aggregating P34,150,000.00 including accrued interest, secured by a real estate mortgage over certain properties. The governing statutory framework for the foreclosure was Act No. 3135, as amended by Act No. 4118, which governs extrajudicial foreclosure of real estate mortgages, and Presidential Decree No. 1079, which prescribes the requirements for publication of judicial notices and advertisements in newspapers of general circulation.

Fortune Motors (Phils.) Inc. obtained four loans from Metropolitan Bank and Trust Company: P20 Million on March 31, 1982; P8 Million on April 30, 1983; P2,500,000.00 on June 8, 1983; and P3 Million on August 16, 1983. On January 6, 1984, the bank consolidated the P8 Million and P3 Million loans into a single promissory note amounting to P12,650,000.00, which included P1,650,000.00 in accrued interest. The total obligation stood at P34,150,000.00, secured by a real estate mortgage over certain properties of petitioner.

Due to financial constraints, Fortune Motors failed to pay the loans upon maturity. On May 25, 1984, Metrobank initiated extrajudicial foreclosure proceedings. Senior Deputy Sheriff Pablo Y. Sy conducted the foreclosure, sending copies of the Notice of Extrajudicial Sale to the opposing parties by registered mail. He posted copies of the notice at three conspicuous public places in Makati — the Office of the Sheriff, the Assessor's Office, and the Register of Deeds — and executed Certificates of Posting on May 20, 1984. The notice was published on June 2, 9, and 16, 1984 in three issues of "The New Record," a newspaper published by Daily Record, Inc. An affidavit of publication was executed on June 19, 1984 by Teddy F. Borres, the newspaper's publisher.

The mortgaged property was thereafter sold at public auction for P47,899,264.91 to Metrobank as the highest bidder. Fortune Motors failed to redeem the property within the one-year redemption period, and titles were consolidated in the name of the bank, which was thereby entitled to and in fact possessed the property.

Fortune Motors then filed a complaint for annulment of the extrajudicial foreclosure, covering TCT Nos. 461087, 432685, 457590, 432684, S-54185, S-54186, S-54187, and S-54188. The trial court rendered judgment on December 27, 1991 annulling the foreclosure. Metrobank appealed to the Court of Appeals, which reversed the lower court's decision. Fortune Motors' motion for reconsideration was denied on April 26, 1994, and its petition before the Supreme Court was denied on May 30, 1994, prompting the present motion for reconsideration.

• Qualification of Newspaper: Petitioner contended that "Daily Record" (sic; the newspaper's actual name is "New Record") does not qualify as a newspaper of general circulation, arguing that its circulation in Makati in 1984 was only 1,000 to 1,500 per week, reaching merely .004% of the population, and that this falls short of the standard contemplated by law.
• Place of Publication and Circulation: Petitioner argued that "New Record" is published and edited in Quezon City and not in Makati where the foreclosed property is situated, and that Makati was not mentioned in the publisher's affidavit enumerating the places of circulation.
• Frequency of Publication: Petitioner claimed that "New Record" is not a daily newspaper because it is published only once a week.
• Availability at Newsstands: Petitioner alleged that its representative could not find a copy of the newspaper at a newsstand, implying it is not of general circulation.
• Designation for Publication: Petitioner contended that since it was the Executive Judge who caused the publication of the notice of sale and not the Sheriff, the extrajudicial foreclosure should be annulled.
• Non-Receipt of Notices: Petitioner claimed it did not personally receive the notices of extrajudicial foreclosure and sale supposedly sent by Metrobank, pointing out that the signature on the registry return card appears to be only a dot and that the photostat copy does not contain a signature at all. Petitioner also noted it had transferred to a different address but the notice was sent to its old address.
• Posting Irregularities: Petitioner assailed the posting of notices at the Office of the Sheriff, Office of the Assessor, and Register of Deeds as not being the conspicuous public places required by law, and questioned the non-posting of the notice on the property itself.
• Decision Based on Presumption: Petitioner maintained that the Court of Appeals decision was mainly based on the presumption of regularity of performance of official function rather than on actual compliance with legal requirements.

• Registry Return Card: Respondent argued that the fact that it received the registry return card from the mail in regular course shows that the postal item had been received by the addressee; otherwise, the mailed item should have been stamped "Returned to Sender," still sealed with all postal markings and the return card still attached.

• Validity of Publication: Whether the publication of the notice of extrajudicial foreclosure in "New Record" complied with the requirement that it be published in a newspaper of general circulation.
• Receipt of Notices: Whether the notices of extrajudicial foreclosure and sale were duly received by petitioner, and whether personal notice to the mortgagor is required.
• Posting and Sale Irregularities: Whether there were irregularities in the posting of notices and the conduct of the sale, including the failure to post the notice on the mortgaged property itself.
• Basis of the Appellate Decision: Whether the Court of Appeals rendered judgment based on presumption rather than on actual compliance with legal requirements.

• Validity of Publication: Yes. The publication was valid; "New Record" qualified as a newspaper of general circulation under P.D. 1079 and Act 3135, as evidenced by the publisher's affidavit of publication and corroborated by the testimony of the newspaper's executive editor.
• Receipt of Notices: Yes. The notices were duly received, and in any event, personal notice to the mortgagor is not required under Section 3 of Act 3135, which requires only posting and publication.
• Posting and Sale Irregularities: No. The posting at the Sheriff's Office, Assessor's Office, and Register of Deeds satisfied the statutory requirement of posting in at least three public places, and Act 3135 does not require posting on the mortgaged property itself.
• Basis of the Appellate Decision: No. The Court of Appeals decision was not based on presumption but on actual compliance with the requirements of Act 3135, as duly established by the records.

• Validity of Publication: The affidavit of publication executed by Teddy F. Borres, publisher of "New Record," stated that it is a newspaper edited in Manila and Quezon City and of general circulation in the cities of Manila, Quezon City, and the Provinces of Rizal, published every Saturday by Daily Record, Inc. This constitutes prima facie evidence of compliance with the requisite publication, consistent with the ruling in Bonnevie vs. Court of Appeals. The qualification of a newspaper of general circulation does not require the largest circulation; it is enough that it is published for the dissemination of local news and general information, has a bona fide subscription list of paying subscribers, and is published at regular intervals. Pedro Deyto, the newspaper's executive editor and a witness for petitioner, testified that "New Record" contains news, has subscribers from Metro Manila and all over the Philippines, is published once a week, and had been in existence since before 1958. Petitioner's argument that Makati was not mentioned in the affidavit was untenable because in 1984, Makati was still part of the province of Rizal, which was among the places enumerated. Neither P.D. 1079 nor Act 3135 requires that the newspaper be a daily or have the largest circulation. Petitioner's representative's failure to find the newspaper at a newsstand was attributable to his looking for "Daily Record" rather than the correct name "New Record."

• Receipt of Notices: Personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary. Section 3 of Act No. 3135, as amended by Act No. 4118, requires only the posting of the notice of sale in three public places and the publication of that notice in a newspaper of general circulation. The lack of personal notice is therefore not a ground to set aside the foreclosure sale. As to the mailed notice, the receipt of the registry return card in regular course indicates that the postal item was received by the addressee; otherwise, it would have been stamped "Returned to Sender." After close scrutiny of the registry return card, the Court found strokes before and after the dot that appear to be a signature signifying receipt. The trial court itself found no cogent reason to overcome the presumption that Sheriff Sy performed his task regularly, and found the xerox copy to be a misprint rather than a forgery. Petitioner's claim that it had transferred to a different address was unavailing because it failed to notify respondent of any change of address, and respondent sent the notice to petitioner's official address.

• Posting and Sale Irregularities: Act 3135 does not require posting of the notice of sale on the mortgaged property. Section 3 merely requires that the notice be posted for not less than twenty days in at least three public places of the municipality or city where the property is situated. The Sheriff's Office, the Assessor's Office, and the Register of Deeds are certainly the public places contemplated by law, as these are places where people interested in purchasing real estate congregate. The contention regarding non-posting on the property itself was thus without legal basis.

• Basis of the Appellate Decision: A perusal of the records indubitably showed that the requirements of Act No. 3135 on extrajudicial foreclosure had been duly complied with by Senior Deputy Sheriff Sy. The Court of Appeals decision was therefore not based merely on the presumption of regularity but on actual compliance with statutory requisites as established by the evidence.

• Newspaper of General Circulation — A newspaper of general circulation is one published for the dissemination of local news and general information, with a bona fide subscription list of paying subscribers, and published at regular intervals. It need not have the largest circulation so long as it is of general circulation. The affidavit of publication executed by the publisher constitutes prima facie evidence of compliance with the requisite publication. In this case, "New Record" qualified as a newspaper of general circulation based on its publisher's affidavit and the testimony of its executive editor, notwithstanding its weekly publication schedule and relatively modest circulation.

• No Personal Notice Required in Extrajudicial Foreclosure — Section 3 of Act No. 3135, as amended by Act No. 4118, requires only the posting of the notice of sale in at least three public places and the publication of that notice in a newspaper of general circulation. Personal notice to the mortgagor is not required, and the lack thereof is not a ground to set aside the foreclosure sale. The Court applied this doctrine to reject petitioner's claim that it did not personally receive the notices.

• Posting Requirements Under Act 3135 — The notice of sale must be posted for not less than twenty days in at least three public places of the municipality or city where the property is situated. Act 3135 does not require posting on the mortgaged property itself. The Sheriff's Office, the Assessor's Office, and the Register of Deeds qualify as the public places contemplated by law.

• Presumption of Regularity in Official Functions — Officers involved in extrajudicial foreclosure are presumed to have performed their tasks regularly and in accordance with the rules. In this case, the presumption was not the sole basis of the ruling; actual compliance with statutory requisites was established by the records.

• "To be a newspaper of general circulation, it is enough that 'it is published for the dissemination of local news and general information; that it has a bona fide subscription list of paying subscribers; that it is published at regular intervals.'" — This passage, quoting Basa vs. Mercado, articulates the canonical definition of a newspaper of general circulation and is frequently cited in subsequent jurisprudence on publication requirements.

• "Settled is the rule that personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary." — This statement encapsulates the settled doctrine that Act 3135 requires only posting and publication, not personal notice to the mortgagor, and is a cornerstone principle in foreclosure law.

• "Act 3135 does not require posting of the notice of sale on the mortgaged property." — This clarifies a common misconception about the posting requirement, confirming that the three public places need not include the property itself.

• Bonnevie vs. Court of Appeals, 125 SCRA 122 (1983) — Followed. Established that the affidavit of publication executed by the publisher constitutes prima facie evidence of compliance with the requisite publication, and that a newspaper need not have the largest circulation so long as it is of general circulation.
• Sadang vs. GSIS, 18 SCRA 491 — Cited as supporting authority for the proposition that the affidavit of publication constitutes prima facie evidence of compliance.
• Basa vs. Mercado, 61 Phil. 632 — Cited for the definition of a newspaper of general circulation: published for the dissemination of local news and general information, with a bona fide subscription list of paying subscribers, and published at regular intervals.
• Banta vs. Pacheco, 74 Phil. 67 — Cited for the principle that a newspaper need not have the largest circulation so long as it is of general circulation.
• Olizon vs. Court of Appeals, 236 SCRA 148 (1994) — Cited as authority for the rule that personal notice to the mortgagor is not required in extrajudicial foreclosure proceedings.
• Philippine National Bank vs. International Corporate Bank, 199 SCRA 508 (1991) — Cited as authority for the rule on lack of personal notice in extrajudicial foreclosure.
• Cruz vs. Court of Appeals, 191 SCRA 170 (1990) — Cited as authority for the rule on lack of personal notice in extrajudicial foreclosure.
• Cortes vs. Intermediate Appellate Court, 175 SCRA 545 (1989) — Cited as authority for the rule on lack of personal notice in extrajudicial foreclosure.

• Section 3, Act No. 3135, as amended by Act No. 4118 — Governs extrajudicial foreclosure of real estate mortgages. Requires posting of the notice of sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and publication of the notice in a newspaper of general circulation. Does not require personal notice to the mortgagor. Applied to uphold the validity of the foreclosure proceedings.
• Presidential Decree No. 1079 — Prescribes the requirements for publication of judicial notices and advertisements in newspapers of general circulation. Requires that the newspaper be authorized by law to publish and regularly published for at least one year before the date of publication. Does not require that the newspaper be a daily or have the largest circulation. Section 2 provides that the executive judge shall personally distribute judicial notices or advertisements to qualified newspapers by raffle. Applied to validate the publication in "New Record" and the Executive Judge's role in causing publication.

Padilla, Bellosillo, Vitug, and Kapunan, JJ., concurred.