Case Digest (G.R. No. 57617)
Facts:
Fortune Homes, Inc. v. Court of Appeals, G.R. No. L-57617. May 24, 1984, the Supreme Court Second Division, Aquino, J., writing for the Court.
This case concerns the validity of an extrajudicial foreclosure initiated in 1968 on a 1965 mortgage over a 53-hectare lot in Bacolod City and the mortgagor's liability for a deficiency judgment of P9,850,915.75 with 6% interest per annum from June 30, 1973 until paid. Fortune Homes, Inc. (petitioner), the developer of Fortune Town Subdivision, mortgaged the lot to National Investment and Development Corporation (NIDC) as security for a $1,000,000 loan extended by Continental Illinois National Bank and Trust Company; NIDC acted as the primary obligor in that loan (Exh. B).
Fortune Homes failed to pay three amortizations on the loan. NIDC paid those amortizations and, invoking the mortgage's acceleration clause (Exh. D, par. [c]), moved for extrajudicial foreclosure. The sheriff conducted a public auction: the foreclosure sale is dated in the record as occurring in April 1968 (foreclosure set in question as April 13, 1968), and the sheriff sold the mortgaged property on April 29, 1968; NIDC was the highest bidder at P1,446,343.65 and received a sheriff's certificate thereafter (the certificate was annotated TCT-No. T-15305).
Two days before the one-year redemption period expired (July 30, 1969), Fortune Homes filed an injunction suit in the Court of First Instance seeking to enjoin consolidation of title and later amended the petition to annul the foreclosure sale. During the pendency of that suit, NIDC consolidated the title (April 19, 1974) and was issued a new title (No. 270 in the record).
The trial court (Court of First Instance) in its 1976 judgment found the extrajudicial foreclosure valid and, on NIDC's counterclaim, ordered Fortune Homes to pay a deficiency of P9,850,915.75 with interest. The Court of Appeals affirmed the trial court's judgment and clarified that interest on the deficiency is at six percent per annum. Fortune Homes then brought the case to the Supreme Court by a petition for review (seeking reversal of the lower courts' rulings).
On appeal Fortune Homes largely relied on factual contentions: that it did not receive the full loan proceeds (claiming only $800,000 was actually received), that PNB withheld $200,000 of the proceeds, that NIDC prevented fulfillment of the loan obligation, that it was not in default, and that the foreclosure was premature. These defenses were addressed below. The trial court and the Court of Appeals foun...(Pro-only)
Issues:
- Was the extrajudicial foreclosure of the 1965 mortgage valid?
- Is Fortune Homes, Inc. liable to pay NIDC the deficiency of P9,850,915.75 with interest at 6% per annum from June 30, 1973...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)