G.R. No. 187917 - Metropolitan Bank and Trust Co. vs. Spouses Miranda

Metropolitan Bank & Trust Company (Metrobank) is the petitioner.
Respondents are spouses Edmundo Miranda and Julie Miranda, who obtained credit accommodations and several loans from Metrobank.

On August 27, 1996, respondents acquired a loan of ₱4,000,000.00 secured by a real estate mortgage over a parcel of land in Poblacion, Santiago, Isabela (TCT No. 202288).
At their request, the loan was increased to ₱5,000,000.00 and the mortgage was accordingly amended.
Additional loans were later obtained: ₱1,000,000.00 on December 3, 1996, and another ₱1,000,000.00 on May 8, 1997.
These additional advances were secured by separate mortgages over lands in Dubinan and Mabini, Santiago, Isabela, evidenced by multiple transfer certificates (including TCT Nos. T-202288, T-180503, T-260279, and T-272664).

Facing payment difficulties, respondents requested an extension and restructuring of their loans, which was granted by Metrobank.
Promissory Notes were executed: PN No. 599773 for ₱6,400,000.00 and PN No. 599772 for ₱950,000.00, both due on February 24, 2002, with interest set at 17.250% per annum.
Deeds of real estate mortgage were amended to reflect an increased secured amount of ₱6,350,000.00, with the amendments recorded in the titles.

On August 25, 2000, Metrobank sent a demand letter to respondents for the settlement of an overdue account amounting to ₱8,512,380.15 (inclusive of interest and penalties).
Following non-payment by respondents, Metrobank initiated extrajudicial foreclosure, leading to an auction sale of the mortgaged properties on November 16, 2000, where Metrobank emerged as the highest bidder at ₱9,284,452.00.
A Certificate of Sale was issued on November 27, 2000 and later registered with the Registry of Deeds on November 29, 2000.

Claiming the extrajudicial foreclosure was void, respondents filed a complaint for annulment of the foreclosure proceedings and for damages, seeking a Temporary Restraining Order/Injunction at the RTC of Santiago City.
Their key allegations included:

Non-compliance with the publication requirement under Presidential Decree No. 1079 and Act No. 3135.
Being required to sign blank promissory notes and mortgage documents, with subsequent discoveries that the terms were different from what had been represented.
An assertion that the bank’s actions, particularly in setting interest rates and consolidating title, were irregular.

Metrobank responded by denying the allegations and asserting that all posting and publication requirements had been met.

The RTC of Santiago City rendered a decision on June 16, 2006 annulling the extrajudicial foreclosure proceedings based on:

Lack of evidence of proper publication (no affidavit of publication attached to the records).
Discovery that respondents had overpaid interest by ₱1,529,922.00, indicating that their loan account was not yet past due.
An irregular consolidation of title prior to the issuance of the sheriff’s Final Deed of Sale.

Declaring the Certificate of Sale and the Final Deed of Sale null and void.
Cancelling the titles transferred to Metrobank and restoring respondents’ original titles.
Awarding Metrobank ₱50,000.00 as attorney’s fees along with the cost of suit.

The Court of Appeals (CA) affirmed the RTC decision on June 30, 2008 and denied Metrobank’s motion for reconsideration on May 7, 2009.

Extrajudicial foreclosure proceedings enjoy a presumption of regularity, and respondents failed to prove non-compliance with the publication requirement.
There was compliance with the posting and publication requirement.
The computation of interest (allegedly 12% by the RTC) was erroneous since the agreed rates were 17% for part of the period.
A final deed of sale is not necessary for consolidating title.

The Supreme Court, however, noted that such factual determinations are generally for the trial court’s cognizance, and the lower courts’ findings were supported by the records.

Whether the extrajudicial foreclosure proceedings were void due to the failure to comply with the mandatory publication requirement.
Whether Metrobank met its duty to provide proper notice and attain posting/publication as required by law in its extrajudicial foreclosure process.
Whether the respondents’ alleged overpayment of interest (amounting to ₱1,529,922.00) invalidates the foreclosure proceedings on the grounds that the loan account was still current.
Whether the trial court and the CA were justified in taking judicial notice of the extrajudicial foreclosure proceedings’ records from another case.
Whether the consolidation of title by Metrobank, carried out prior to the issuance of the sheriff’s Final Deed of Sale, affected the validity of the foreclosure proceedings.