Case Summary (G.R. No. 115068)
Petitioner and Respondent
Petitioner: Fortune Motors (Phils.) Inc.
Respondents: Metropolitan Bank and Trust Company; Court of Appeals (in its capacity as reviewing tribunal)
Key Dates
– March 31, 1982 to August 16, 1983: Loans granted (totaling ₱34,150,000)
– January 6, 1984: Consolidation of two promissory notes into one for ₱12,650,000 (including accrued interest)
– May 20–25, 1984: Posting of Extrajudicial Sale notices; initiation of foreclosure proceedings
– June 2, 9, 16, 1984: Publication in The New Record
– Auction sale date 1984: Property sold to bank for ₱47,899,264.91; one‐year redemption period expired
– December 27, 1991: Trial court annuls foreclosure sale
– May 14, 1992: Bank appeals to Court of Appeals
– April 26, 1994: CA denies reconsideration; Fortune Motors petitions the Supreme Court
– November 28, 1996: Supreme Court renders decision
Applicable Law
– 1987 Philippine Constitution (due‐process and property‐rights clauses)
– Act No. 3135, as amended by Act No. 4118 (governing extrajudicial foreclosure of real‐estate mortgages)
– Presidential Decree No. 1079 (defining qualified newspapers and publication requirements)
Factual Background
Fortune Motors mortgaged real estate to secure multiple loans. After default, the bank caused notices of extrajudicial sale to be mailed by registered mail, posted in three public offices of Makati (Sheriff’s Office, Assessor’s Office, Register of Deeds), and published in The New Record. The property was auctioned to the bank as highest bidder. Fortune Motors did not redeem within one year, and titles were consolidated in the bank’s name. The trial court found procedural defects and annulled the sale; the Court of Appeals reversed; Fortune Motors advanced four errors before the Supreme Court.
Issue I – Validity of Publication in The New Record
Fortune Motors argued that The New Record lacked general circulation and failed to meet statutory standards. Relying on Bonnevie v. Court of Appeals and statutory definitions in PD 1079, the Court held that:
- The publisher’s affidavit constitutes prima facie proof of qualification and circulation.
- A “newspaper of general circulation” need only be regularly published for at least one year, maintain a bona fide subscription list, and disseminate local and general information.
- The New Record satisfied these criteria; its coverage in Manila, Quezon City and former Rizal Province (including Makati) was sufficient.
Issue II – Requirement of Personal Notice to Mortgagor
Fortune Motors contended that it never received the mailed notices. The Court ruled that under Act No. 3135 personal notice is unnecessary:
– Only posting in three public places and publication in a qualified newspaper are required.
– Registry return cards bearing post‐office markings and a recipient’s signature (even if abbreviated) create a presumption of proper delivery.
Issue III – Posting of Sale Notices
It was alleged that posting in the Sheriff’s Office, Assessor’s Office and Register of Deeds was not “conspicuous” and that notices should have been posted on the property itself. The Supreme Court clarified that:
– Section 3 of Act No. 3135 mandates posting for at least twenty days in three public places within the
Case Syllabus (G.R. No. 115068)
Facts
- Fortune Motors (Phils.) Inc. obtained four loans from Metropolitan Bank and Trust Company:
• P20,000,000.00 on March 31, 1982
• P8,000,000.00 on April 30, 1983
• P2,500,000.00 on June 8, 1983
• P3,000,000.00 on August 16, 1983 - On January 6, 1984, the P8 M and P3 M loans were consolidated into one promissory note of P12,650,000.00 (including P1,650,000.00 accrued interest).
- To secure a total obligation of P34,150,000.00, petitioner mortgaged several real estate titles in favor of the bank.
- Petitioner defaulted upon maturity; the bank initiated extrajudicial foreclosure on May 25, 1984.
Extrajudicial Foreclosure Proceedings
- Senior Deputy Sheriff Pablo Y. Sy conducted the foreclosure.
- Notices of Extrajudicial Sale were:
• Sent by registered mail to opposing parties
• Posted at three public places in Makati—Sheriff’s Office, Assessor’s Office, Register of Deeds—with Certificates of Posting dated May 20, 1984
• Published in The New Record on June 2, 9, and 16, 1984 (Affidavit of Publication dated June 19, 1984 by Teddy F. Borres) - The property was auctioned to the mortgagee bank for P47,899,264.91 as highest bidder.
- Petitioner failed to redeem within one year; titles consolidated in the bank’s name and possession was taken.
Procedural History
- Petitioner filed for annulment of the extrajudicial foreclosure covering eight Torrens Certificate titles.
- On December 27, 1991, the Regional Trial Court of Makati annulled the foreclosure.
- Respondent bank appealed to the Court of Appeals on May 14, 1992; CA reversed the trial court’s decision.
- Petitioner’s motion for reconsideration before CA denied on April 26, 1994.
- Petitioner filed a petition for review with the Supreme Court, denied on May 30, 1