FORTUNE MOTORS vs.

METRO BANK
1. EXTRAJUDICIAL FORECLOSURE PROCEEDINGS; PUBLICATION, REQUIRED; NEWSPAPER OF GENERAL CIRCULATION, CONSTRUED. - 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.' (Basa v. Mercado, 61 Phil. 632). The newspaper need not have the largest circulation so long as it is of general circulation. (Banta v. Pacheco, 74 Phil. 67). 2. ID.; ID.; ID.; ID.; SUBSTANTIAL COMPLIANCE OF THE LEGAL REQUIREMENTS IN THE CASES AT BAR. - In the case at bench, there was sufficient compliance with the requirements of the law regarding publication of the notice in a newspaper of general circulation. A perusal of Presidential Decree (P.D.) No. 1079 and Act 3135 shows that the said laws do not require that the newspaper which publishes judicial notices should be a daily newspaper. Under P.D. 1079, for a newspaper to qualify, it is enough that it be a "newspaper or periodical which is authorized by law to publish and which is regularly published for at least one (1) year before the date of publication" which requirement was satisfied by New Record. Nor is there a requirement, as stated in the said law, that the newspaper should have the largest circulation in the place of publication. 3. ID.; ID.; REQUIREMENTS AS PROVIDED FOR UNDER SEC. 3 OF ACT No. 3135; PERSONAL NOTICE TO THE MORTGAGOR NOT INCLUDED. - Settled is the rule that personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary. Section 3 of Act No. 3135 governing extrajudicial foreclosure of real estate mortgages, 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. It is pristine clear from the above provision that the lack of personal notice to the mortgagor, herein petitioner, is not a ground to set aside the foreclosure sale. Act 3135 does not require posting of the notice of sale on the

mortgaged property. Section 3 of the said law merely requires that the notice of the sale 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 aforementioned places, to wit: 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.

FACTS
Fortune Motors obtained loans in different dates from the Metropolitan Bank and Trust company Metrobank consolidated the loans of P8 Million and P3 Million into one promissory note, which amounted toP12,650,000.00. This included the interest that had accrued thereon. To secure the obligation in the total amount of P34,150,000.00, petitioner mortgaged certain real estate in favor of respondent bank. Due to financial constraints, petitioner failed to pay the loan upon maturity. Consequently on May 25, 1984, respondent bank initiated extrajudicial foreclosure proceedings and in effect, foreclosed the real estate mortgage. The extrajudicial foreclosure was actually conducted by Senior Deputy Sheriff Pablo Y. Sy who had sent copies of the Notice of Extrajudicial Sale to the opposing parties by registered mail. In accordance with law, he posted copies of the Notice of Sheriffs Sale at three conspicuous public places in Makati 1. the office of the Sheriff, 2. the Assessors office 3. and the Register of Deeds in Makati. He thereafter executed the Certificates of Posting on May 20, 1984. The said notice was in fact published on June 2, 9 and 16, 1984 in three issues of The New Record. An affidavit of publication, dated June 19, 1984,[2] was executed

by Teddy F. Borres, publisher of the said newspaper. Subsequently, the mortgaged property was sold at public auction for P47,899,264.91 to the mortgagee bank, the highest bidder. Petitioner failed to redeem the mortgaged property within the one-year redemption period and so, the titles thereto were consolidated in the name of respondent bank by which token the latter was entitled to the possession of the property mortgaged and, in fact possessed the same. Petitioner then filed a complaint for the annulment of the extrajudicial foreclosure. RTC DECISION: the trial court rendered judgment annulling the extrajudicial foreclosure of the mortgage. CA DECISION: reversed the decision rendered by the lower court. Subsequently, the motion for Reconsideration filed by petitioner was denied on April 26, 1994.

who was the executive editor of the said newspaper and who was a witness for petitioner. b. whether or not it is valid to plublish the notice in QC and not in Makati. YES! In 1984, when the publishers affidavit relied upon by petitioner was executed, Makati, Mandaluyong, San Juan, Paraaque et. al., were still part of the province of Rizal. Apparently, this is the reason why in the New Records affidavit of publication executed by its publisher, the enumeration of the places where it was being circulated, only the cities of Manila, Quezon, Caloocan, Pasay, Tagaytay, et. al., were named. Furthermore, as aptly ratiocinated by the Court of Appeals: For what is important is that a paper should be in general circulation in the place where the properties to be foreclosed are located in order that publication may serve the purpose for which it was intended.[10] Petitioner also claims that the New Record is not a daily newspaper because it is published only once a week. A perusal of Presidential Decree (P.D.) No. 1079 and Act 3135 shows that the said laws do not require that the newspaper which publishes judicial notices should be a daily newspaper. Under P.D. 1079, for a newspaper to qualify, it is enough that it be a newspaper or periodical which is authorized by law to publish and which is regularly published for at least one (1) year before the date of publication which requirement was satisfied by New Record. Nor is there a requirement, as stated in the said law, that the newspaper should have the largest circulation in the place of publication. 2. EXECUTIVE JUDGE CAUSED THE PUBLICATION. Whether or not the extrajudicial foreclosure should be annulled since it was the executive Judge who caused the publication of the notice of the sale and not the sheriff. NO, because Sec. 2 of P.D. No. 1079 clearly provides that: The executive judge of the court of first instance shall designate a regular working day and a definite time each week during which the said judicial notices or advertisements shall be distributed personally by him[11] for publication to

RULING
1. YES. Publication in a newspaper of general circulation was satisfied. a. Whether it is a NEWSPAPER OF GENERAL CIRCULATION. 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. (Basa v. Mercado, 61 Phil. 632). The newspaper need not have the largest circulation so long as it is of general circulation. (Banta v. Pacheco, 74 Phil. 67). In the case at bench, there was sufficient compliance with the requirements of the law regarding publication of the notice in a newspaper of general circulation. This is evidenced by the affidavit of publication executed by the New Records publisher, Teddy F. Borres, which stated that it is a newspaper edited in Manila and Quezon City and of general circulation in the cities of Manila, Quezon City et al., and in the Provinces of Rizal xxx, published every Saturday by the Daily Record, Inc. This was affirmed by Pedro Deyto,

qualified newspapers or periodicals xxx, which distribution shall be done by raffle. The said provision of the law is clear as to who should personally distribute the judicial notices or advertisements to qualified newspapers for publication. There was a substantial compliance with the requirements when it was the Executive Judge of the Regional Trial Court of Makati who caused the publication of the said notice by the newspaper selected by means of raffle. 3. PUBLICATION IS ENOUGH AND NOT PERSONAL NOTICE: Whether or not the petitioner did not personally receive the notices of extrajudicial foreclosure and sale supposedly sent to it by Metrobank. NO! Settled is the rule that personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary. Section 3 of Act No. 3135 governing extrajudicial foreclosure of real estate mortgages, 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. It is pristine clear from the above provision that the lack of personal notice to the mortgagor, herein petitioner, is not a ground to set aside the foreclosure sale.[12] 4. LOCATION Petitioner also claims that it had transferred to a different location but the notice was sent to its old address. Petitioner failed to notify respondent of its supposed change of address. Needless to say, it can be surmised that respondent had sent the notice to petitioners official address. 5. NOT LESS THAN THREE PUBLIC PLACES: Whether or not the posting of the notices of sale by the Sheriff in the Office of the Sheriff, Office of the Assessor and the Register of Deeds are not the conspicuous public places required by law. Furthermore, it also questions the nonposting of the notice of sale on the property itself which was to be sold. NO! Act 3135 does not require posting of the notice of sale on the mortgaged property. Section 3 of the said law merely requires that the notice of the sale 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 aforementioned places, to wit: the Sheriffs Office, the Assessors 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.

GC DALTON INDUSTRIES, INC., vs. EQUITABLE PCI BANK

FACTS: Equitable PCI Bank extended a P30-million credit line to Camden Industries, Inc. (CII) allowing the latter to avail of several loans (covered by promissory notes) and to purchase trust receipts. To facilitate collection, CII executed a hold-out agreement in favor of respondent authorizing it to deduct from its savings account any amounts due. To guarantee payment, petitioner GC Dalton Industries, Inc. executed a third-party mortgage of its real properties in Quezon City and Malolos, Bulacan] as security for CIIs loans. CII did not pay its obligations despite respondents demands. Consequently, respondent filed a petition for extrajudicial foreclosure of petitioners Bulacan properties in RTC of Bulacan. On August 3, 2004, the mortgaged properties were sold at a public auction where respondent was declared the highest bidder. Consequently, a certificate of sale*6+ was issued in respondents favor on August 3, 2004. Thereafter respondent filed the certificate of sale and an affidavit of consolidation of ownership in the Register of Deeds of Bulacan pursuant to Section 47 of the General Banking Law.[Hence, petitioners TCTs covering the Bulacan properties were cancelled and new ones were issued in the name of respondent.

Respondent filed an ex parte motion for the issuance of a writ of possession] in the RTC Bulacan. Previously, however, CII had filed an action for specific performance and damages in the RTC of Pasig, asserting that it had allegedly paid its obligation in full to respondent. CII sought to compel respondent to render an accounting in order to prove that the bank fraudulently foreclosed on petitioners mortgaged properties. Because respondent allegedly failed to appear during the trial, the Pasig RTC rendered a decision based on the evidence presented by CII. It found that, while CIIs past due obligation amounted only to P14,426,485.66 as of November 30, 2002, respondent had deducted a total of P108,563,388.06 from CIIs savings account. Respondent filed a notice of appeal. CII, on the other hand, moved for the immediate entry and execution of the abovementioned decision. Pasig RTC DECISION: dismissed respondents notice of appeal due to its failure to pay the appellate docket fees. It likewise found respondent guilty of forum-shopping for filing the petition for the issuance of a writ of possession in the Bulacan RTC. Thus, the Pasig RTC ordered the immediate entry of its March 30, 2005 decision. Meanwhile, in view of the pending case in the Pasig RTC, petitioner opposed respondents ex parte motion for the issuance of a writ of possession in the Bulacan RTC. It claimed that respondent was guilty of fraud and forumshopping, and that it was not informed of the foreclosure. Furthermore, respondent fraudulently foreclosed on the properties since the Pasig RTC had not yet

determined whether CII indeed failed to pay its obligations. Thereafter Bulacan RTC granted the motion and a writ of possession was issued in respondents favor on December 19, 2005. Petitioner immediately assailed the order of the Bulacan RT. It claimed that the order violated Section 14, Article VIII of the Constitution[17] which requires that every decision must clearly and distinctly state its factual and legal bases. CA dismissed the petition for lack of merit on the ground that an order involving the issuance of a writ of possession is not a judgment on the merits, hence, not covered by the requirement of Section 14, Article VIII of the Constitution. ISSUES: 1. Petitioner likewise cites the conflict between the order of the Bulacan RTC and order the Pasig RTC. Petitioner claims that, since the Pasig RTC already ordered the entry of its March 30, 2005 decision (in turn ordering respondent to return TCT No. 351231 and all such other owners documents of title as may have been placed in its possession by virtue of the subject trust receipt and loan transactions), the same was already final and executory. Thus, inasmuch as CII had supposedly paid respondent in full, it was erroneous for the Bulacan RTC to order the issuance of a writ of possession to respondent. Respondent, on the other hand, asserts that petitioner is raising a question of fact as it essentially assails the propriety of the issuance of the writ of possession. It likewise points out that petitioner did not truthfully disclose the status of the March 30, 2005 decision of the Pasig RTC because, in an order dated April 4, 2006, the Pasig RTC partially reconsidered its December 7, 2005 order and gave due course to respondents notice of appeal. (The propriety of the said April 4, 2006 order is still pending review in the CA.)

RULINGS: Denied Petition 1. The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is summary and ministerial in nature as such proceeding is merely an incident in the transfer of title. The trial court does not exercise discretion in the issuance thereof. For this reason, an order for the issuance of a writ of possession is not the judgment on the merits contemplated by Section 14, Article VIII of the Constitution. 2. The mortgagor loses all legal interest over the foreclosed property after the expiration of the redemption period. Under Section 47 of the General Banking Law, if the mortgagor is a juridical person, it can exercise the right to redeem the foreclosed property until, but not after, the registration of the certificate of foreclosure sale within three months after foreclosure, whichever is earlier. Thereafter, such mortgagor loses its right of redemption. Respondent filed the certificate of sale and affidavit of consolidation with the Register of Deeds of Bulacan on September 13, 2004. This terminated the redemption period granted by Section 47 of the General Banking Law. Because consolidation of title becomes a right upon the expiration of the redemption period,[23] respondent became the owner of the foreclosed properties.[24]Therefore, when petitioner opposed the ex parte motion for the issuance of the writ of possession on January 10, 2005 in the Bulacan RTC, it no longer had any legal interest in the Bulacan properties. Nevertheless, even if the ownership of the Bulacan properties had already been consolidated in the name of respondent, petitioner still had, and could have availed of, the remedy provided in Section 8 of Act 3135.

It could have filed a petition to annul the auction sale and to cancel the writ of possession within 30 days after respondent was given possession. But it did not. Thus, inasmuch as the 30-day period to avail of the said remedy had already lapsed, petitioner could no longer assail the validity of the sale. Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for the refusal to issue a writ of possession. Regardless of whether or not there is a pending suit for the annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession, without prejudice, of course, to the eventual outcome of the pending annulment case[ Needless to say, petitioner committed a misstep by completely relying and pinning all its hopes for relief on its complaint for specific performance and damages in the Pasig RTC,[29] instead of resorting to the remedy of annulment (of the auction sale and writ of possession) under Section 8 of Act 3135 in the Bulacan RTC.