Republic
of the
Supreme
Court
SECOND DIVISION
|
METROPOLITAN BANK &
TRUST COMPANY, Petitioner, - versus - SPOUSES EDMUNDO MIRANDA
and JULIE MIRANDA, Respondents. |
G.R.
No. 187917
Present: CARPIO, J.,
Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ. Promulgated: January 19, 2011 |
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
On
appeal is the June 30, 2008 Decision[1] of
the Court of Appeals (CA) in CA-G.R. CV No. 87775, affirming the June 16, 2006 Decision[2] of
the Regional Trial Court (RTC) of Santiago City, Branch 35, as well as its
subsequent Resolution dated May 7, 2009,[3]
denying petitioner’s motion for reconsideration.
Respondents,
spouses Edmundo Miranda and Julie Miranda, applied for and obtained a credit
accommodation from petitioner Metropolitan Bank & Trust Company
(Metrobank). On August 27, 1996,
respondents obtained a P4,000,000.00 loan from Metrobank and executed a real
estate mortgage[4] over a
parcel of land in Poblacion, Santiago, Isabela, covered by Transfer Certificate
of Title (TCT) No. 202288. Upon respondents’ request, Metrobank increased the
loan from P4,000,000.00 to P5,000,000.00. The real estate mortgage executed on August
27, 1996 was thus amended[5] to
increase the principal amount of loan secured by the mortgage to P5,000,000.00.
Subsequently, respondents obtained
additional loans from Metrobank - P1,000,000.00 on December 3, 1996, and P1,000,000.00 on
May 8, 1997. The additional loans were secured by mortgage[6]
over lands situated in Dubinan and Mabini,
Respondents
encountered difficulties in paying their loans.
They requested for a longer period to settle their account and further
requested for the restructuring of their loans, which requests Metrobank
granted. Respondents then signed Promissory
Note (PN) No. 599773[7]
for P6,400,000.00, and PN No. 599772[8]
for P950,000.00, both payable on February 24, 2002, with interest at
17.250% per annum. They also amended the deeds of real estate mortgage they
executed in favor of Metrobank to increase the amount of loans secured by
mortgage to P6,350,000.00. The
amendment was inscribed on TCT Nos. T-202288,[9]
T-260279,[10] and T-180503.[11]
On
August 25, 2000, Metrobank sent respondents a demand letter[12]
to settle their overdue account of P8,512,380.15, inclusive of interest
and penalties; otherwise, the bank would initiate “the necessary legal proceedings x x x, without further notice.”
Respondents, however, failed to settle their account. Consequently, Metrobank caused the
extrajudicial foreclosure and auction sale of the mortgaged properties on
November 16, 2000. The Clerk of Court and Ex-Officio Sheriff of P9,284,452.00 to Metrobank, as the highest
bidder. A Certificate of Sale[13]
was issued in favor of Metrobank on November 27, 2000, which was registered with
the Registry of Deeds on November 29, 2000.
Claiming
that the extrajudicial foreclosure was void, respondents filed a complaint for Nullification
of the Foreclosure Proceedings and Damages with Prayer for Temporary Restraining
Order/Injunction[14] with the RTC of Santiago City. They alleged non-compliance with the
provisions of Presidential Decree No. 1079[15]
and Act No. 3135,[16]
particularly the publication requirement.
Respondents further asserted that Metrobank required them to sign blank promissory
notes and real estate mortgage, and that they were not furnished with copies of
these documents. Later, they discovered
that the terms and conditions of the promissory notes and of the mortgage were
entirely different from what was represented to them by the bank. The
right to fix the interest rates, they added, was
exclusively given to the bank. Respondents, thus, prayed for the annulment
of the extrajudicial foreclosure proceedings.
Metrobank
answered the complaint, denying its material allegations and asserting the
validity of the foreclosure proceedings.
Specifically, it averred compliance with the posting and publication requirements. Thus, it prayed for the dismissal of the
complaint.[17]
Meanwhile,
on December 20, 2001, Metrobank caused the cancellation of the TCTs in the name
of respondents and the issuance of new ones in its name. On December 21, 2001, the Ex-Officio Sheriff executed a Final Deed
of Sale.[18]
On June 16, 2006, the RTC rendered a decision[19] annulling
the extrajudicial foreclosure proceedings.
The RTC reviewed the records of the foreclosure proceedings and found no
proof of publication of the sheriff’s notice of sale; there was no affidavit of
publication attached to the records. This
fatal defect, it held, invalidated the auction sale and the entire foreclosure
proceedings. The RTC further held that, when
Metrobank foreclosed the mortgaged properties, respondents’ loan account was
still outstanding for there was an overpayment of interests amounting to P1,529,922.00. Thus, the foreclosure proceedings were
without factual and legal basis. The RTC
further noted that Metrobank consolidated its title even before the issuance of
the sheriff’s Final Deed of Sale. The
trial court considered it an irregularity sufficient to invalidate the
consolidation.
The dispositive portion of the RTC
decision reads:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of [respondents] and against [petitioner] Metrobank as
follows:
1) DECLARING
as null and void the Sheriff’s Certificate of
2) DECLARING as null and void the Sheriff’s
Final Deed of
3) CANCELLING
[Metrobank’s] TCT Nos. T-319236 (Exhibit
“13”); T-319235 over Lot 6-B-18
(Exhibit “14”); T-T-319235 over
4) RESTORING [respondents’] TCT Nos. T-260279
(Exhibit “E”); T-202288 (Exhibit
“F”); T-180503 (Exhibit “G”; and T- 272664 (Annex “E”); and
5) ORDERING x x x Metrobank to pay PHP50,000.00
as attorney’s fees, and the cost of suit.
SO ORDERED. [20]
Metrobank
filed a motion for reconsideration, but the RTC denied it on July 31, 2006.
Metrobank
then appealed to the CA, faulting the RTC for annulling the foreclosure
proceedings. It insisted that the bank complied
with the publication requirement. Metrobank
also disagreed with the trial court’s finding of overpayment of interests
amounting to P1,529,922.00, claiming that the applicable interest rates
on respondents’ loans were 17% and not 12% as computed by the trial court. It further asserted that a final deed of sale
is not necessary for purposes of consolidating its ownership over the subject
properties. Finally, Metrobank assailed
the award of attorney’s fees for lack of basis.
On
June 30, 2008, the CA resolved Metrobank’s appeal in this wise:
WHEREFORE, the appeal is DISMISSED. The assailed
decision dated June 16, 2006 of the RTC of Santiago City, Branch 35, in Civil
Case No. 35-3022 is AFFIRMED.
SO
ORDERED.[21]
Metrobank’s
motion for reconsideration also suffered the same fate, as the CA denied it on
May 7, 2009.[22]
Before us, Metrobank insists on the
validity of the foreclosure proceedings.
Essentially, it argues that foreclosure proceedings enjoy the
presumption of regularity, and the party alleging irregularity has the burden
of proving his claim. Metrobank asserts
that, in this case, the presumption of regularity was not disputed because
respondents failed to prove that the notice of sale was not published as
required by law.
At the outset, it must be stated that
only questions of law may be raised before this Court in a Petition for Review
under Rule 45 of the Revised Rules of Civil Procedure. This Court is not a
trier of facts, and it is not the function of this Court to reexamine the
evidence submitted by the parties.[23]
It has been our consistent ruling
that the question of compliance or non-compliance with notice and publication
requirements of an extrajudicial foreclosure sale is a factual issue, and the
resolution thereof by the trial court is generally binding on this Court. The matter of sufficiency of posting and publication of a notice of foreclosure sale
need not be resolved
by this Court, especially when the
findings of the RTC were sustained by the CA. Well-established is the rule that
factual findings of the CA are conclusive on the parties and carry even more
weight when the said court affirms the factual findings of the trial court.[24]
The unanimity of the CA and the trial
court in their factual ascertainment that there was non-compliance with the
publication requirement bars us from supplanting their findings
and substituting them with our own. Metrobank has not shown that they are
entitled to an exception to this rule. It has not sufficiently demonstrated any
special circumstances to justify a factual review.
Metrobank makes much ado of
respondents’ failure to present proof of non-compliance with the publication
requirement. It insists that respondents
failed to discharge the requisite burden of proof.
Apparently, Metrobank lost sight of
our ruling in Spouses Pulido v. CA,[25] Sempio v. CA,[26]
and, recently, in Philippine Savings Bank
v. Spouses Dionisio Geronimo and Caridad Geronimo,[27] viz.:
While it may be true that the party alleging
non-compliance with the requisite publication has the burden of proof, still negative
allegations need not be proved even if essential to one’s cause of action or
defense if they constitute a denial of the existence of a document the custody
of which belongs to the other party.
It would have been a simple matter
for Metrobank to rebut the allegation of non-compliance by producing the
required proof of publication. Yet, Metrobank
opted not to rebut the allegation; it simply relied on the presumption of
regularity in the performance of official duty.
Unfortunately, Metrobank’s reliance
on the presumption of regularity must fail because it did not present any proof
of publication of the notice of sale. As
held by this Court in Spouses Pulido v.
Court of Appeals:[28]
[P]etitioners' reliance on the presumption of
regularity in the performance of official duties falls in the face of a serious
imputation on non-compliance. The presumption of compliance with official duty
is rebutted by failure to present proof of posting.
Further, in Philippine Savings Bank v. Spouses Dionisio Geronimo and Caridad
Geronimo,[29] this Court rejected a similar
contention, viz.:
Petitioner's invocation of the presumption of
regularity in the performance of official duty on the part of Sheriff Castillo
is misplaced. While posting the notice of sale is part of a sheriff's official
functions, the actual publication of the notice of sale cannot be considered as
such, since this concerns the publisher's business. Simply put, the sheriff is
incompetent to prove that the notice of sale was actually published in a
newspaper of general circulation.
As correctly found by the RTC and the
CA, the records[30] of the
foreclosure proceedings lacked any proof of publication. This explains why
Metrobank could not present any proof of publication.
We take this occasion to reiterate
that the object of a notice of sale is to inform the public of the nature and
condition of the property to be sold, and of the time, place, and terms of the
sale. Notices are given for the purpose of securing bidders and preventing a sacrifice sale of the
property.
The goal of the notice requirement is
to achieve a “reasonably wide publicity” of the auction sale. This is why publication in a newspaper of
general circulation is required. The Court has previously taken judicial notice
of the “far-reaching effects” of publishing the notice of sale in a newspaper
of general circulation. Thus, the
publication of the notice of sale was held essential to the validity of
foreclosure proceedings.[31]
In this case, Metrobank failed to establish compliance with the publication
requirement. The RTC and the CA cannot,
therefore, be faulted for nullifying the foreclosure proceedings.
Metrobank next questions the
authority of the RTC and the CA to take cognizance of the records of the
foreclosure proceedings as basis for annulling the auction sale. It claims that
the trial court may not take judicial notice of the records of proceedings in
another case, unless the parties themselves agreed to it. Metrobank asserts that it did not give its
consent to the trial court’s examination of the records of the extrajudicial
foreclosure proceedings. Further, the
RTC did not even set a hearing for the purpose of declaring its intention to
take judicial notice of the records of the extrajudicial proceedings, as
required by Section 3[32] of
Rule 129. Metrobank, thus, contends that
the RTC exceeded its authority in taking cognizance of the records of the
extrajudicial proceedings.
We
disagree.
As a rule, courts do not take judicial
notice of the evidence presented in other proceedings, even if these have been
tried or are pending in the same court or before the same judge. This rule,
however, is not absolute.
In Juaban v. Espina[33]
and “G”
Holdings, Inc. v. National Mines and Allied Workers Union Local 103 (NAMAWU),[34] we
held that, in some instances, courts have also taken judicial notice of
proceedings in other cases that are closely connected to the matter in
controversy. These cases may be so closely interwoven, or so clearly
interdependent, as to invoke a rule of judicial notice.
The RTC, therefore, acted well within
its authority in taking cognizance of the records of the extrajudicial
foreclosure proceedings, and the CA cannot be faulted for sustaining the RTC.
Metrobank further questions the trial
court’s finding of overpayment of interests.
But like the issue on compliance with the publication requirement, the
issue on overpayment of interests involves the ascertainment of facts not
subject of review by this Court. We reiterate that our jurisdiction is limited
to reviewing and revising errors of law imputed to the lower court, the
latter’s findings of fact being conclusive and not reviewable by this Court.[35]
Besides, we find nothing erroneous in
this factual finding of the RTC. As explained
by the RTC in its decision:
[T]he Court notes that the original
promissory notes evidencing the various loans of the plaintiffs were not
presented in court by either party; they are needed to determine the stipulated
interest rate. The Court is thus left to
determine the same based on the testimony of the plaintiffs that the agreed
interest rate is 12% per annum; amazingly, this was not denied or refuted by
the [petitioner] bank, in which case, 12% interest rate is applied at least for
the period beginning 1997 until 1999, when the loan was renewed under the two
(2) new promissory notes which indicated a higher rate of interest of 17.250%
per annum. As mentioned above, the
interest payments made by the [respondents] were already admitted by
[Metrobank] in its answer to the complaint as well as in its comment to
[respondents’] formal offer of evidence, and such interest payments are duly
reflected and contained in the passbook account of the [respondents], Exhibit
“H,” “H-1” to “H-10.” But, in order to
determine whether [respondents’] account has become past due or not, as the [petitioner]
bank represents, the Court deems it necessary to undertake some mathematical
computation the result of which would decisively guide the Court to arrive at a
rightful conclusion, thus:
1) Total interest payments by [respondents]
from
May 7, 1997 to June 30, 1999 - P3,332,422.00
2) Interest due
from May 7, 1997 to June 30, 1999 - P1,802,500.00
computed as follows:
a) 1st year (P7 M x 12%), from
May 7, 1997 to May 28, 1998 - P 840,000.00
b) 2nd year
i) from June 3, 1998 to Feb. 24, 1999 (8 mos.) - P 560,000.00 ii) from March, 1999 to June 30, 1999 (4
mos.) - P 402,500.00
3) Total
Interest paid - P 3,332,422.00
Less
Interest due - P 1,802,500.00
Overpaid
interest - P 1,529,922.00
From
the foregoing, it is evident that [respondents] overpaid interests for the
period of two (2) years, from May 1997 to June 1999, in the total amount of
Php. 1,529,922.00. Thus, the Court is
convinced that it is just and equitable that such an overpayment be construed
as advance interest payments which should be applied for the succeeding period
or year of their contract. Otherwise,
[Metrobank] would unjustly enrich itself at the expense of [respondents]. In such a case, it was premature then for
[Metrobank] to declare [respondents’] account as past due, because at that
juncture[, respondents’] loan obligation was outstanding and in declaring
otherwise, [Metrobank’s] action was without basis as there was no violation of
their loan contract. Consequently, it
follows that the foreclosure proceedings subsequently held on November 26, 2000
was without factual and legal basis, too.
For, indeed, when the foreclosure proceedings in question was conducted,
[respondents’] loan account with [Metrobank], as it is said, was still
outstanding, because [respondents] were able to pay the interest due. Therefore, the Court is again convinced that
the nullification prayed for is in order.[36]
We need not say more.
In fine, the right of a bank to
foreclose a mortgage upon the mortgagor's failure to pay his obligation must be
exercised according to its clear mandate, and every requirement of the law must
be complied with, or the valid exercise of the right would end. The exercise of a right ends when the right
disappears, and it disappears when it is abused especially to the prejudice of
others.[37]
As further declared by this Court in Philippine Savings Bank v. Spouses Dionisio
Geronimo and Caridad Geronimo:[38]
While the law recognizes the right of a bank to foreclose a mortgage upon the mortgagor's failure to pay his
obligation, it is imperative that such right be exercised according to its
clear mandate. Each and every requirement of the law must be complied with,
lest, the valid exercise of the right would end. It must be remembered that the
exercise of a right ends when the right disappears, and it disappears when it
is abused especially to the prejudice of others.
We, therefore, affirm the CA and sustain
the RTC in nullifying the extrajudicial foreclosure of real estate mortgage and
sale, including Metrobank’s title.
With this disquisition, we find no
necessity to discuss the issue of the validity of the consolidation of title by
Metrobank.
WHEREFORE, the
petition is DENIED. The challenged Decision and Resolution of the
Court of Appeals in CA-G.R. CV No. 87775 are AFFIRMED.
SO ORDERED.
ANTONIO
EDUARDO B. NACHURA
Associate
Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate
Justice
Chairperson
|
DIOSDADO M. PERALTA Associate
Justice |
ROBERTO A. ABAD Associate
Justice |
JOSE CATRAL
Associate
Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate
Justice
Chairperson,
Second Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution
and the Division Chairperson's Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
RENATO
C. CORONA
Chief
Justice
[1] Penned by Associate Justice Hakim S. Abdulwahid, with Associate Justices Rodrigo V. Cosico and Mariflor P. Punzalan Castillo, concurring, rollo, pp. 25-37.
[2]
[3]
[4] Exhibit “2”; records, p. 265.
[5] Exhibit “3”; id. at 266.
[6] See Exhibits “4” and “5”; id. at 267, 268.
[7] Exhibit “17”; id. at 285.
[8] Exhibit “18”; id. at 286.
[9]
[10]
[11]
[12] Exhibit “10”; id. at 273.
[13] Exhibit “11”; id. at 274-276.
[14]
[15] Revising and Consolidating All Laws and Decrees
Regulating Publication of Judicial Notices, Advertisements for Public Biddings,
Notices of Auction Sales and Other Similar Notices.
[16] An
Act to Regulate the
[17] Records, pp. 30-34.
[18]
[19] Supra note 2.
[20]
[21] Rollo, p. 36.
[22] CA rollo, pp. 117-118.
[23] Langkaan Realty & Devt., Inc. v. UCPB, 400 Phil. 1349, 1356-1357 (2000).
[24]
[25] 321 Phil. 1064, 1069 (1995).
[26] 331 Phil. 912, 925 (1996).
[27] G.R. No. 170241, April 19, 2010.
[28] Supra note 25, at 1070.
[29] Philippine Savings Bank v. Spouses Dionisio Geronimo and Caridad Geronimo, supra note 27.
[30] Records, pp. 348-405.
[31] Philippine Savings Bank v. Spouses Dionisio Geronimo and Caridad Geronimo, supra note 27, citing Metropolitan Bank and Trust Company, Inc. v. Peñafiel, G.R. No. 173976, February 27, 2009, 580 SCRA 352, 357.
[32] Section 3. Judicial
notice, when hearing necessary. — During the trial, the court, on its own
initiative, or on request of a party, may announce its intention to take
judicial notice of any matter and allow the parties to be heard thereon.
(Rule 129, Revised Rules on Evidence).
[33] G.R. No. 170049, March 14, 2008, 548 SCRA 588, 611.
[34] G.R. No. 160236, October 16, 2009, 604 SCRA 73, 91.
[35]
[36] Records, pp. 414-416.
[37] PNB v. Nepomuceno Productions, Inc., 442 Phil. 655, 665 (2002).
[38] Supra note 27, citing Metropolitan Bank v. Wong, 412 Phil. 207, 220 (2001).