G.R. No. 187917; January 19, 2011
METROPOLITAN BANK & TRUST COMPANY, Petitioner, vs. SPOUSES EDMUNDO MIRANDA and JULIE MIRANDA, Respondents.

FACTS

Respondents Spouses Miranda obtained several loans from petitioner Metrobank, secured by real estate mortgages. After encountering payment difficulties, the loans were restructured into two promissory notes totaling ₱7,350,000.00, payable on February 24, 2002, with interest at 17.250% per annum, and the corresponding mortgage deeds were amended. Due to respondents’ failure to settle their overdue account despite demand, Metrobank extrajudicially foreclosed the mortgaged properties on November 16, 2000. The properties were sold at public auction to Metrobank as the highest bidder, and a Certificate of Sale was issued and registered. Metrobank subsequently consolidated its ownership, cancelling the respondents’ titles and issuing new ones in its name. Respondents filed a complaint for the nullification of the foreclosure proceedings, alleging non-compliance with the publication requirement under Act No. 3135 and P.D. No. 1079, and that they were made to sign blank documents with terms different from what was represented. The Regional Trial Court (RTC) annulled the foreclosure, finding no proof of publication (no affidavit of publication in the records) and that there was an overpayment of interest, making the foreclosure without basis. It also noted Metrobank consolidated title before the sheriff’s Final Deed of Sale was issued. The Court of Appeals affirmed the RTC decision.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s decision which declared the extrajudicial foreclosure proceedings null and void due to non-compliance with the publication requirement and other irregularities.

RULING

The Supreme Court DENIED the petition and AFFIRMED the assailed Court of Appeals Decision. The Court held:
1. The question of compliance with the notice and publication requirements for an extrajudicial foreclosure sale is a factual issue. The factual findings of the trial court, affirmed by the Court of Appeals, are generally conclusive and binding on the Supreme Court. No special circumstance was shown to warrant a deviation from this rule.
2. While the party alleging non-compliance (the respondents) has the burden of proof, negative allegations (like the absence of publication) need not be proved if they constitute a denial of the existence of a document within the custody of the other party. It was incumbent upon Metrobank to rebut the allegation by producing the required proof of publication, such as the affidavit of publication. Metrobank’s mere reliance on the presumption of regularity in the performance of official duty was insufficient to discharge its burden.
3. The Supreme Court found no reason to disturb the lower courts’ factual finding of non-compliance with the publication requirement, which rendered the foreclosure sale void.
4. The Court declined to review the other grounds for nullity cited by the RTC (overpayment of interest and premature consolidation of title), as the resolution on the publication issue was sufficient to sustain the nullification of the foreclosure proceedings. The award of attorney’s fees was also upheld.
The dispositive portion of the RTC decision, as affirmed, was:
1. Declaring as null and void the Sheriff’s Certificate of Sale and the Sheriff’s Final Deed of Sale;
2. Cancelling Metrobank’s TCTs;
3. Restoring respondents’ TCTs; and
4. Ordering Metrobank to pay attorney’s fees and costs.