G.R. No. 209452. July 26, 2017.
GOTESCO PROPERTIES, INC., Petitioner, vs. SOLID BANK CORPORATION (NOW METROPOLITAN BANK AND TRUST COMPANY), Respondent.

FACTS

Petitioner Gotesco Properties, Inc. obtained a loan from respondent Solidbank, secured by a Mortgage Trust Indenture over several properties, including a lot in San Fernando, Pampanga. Upon the loan’s maturity, Gotesco, citing financial difficulties from the 1997 Asian Financial Crisis, proposed a restructuring. Solidbank responded by informing Gotesco of a substantial reduction in the appraised value of the mortgaged properties, creating a collateral deficiency, and requiring Gotesco to address it. Gotesco construed this as an implied agreement to restructure and did not act on the deficiency. After Solidbank sent a demand letter and Gotesco failed to pay, Solidbank initiated extrajudicial foreclosure of the Pampanga property.
Gotesco filed a complaint for annulment of the foreclosure, arguing the proceedings were premature and violated jurisdictional requirements under Act No. 3135. It specifically claimed non-compliance with publication requirements, alleging the Notice of Sale was published only in a newspaper of general circulation in Metro Manila, not in Pampanga where the property was located. The Regional Trial Court dismissed Gotesco’s complaint and granted Solidbank’s petition for a writ of possession, a decision affirmed by the Court of Appeals.

ISSUE

Whether the extrajudicial foreclosure sale was void for non-compliance with the publication requirement under Act No. 3135, as amended.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ rulings. The Court held that the publication requirement was duly satisfied. Act No. 3135, as amended, requires publication of the notice of sale in a newspaper of general circulation. Jurisprudence clarifies that a newspaper is considered of general circulation in a city if it is circulated therein, regardless of its principal editorial office’s location. The Notice of Sale was published in “The Daily Tribune,” a newspaper of general circulation. The Court found that Gotesco failed to present evidence to rebut the presumption of regularity accorded to the notarized Affidavit of Publication, which stated the newspaper was circulated in San Fernando, Pampanga. Therefore, the publication was valid.
The Court further ruled that Gotesco was in default. Solidbank’s letter regarding the collateral deficiency was not an implied agreement to restructure the loan but a demand for Gotesco to comply with the Indenture’s covenant to maintain the sound value of the collateral. Gotesco’s failure to cure this deficiency and to pay upon demand constituted an event of default, authorizing Solidbank to foreclose. All other prerequisites under the Indenture were met. Consequently, the foreclosure was valid, and Solidbank, as the purchaser at the public auction, was entitled to a writ of possession as a matter of right.