Invalid Notice, Invalid Sale

Various provisions of law require the publication of legal or judicial notices in newspapers of general circulation. For example, Act No. 3135 requires that in extra-judicial foreclosure proceedings, the notice of the sale must be published in a newspaper of general circulation in the municipality or city where the property is located.  

The law provides:        

SECTION 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.

If the required notice of sale is not published in a newspaper of general circulation in the municipality or city where the property is located, the court can declare the extra-judicial foreclosure sale of the property as invalid.

In Metropolitan Bank and Trust Company vs. Peñafiel, G.R. No. 173976, February 29, 2009, the Supreme Court explained the rationale for the requirement:

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 to prevent a sacrifice 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.

But what is a newspaper of general circulation? According to the Supreme Court:

True, 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, and that it is published at regular intervals. Over and above all these, the newspaper must be available to the public in general, and not just to a select few chosen by the publisher. Otherwise, the precise objective of publishing the notice of sale in the newspaper will not be realized.

In fact, to ensure a wide readership of the newspaper, jurisprudence suggests that the newspaper must also be appealing to the public in general. The Court has, therefore, held in several cases that the newspaper must not be devoted solely to the interests, or published for the entertainment, of a particular class, profession, trade, calling, race, or religious denomination. The newspaper need not have the largest circulation so long as it is of general circulation.

In Metropolitan Bank, the notice of sale was published in Maharlika Pilipinas. The mortgagors defaulted in the payment of their loan obligation and the bank instituted an extrajudicial foreclosure proceeding under Act No. 3135. The mortgagors assailed the validity of the auction sale on the ground that the notice of sale was not published in a newspaper of general circulation.

The bank argued that Maharlika Pilipinas is a newspaper of general circulation:

. . . Maharlika Pilipinas is a newspaper of general circulation since it is published for the dissemination of local news and general information, it has a bona fide subscription list of paying subscribers, and it is published at regular intervals. It asserts that the publisher’s Affidavit of Publication attesting that Maharlika Pilipinas is a newspaper of general circulation is sufficient evidence of such fact. Further, the absence of subscribers in Mandaluyong City does not necessarily mean that Maharlika Pilipinas is not circulated therein; on the contrary, as testified to by its publisher, the said newspaper is in fact offered to persons other than its subscribers. Petitioner stresses that the publisher’s statement that Maharlika Pilipinas is also circulated in Rizal and Cavite was in response to the question as to where else the newspaper was circulated; hence, such testimony does not conclusively show that it is not circulated in Mandaluyong City.”

To prove that Maharlika Pilipinas was not a newspaper of general circulation in Mandaluyong City, the mortgagees presented the following documents:

(1)     a certification from the Chief of the Business Permit and Licensing Office of Mandaluyong City, attesting that Maharlika Pilipinas did not have a business permit in Mandaluyong City; and

(2)     List of Subscribers of Maharlika Pilipinas showing that there were no subscribers from Mandaluyong City.

In addition, during the direct examination the publisher of Maharlika Pilipinas, he stated:

Atty. Mendoza: Do you offer your newspaper to other persons other than the subscribers listed here?

Witness: Yes, but we do not just offer it to anybody.

The Court ruled that Maharlika Pilipinas is not a newspaper of general circulation in Mandaluyong City. It held:

Petitioner correctly points out that neither the publisher’s statement that Maharlika Pilipinas is being circulated in Rizal and Cavite, nor his admission that there are no subscribers in Mandaluyong City proves that said newspaper is not circulated in Mandaluyong City.

Nonetheless, the publisher’s testimony that they “do not just offer [Maharlika Pilipinas] to anybody” implies that the newspaper is not available to the public in general. This statement, taken in conjunction with the fact that there are no subscribers in Mandaluyong City, convinces us that Maharlika Pilipinas is, in fact, not a newspaper of general circulation in Mandaluyong City. . . 

Noticeably, in the Affidavit of Publication, Mr. Alvarez attested that he was the “Publisher of Maharlika Pilipinas, a newspaper of general circulation, published every Thursday.” Nowhere is it stated in the affidavit that Maharlika Pilipinas is in circulation in Mandaluyong City. To recall, Sec. 3 of Act No. 3135 does not only require that the newspaper must be of general circulation; it also requires that the newspaper be circulated in the municipality or city where the property is located. Indeed, in the cases wherein the Court held that the affidavit of the publisher was sufficient proof of the required publication, the affidavit of the publisher therein distinctly stated that the newspaper was generally circulated in the place where the property was located.

There are several items that should be noted here. First, a newspaper cannot be deemed a newspaper of general circulation if it is offered to a select group of persons only. Second, the Affidavit of Publication should specify where the newspaper is being circulated.

It is noteworthy that the Court seems to have found unconvincing what appears to be testimony that Maharlika Pilipinas is circulated in Marikina City:

Atty. Mendoza: Now, you said that you print and publish Maharlika Pilipinas in Marikina and Quezon City?

Witness: Yes.

Atty. Mendoza: Where else do you circulate your newspaper?

Witness: In Rizal and in Cavite.

While the lawyer used the phrase “print and publish”, the question appears to be where Maharlika Pilipinas is circulated (as may be implied by the succeeding question).

As noted by the Supreme Court, “for the purpose of extrajudicial foreclosure of mortgage, the party alleging non-compliance with the requisite publication has the burden of proving the same.”  The Court was convinced that the mortgagors met the burden of proof.

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