FORTUNE MOTORS V.

CA, 178 SCRA 564 (1989)

FACTS Metrobank extended various loans to Fortune which was secured by a real
estate mortgage on the Fortune building and lot in Makati. For failure of Fortune to
pay the loans, Metrobank initiated extrajudicial foreclosure proceedings. After
notice were served, posted and published, the mortgaged property was sold at a
public auction to Metrobank as the highest bidder.

3days after the expiration of the 1yr redemption period, Fortune filed a complaint
for annulment of the extrajudicial foreclosure sale alleging that the foreclosure was
premature because its obligation to Metrobank was not yet due, publication of the
notice of sale was incomplete, there was no public auction, and the price for which
the property was sold was “shockingly low”.

Before summons could be served, Metrobank filed a MtD the complaint on the
ground that the venue of the action was improperly laid in Manila for the subject real
property is situated in Makati, therefore the action to annul the foreclosure sale
should be filed in Makati RTC.

MtD was opposed by Fortune alleging that its action “is a personal action” and that
“the issue is the validity of the extrajudicial proceedings” so that it may have a new
1yr redemption period.

Manila RTC issued an order reserving the resolution of Metrobank’s MtD until after
the trial on the merits as the grounds relied upon by the defendant were not clear
and indubitable. Metrobank filed a MfR but was denied by Manila RTC. Metrobank
appealed to CA. CA granted and dismissed the annulment case without prejudice
to its being filed in the proper venue.

HELD An action to annul a real estate mortgage foreclosure sale is no different from
an action to annul a private sale of real property. Both are actions that affect title
and seek recovery of the real property sold. It is therefore a real action which should
be commenced and tried in the province where the property or part thereof lies.
Petition denied. CA decision affirmed.