Republic of the
SPOUSES VICENTE YU AND G.R. No. 147902
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
INTERNATIONAL BANK, Promulgated:
Respondent. March 17, 2006
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D E C I S I O N
Before the Court is a Petition for Review
on Certiorari of the Decision
The factual background of the case is as follows:
Under a Real Estate Mortgage dated August
and Amendments of Real Estate Mortgage dated April 4, 1995
and December 4, 1995, spouses
Vicente Yu and Demetria Lee-Yu (petitioners) and spouses Ramon T. Yu and
Virginia A. Tiu, or Yu Tian Hock aka Victorino/Vicente Yu, mortgaged their
title, interest, and participation over several parcels of land located in
Dagupan City and Quezon City, in favor of the Philippine Commercial International
Bank (respondent) as security for the payment of a loan in the amount of
As the petitioners failed to pay the
loan, the interest, and the penalties due thereon, respondent filed on
At the auction sale on
About two months before the
expiration of the redemption period, or on
On September 30, 1999, petitioners
filed a Motion to Dismiss and to Strike Out Testimony of Rodante Manuel stating
that the Certificate of Sale dated September 14, 1998 is void because respondent
violated Article 2089 of the Civil Code on the indivisibility of the mortgaged
by conducting two separate foreclosure proceedings on the mortgage properties
in Dagupan City and Quezon City and indicating in the two notices of extra-judicial
sale that petitioners obligation is
as of March 31, 1998, when petitioners are not indebted for the total amount of
In the meantime, petitioners filed a
complaint for Annulment of Certificate of Sale before the
On June 1, 2000, petitioners filed a Petition for Certiorari with the CA. On November 14, 2000, the CA dismissed petitioners Petition for Certiorari on the grounds that petitioners violated Section 8 of Act No. 3135 and disregarded the rule against multiplicity of suits in filing Civil Case No. 99-03169-D in RTC Branch 44 despite full knowledge of the pendency of Spec. Proc. No. 99-00988-D in RTC Branch 43; that since the one-year period of redemption has already lapsed, the issuance of a writ of possession in favor of respondent becomes a ministerial duty of the trial court; that the issues in Civil Case No. 99-03169-D are not prejudicial questions to Spec. Proc. No. 99-00988-D because: (a) the special proceeding is already fait accompli, (b) Civil Case No. 99-03169-D is deemed not filed for being contrary to Section 8 of Act No. 3135, (c) the filing of Civil Case No. 99-03169-D is an afterthought and dilatory in nature, and (d) legally speaking what seems to exist is litis pendentia and not prejudicial question.
Hence, the present Petition for Review on Certiorari.
Petitioners pose two issues for resolution, to wit:
A. Whether or not a real estate mortgage over several properties located in different locality [sic] can be separately foreclosed in different places.
B. Whether or not the pendency of a prejudicial issue renders the issues in Special Proceedings No. 99-00988-D as [sic] moot and academic.
Anent the first issue, petitioners contend
that since a real estate mortgage is indivisible, the mortgaged properties in
as of March 31, 1998 or a total of P20,874,030.40,
yet their own computation yields only P9,957,508.90 as of February 27,
As to the second issue, petitioners posit that the pendency of Civil Case No. 99-03169-D is a prejudicial issue, the resolution of which will render the issues in Spec. Proc. No. 99-00988-D moot and academic. Petitioners further aver that they did not violate Section 8 of Act No. 3135 in filing a separate case to annul the certificate of sale since the use of the word may in said provision indicates that they have the option to seek relief of filing a petition to annul the certificate of sale in the proceeding involving the application for a writ of possession or in a separate proceeding.
that, with respect to the first issue, the filing of two separate foreclosure
proceedings did not violate Article 2089 of the Civil Code on the indivisibility
of a real estate mortgage since Section 2 of Act No. 3135 expressly provides
that extra-judicial foreclosure may only be made in the province or
municipality where the property is situated.
Respondent further submits that the filing of separate applications for
extra-judicial foreclosure of mortgage involving several properties in
different locations is allowed by A.M. No. 99-10-05-0, the Procedure on Extra-Judicial
Foreclosure of Mortgage, as further amended on
As to the second issue, respondent maintains that there is no prejudicial question between Civil Case No. 99-03169-D and Spec. Proc. No. 99-00988-D since the pendency of a civil action questioning the validity of the mortgage and the extra-judicial foreclosure thereof does not bar the issuance of a writ of possession. Respondent also insists that petitioners should have filed their Petition to Annul the Certificate of Sale in the same case where possession is being sought, that is, in Spec. Proc. No. 99-00988-D, and not in a separate proceeding (Civil Case No. 99-01369-D) because the venue of the action to question the validity of the foreclosure is not discretionary since the use of the word may in Section 8 of Act No. 3135 refers to the filing of the petition or action itself and not to the venue. Respondent further argues that even if petitioners filed the Petition to Annul the Certificate of Sale in Spec. Proc. No. 99-00988-D, the writ of possession must still be issued because issuance of the writ in favor of the purchaser is a ministerial act of the trial court and the one-year period of redemption has already lapsed.
Anent the first issue, the Court finds that petitioners have a mistaken notion that the indivisibility of a real estate mortgage relates to the venue of extra-judicial foreclosure proceedings. The rule on indivisibility of a real estate mortgage is provided for in Article 2089 of the Civil Code, which provides:
Art. 2089. A pledge or mortgage is indivisible, even though the debt may be divided among the successors in interest of the debtor or of the creditor.
Therefore, the debtors heir who has paid a part of the debt cannot ask for the proportionate extinguishment of the pledge or mortgage as the debt is not completely satisfied.
Neither can the creditors heir who received his share of the debt return the pledge or cancel the mortgage, to the prejudice of the other heirs who have not been paid.
From these provisions is excepted the case in which, there being several things given in mortgage or pledge, each one of them guarantees only a determinate portion of the credit.
The debtor, in this case, shall have a right to the extinguishment of the pledge or mortgage as the portion of the debt for which each thing is specially answerable is satisfied.
This rule presupposes several heirs of the debtor or creditor and therefore not applicable to the present case. Furthermore, what the law proscribes is the foreclosure of only a portion of the property or a number of the several properties mortgaged corresponding to the unpaid portion of the debt where, before foreclosure proceedings, partial payment was made by the debtor on his total outstanding loan or obligation. This also means that the debtor cannot ask for the release of any portion of the mortgaged property or of one or some of the several lots mortgaged unless and until the loan thus secured has been fully paid, notwithstanding the fact that there has been partial fulfillment of the obligation. Hence, it is provided that the debtor who has paid a part of the debt cannot ask for the proportionate extinguishment of the mortgage as long as the debt is not completely satisfied. In essence, indivisibility means that the mortgage obligation cannot be divided among the different lots, that is, each and every parcel under mortgage answers for the totality of the debt.
On the other hand, the venue of the extra-judicial foreclosure proceedings is the place where each of the mortgaged property is located, as prescribed by Section 2 of Act No. 3135, to wit:
SECTION 2. Said sale cannot be made legally outside of the province in which the property sold is situated; and in case the place within said province in which the sale is to be made is subject to stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated.
A.M. No. 99-10-05-0, the Procedure on Extra-Judicial Foreclosure of Mortgage, lays down the guidelines for extra-judicial foreclosure proceedings on mortgaged properties located in different provinces. It provides that the venue of the extra-judicial foreclosure proceedings is the place where each of the mortgaged property is located. Relevant portion thereof provides:
Where the application concerns the extrajudicial foreclosure of mortgages of real estates and/or chattels in different locations covering one indebtedness, only one filing fee corresponding to such indebtedness shall be collected. The collecting Clerk of Court shall, apart from the official receipt of the fees, issue a certificate of payment indicating the amount of indebtedness, the filing fees collected, the mortgages sought to be foreclosed, the real estates and/or chattels mortgaged and their respective locations, which certificate shall serve the purpose of having the application docketed with the Clerks of Court of the places where the other properties are located and of allowing the extrajudicial foreclosures to proceed thereat. (Emphasis supplied)
The indivisibility of the real estate
mortgage is not violated by conducting two separate foreclosure proceedings on
mortgaged properties located in different provinces as long as each parcel of
land is answerable for the entire debt. Petitioners assumption that their
total obligation is
P20,874,030.40 because the two notices of
extra-judicial sale indicated that petitioners obligation is P10,437,015.20
each, is therefore flawed. Considering
the indivisibility of a real estate mortgage, the mortgaged properties in P10,437,015.29.
As to the second issue, that is, whether a civil case for annulment of a certificate of sale is a prejudicial question to a petition for issuance of a writ of possession, this issue is far from novel and, in fact, not without precedence. In Pahang v. Vestil, the Court said:
A prejudicial question is one that arises in a case the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal. It generally comes into play in a situation where a civil action and a criminal action are both pending and there exists in the former an issue that must be preemptively resolved before the criminal action may proceed, because howsoever the issue raised in the civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminal case. The rationale behind the principle of prejudicial question is to avoid two conflicting decisions.
In the present case, the complaint of the petitioners for Annulment of Extrajudicial Sale is a civil action and the respondents petition for the issuance of a writ of possession of Lot No. 3-A, Block 1, Psd-07-021410, TCT No. 44668 is but an incident in the land registration case and, therefore, no prejudicial question can arise from the existence of the two actions. A similar issue was raised in Manalo v. Court of Appeals, where we held that:
At any rate, it taxes our imagination why the questions raised in Case No. 98-0868 must be considered determinative of Case No. 9011. The basic issue in the former is whether the respondent, as the purchaser in the extrajudicial foreclosure proceedings, may be compelled to have the property repurchased or resold to a mortgagors successor-in-interest (petitioner); while that in the latter is merely whether the respondent, as the purchaser in the extrajudicial foreclosure proceedings, is entitled to a writ of possession after the statutory period for redemption has expired. The two cases, assuming both are pending, can proceed separately and take their own direction independent of each other.
In the present case, Civil Case No. 99-01369-D and Spec. Proc. No. 99-00988-D are both civil in nature. The issue in Civil Case No. 99-01369-D is whether the extra-judicial foreclosure of the real estate mortgage executed by the petitioners in favor of the respondent and the sale of their properties at public auction are null and void, whereas, the issue in Spec. Proc. No. 99-00988-D is whether the respondent is entitled to a writ of possession of the foreclosed properties. Clearly, no prejudicial question can arise from the existence of the two actions. The two cases can proceed separately and take their own direction independently of each other.
Nevertheless, there is a need to correct the CAs view that petitioners violated Section 8 of Act No. 3135 and disregarded the proscription on multiplicity of suits by instituting a separate civil suit for annulment of the certificate of sale while there is a pending petition for issuance of the writ of possession in a special proceeding.
Section 8 of Act No. 3135 provides:
Sec. 8. Setting aside of sale and writ of possession. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal. (Emphasis supplied)
Under the provision above cited, the mortgagor may file a petition to set aside the sale and for the cancellation of a writ of possession with the trial court which issued the writ of possession within 30 days after the purchaser mortgagee was given possession. It provides the plain, speedy, and adequate remedy in opposing the issuance of a writ of possession. Thus, this provision presupposes that the trial court already issued a writ of possession. In Sps. Ong v. Court of Appeals, the Court elucidated:
The law is clear that the purchaser must first be placed in possession of the mortgaged property pending proceedings assailing the issuance of the writ of possession. If the trial court later finds merit in the petition to set aside the writ of possession, it shall dispose in favor of the mortgagor the bond furnished by the purchaser. Thereafter, either party may appeal from the order of the judge in accordance with Section 14 of Act 496, which provides that every order, decision, and decree of the Court of Land Registration may be reviewedin the same manner as an order, decision, decree or judgment of a Court of First Instance (RTC) might be reviewed. The rationale for the mandate is to allow the purchaser to have possession of the foreclosed property without delay, such possession being founded on his right of ownership.
Accordingly, Section 8 of Act No. 3135 is not applicable to the present case since at the time of the filing of the separate civil suit for annulment of the certificate of sale in RTC Branch 44, no writ of possession was yet issued by RTC Branch 43.
Similarly, the Court rejects the CAs application of the principle of litis pendentia to Civil Case No. 99-03169-D in relation to Spec. Proc. No. 99-00988-D. Litis pendentia refers to that situation wherein another action is pending between the same parties for the same cause of actions and that the second action becomes unnecessary and vexatious. For litis pendentia to be invoked, the concurrence of the following requisites is necessary: (a) identity of parties or at least such as represent the same interest in both actions; (b) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and, (c) the identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res judicata in the other.
Applying the foregoing criteria in
the instant case, litis pendentia does not obtain in
this case because of the absence of the second and third requisites. The
issuance of the writ of possession being a ministerial function, and summary
in nature, it cannot be said to be a judgment on the merits, but simply an
incident in the transfer of title. Hence, a separate case for annulment of
mortgage and foreclosure sale cannot be barred by litis pendentia or res
judicata. Thus, insofar as Spec. Proc. No. 99-00988-D
and Civil Case No. 99-03169-D pending before different branches of
To sum up, the Court holds that the rule on indivisibility of the real estate mortgage cannot be equated with the venue of foreclosure proceedings on mortgaged properties located in different provinces since these are two unrelated concepts. Also, no prejudicial question can arise from the existence of a civil case for annulment of a certificate of sale and a petition for the issuance of a writ of possession in a special proceeding since the two cases are both civil in nature which can proceed separately and take their own direction independently of each other.
Furthermore, since the one-year
period to redeem the foreclosed properties lapsed on
WHEREFORE, the petition is DENIED.
MA. ALICIA AUSTRIA-MARTINEZ
ARTEMIO V. PANGANIBAN
CONSUELO YNARES-SANTIAGO ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice
MINITA V. CHICO-NAZARIO
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
ARTEMIO V. PANGANIBAN
 Penned by Associate Justice Andres B. Reyes, Jr. and concurred in by Associate Justices Cancio C. Garcia (now Associate Justice of this Court) and Romeo A. Brawner (now retired).
 Records, pp. 7-8.
 Should be
Notice of Extra-Judicial Sale, records, p. 52.
 CA rollo, p. 1.
 Petition, rollo, p. 15; and Memorandum, rollo, pp. 143-144.
 Comment, rollo, p. 114; and Memorandum, rollo, p. 152.
Packing Co., Inc. v. Court of Appeals, G.R. No. L-33084,
National Bank v. De los Reyes, G.R. Nos. 46898-99, November 28, 1989, 179
SCRA 619, 626; Philippine National Bank
v. Amores, G.R. No. L-54551,
 Aquino v. Macondray & Co. Inc., 97 Phil. 731, 741 (1955).
National Bank v.
 Entitled An Act To Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real-Estate Mortgages, approved on March 6, 1924.
 Supra, note 12.
 G.R. No. 148595,
v. Rivera, G.R. No. 154355,
 388 Phil. 857 (2000).
 Arquiza v. Court of Appeals, G.R. No. 160479, June 8, 2005, 459 SCRA 753, 765; Sps. Ong v. Court of Appeals, supra, note 36 at 867-868.
 De Vera v. Agloro, G.R. No.
155673, January 14, 2005, 448
SCRA 203, 214; Chailease Finance Corporation v. Ma, G.R. No. 151941,
 Philippine National Bank v. Sanao Marketing Corporation, supra, note 37 at 303.
 Idolor v. Court of Appeals, G.R. No. 161028, January 31, 2005, 450 SCRA 396, 403; Sps. Ong v. Court of Appeals, supra, note 36 at 866.
 Idolor v. Court of Appeals, supra, note 42 at 403; Sps. Ong v. Court of Appeals, supra, note 36 at 866-867.