Manahan v. Cruz
REITERATIONFacts
The Antecedents: Ambrosio Manahan, as registered owner of two parcels of land in Caloocan City, executed a mortgage on January 13, 1959, in favor of Philippine National Bank (PNB). On September 20, 1961, Manahan executed a Deed of Sale with Assumption of Mortgage over the lands in favor of Rapid Construction Supplies, Inc., which assumed the mortgage debt under the same terms and conditions. The titles to the lands were transferred to Rapid Construction Supplies, Inc. Due to failure to satisfy the mortgage indebtedness, PNB extra-judicially foreclosed the mortgage. A Certificate of Sale was issued on June 4, 1964. Procedural History: On April 28, 1965, PNB filed a petition for a writ of possession. On June 16, 1965, the respondent Judge granted the writ. On July 9, 1965, the City Sheriff served a notice to vacate, including the residential building on the property. Manahan filed an Ex-Parte Urgent Motion to exclude the residential building from the writ of possession. On April 15, 1966, the respondent Judge issued an order stating that the residential building was deemed included in the Certificate of Sale and the writ of possession, and authorized the sheriff to break open the padlock to carry out the writ. The Petition: Manahan filed a petition for certiorari and prohibition, seeking to set aside the order of the respondent Judge, contending that the residential building was not intended to be included in the mortgage. The Supreme Court issued a preliminary injunction.
Issue(s)
Whether the residential building constructed on the mortgaged parcels of land is included in the extra-judicial foreclosure sale and the subsequent writ of possession, even if not expressly mentioned in the deed of sale with assumption of mortgage.
Ruling
The petition for certiorari and prohibition is dismissed. The preliminary injunction issued by the Supreme Court is set aside and declared to be of no further force and effect. Costs are against the petitioner.
Ratio Decidendi
On Issue 1: The Supreme Court affirmed that the residential building is included in the mortgage and, by extension, in the extra-judicial foreclosure sale and the writ of possession. The Court explicitly relied on Article 2127 of the Civil Code of the Philippines, which states that a mortgage extends to "natural accessions, to the improvements, growing fruits, and the rents or income not yet received when the obligation becomes due." This provision is a reiteration of Article 1877 of the former Civil Code. The Court emphasized that this principle has been authoritatively interpreted and uninterruptedly adhered to since the 1909 decision in Bischoff v. Pomar. Jurisprudence, including Cu Unjieng e Hijos v. Mabalacat Sugar Co., consistently holds that improvements on mortgaged property form an integral part of the mortgage, following the legal maxim that the accessory follows the principal. Furthermore, the Court noted that the equities of the case supported the respondent Judge's order, as the petitioner and his spouse were involved in both the original mortgage and the subsequent deed of sale with assumption of mortgage, with the spouse even acting as an attorney-in-fact for the vendee corporation. To claim ignorance of the mortgage's scope under these circumstances would run counter to principles of bona fides in business transactions, making certiorari and prohibition, as equitable remedies, unsuitable.
Main Doctrine
Under Article 2127 of the Civil Code, a mortgage extends to the natural accessions, improvements, growing fruits, and rents or income not yet received when the obligation becomes due, and to the indemnity granted or owing to the proprietor from insurers or in virtue of expropriation. This includes buildings constructed on the mortgaged land.