Komatsu Industries (Phils.), Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Komatsu Industries (Phils.) Inc. (KIPI) obtained loans from National Investment and Development Corporation (NIDC) and Philippine National Bank (PNB). KIPI executed a Deed of Real Estate Mortgage in favor of NIDC, which was later amended to include PNB as a joint mortgagee on a pari passu basis to secure KIPI's obligations to both entities. Upon full payment of its obligations to NIDC, NIDC executed a Deed of Release and Cancellation of Mortgage. Subsequently, PNB requested the return of the owner's copy of the title and filed a Petition for Correction of Entry and Adverse Claim. PNB also initiated extrajudicial foreclosure proceedings on the mortgaged property. Procedural History: The trial court ruled in favor of KIPI, declaring the extrajudicial foreclosure invalid. The Court of Appeals reversed the trial court's decision, upholding the validity of the mortgage to PNB and the extrajudicial foreclosure, and dismissing KIPI's claim for damages. KIPI filed a motion for reconsideration, which was denied. KIPI then filed a second motion for reconsideration with the Supreme Court, which was also denied. The Petition: Petitioner KIPI filed a Motion for Leave to file an Incorporated Second Motion for Reconsideration of the Supreme Court's Resolution of September 10, 1997, arguing that the Court of Appeals and the Supreme Court had committed errors and irregularities in their dispositions. KIPI contended that its petition for review on certiorari was denied without sufficient showing of reversible error by the Court of Appeals, and that its subsequent motions for reconsideration were also denied without proper consideration. KIPI further argued that the Supreme Court's "minute resolutions" were in violation of Article VIII, Section 14 of the Constitution. In its second motion for reconsideration, KIPI also raised for the first time the issue of whether it was entitled to redeem its foreclosed property, a contention that was dismissed by the Supreme Court as not having been raised in the lower courts and having been rendered moot by the execution of a Deed of Assignment of Right of Redemption.
Issue(s)
Whether the Supreme Court's "minute resolutions" denying petitions for review on certiorari violate Section 14, Article VIII of the Constitution. Whether a Deed of Release executed solely by one joint mortgagee (NIDC) can release the mortgage in favor of another joint mortgagee (PNB) who was not a signatory to the deed. Whether the Amendment of Mortgage Deed, which included obligations to both NIDC and PNB on a pari passu basis, is valid. Whether the extrajudicial foreclosure of the entire mortgaged property is valid despite the partial payment of obligations and the existence of joint mortgages. Whether KIPI is entitled to damages (damnum absque injuria).
Ruling
The Supreme Court denied petitioner's second motion for reconsideration, holding it to be an unauthorized pleading. The Court reiterated that minute resolutions denying petitions for review on certiorari are not decisions within the constitutional requirement of expressing facts and law, provided a legal basis is given. The Court affirmed the Court of Appeals' ruling that the Deed of Release executed by NIDC did not bind PNB, that the Amendment of Mortgage Deed was valid, that the extrajudicial foreclosure was valid due to the indivisibility of the mortgage, and that KIPI was not entitled to damages.
Ratio Decidendi
On the constitutionality of minute resolutions: The Court reiterated that "minute resolutions" denying petitions for review on certiorari are not "decisions" within the meaning of Section 14, Article VIII of the Constitution. These resolutions merely hold that the petition should not be entertained, and the grant of due course to a petition is a matter of sound judicial discretion. The constitutional mandate applies only to cases "submitted for decision," meaning those given due course and after the filing of briefs or memoranda. When the Court denies due course and states the legal basis, such as the questions being factual or the absence of reversible error, there is sufficient compliance. On the Deed of Release and its effect on PNB's mortgage: The Court affirmed the Court of Appeals' finding that the Deed of Release executed solely by NIDC did not operate to release the real estate mortgage in favor of PNB. This is because PNB was not a signatory to the deed and had not ratified it. Contracts take effect only between the parties thereto, their assigns, and heirs, and cannot bind a non-party even if they are aware of the contract. The Court emphasized that PNB promptly objected to the erroneous cancellation of its mortgage. On the validity of the Amendment of Mortgage Deed: The Court agreed with the Court of Appeals that the Amendment of Mortgage Deed was valid. The argument that Article 2089 of the Civil Code prohibits a mortgagor from mortgaging the same property for separate and distinct debts in favor of different creditors was rejected. The Court clarified that Article 2089 prohibits a mortgagor from demanding the release of the mortgage in proportion to the debt paid; the debt must be paid in full before release. The amendment secured both NIDC's and PNB's obligations, and the pari passu stipulation was permissible. On the validity of the extrajudicial foreclosure: The Court upheld the validity of the extrajudicial foreclosure. It reiterated the principle that a mortgage is indivisible in nature, meaning payment of a part of the secured debt does not extinguish the entire mortgage. The mortgage instrument contemplated future obligations, making a division of the mortgaged property impractical. Therefore, the foreclosure of the entire Pasong Tamo property was valid, even though the Deed of Release only pertained to NIDC's obligation, as PNB's mortgage subsisted. On the entitlement to damages: The Court ruled that KIPI was not entitled to any award of damages based on the principle of damnum absque injuria. This principle states that a loss or damage which does not constitute the violation of a legal right or amount to a legal wrong does not create a ground for legal redress. Since the foreclosure was deemed valid and the mortgage subsisting in favor of PNB, KIPI's loss did not arise from a legal wrong committed by PNB.
Main Doctrine
A second motion for reconsideration is generally prohibited. Minute resolutions denying petitions for review on certiorari are not decisions within the constitutional requirement of expressing facts and law, as long as a legal basis is given. A deed of release executed by one joint mortgagee does not bind the other mortgagee if the latter was not a signatory and did not ratify it. A mortgage is indivisible, and foreclosure of the entire property is valid even if only one of the secured obligations remains unpaid.