Yu v. Philippine Commercial International Bank
REITERATIONFacts
The Antecedents: Spouses Vicente and Demetria Lee-Yu, along with spouses Ramon and Virginia Tiu, mortgaged several parcels of land in Dagupan City and Quezon City to Philippine Commercial International Bank (PCIB) as security for a P9,000,000.00 loan. Upon the petitioners' failure to pay the loan, interest, and penalties, PCIB initiated an extra-judicial foreclosure proceeding for the Dagupan City properties. Procedural History: The extra-judicial foreclosure sale of the Dagupan City properties occurred on September 10, 1998, with PCIB emerging as the highest bidder. A Certificate of Sale was issued and registered. Subsequently, PCIB filed an Ex-Parte Petition for Writ of Possession before the Regional Trial Court (RTC) of Dagupan City. The petitioners filed a Motion to Dismiss and to Strike Out Testimony, arguing the Certificate of Sale was void due to alleged violations of the Civil Code's indivisibility rule and discrepancies in the stated loan amounts. They also filed a separate civil case for Annulment of Certificate of Sale. The RTC denied their motion, ruling that a motion to dismiss is not allowed in writ of possession proceedings and that the pendency of the annulment case was not a prejudicial question. The Court of Appeals (CA) affirmed the RTC's decision, dismissing the petitioners' certiorari petition and subsequent motion for reconsideration. The Petition: The petitioners seek a review on certiorari of the CA's decision. They raise two main issues: (1) whether real estate mortgages over properties in different locations can be foreclosed separately, and (2) whether the pendency of a civil case for annulment of the sale constitutes a prejudicial issue that would render the writ of possession proceedings moot. The petitioners argue that the indivisibility of the mortgage prohibits separate foreclosures and that the annulment case should have been resolved first. They also contend that Section 8 of Act No. 3135 allows for separate proceedings to challenge the sale. The respondent bank counters that separate foreclosures are permissible based on the location of the properties and administrative procedures, and that a writ of possession is a ministerial duty after the redemption period expires, irrespective of a pending annulment case.
Issue(s)
Whether a real estate mortgage over several properties located in different localities can be separately foreclosed in different places. Whether the pendency of a civil case for annulment of a certificate of sale constitutes a prejudicial question to a petition for the issuance of a writ of possession.
Ruling
The petition is DENIED. The Court affirmed the Court of Appeals' decision dismissing the petition for review on certiorari.
Ratio Decidendi
On the issue of separate foreclosures of mortgaged properties in different localities: The Court clarified that the indivisibility of a real estate mortgage, as provided in Article 2089 of the Civil Code, means that the entire mortgaged property answers for the entire debt, and a debtor cannot demand the release of a portion of the property unless the entire debt is satisfied. This rule does not prohibit separate foreclosure proceedings for properties located in different provinces. The venue for extra-judicial foreclosure is governed by Section 2 of Act No. 3135, which mandates that the sale must be made in the province where the property is situated. Administrative Matter No. 99-10-05-0 also allows for the foreclosure of properties in different locations covering one indebtedness, with a certificate of payment serving to docket the application in the respective Clerks of Court where other properties are located. Therefore, conducting separate foreclosure proceedings in Dagupan City and Quezon City for properties located therein does not violate the principle of indivisibility of the mortgage, as each property remains answerable for the entire debt. On the issue of prejudicial question: The Court held that a civil case for annulment of a certificate of sale is not a prejudicial question to a petition for the issuance of a writ of possession. A prejudicial question is one that arises in a civil case, the resolution of which is a logical antecedent to the issue in another case, typically involving a civil and a criminal action, to avoid conflicting decisions. In this case, both the annulment of the sale and the petition for a writ of possession are civil in nature. The issue in the annulment case is the validity of the foreclosure, while the issue in the special proceeding is the entitlement to possession after the redemption period has expired. These two cases can proceed independently. The Court also clarified that Section 8 of Act No. 3135, which allows a debtor to petition to set aside the sale and cancel the writ of possession, is not applicable here because it presupposes that a writ of possession has already been issued, which was not the case when the separate civil suit was filed. Furthermore, the issuance of a writ of possession is a ministerial duty of the court once the redemption period has lapsed and title has consolidated in the purchaser, and any question regarding the validity of the mortgage or foreclosure cannot legally bar its issuance. The Court also rejected the CA's application of litis pendentia, as the issuance of a writ of possession is a summary and ministerial act, not a judgment on the merits, and thus cannot be subject to res judicata.
Main Doctrine
The indivisibility of a real estate mortgage pertains to the entirety of the mortgaged property answering for the whole debt, not to the venue of foreclosure proceedings, which is determined by the location of the mortgaged properties. Furthermore, a civil case for annulment of a certificate of sale is not a prejudicial question to a petition for the issuance of a writ of possession, as the latter is a ministerial duty of the court after the redemption period has expired.