Bank of the Philippine Islands v. Green
REITERATIONFacts
The Antecedents: The Bank of the Philippine Islands (BPI) filed a complaint against B.A. Green to recover a mortgage credit and foreclose properties. An amended judgment ordered Green to pay P57,900 minus P62.24, with 12% interest, attorney's fees, and costs, and to deposit the amount within 90 days, failing which the mortgaged properties would be sold. This judgment was affirmed on appeal. Green failed to deposit the amount, and the mortgaged property in Azcarraga Street was sold at public auction for P25,000, with BPI as the highest bidder. The O'Briens held a second mortgage on this property, which was noted on the transfer certificate of title. BPI filed an independent action to compel the O'Briens to redeem the property, and upon their failure, their second mortgage was declared extinguished. Procedural History: BPI later filed a complaint in the Court of First Instance of Rizal against B.A. Green and the O'Briens to recover the balance of the judgment and foreclose the remaining mortgaged lands in Rizal. This case was appealed, and the Supreme Court reversed the judgment, ordering its dismissal without prejudice to legally instituted proceedings for final adjudication. The Petition: Six years after the original judgment became final, BPI filed the present complaint to revive the judgment entered in civil case No. 24594 and execute the balance on the mortgaged properties in Rizal, where the O'Briens held a second mortgage. The trial court rendered a judgment ordering the foreclosure of these properties and declaring the O'Briens' right as second mortgagees extinguished if they failed to redeem.
Issue(s)
Whether the trial court erred in overruling the demurrer to the complaint on grounds of vagueness, ambiguity, unintelligibility, misjoinder of defendants, failure to state a cause of action against the O'Briens, and lack of jurisdiction. Whether the trial court erred in rendering a judgment for the foreclosure of Green's properties in Rizal and declaring the O'Briens' mortgage lien extinguished. Whether the trial court erred in not holding that the unpaid balance of the judgment against Green is a personal money judgment and not secured by the properties in Rizal.
Ruling
The Supreme Court modified the judgment. It revived the judgment foreclosing the mortgage entered in civil case No. 24594 and ordered the public sale of the mortgaged properties situated in Pasay, Province of Rizal, to satisfy the unpaid balance, plus land taxes and interest, and attorney's fees. However, the complaint was dismissed as to the second mortgagees (the O'Briens), without special pronouncement as to costs.
Ratio Decidendi
On the demurrer and misjoinder of defendants: The Court held that the complaint did not allege two distinct causes of action but rather sought to revive a single judgment for mortgage foreclosure covering properties in both Manila and Rizal. The revival of a judgment, under Section 447 of the Code of Civil Procedure, requires an ordinary action based on the judgment. However, the Court clarified that a second mortgagee, who was not a party to the original judgment sought to be revived, cannot be included as a defendant in an action to revive that judgment. Therefore, the complaint should be dismissed with respect to the O'Briens as second mortgagees in the context of reviving the judgment against Green. On the foreclosure of properties in Rizal and the O'Briens' mortgage lien: The Court found that while the original judgment ordered the foreclosure of all mortgaged properties, including those in Rizal, the Bank of the Philippine Islands (BPI) only foreclosed the property in Manila. The present action was filed more than five years after the original judgment became final, thus losing its executory force. While the judgment could be revived against B.A. Green, the O'Briens, as second mortgagees, had rights that could not be summarily extinguished in an action to revive a judgment to which they were not parties. The Court's previous ruling in civil case No. 4099 had already directed the dismissal of the petition concerning the O'Briens without prejudice to legally instituted proceedings for the final adjudication of their claims. On the nature of the unpaid balance and interest: The Court determined that the unpaid balance of the judgment against Green was indeed a mortgage indebtedness secured by the properties in Rizal. However, it ruled that BPI was not entitled to charge interest on this balance for the period of delay in enforcing its rights. The delay in filing the present action, which occurred six years after the original judgment became final, meant that BPI could not recover interest, attorney's fees, and costs accumulated from the confirmation of the sale of the Manila property up to the filing of the current complaint. This was deemed unfair to B.A. Green and, consequently, to the O'Briens as second mortgagees.
Main Doctrine
A judgment foreclosing a mortgage, which has lost its executory force due to the lapse of five years, may be revived by filing a complaint based thereon. However, a second mortgagee, not a party to the original judgment, cannot be included as a defendant in an action to revive said judgment. Furthermore, a mortgagee who forecloses only a part of the mortgaged properties and delays the foreclosure of the remainder beyond five years is not entitled to charge interest on the balance for the period of delay.