Somes v. Government of the Philippine Islands
REITERATIONFacts
The Antecedents: Enrique Somes (plaintiff) sought to annul a judgment in a mortgage foreclosure proceeding initiated by the Government of the Philippine Islands (defendant) and to prevent the sale of the mortgaged property. The Government had granted an P8,000 loan to Vicente Somes, secured by a mortgage on a property. Nieves Chofre (intervenor) had obtained a judgment for support against her husband, Vicente Somes, and had attached the same property. Notices of lis pendens were noted on the property's title by both Enrique Somes and Nieves Chofre. Procedural History: The Government initiated a mortgage foreclosure suit (Civil Case No. 38999) against Vicente Somes. Neither the receiver, the plaintiff Enrique Somes, nor the intervenor Nieves Chofre were joined as defendants. Vicente Somes defaulted, and a judgment was rendered in favor of the Government, ordering the sale of the property upon failure to pay. This judgment became final. Subsequently, Enrique Somes filed the present action to annul this foreclosure judgment, arguing it was premature. The trial court ruled the foreclosure suit premature, converted the preliminary injunction into a final one, and restrained the defendants from selling the property. The Petition: The Government appealed the trial court's decision, arguing that the foreclosure judgment was valid and that the lower court erred in declaring it null and void and in restraining the execution.
Issue(s)
Whether the mortgage foreclosure action was premature. Whether the plaintiff, intervenor, and receiver should have been joined as defendants in the foreclosure proceedings. Whether the notices of lis pendens and the attachment prevented the execution of the foreclosure judgment.
Ruling
The appealed judgment is reversed. The judgment rendered in mortgage foreclosure proceedings No. 38999 of the Court of First Instance of Manila is declared valid and legal. The preliminary injunction issued against the defendants is set aside, and the defendants are absolved from the complaint and the complaint in intervention, with costs against the plaintiff and the intervenor.
Ratio Decidendi
On whether the mortgage foreclosure action was premature: The Court held that the foreclosure action was not premature. While the validity of the mortgage was still under determination in a separate case (G.R. No. 38552), this fact became academic once this Court rendered a final and executory judgment affirming the validity and effectiveness of the Government's mortgage. The Court noted that the Government's mortgage was constituted prior to the appointment of a receiver and that the foreclosure action was not for the purpose of obtaining possession, thus rendering court permission unnecessary. On whether the plaintiff, intervenor, and receiver should have been joined as defendants: The Court ruled that while Section 255 of the Code of Civil Procedure requires the joinder of parties claiming an interest subordinate to the mortgage, this provision is merely directory and not mandatory. The failure to implead the plaintiff, intervenor, and receiver did not invalidate the foreclosure proceedings or the judgment rendered therein because their interests, if any, were subordinate to the Government's mortgage right. The Court cited previous rulings in Fanlo vs. Albaladejo, Sun Life Assurance Co. of Canada vs. Gonzalez Diez, and Government of the Philippine Islands vs. De las Caligas, which established that the failure to join subordinate lienholders does not affect the court's jurisdiction or the validity of the foreclosure decree between the parties, though it may leave the subordinate lienholder's equity of redemption unforeclosed. On whether the notices of lis pendens and the attachment prevented the execution of the foreclosure judgment: The Court clarified that a notice of lis pendens does not create a right or lien but merely informs purchasers that the property is subject to litigation. The plaintiff's notice of lis pendens had no effect against the Government's prior mortgage. The intervenor's notice was also ineffective as her right arose from a money judgment, which was personal in character and did not involve the mortgaged property directly. The attachment by the sheriff, while creating a lien, was inferior to the Government's lawfully constituted mortgage. Therefore, these notations and the attachment did not constitute justifiable causes to prevent the execution of the foreclosure judgment.
Main Doctrine
Failure to implead subordinate lienholders or parties with notices of lis pendens in a mortgage foreclosure proceeding does not invalidate the foreclosure judgment as between the parties, although it may leave the rights of the unjoined parties unforeclosed. Such joinder is directory, not mandatory, for the court's jurisdiction.