Dilag v. Heirs of Resurreccion
REITERATIONFacts
The Antecedents: Laureano Marquez was indebted to Fortunato Resurreccion for P5,000, the balance of the purchase price of a parcel of land. Resurreccion, in turn, owed P5,000 to Luzon Surety Company, secured by a mortgage on three parcels of land, one of which was the land sold to Marquez. Marquez agreed to pay Resurreccion's debt to Luzon Surety Company in satisfaction of his own debt. Marquez failed to pay, leading to the judicial foreclosure of the mortgage by Luzon Surety Company. On April 25, 1936, pending the foreclosure sale, Marquez executed a document (Exhibit A) wherein he committed to pay Luzon Surety Company the debt of Resurreccion, including interest, attorney's fees, and costs. He also agreed to pay Resurreccion the real value of the mortgaged properties if they were sold at public auction due to his failure to pay, and constituted a second mortgage on five parcels of his own land and any future property he might acquire to secure these obligations. Marquez later received Transfer Certificate of Title No. 16562 for one of his lands (lot No. 2811) to sell it, with the proceeds to be paid to Luzon Surety Company. Procedural History: Fortunato Resurreccion filed an action against Laureano Marquez to recover the value of the lost properties (P16,500), indemnity for rents (P2,000), and attorney's fees (P1,000), and to foreclose the mortgage in Exhibit A. The Court of First Instance ruled in favor of the plaintiff. The Court of Appeals affirmed with modification, ordering Marquez to pay P16,500 plus P1,246 for rents and P1,000 for attorney's fees, minus P5,255.99 already paid, with legal interest. If payment was not made within 90 days, the mortgaged properties in Exhibit A would be sold at public auction. The Petition: The case reached the Supreme Court via certiorari, with petitioner Laureano Marquez (as administrator of the estate of the deceased Laureano Marquez) assigning several errors to the Court of Appeals' decision, primarily questioning the validity of the sale agreement and Exhibit A, and the enforceability of the mortgage.
Issue(s)
Whether the Court of Appeals erred in not holding that the verbal sale agreement and Exhibit A were void ab initio due to lack of consideration or lack of judicial approval. Whether the Court of Appeals erred in not holding that Laureano Marquez signed Exhibit A merely for accommodation. Whether Fortunato Resurreccion had the right to enforce Exhibit A regarding damages for the loss of lands not belonging to him. Whether the Court of Appeals erred in ordering the sale of five parcels of land not specifically described in the mortgage deed Exhibit A. Whether the award of P1,246 for rents was proper.
Ruling
The Supreme Court modified the decision of the Court of Appeals. It affirmed the judgment for the heirs of Fortunato Resurreccion for P16,500 with legal interest and P1,000 for attorney's fees, but eliminated the P1,246 awarded for rents. The Court also ruled that the foreclosure sale should be limited to the five parcels of land specifically described in Exhibit A, and not include any future properties acquired by Marquez. The Court sustained the fifth assignment of error regarding the invalidity of the mortgage on subsequently acquired properties.
Ratio Decidendi
On the validity of the sale agreement and Exhibit A: The Court found no factual basis in the Court of Appeals' decision to support the petitioner's claim that the sale agreement or Exhibit A were void ab initio for lack of consideration or judicial approval. The Court of Appeals found that Marquez signed Exhibit A not for accommodation but as an obligation arising from his purchase of land and his failure to pay the balance, which led to Resurreccion's default. The Court emphasized that it cannot reverse a lower court's judgment based on alleged facts not found by that court. On the right to enforce Exhibit A for damages: The Court held that Fortunato Resurreccion had the right to enforce Exhibit A even for damages caused by the loss of lands that did not belong to him, citing Section 3 of Rule 3 of the Rules of Court. This rule allows a party with whom or in whose name a contract is made for the benefit of another to sue without joining the beneficiary. The Court reasoned that the stipulation in Exhibit A to pay the real value to Resurreccion or the owners of the lands was a contract made for the benefit of the owners, and Resurreccion, as the party to the contract, could enforce it. On the mortgage of subsequently acquired properties: The Court sustained the fifth assignment of error, ruling that the stipulation in Exhibit A to mortgage future property was invalid. The Court cited Article 1857 of the Civil Code, which prohibits mortgaging property not yet owned by the mortgagor. Furthermore, for a mortgage to be valid, the instrument must be recorded, and the registration of Exhibit A could not affect subsequently acquired parcels not specifically described therein. The Court noted that the filing of a notice of lis pendens for these properties only emphasized the absence of a valid mortgage. On the award of rents: The Court found error in the award of P1,246 for rents. The Court reasoned that Marquez's undertaking in Exhibit A was to pay the real value of the lost properties, not subsequent rents. If indemnified for the value of the land, the owner is not entitled to subsequent income. The Court found no basis for the award, as the period for which the rent was claimed was not shown, and Marquez could not be liable for rent after the sale. On the issue of accommodation: The Court rejected the claim that Marquez signed Exhibit A for accommodation. The Court of Appeals found that Marquez had executed prior documents (Exhibits O and Q) acknowledging his obligation to pay Resurreccion's debt due to his own outstanding balance for the land purchase. The Court also noted Marquez's negotiations with Luzon Surety Company for extensions, indicating his awareness and acceptance of the obligation.
Main Doctrine
A stipulation in a mortgage instrument purporting to mortgage future property is invalid, as a mortgage can only be constituted over property owned by the mortgagor at the time of its execution. Furthermore, a notice of lis pendens does not create a mortgage but merely serves to notify third parties of the pendency of an action concerning the property.