526 Phil. 419
CALLEJO, SR., J.:
Promissory Note No. | Date | Amount (in Phil. Peso) | |
1. | 02-052-960971 | 29 August 1996 | 148,000 |
2. | 02-052-961095 | 23 September 1996 | 1,200,000 |
3. | 02-052-961122 | 27 September 1996 | 550,000 |
4. | 02-052-961205 | 11 October 1996 | 180,000 |
5. | 02-052-961231 | 18 October 1996 | 155,000 |
6. | 02-052-961252 | 24 October 1996 | 190,000 |
7. | 02-052-961274 | 30 October 1996 | 115,000 |
8. | 02-052-961310 | 8 November 1996 | 90,000 |
9. | 02-052-961373 | 21 November 1996 | 125,000 |
10. | 02-052-961442 | 6 December 1996 | 650,000 |
11. | 02-052-961464 | 12 December 1996 | 240,000 |
12. | 02-052-961498 | 19 December 1996 | 164,000 |
13. | 02-052-961542 | 27 December 1996 | 200,000 |
14. | 02-052-970018 | 3 January 1997 | 120,000 |
15. | 02-052-970052 | 10 January 1997 | 185,000 |
16. | 02-052-970078 | 15 January 1997 | 80,000 |
17. | 02-052-970087 | 17 January 1997 | 170,000 |
18. | 02-052-970131 | 23 January 1997 | 180,000 |
19. | 02-052-970163 | 31 January 1997 | 220,000 |
20. | 02-052-970190 | 7 February 1997 | 110,000 |
21. | 02-052-970215 | 13 February 1997 | 170,000 |
22. | 02-052-970254 | 20 February 1997 | 140,000 |
23. | 02-052-970293 | 28 February 1997 | 130,000 |
24. | 02-052-970345 | 7 March 1997 | 90,000 |
25. | 02-052-970367 | 13 March 1997 | 50,000 |
26. | 02-052-970402 | 21 March 1997 | 160,000 |
27. | 02-052-970422 | 26 March 1997 | 190,000 |
28. | 02-052-970453 | 4 April 1997 | 82,000 |
29. | 02-052-970478 | 11 April 1997 | 150,000 |
30. | 02-052-970502 | 17 April 1997 | 80,000 |
31. | 02-052-970539 | 25 April 1997 | 145,000 |
32. | 02-052-970558 | 30 April 1997 | 135,000 |
33. | 02-052-970589 | 8 May 1997 | 54,000 |
34. | 02-052-970770 | 25 June 1997 | 646,492 |
35. | 02-052-970781 | 27 June 1997 | 160,000 |
36. | 02-052-970819 | 4 July 1997 | 250,000 |
37. | 02-052-970852 | 11 July 1997 | 350,000 |
38. | 02-052-970926 | 1 August 1997 | 170,000 |
39. | 02-052-970949 | 5 August 1997 | 200,000 |
40. | 02-052-970975 | 8 August 1997 | 120,000 |
41. | 02-052-970999 | 15 August 1997 | 150,000 |
42. | 02-052-971028 | 22 August 1997 | 110,000 |
43. | 02-052-971053 | 29 August 1997 | 130,000 |
44. | 02-052-971073 | 4 September 1997 | 90,000 |
45. | 02-052-971215 | 12 September 1997 | 160,000 |
46. | 02-052-971253 | 19 September 1997 | 190,000 |
47. | 02-052-971280 | 26 September 1997 | 140,000 |
48. | 02-052-971317 | 2 October 1997 | 115,000 |
49. | 02-052-971340 | 10 October 1997 | 115,000 |
50. | 02-052-971351 | 15 October 1997 | 700,000 |
51. | 02-052-971362 | 16 October 1997 | 90,000 |
52. | 02-052-971394 | 24 October 1997 | 185,000 |
53. | 02-052-971407 | 29 October 1997 | 170,000 |
54. | 02-052-971449 | 6 November 1997 | 105,000 |
55. | 02-052-971464 | 13 November 1997 | 170,000 |
56. | 02-052-971501 | 20 November 1997 | 150,000 |
57. | 02-052-971527 | 25 November 1997 | 620,000 |
58. | 02-052-971538 | 28 November 1997 | 130,000 |
59. | 02-052-971569 | 4 December 1997 | 140,000 |
60. | 02-052-971604 | 12 December 1997 | 220,000 |
61. | 02-052-971642 | 18 December 1997 | 185,000 |
62. | 02-052-971676 | 23 December 1997 | 117,000 |
63. | 02-052-971688 | 29 December 1997 | 100,000 |
64. | 02-052-980019 | 7 January 1998 | 195,000 |
65. | 02-052-980032 | 8 January 1998 | 170,000 |
66. | 02-052-980064 | 15 January 1998 | 225,000 |
67. | 02-052-980079 | 23 January 1998 | 176,000 |
PN No. | Date | Amount | Annex |
2-052-980079 | January 02, 1998 | 176,000.00 | A |
2-052-980064 | January 15, 1998 | 225,000.00 | B |
2-052-980032 | January 08, 1998 | 170,000.00 | C |
2-052-980019 | January 07, 1998 | 195,000.00 | D |
2-052-971688 | December 29, 1997 | 100,000.00 | E |
2-052-971676 | December 23, 1997 | 117,000.00 | F |
2-052-971642 | December 18, 1997 | 185,000.00 | G |
2-052-971604 | December 12, 1997 | 220,000.00 | H |
2-052-971569 | December 04, 1997 | 140,000.00 | I |
2-052-971538 | November 28, 1997 | 130,000.00 | J |
2-052-971527 | November 25, 1997 | 620,000.00 | K |
2-052-971501 | November 20, 1997 | 150,000.00 | L |
2-052-971464 | November 13, 1997 | 170,000.00 | M |
2-052-971449 | November 06, 1997 | 105,000.00 | N |
2-052-971407 | October 29, 1997 | 170,000.00 | O |
2-052-971394 | October 24, 1997 | 185,000.00 | P |
2-052-971362 | October 16, 1997 | 90,000.00 | Q |
2-052-971351 | October 15, 1997 | 700,000.00 | R |
2-052-971340 | October 15, 1997 | 115,000.00 | S |
2-052-971317 | October 02, 1997 | 115,000.00 | T |
2-052-971280 | September 26, 1997 | 140,000.00 | U |
2-052-971253 | September 19, 1997 | 190,000.00 | V |
2-052-971215 | September 12, 1997 | 160,000.00 | W |
2-052-971073 | September 04, 1997 | 90,000.00 | X |
2-052-971053 | August 29, 1997 | 130,000.00 | Y |
2-052-971028 | August 22, 1997 | 110,000.00 | Z |
2-052-970999 | August 15, 1997 | 150,000.00 | AA |
2-052-970975 | August 08, 1997 | 120,000.00 | BB |
2-052-970949 | August 05, 1997 | 200,000.00 | CC |
2-052-970926 | August 01, 1997 | 170,000.00 | DD |
2-052-970852 | July 11, 1997 | 350,000.00 | EE |
2-052-970819 | July 04, 1997 | 250,000.00 | FF |
2-052-970781 | June 27, 1997 | 160,000.00 | GG |
2-052-970770 | June 25, 1997 | 646,492.00 | HH |
2-052-961442 | December 06, 1996 | 650,000.00 | II |
2-052-961095 | September 23, 1996 | 1,200,000.00 | JJ [11] |
WHEREFORE, it is respectfully prayed that, after trial, judgment be rendered in its favor and against defendants ordering them to pay the following:In her answer, respondent alleged, by way of special and affirmative defense, that the complaint was barred by litis pendentia, specifically, the pending petition for the extrajudicial foreclosure of the real estate mortgage, thus:Other reliefs just and equitable in the premises are similarly prayed for.[12]
- The amount TWELVE MILLION SIX HUNDRED SEVENTY-TWO THOUSAND PESOS and 31/100 (P12,672,000.31), with additional stipulated interest and penalty equivalent to one (1%) percent of the amount due for every thirty (30) days or fraction thereof, until fully paid;
- Expense of litigation amounting to P50,000.00;
- The amount of P500,000.00 as attorney's fees.
8) That plaintiff is guilty of forum shopping, in that some of the promissory notes attached to plaintiff's complaint are also the same promissory notes which were made the basis of the plaintiff in their extrajudicial foreclosure of mortgage filed against the defendant-spouses and also marked in evidence in support of their opposition to the issuance of the preliminary injunction in Civil Case No. 99-10864;Petitioner presented Emmanuel Ganuelas, its loan officer in its Bacolod City Branch, as sole witness. He testified that the spouses Coscolluela were granted an agricultural sugar loan which is designed to finance the cultivation and plantation of sugar farms of the borrowers.[14] Borrowers were allowed to make successive drawdowns or availments against the loan as their need arose. Each drawdown is covered by a promissory note with uniform maturity dates.[15] The witness also testified that the loan account of the spouses was a "single loan account."[16]
9) That plaintiff-bank has not only charged but over charged the defendant-spouses with excessive and exorbitant interest over and above those authorized by law. And in order to add more injury to the defendants, plaintiff also included other charges not legally collectible from the defendant-spouses;
10) That the act of the plaintiff-bank in seeking to collect twice on the same promissory notes is not only unfair and unjust but also condemnable as plaintiff seek to unjustly enrich itself at the expense of the defendants;
11) That there is another action pending between the same parties for the same cause;
12) That the claim or demand set forth in the plaintiff's complaint has either been waived, abandoned or otherwise extinguished.[13]
Meanwhile, on January 6, 2003, the parcel of land subject of the aforementioned real estate mortgage was sold at public auction where petitioner emerged as the highest bidder.[23]
- PUBLIC RESPONDENT GRAVELY ABUSED HER DISCRETION TANTAMOUNT TO LACK AND/OR EXCESS OF JURISDICTION IN HOLDING THAT THE RESPONDENT BANK CAN FILE SIMULTANEOUS ACTIONS FOR FORECLOSURE AND FOR COLLECTION.
WHEREFORE, the instant petition is GRANTED. The assailed Orders dated January 10, 2002 and February 19, 2002 are SET ASIDE.The CA cited the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icarañgal and Oriental Commercial Co., Inc.[25]
SO ORDERED.
During the pendency of this appeal, petitioner filed with this Court on December 2, 2005 a manifestation and joint motion for substitution, informing the court that petitioner bank has assigned to the Philippine Asset Investment, Inc. all its rights, title and interest over its non-performing loan accounts pursuant to Republic Act No. 9182 entitled "The Special Purpose Vehicle Act of 2002."I.
THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI OF RESPONDENT ON THE GROUND OF GRAVE ABUSE OF DISCRETION.x x x x
The Trial Court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in denying the Demurrer to Evidence filed by the respondents. Petitioner, in instituting a petition for the Extra Judicial Foreclosure of the Mortgage of respondents based on 31 promissory notes executed by respondents and another action to collect on a separate set of 36 promissory notes, did not split their cause of action.x x x x
The trial court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it denied respondents' Demurrer to Evidence. In this wise, the Petition for Certiorari filed by respondents should not have been granted.[29]
It bears stressing that a writ of certiorari is of the highest utility and importance for curbing excessive jurisdiction and correcting errors and most essential to the safety of the people and the public welfare. Its scope has been broadened and extended, and is now one of the recognized modes for the correction of errors by this Court. The cases in which it will lie cannot be defined. To do so would be to destroy its comprehensiveness and limit its usefulness.The aggrieved party is entitled to a writ of certiorari where the trial court commits a grave abuse of discretion amounting to excess or lack of jurisdiction in denying a motion to dismiss a complaint on the ground of litis pendentia. An appeal while available eventually is cumbersome and inadequate for it requires the parties to undergo a useless and time-consuming and expensive trial. The second case constitutes a rude if not debilitating imposition on the trial and the docket of the judiciary.[36]
The appropriate function of a certiorari writ is to relieve aggrieved parties from the injustice arising from errors of law committed in proceedings affecting justiciable rights when no other means for an adequate and speedy relief is open. It is founded upon a sense of justice, to release against wrongs otherwise irreconcilable, wrongs which go unredressed because of want of adequate remedy which would be a grave reproach to any system of jurisprudence.[35]
It was held in the case of Bendernagle v. Cocks, 19 Wend. 207 (32 Am.Dec. 448), that where a party had several demands or existing causes of action growing out of the same contract or resting in matter of account, which may be joined and sued for in the same action, they must be joined; and if the demands or causes of action be split up, and a suit brought for part only, and subsequently a second suit for the residue is brought, the first action may be pleaded in abatement or in bar of the second action. x x x[41]The rule against splitting causes of action is not altogether one of original legal right but is one of interposition based upon principles of public policy and of equity to prevent the inconvenience and hardship incident to repeated and unnecessary litigation.[42]
We hold, therefore, that, in the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other words, he may pursue either of the two remedies, but not both. By such election, his cause of action can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a personal action will leave open to him all the properties of the debtor for attachment and execution, even including the mortgaged property itself. And, if he waives such personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give him the right to sue for a deficiency judgment, in which case, all the properties of the defendant, other than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely accidental and are all under his right of election. On the other hand, a rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously or successively another action against the mortgaged property, would result not only in multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in the place of his residence or of the residence of the plaintiff, and then again in the place where the property lies.[50]If the mortgagee opts to foreclose the real estate mortgage, he thereby waives the action for the collection of the debt and vice versa.[51] If the creditor is allowed to file its separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, he will, in effect, be authorized plural redress for a single breach of contract at so much costs to the court and with so much vexation and oppressiveness to the debtor.[52]
Petitioner cannot split the loan account of respondent by filing a petition for the extrajudicial foreclosure of the real estate mortgage for the principal amount of P4,687,006.68 covered by the first set of promissory notes, and a personal action for the collection of the principal amount of P12,672,000.31 covered by the second set of promissory notes without violating the proscription against splitting a single cause of action against respondent.
- The terms and conditions of the Mortgage have been violated when the Mortgagors failed and/or refused to pay, notwithstanding repeated demands, the installment and/or maturity amount of the Mortgage obligation which became due and payable on the said date;
- Under the terms and conditions of the Mortgage Agreement, in the event the Mortgagors fail and/or refuse to pay the Mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall, without need for demand, notice, or any other act or deed, become immediately due, payable and defaulted;
- The Mortgage Agreement provides that upon such breach or violation of the terms and conditions thereof, the Mortgagee may, at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed the Mortgagee as its attorney-in-fact with full power and authority to enter the premises where the Mortgaged property is located and to take actual possession and control thereof without need of any order of any Court, nor written permission from the Mortgagors, and with special power to sell the Mortgaged Property at a public or private sale at the option of the Mortgagee.[53]
That for and in consideration of credit accommodation obtained from the MORTGAGEE, and to secure the payment of the same and those that may hereafter be obtained, the principal of all of which is hereby fixed at SEVEN MILLION PESOS ONLY (P7,000,000.00), Philippine Currency, as well as those that the MORTGAGEE may extend to the MORTGAGOR, including interest and expenses or any other obligation owing to the MORTGAGEE, whether direct or indirect, principal or secondary, as appears in the accounts, books and records of the MORTGAGEE, the MORTGAGOR does hereby transfer and convey by way of mortgage unto the MORTGAGEE, its successors or assigns, the parcels of land which are described in the list inserted on the back of this document and/or appended herein, together with all the buildings and improvements now existing or which may hereafter be erected or constructed thereon, of which the MORTGAGOR declares that he/it is the absolute owner free from all liens and encumbrances. However, if the MORTGAGOR shall pay to the MORTGAGEE, its successors or assigns, the obligation secured by this mortgage when due, together with interest, and shall keep and perform all and singular the covenants and agreements herein contained for the MORTGAGOR to keep and perform, then this mortgage shall be void, otherwise, it shall remain in full force and effect.[54] (Emphasis supplied)The testimony of Ganuelas in the RTC relative to the real estate mortgage follows:
Q | The real estate mortgage states: "That for and in consideration of credit accommodation obtained from the mortgagee." This simply means, Mr. Witness, that this mortgage is offered to secure loans already obtained by the mortgagor from the mortgagee Far East Bank and Trust Company. I am referring only to that phrase, obtained from the mortgagee, is that correct? | |
A | Yes, Sir. | |
| | |
Q | So from this phrase in the real estate mortgage, this mortgage was constituted to secure the credit accommodation already obtained by the mortgagor, the defendant spouses, as of the time of the execution of the real estate mortgage, is that correct? | |
A | Yes, Sir. | |
| | |
Q | Now since the loan secured by the defendants are evidenced by promissory notes, will you agree with me, Mr. Witness, that this real estate mortgage was executed for promissory notes already executed by the defendant spouses as of the time of the execution of the mortgage on June 13, 1997, is that correct? | |
A | Yes, Sir. | |
| |
- ATTY. MIRANO:
- For purposes of identification, we respectfully request that this phrase: "that for and in consideration of the credit accommodation obtained from the mortgagee" be bracketed and mark as Exhibit 6-B. (Acting court interpreter marking said phrase as Exhibit 6-B.)
Q | Now in accordance with the terms of this real estate mortgage, this real estate mortgage was executed by the defendant spouses not only to secure the loan already obtained by the said spouses as of the time of the execution of the mortgage on June 13, 1997 but also all other loans that may be extended by Far East Bank and Trust Company to the defendant spouses after the execution of the mortgage as stated in this portion of the real estate mortgage which we quote: "to secure the payment as and those that may hereafter be obtained," is that correct? | |
A | Yes, Sir. | |
| | |
Q | So from your statement, Mr. Witness, this real estate mortgage was offered by the defendant spouses as a security for the loans they already secured as of the time of the execution of the mortgage but also for the loans that they will secure thereafter, is that correct? | |
A | Yes, Sir.[55] (Emphasis supplied) |
The rule, of course, is well settled that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage. The exact amount, however, for which the mortgage is given need not always be specifically named. The amount for which the mortgage is given may be stated in definite or general terms, as is frequently the case in mortgages to secure future advancements. The amount named in the mortgage does not limit the amount for which it may stand as security, if, from the four corners of the document, the intent to secure future indebtedness or future advancements is apparent. Where the plain terms, of the mortgage, evidence such an intent, they will control as against a contention of the mortgagor that it was the understanding of the parties that the mortgage was security only for the specific amount named. (Citizens' Savings Bank v. Kock, 117 Mich. 225). In that case, the amount mentioned in the mortgage was $7,000. The mortgage, however, contained a provision that "the mortgagors agree to pay said mortgagee any sum of money which they may now or hereafter owe said mortgagee."Moreover, the series of loan advancements herein cannot be likened to the credit line discussed in Caltex Philippines, Inc. v. Intermediate Appellate Court,[58] as petitioner posited in its reply[59] filed before this Court. In Caltex, unlike the instant case, the real estate mortgage executed did not contain a "dragnet" clause[60] that would subsume all past and future debts. The mortgage therein specifically secured only the loans extended prior to the mortgage. Thus, in the said case, the future debts were deemed as constituting a separate transaction from the past debts secured by the mortgage.
At the time the action of foreclosure was brought, the mortgagors owed the mortgagee the sum of $21,522. The defendants contended that the amount to be recovered in an action to foreclose should be limited to the amount named in the mortgage. The court held that the amount named as consideration for the mortgage did not limit the amount for which the mortgage stood as security, if, from the whole instrument the intent to secure future indebtedness could be gathered. The court held that a mortgage to cover future advances is valid. (Michigan Insurance Co. v. Brown, 11 Mich. 265; Jones on Mortgages, 1, sec. 373; Keyes v. Bump's Administrator, 59 Vt. 391; Fisher v. Otis, 3 Pin. 78; Brown v. Kiefer, 71 N.Y. 610; Douglas v. Reynolds, 7 Peters [U.S.] 113; Shores v. Doherty, 65 Wis. 153)
Literal accuracy in describing the amount due, secured by a mortgage, is not required, but the description of the debt must be correct and full enough to direct attention to the sources of correct information in regard to it, and be such as not to mislead or deceive as to the amount of it, by the language used. Reading the mortgage before us from its four corners, we find that the description of the debt is full enough to give information concerning the amount due. The mortgage recites that it is given to secure the sum of P12,000, interest, commissions, damages, and all other amounts which may be found to be due at maturity. The terms of the contract are sufficiently clear to put all parties who may have occasion to deal with the property mortgaged upon inquiry. The parties themselves from the very terms of the mortgage could not be in ignorance at any time of the amount of their obligation and the security held to guarantee the payment.
When a mortgage is given for future advancements and the money is paid to the mortgagor "little by little" and repayments are made from time to time, the advancements and the repayments must be considered together for the purpose of ascertaining the amount due upon the mortgage at maturity. Courts of equity will not permit the consideration of the repayments only for the purpose of determining the balance due upon the mortgage. (Luengo & Martinez v. Moreno, 26 Phil. 111) The mere fact that, in contract of advancements, the repayments at any one time exceeds the specific amount mentioned in the mortgage will not have the effect of discharging the mortgage when the advancements at that particular time are greatly in excess of the repayments; especially is this true when the contract of advancement or mortgage contains a specific provision that the mortgage shall cover all "such other amounts as may be then due." Such a provision is added to the contract of advancements or mortgage for the express purpose of covering advancements in excess of the amount mentioned in the mortgage. (Luengo & Martinez v. Moreno, supra)
The sum found to be owing by the debtor at the termination of the contract of advancements between him and the mortgagee, during continuing credit, is still secured by the mortgage on the debtor's property, and the mortgagee is entitled to bring the proper action for the collection of the amounts still due and to request the sale of the property covered by the mortgage. (Luengo & Martinez v. Moreno, supra; Russell v. Davey, 7 Grant Ch. 13; Patterson First National Bank v. Byard, 26 N.J. Equity 225)
Under a mortgage to secure the payment of future advancements, the mere fact that the repayments on a particular day equal the amount of the mortgage will not discharge the mortgage before maturity so long as advancements may be demanded and are being received. (Luengo & Martinez v. Moreno, supra)[57]