Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 3277 January 8, 1907
LA JUNTA ADMINISTRADORA DE OBRAS PIAS, plaintiff-appellee,
vs.
NARCISO PATERNO, and now his heirs, defendants-appellants.
Ledesma, Sumulong & Quintos for appellants.
Del-Pan, Ortigas & Fisher for appellee.
xappel2, defendant-appellant.
JOHNSON, J.:
On the 21st day of October, 1884, the defendant herein executed and delivered to the plaintiff a mortgage for the sum of 10,000 pesos upon the following described property; "Situated in Calle Iris or Grand Divisoria, within the district of Santa Cruz of this city; bounded on the front of the said street, which runs between this property and Bilibid Prison; on the right and left by certain building lots belonging to Rafael de Coca and his wife Agustina Medel; and on the rear by lands belonging to Felipa Gonzaga and Felix and Carlos Mariano;" which mortgage was to continue for a period of four years and to bear 6 per cent interest, payable annually.
On the 30th day of December, 1886, the defendant executed and delivered to the plaintiff another mortgage for the additional sum of 5,000 pesos upon the same property and under the same conditions, with the understanding that the above mortgages should become due and payable on the 21st day of October, 1888, or before if there should occur any of the conditions mentioned in said mortgages.
On the 3d day of November, 1891, the plaintiff commenced an action in the court of Binondo, to recover of the defendant the amount of said mortgages with interest and costs.
On the 27th of January, 1892, the said Court of First Instance "despacho el oportuno mandamiento de ejecucion contra el dicho demandado y como no pagara el capital e intereses reslamados en el acto del requerimiento, se embargo la finca especialmente hipotecada y se deposito en 17 de Agosto, 1892, en poder de Luis R. Elizalde, apoderado general de la demandante."
On the 16th day of April, 1892, the defendant was declared to be in default. On the 29th day of April, 1892, the said court "dicto sentencia de remate, mandando seguir la ejecucion adelante."
Later in accordance with the provisions of the Code of Civil Procedure, said mortgaged property was duly appraised at the sum of 24,516.77 pesos.
On the 28th day of April, 1893, the said court ordered a public sale of the said property under the said appraisement, to take place on the 23d day of May of the same year.
On the said 23rd day of May, 1893, said mortgaged property was offered for sale at public auction, but no bids were offered for said property.
On the 24th day of May, 1893, the said court ordered a revaluation of said mortgaged property under the provisions of article 1486 of the said Code of Procedure and ordered another public sale of the same under the provisions of said article 1486. For the purpose of the second public sale of said property, it was valued at the sum of 18,387.76 pesos.
On the 21st day of June, 1893, after a notice of twenty days of the same, said property was offered at public sale the second time, without being sold, for the reason that no bidders appeared.
Without offering the said mortgaged property at public sale a third time, the plaintiff in the said original action took possession of the same and continued to administer it until the 16th day of February, 1905.
On the 16th day of February, 1905, the plaintiff filed a petition in the Court of First Instance of the city of Manila asking that his accounts in administering said property be approved and that the said mortgaged property be adjudged to it under article 1487 of the Code of Civil Procedure (old) at two-thirds of the said appraisement (18,387.76 pesos) or in the sum of 12,258.38 pesos, and that the court issue to him a deed for the said property.
It being made to appear of record that the defendant in the original action, Narciso Paterno, had died, his heirs were cited to appear as defendants in the petition of the plaintiff, of the said 16th day of February, 1905.
On the 2d day of August, 1905, the said heirs appeared by their attorneys and opposed the approval of the accounts presented by the plaintiff, as well as the adjudication of the said mortgaged property to the plaintiff. Said cause was finally presented to the Court of First Instance of the city of Manila.
On the 19th day of October, 1905, the said Court of First Instance of the city of Manila decided the said cause and approved the accounts presented by the plaintiff and adjudged said mortgaged property to the plaintiff at the sum of 12,258.38 pesos, and ordered that the defendants, after the expiration of eight days execute and deliver to the plaintiff a deed for said property. From this judgment the defendants appealed to this court.
The defendant having failed or refused to execute and deliver to the plaintiff a deed in accordance with said order of the court, the court on the 1st day of February, 1906, executed and delivered to the plaintiff a deed of said mortgaged property.
The objection made by the defendants to the adjudication of said mortgaged property to the plaintiff was based upon the provision contained in the said mortgaged for 10,000 pesos, dated October, 1884.
Paragraph 4 of said mortgage gave to the plaintiff the option of selling said mortgaged property at public sale when there should be a breach of any of the conditions of said mortgage. Paragraph 5 and 6 of said mortgage provided the conditions under which the plaintiff might sell said property without judicial intervention, as follows:
Quinto. Para vender la finca en un martillo, se anunciara la venta por un notario en los periodicos de esta capital con treinta dias de anticipacion, sirviendo de tipo para la postura en cantidad ascendente la suma de capital y premios que se adeuden, mas lo que prudencialmente calcule necesario la junta para atender a los gastos de subasta, la cual se hara con asistencia de notario.
Sexto. Si en la primera subasta no se presentaren postores, se anunciara por el mismo notario, con solo diez dias de antelacion, otra segunda subasta, bajando el tipo para hacer postura un veinte por ciento del tipo fijado para la subasta anterior. Si tampoco se presentasen postores en la segunda subasta, se anunciara una tercera con la misma antelacion de diez dias y baja de otro veinte por ciento de su tipo anterior; y si aun no se vendiere asi la finca por falta de postores, quedara la misma adjudicada a los fondos de Obras Pias por el tipo de la tercera subasta.
The plaintiff, however, elected to foreclose said mortgages in the courts. It was therefore obliged to foreclose said mortgages and to sell said mortgaged property under and in accordance with the provisions of the Code of Civil Procedure then in force.
After the failure to sell the said mortgaged property under the second attempt, as stated above, the plaintiff took possession of the said property, and from the accounts which it rendered it appears that the plaintiff has administered the same since the said 21st day of June, 1893.
While the record does not disclose, it is assumed that it took possession and administered the same in accordance with the provisions of article 1487 of the said Code of Civil Procedure. Under the provisions of the said last-mentioned article, the plaintiff had the right, after the failure of the second effort to sell said property, to have the same sold to it at two-thirds of the reduced appraised value. This it did not elect to do but did elect to take the same under administration, Inasmuch, therefore, as the plaintiff did not elect to have the property sold to it, after the failure to sell the same under the second attempt, its right to have the property adjudged to it is governed by the provisions of article 1511 of the said Code of Procedure. Said article provides:
The creditor may cease in the administration of the property whenever he deems it convenient, and may ask that it be advertised for sale at public auction at a reduced price of 25 per cent of its appraised value; and if there be no bidders, that the property or so much thereof as may be necessary to satisfy his claim he awarded him at two- thirds of such reduced value, less what he may have received in partial payment of his claim.
Under the above-quoted provision of the said code, the plaintiff, after it had accepted the administration of the property, can not ask that the same be adjudged to it without the necessity of a third public sale; therefore the judgment of the lower court relating to its administration of said mortgaged property, which were approved by the lower court, conform in all respects to the requirements of the said Code of Procedure. The judgment of the lower court approving of the same is therefore hereby affirmed.
After the expiration of twenty days let judgment be entered reversing that part of the judgment of the lower court adjudicating to the plaintiff the right to said mortgaged property and affirming that part of the judgment of the lower court approving the accounts presented by the plaintiff, with reference to the administration of said property, and ten days thereafter let the record be remanded to the court from whence it came for proper action. So ordered.
Arellano, C.J., Torres, Mapa, Carson, Willard and Tracey, JJ., concur.
MOTION FOR REHEARING.
FEBRUARY 13, 1907.
JOHNSON, J.:
After receiving notice of the decision of this court in the above-entitled cause, the plaintiff and appellee presents a motion for a rehearing, basing its motion upon the general ground that the conclusions of this court are wrong in law.
The original action commenced by the plaintiff against the defendant was an action to foreclose two certain mortgages. The said original action was commenced in the Court of First Instance of the district of Binondo on the 3d day of November, 1891, and was prosecuted under the Spanish Code of Procedure in Civil Actions. That code provided for various steps, from the beginning of an action to foreclose a mortgage to the time of the judgment and sale of the mortgaged property. That code provided (art. 1486) for a sale of the mortgaged property after the same had been appraised, and if at this first sale there were no bidders, the plaintiff might require that the property be sold to him at two-thirds of its appraised value, or that another public sale be ordered based upon a reduction of 25 per cent of the said appraised value, after notice of said second sale had been duly given in accordance with law. The record discloses that a second sale was ordered by the court. this fact is conclusive proof that the plaintiff did not elect to have the property sold to him at two- thirds of its first appraised value.
The same code also provides (art. 1487) that if no bids are offered at the second sale, the plaintiff may require either that the property be sold to him at two-thirds of the reduced appraised value or that he be entrusted with the management of the same for the purpose of applying the profits to the payment of the interest and of the principal obligation.
In the original decision the court stated that it presumed that the plaintiff elected to take said property in administration, for the reasons:
(a) That the record did not expressly show that the plaintiff had elected to have the property sold to it; and
(b) That from the accounts presented by the plaintiff that it had elected to take said property in administration.
The presumption of the court seems with reference to the absence of an express statement with reference to the first fact and the accounts actually presented by the plaintiff, showing its administration of said property.
The plaintiff, however, in its motion for a rehearing, asserts that the presumption that the plaintiff took the property in administration after the failure to sell the same at the second sale is rebutted by the fact that the plaintiff, through its representative, had taken the said property into administration even before the first offer to sell the same. The plaintiff accompanies its motion for a rehearing by additional excerpts from the record of the said Court of First Instance of the district of Binondo. This additional record (while the same is not complete) shows that upon the 8th day of January, 1892, the said court made an order directing the defendant to pay the amount of said mortgages and that upon the 27th day of January, 1892, the court issued an attachment upon said mortgaged property, the debt not having been paid in accordance with the order of the 8th of the same month.
The said additional record further shows that upon the 21st day of March, 1892, the court appointed Luis R. de Elizalde as receiver of said property, etc. It will be noticed that the Elizalde was appointed as a receiver of said property and in this capacity was a representative of the court and not a representative of the plaintiff in that particular capacity; however, at the same time he happened to be the representative of the plaintiff in its general business.
The additional record further discloses the fact that the said receiver, for reasons which the record does not set forth, did not take actual possession of the said property until the 17th day of August, 1892. The additional record further discloses that upon the same day or immediately following the delivery of the said mortgaged property to the said Elizalde he notified the tenants in the possession of the said property that thereafter the rent should be paid to him.
Nothing further of importance is disclosed by the record until the 28th day of April, 1893. On that date the record discloses that he said court of the district of Binondo made an order providing for the public sale of the said mortgaged property, which sale was ordered to take place on the 23d day of May of the same year. The record discloses that this order was made on the petition of one Jose C. Reyes, as representative of the plaintiff. The record further discloses that upon the said 23d day of May, 1893, the property was not sold for the reason that no bidders appealed.
The record further discloses that upon the 24th day of May, the said Reyes, in representation of the plaintiff, requested the court to order another sale of said property, which second sale was, by order of the court, directed to take place upon the 21st day of June of the same year. The record also discloses that upon the 21st day of June, 1893, the said property was offered for sale but was not sold for the reason that no bidders appeared.
An examination of the record of the court of the district of Binondo, or at least that part of it brought here, fails to disclose what disposition was actually made of the property after the failure to sell at this second sale, However, from an examination of the accounts presented by the plaintiff for confirmation in its action commenced in the Court of First Instance of the city of Manila on the 16th of February, 1905, we feel safe in assuming that the plaintiff did not elect at the time of the second sale to have the property sold to it at two-thirds of the reduced appraised value, but did elect to accept the administration of the same. In motion for a rehearing, the plaintiff attempts to make it appear that it was simply continuing in the administration of the said property under and by virtue of the order of the court appointing Luis R. de Elizalde receiver on the 21st day of March, 1892. This contention of the plaintiff can not be allowed. By referring to article 1487 it will be seen that after a second attempt to sell the mortgaged property and the plaintiff does not elect to have the same sold to him, that then the "judicial administration of said property ceases." So we are necessarily driven to the conclusion that in the absence of express proof of the fact that the plaintiff elected to have the property sold to it after the second failure to sell the same, that it elected to take the management thereof, for the purposes mentioned in article 1487.
The implied contention of the plaintiff in its motion for a rehearing is that the court can not presume that the plaintiff elected to take said property in administration unless the record expressly shows that fact. In the present at the second sale, continued in the administration of the same from the 21st day of June, 1893, until the 16th day of February, 1905, a period of nearly twelve yeas, and then elected to have said property sold to it, without offering the same at public sale the third time. If the contention of the plaintiff is permissible, then the party plaintiff may take advantage of both of the conditions — to wit, to take the property in administration and to have the same sold to it — provided for in article 1487. If the plaintiff in an action to foreclose a mortgaged property for a period of twelve or more years and then elect to have the same sold to him without the necessity of a third sale, he may elect to continue in the administration of it for any number of years under the same conditions and thus defeat the provisions of article 1511, even though the property has greatly increased in value. It seems to be a just interpretation of article 1487 to hold that the mortgagee, immediately after a failure to sell the mortgaged property at a second sale, must then and there elect either to have the property sold to him or take the same in administration, and that he can not be permitted to continue in the administration of the property for an indefinite period and then elect to have the same sold to him. If he elects either expressly or impliedly to take the property in administration, the he can not have the same sold to him without complying with article 1511 of said code.
The fact being established then beyond doubt that the plaintiff elected to accept the administration of the property instead of electing to have the same sold to it after the second failure to sell, the plaintiff is necessarily governed by the provisions of article 1511 of said Code of Procedure in Civil Action in its attempt now to have said property adjudged to it.
For the foregoing reasons the motion for a rehearing is denied. So ordered.
Arellano, C.J. Torres, Mapa, Carson, Willard and Tracey, JJ., concur.
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