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https://www.lawyerly.ph/juris/view/c1222?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09
[VICENTE DIAZ v. SECUNDINO DE MENDEZONA ET AL.](https://www.lawyerly.ph/juris/view/c1222?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. 24824, Jan 30, 1926 ]

VICENTE DIAZ v. SECUNDINO DE MENDEZONA ET AL. +

DECISION

48 Phil. 666

[ G.R. No. 24824, January 30, 1926 ]

VICENTE DIAZ AND TEODORA RUBILLOS, PLAINTIFFS AND APPELLEES, VS. SECUNDINO DE MENDEZONA ET AL., DEFENDANTS. SECUNDINO DE MENDEZONA, APPELLANT.

D E C I S I O N

VILLAMOR, J.:

It appears from the record  that the plaintiffs-appellees commenced an  action in the Court  of  First Instance  of Leyte for the collection of a mortgage credit of P10,000. Defendant-appellant  was  adjudged  in default  and the court rendered  judgment, ordering the sale  of  the mortgaged properties.  Before the  expiration of the period  of ninety days that the law grants the debtor within which to pay the amount of the indebtedness, a writ of execution was issued on March 24,  1919, which was duly enforced by the sheriff, selling the mortgaged properties and giving possession  thereof  to the  plaintiffs-appellees  on June 18, 1919.

Upon motion  of the defendant-appellant, the lower court on  September 22, 1920, annulled all  the proceedings had under the writ of execution, including the sale of the mortgaged  property.  The  plaintiffs-appellees appealed  from said order, which was affirmed by this court  in a decision rendered June 9, 1922  (R. G. No. 17536) .[1]

The record having been remanded to the court of origin, proceeding was again had for the sale of the mortgaged property, the same having been sold to the mortgage creditor.  The court annulled  said proceeding and the second sale to the mortgage creditor in view  of certain irregularities  committed in the proceeding.  The plaintiffs appealed to this court, and  this court, in a decision published December 16, 1924, affirmed the order appealed  from (R. G. No.  22735). [2]  The  record having been remanded for the second time to the court of origin, the defendant-appellant, on March 14,1925, reviving his motions dated December 20, 1920, and June 24, 1922, petitioned the court that the plaintiffs be ordered to render an account beginning June 18, 1919,  when they  took  possession of the mortgaged premises.  The court denied the motion, and for the third time the mortgaged property was ordered sold, the sale having been held March 16, 1925, and made to the plaintiffs who were in  possession of the  premises since  June 18, 1919.  The court approved and affirmed  the sale and adjudication of the said  property to the plaintiffs, over the objection of the defendants.

This appeal is concerned with the order of the court approving  the sale and adjudication of the property to the plaintiffs, and with the order overruling the motion of the defendant for rendition of account by the plaintiffs.

In the two decisions of this court, affirming the orders appealed from, the question  now submitted  to  this  court was neither raised nor  discussed.  In the said two decisions this court limited itself to ordering the remanding of the record to the court of origin for  further proceedings.  It is evident that when a record  is remanded, the subsequent proceedings to be had are the giving of a new notice for the sale of the mortgaged  property, and the  making of  a demand upon the mortgagor to pay within ninety days the debt secured by the mortgage, with the advice that upon failure of payment, the mortgaged premises would be sold. The instant case, however, is a  peculiar one in that the plaintiffs have been in possession of the mortgaged property since  the date of the  first sale which was annulled, and continued in said possession until the present time.  This circumstance gave  rise  to  the right of the  defendant- appellant to ask in turn that an  account be rendered by the plaintiffs who had  been in  possession of the mortgaged property by virtue of sales that were annulled on account of irregularities in the proceedings.

In 19 R. C. L., 329, paragraph 104, we find the following:
"Purchaser at invalid foreclosure sale. Though there is authority to the contrary, the great majority of the decisions are to the effect that, since a  purchaser at a foreclosure sale, which, by reason of some  invalidity, fails to pass the interest of the mortgagor acquires the interest of the mortgagee,  he becomes, if he takes possession of the mortgaged property  with the acquiescence of  the  mortgagor, a  mortgagee  in.  possession, entitled  to the rights, and  chargeable  with  the  liabilities, of a person in that capacity,  and the  same  has been held true as to one who takes possession under mesne conveyances from a purchaser at a void foreclosure sale of a valid  mortgage.  And the proposition has  even  been enunciated  and applied that the consent of the mortgagor is not  necessary to establish the relation  of mortgagee in  possession,  where possession is taken under an  invalid foreclosure proceeding.  *  *  * "
And in 27 Cyc, 1237, note 71  to paragraph 4, it is also held that:
"Where possession  was gained under foreclosure  proceedings,  the mortgagee occupies the  position of a 'mortgagee  in  possession/  although  such  proceedings  were defective  or even voidable for  irregularity  (Blain  vs. Rivard, 19 111. App.,  477;  Bryan vs. Brasius, 162 U. S., 415; 16 S. Ct., 803; 40 Law. ed.,  1022; Stevens vs. Lord, 2 Jur., 92)   *   *   *."   And "the term 'mortgagee in possession' is applied to  one who has lawfully  acquired actual or constructive possession of the premises mortgaged to him, standing upon his rights as mortgagee and not  claiming under another title, for the purpose of enforcing his security upon such property or making its income  help to pay his  debt.   *   *   *"
We might consider this  phase of the  question from  the standpoint of the contract of antichresis  which is regulated by the Civil Code  in articles 1881 et seq.
"By antichresis the creditor acquires the right to receive the fruits of real property belonging to his debtor, under the obligation  of applying them to the payment of the interest, if any, and  afterwards to the principal  of  his credit."
Under the provisions of the Civil Code, the creditor  in antichresis does  not acquire title to the property by the failure of payment of  the debt, nor can the debtor recover the possession and  enjoyment thereof  without first paying the creditor all  that  he  owes.  On the other hand, the creditor  is obliged  to  apply the fruits of the property  to the payment, first,  of  the  interest upon the debt, if there is any, and then to the payment of the principal.  Hence, the duty of the creditor to render an account of said fruits to the debtor and  the corresponding  right of the  debtor that the  said fruits be  applied to the mortgage debt.  (Barretto vs. Barretto, 37 Phil., 234.)

In the case of Macapinlac vs. Gutierrez Repide (43 Phil., 770) this court said:
"The respective rights and  obligations of the parties  to a contract of antichresis, under the Civil Code, appear  to be similar and in many respects identical with those recognized  in the  equity  jurisprudence  of  England  and America as  incident  to the  position of a  mortgagee  in possession, in  reference to which the following  propositions may  be taken to be  established, namely, that if the mortgagee acquires possession in any lawful manner, he is entitled to retain such possession until the indebtedness is satisfied  and the property redeemed; that the non-payment of the debt within the term  agreed  does not vest the ownership of the property  in the creditor; that the general duty of the mortgagee in possession towards  the premises is that of the ordinary prudent owner; that the mortgagee must account for the  rents and profits of the land, or its value for purposes  of use and occupation, any amount thus realized going towards the discharge of the mortgage debt; that if the mortgagee remains in possession after the mortgage debt has  been satisfied, he becomes a trustee for the mortgagor as  to the excess of the rents and profits over such debt; and, lastly, that the mortgagor can only enforce his rights to the land by an equitable action for an account and to redeem.  (3 Pom. Eq. Jur., secs. 1215-1218.)"
The objection of the appellees to appellant's petition for an accounting  is based on the  doctrine laid down by this court in the case of Shioji vs.  Harvey  (43 Phil., 333), in which it was held that:
"Inferior courts cannot vary the mandate of the superior court, or examine it, for any other purpose than execution; nor give any other or further  relief; nor review it, upon any matter  decided  on  appeal for error  apparent; nor intermeddle with it further  than to settle so much as has been remanded.   (Sibbald vs.  United  States  [1838],  12 Pet, 488, followed.)"
This doctrine, however, is not applicable to the instant case, not only  because the question as to rendition of account by the plaintiffs, mortgagees in possession  of the premises, was  not considered before, but also because the aforesaid two decisions of this court in the former appeals did not decide except the question as to the annulment  of the  two  sales of the mortgaged property,  decreed in the two orders of the court  below which were appealed from. It is clear that the judgment of the court dated February 11, 1919, ordering the defendant to pay the debt  within ninety days and directing the sale at public auction of the mortgaged property in case  of failure of payment has become final; but since the proceedings for the foreclosure of the mortgage were annulled, the case must relate back  to the  date of the judgment of the trial  court, which was February 11, 1919,  for  the further proceedings.   If the defendant should pay his debt within the legal period, there would be no  reason for issuing any writ of execution.   If he has a  valid claim against the mortgagee by reason of the latter having been in possession of the property, as he does in the present  case,  such a claim should be  settled  before the mortgage for the  reason that that claim arose from the first sale that was later annulled.

For the foregoing, the order of the lower court of July 27, 1925, approving the sale and adjudication of the mortgaged property  to the appellees must be, as is hereby, reversed.  The sale made by the sheriff on March 16, 1925, is hereby  set aside and annulled.  The order  of  July 7, 1925, denying the plaintiffs' motion of March 14th of the same year, is reversed and the plaintiffs-appellees are ordered to render an account to the court of the fruits obtained from the  mortgaged property from the time they took possession thereof, to wit, June 18, 1919, until the date when they shall submit the  account to  the court for approval.  The lower court, after considering the account and  the facts of the case, shall determine the amounts to be applied to the payment  of the interest of the debt, if any, and the rest to the payment of the principal, making such  orders as may be necessary to enforce compliance with the judgment rendered  by the court  on  February  11, 1919.  So ordered.

Avanceña, C. J.,  Johnson, Street, Ostrand, Johns, and Villa-Real, JJ., concur.
Malcolm and Romualdez, JJ., did  not take part.



[1] Diaz and Rubillos vs. Mendezona and De Poli (43 Phil., 472).

[2] Diaz and Rubillos vs. De Mendezona, not reported.
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