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[BANK OF PHILIPPINE ISLANDS v. B. A. GREEN.](https://www.lawyerly.ph/juris/view/c1fbc?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. 35125, Dec 12, 1932 ]

BANK OF PHILIPPINE ISLANDS v. B. A. GREEN. +

DECISION

57 Phil. 712

[ G. R. No. 35125, December 12, 1932 ]

THE BANK OF THE PHILIPPINE ISLANDS, PLAINTIFF AND APPELLEE, VS. B. A. GREEN., ORETHA K. O'BRIEN, AND S. W. O'BRIEN, AS GUARDIAN OF THE MINORS, WILLIAM KEISTER O'BRIEN ET AL., DEFENDANTS AND APPELLANTS.

D E C I S I O N

BUTTE, J.:

On February 13,1929, the Bank of the Philippine Islands filed a  petition  in  the Court of  First  Instance of  Rizal against the defendants-appellants  to  recover  against the defendant-appellant  Green the sum of P68,616.46 with interest and attorneys' fees and to foreclose a mortgage upon real estate situated in the Province of Rizal given by the said Green in favor of said bank.   The defendants O'Brien were made parties to the action on the allegation that they were holders of a second mortgage covering the same lands.

The defendant Green filed a general denial and a special defense alleging in substance that the indebtedness consisting of an overdraft in the sum  of P50,000, for which said mortgage was given as security, was  fully paid  and  liquidated by  two  promissory  notes in the  sum  of P57,900 executed and delivered on August  9, 1921; that  as a consequence  thereof said mortgage was  satisfied and extinguished;  and  Green  confessed  judgment  for  the sum of P70,848.94.

The defendants O'Brien set up special defenses in substance as follows: That the said mortgage had already been foreclosed in civil case No. 24594 of the  Court of  First Instance of  Manila and plaintiff cannot maintain two actions for  the foreclosure of one and same mortgage; that Green's debt secured by said mortgage has been  liquidated and the mortgage satisfied, thus  leaving O'Brien's mortgage as a first lien; that the bank, by requesting the sale of  a part only of the lands covered by the judgment of foreclosure  in said case No. 24594, waived all  right to the sale of the rest.

The plaintiff bank thereupon filed a reply to said answers, alleging that  the special defense  raised by Green is res judicata, having  been  determined in the said suit in the Court of First Instance of Manila; and denying that there was any novation of the debt on August 9, 1921, as claimed by the defendants.

The prayer of the petition is that a receiver be appointed; that  the plaintiff have judgment against Green for the sum  of P68,616.46  with interest  at  9 per cent from January 16, 1929; and if not paid within 90 days, that public sale of the mortgaged lands located in Rizal be made; second,  that  whatever right,  interest  or  participation the other defendants as second mortgagees  may have, should be declared extinguished  in case  they should not exercise their right of redemption.

For  the better understanding  of  the  issues, so far as we intend  to decide them in this case, the following  facts are pertinent:
On April 19, 1921, B. A. Green, the defendant, executed and  delivered  to the  Bank of the  Philippine  Islands the mortgage here in question,  which  covered  eight  parcels of land, one in the City of Manila and the rest in the Province  of Rizal, all with Torrens titles, to secure a credit (overdraft) not to exceed P50,000.  On August 9, 1921, Green delivered to the bank two notes, Exhibits C  and D, for P15,300 and P42,600  respectively.  On August 25, 1921, Green gave S. W. O'Brien, administrator of the estate of C. W. O'Brien,  a mortgage covering the same lands, which  was  duly  registered in the offices of the registers of deeds of Manila and Rizal on the 12th day of November, 1921, as security for a debt of P35,175.02.  On June 14, 1923, the said bank commenced civil case No. 24594 in the Court of First Instance of Manila against the defendant Green, for judgment on said two promissory  notes and for the foreclosure of the  said mortgage of April 19, 1921. Although the bank had both actual and constructive knowledge of said mortgage  to O'Brien,  it did  not make the mortgagee a party to the suit, as required by  section 255 of the  Code of Civil Procedure.  The litigation continued merrily in the  Court of First Instance of Manila and has already been before this court for review  on three appeals.   (Cf. 48 Phil., 284 and 52 Phil., 491.)  The plaintiff bank finally obtained a personal judgment against  Green for the amount of said notes and a decree of foreclosure of the mortgage of April 19, 1921, both as to the lot situated in Manila and the seven lots situated in Rizal.  On application of the bank, the lot in Manila was sold  under said foreclosure. It was  bid in by the plaintiff bank for P25,000, which was credited on the amount of the judgment against Green in said case No. 24594.

The bank now asks  in this new suit, filed in the  Court of First Instance of Rizal on February 13, 1929,  for a personal judgment against Green for the balance remaining unpaid on the said judgment in case No. 24594 of the Court of First Instance of Manila, and asks for the foreclosure of the same mortgage but only as to the lands in the Province of Rizal.   The  case was heard by Judge Enage who rendered judgment for the defendants on April 25, 1930. On May 31, 1930, Judge Zandueta denied a motion for new trial.  On June 10,  1930,  a second motion for new trial was filed by the plaintiff and this was granted by  Judge Lukban  on July 1,  1930.  After  the  presentation  of additional  evidence  by  the plaintiff,  the  latter judge, on October 28, 1930, reversed the decisions of  the former judges and  rendered judgment in favor of the bank  and against the defendant Green for  the sum  of  P68,616.45 with  interest,  attorneys' fees and costs,  and if not paid within 90 days from the date of the decision, ordering; the public sale such of the lands covered by the said mortgage as are situated  in the Province of Rizal.  All relief prayed for in the  petition  against  the defendants O'Brien was denied.  Both  Green and the defendants O'Brien filed their exceptions and motions for new trial which were denied and the appeals lodged in this court.
The appellants O'Brien make the following assignments of error:
"I. The trial court erred in holding that the indebtedness of P68,616.43, was secured by the mortgage Exhibit B and in not declaring that said mortgage has been extinguished and cancelled, because the obligation secured by the same was fully paid.

  "II. The trial  court  erred  in  not dismissing this case, because the appellee has forfeited  and lost its rights  to bring this action for the foreclosure of the mortgaged properties situated in Rizal Province.

"III. The trial court erred in  not holding that the case is res adjudicata.

"IV. The trial court erred in granting the motion for new trial presented by the plaintiff and  in reopening the case to allow said plaintiff to present additional evidence.

  "V. The trial court erred in denying the motion for new trial presented by the appellants O'Brien and in not rendering judgment as prayed for in their amended answers."
In the view that we take  of this case, we do not deem it necessary or proper at this time to determine the questions raised by the first and,second assignments of error; nor is the fourth assignment of error material.

The Court of First Instance of Manila in case No. 24594 had jurisdiction to enter a decree of foreclosure, as it did, of the mortgage covering the lands in  both Manila and Rizal.   (See section 254 of the Code of Civil Procedure.) The Court of First Instance of Rizal should have declined to render a second judgment upon the same obligation and a second  foreclosure of the  same  mortgage,  and should have  dismissed  the  petition,  when  it was convinced the plaintiff  was entitled to no  relief against the defendants O'Brien.  It is  difficult for us to  figure out  upon  what theory this irregular  and  improper suit was  brought  in the court of  Rizal.  If its object was to implead the O'Briens who had been intentionally or negligently omitted as parties in case No. 24594 in the Court  of First  Instance of Manila,  their rights might have  been  determined by a timely supplemental  action  in  the Manila  court.   (Cf. Sun Life Assurance Co. of Canada  vs. Gonzalez  Diez, 52 Phil., 271.)   It is to be noted also that the bank took no exception to the decision below denying it any relief against the O'Briens.

The appellant Green has recently filed a motion to dismiss his appeal, which we do not grant because it was filed to prejudice his  co-appellants and it is of no advantage to the appellee.   We think it  to  the interest of  all parties and conducive to  orderly procedure to  enter  a clear-cut reversal of the judgment appealed, from, with directions to dismiss the petition at the cost in  both instances  of the appellee, but without prejudice in any proceedings that may be legally instituted in the  proper  tribunal for the  final adjudication  of the  respective claims  of the parties.  So ordered.

Avanceña,  C. J., Street, Malcolm, Villamor,  Villa-Real, Abad Santos, Hull, Vickers, and Imperial, JJ., concur.

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