Zulueta v. Reyes

CASTRO, J.:

This is a petition for certiorari , prohibition, and injunction with preliminary prohibitory injunction, filed by the petitioner Jose C. Zulueta, against the Court of First Instance of Rizal, the Government Service Insurance System (GSIS), and the provincial sheriff of Rizal. The petitioner seeks to nullify all the proceedings had in connection with civil case 5741 before the said respondent court, and, specifically, the orders a quo of July 13 and August 8 and 23, 1963, in civil case 7078, denying his application for a preliminary injunction and allowing the respondent sheriff to proceed with the extra-judicial foreclosure of the real estate mortgages constituted on his properties in favor of the respondent GSIS. The petitioner applied for and was granted by the respondent GSIS five real estate loans under four separate mortgage contracts in the total sum of P3,117,000.

The amounts of the loans, the dates when the mortgages were contracted, and the monthly amortizations are stated hereunder: Amount of Loan Date of Mortgage Contract Monthly Amortization P 415,000.00 Sept. 25, 1956 P4,606.50 114,000.00 Sept. 25, 1956 1,232.54 190,000.00 Feb.

6, 1957 2,205.90 1,000,000.00 April 5, 1957 11,574.76 1,398,000.00 Oct. 15, 1957 16,106.91 For the payment of these loans, the petitioner offered as collaterals a parcel of land located in Pasig, Rizal, known as Antonio Subdivision, covered by TCT Nos. 26105, 37177 and 50356 of the Rizal cadastre, and another parcel of land situated at 1203 A. Mabini St., Ermita, Manila, covered by TCT No. 42397 of the Manila cadastre, known as the Antonio Apartments, together with all existing and further improvements thereon. Some of the uniform pertinent conditions of the mortgage contracts are the following: That if the Mortgagor shall at any time fail or refuse to pay any of the amortizations on the indebtedness, or the interest when due, .

. . then all the amortizations and other obligations of the Mortgagor .

. ., shall become due, payable, and defaulted and the Mortgagee may immediately foreclose this mortgage judicially or extra-judiciary . .

. (Paragraph 4 of mortgage contracts). That all receipts from sale of houses and lots in the Antonio Subdivision shall be assigned in favor of and made payable to the System, to be applied in payment of the principal and interest on this loan until the same is fully liquidated which condition shall be embodied in all contracts to sell absolutely or otherwise of any of the houses and lots in said subdivisions.

(Condition No. 4, mortgage contracts; Unilateral Agreement executed by petitioner on August 23, 1957, copy of which is attached as ANNEX I) That upon every release the System shall secure fire insurance on the buildings in the process of construction with the Property Insurance Fund of the GSIS for an amount equivalent to the sum released . . .

and "that the payment of the premiums due on the insurance of the buildings shall be borne by the applicant. (Mortgage contract, April 4, 1957).1äwphï1.ñët The amounts representing the first four loans were fully released by the GSIS to the petitioner who executed promissory notes in connection therewith providing that the monthly amortizations thereon shall be payable at the end of every month until the principal obligation is paid, with interest thereon at the rate of 7170 per annum, and that In case of non-payment of any installment of the note and/or other notes executed by JOSE C. ZULUETA and SOLEDAD D.

RAMOS in favor of the Government Service Insurance System when the same becomes due and payable, then the unpaid balance of this promissory note shall, at the option of the Government Service Insurance System, immediately become due and demandable, and if for the enforcement of the payment thereof the Government Service Insurance System shall bring an action in court and/or resort to extra-judicial foreclosure of the mortgage given as a security for the payment of this obligation, then we, JOSE C. ZULUETA and SOLEDAD D. RAMOS bind ourselves, JOINTLY, SEVERALLY, and SOLIDARILY, to pay attorney's fees as provided for in the mortgage contract in addition to the legal fees and other incidental expenses incurred thereof. (see p. a of Annex D to Petition) Of the fifth loan of P1,398,000, the sum of P960,439.46 was released to the petitioner; the balance of P437,249.54, the petitioner alleges in his amended complaint, "has not yet been released to"

him (see par. 3 of amended complaint, annex 15 of Answer to Petition; see also annex D of Petition, p. 2), although the GSIS asserts that said latter sum was released to the petitioner's contractor Llorente O. Yarisantos, pursuant to Resolution No. 2524 of the respondent GSIS Board of Trustees, adopted on September 25, 1957, which, in its paragraph 4, states 4.

That releases on this loan shall be made in favor of Llorente O. Yarisantos as payment by the applicant (petitioner) to the former for advances made by him in payment of cost of labor and materials used in the construction of houses in the Antonio Subdivision; Provided, that upon satisfaction of accounts due and payable to said Llorente O. Yarisantos, releases may be made in favor of the applicant; (Annex 4 of Answer to Petition, p. 2.) On October 17, 1958 and thereafter up to March 19, 1962, the GSIS made repeated demands upon the petitioner for payment of the arrearages in his real estate loans aforenamed and called his attention to his failure to remit to it the proceeds of the sale of units of the Antonio Subdivision. In the GSIS notice of October 17, 1958, the petitioner was warned that his failure to settle his arrearages "will be construed as the right of this office to proceed immediately with foreclosure proceedings of the mortgage in accordance with the terms and conditions of the Mortgage Contract executed by you in favor of the Government Service Insurance System, to satisfy the mortgage indebtedness, the daily interest thereon, attorney's fees and all other expenses in connection with the proceedings."

(see annex 5 of Answer to Petition; see also annexes 5-A, 6, 7, 8, 8-A, 9, 10 (petitioner's reply), 11, 11-A, 11-B, 11-C, 12, 12-A,12-B, and 12-C, inclusive). On March 19, 1962 the GSIS filed with the office of the Provincial Sheriff of Rizal a petition for extra-judicial foreclosure, alleging that the petitioner was in arrears in the payment of his monthly amortizations of the mortgage indebtedness and that he has never turned over to it the proceeds of the sale of units in the Antonio Subdivision, in spite of repeated demands on him. To forestall the intended foreclosure, the petitioner requested the GSIS to suspend the foreclosure sale for 15 days, and asked that another accounting of his arrearages be made, which request was denied.

On April 12, 1962 the petitioner filed a complaint for "DAMAGES WITH PRELIMINARY INJUNCTION," in the Court of First Instance of Rizal, docketed as Civil Case No. 7071,1 against the respondents sheriff and GSIS, alleging among other things, that of the total amount of P3,117,000 the sum of P417,000 has not yet been release to him by the GSIS, resulting in the stoppage of the construction of his 153 buildings in the Antonio Subdivision, and compelling him to use P417,000 of his own funds to complete their construction; that the GSIS released said sum fraudulently to his contractor L.O.

Yarisantos or to his material suppliers, contrary to the written agreement he has with the GSIS not to release any portion of his loan to anybody without his authority, and in spite of his letter of October 8, 1957 requesting the GSIS not to release said amount to L.O. Yarisantos; that he had repeatedly asked for a statement of his accounts, but the GSIS did not accede to his request, resulting in uncertainty and doubt as to the exact amount of his indebtedness and delay in the payment of his amortizations, if any; that without notice to nor demand made on him, the GSIS advertised in the newspapers for the sale of his Antonio Subdivision as a step toward extra-judicial foreclosure thereof; that there having been no demand on him, he cannot be in default in the payment of his mortgage indebtedness, and hence the GSIS was without authority to extra-judicially foreclose his said properties; that if the GSIS had given him the opportunity to examine the status of his real accounts, such examination would reveal no such arrearages and interests on his amortizations: that because of the pending extra-judicial foreclosure, his tenants in the Antonio Subdivision refused to pay their monthly amortizations, causing him to suffer actual damages daily of P1,600 since March 28, 1962, and moral damages of P200,000; and that the GSIS through the respondent sheriff is determined to proceed with the auction sale scheduled for April 16, 1962.

On April 13, 1962 the respondent court issued a temporary restraining order directing the respondent sheriff to hold in abeyance the public auction sale scheduled for April 16, 1962, until after the application for preliminary injunction shall have been resolved. After the hearing on the application for preliminary injunction, because the petitioner raised the question of accounting in relation to mortgage indebtedness, the respondent court on April 25, 1962 issued an order directing the accountants of the parties to sit together and make an accounting of the petitioners abide by the joint report obligation and for the parties to be submitted by them. On June 6, 1962 the petitioner paid the sum of P276,455.32 in PW bonds, which the GSIS accepted, but the latter manifested to the respondent court that such payment still left arrearages in the sum of P1,064,746.11.

On February 15, 1963 the parties submitted to the respondent court a "Joint Manifestation," wherein the GSIS submitted a statement of accounts as of December 31, 1962 (annex 18-B of Answer to Petition), making it appear that the petitioner's total arrearages amounted to P1,371,088-15 (annex 18-C of Answer to Petition), broken down as follows: Loan of P 415,000.00 - 7 mos . .

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P 32,733.23 Loan of P 114,000.00 - 7 mos . . .

. . P 9,428.50 Loan of P 190,000.00 - 7 mos .

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. P 15,714.37 Loan of P1,000,000.00 - 12 mos . .

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P 152,945.40 Loan of P1,398,000.00 - . . .

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. . P1,022,135.81 Foreclosure expenses .

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. . P 2,231.05 Surcharge .

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. P 278.33 Fire Insurance premiums . .

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. P 118,313,89 Surcharge . .

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. . P 17,307.77 T o t a l .

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