PILIPINAS DEVELOPMENT CORPORATION, PETITIONER, VS. THE HONORABLE PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 195, PARAÑAQUE CITY AS REPRESENTED BY ITS INCUMBENT MAYOR, MAGDIWA…
DE GUIA-SALVADOR, R., J.:
The Order dated May 27, 2013 has the following dispositive portion:
WHEREFORE, pursuant to Section 1, Rule 19 of the Rules of Court, the Motion for Leave to Intervene with Attached Complaint-In-Intervention dated November 8, 2012 filed by Pilipinas Development Corporation, through counsel, is DENIED. The Complaint-in-Intervention is accordingly, DISMISSED.
SO ORDERED.[3]
The Order dated March 21, 2014, which is a resolution of the Motion for Reconsideration filed by petitioner has the following dispositive portion:
For the reasons stated in the Order of this court dated May 27, 2013, the Motion for Reconsideration thereof filed by movant-intervenor, Pilipinas Development Corporation (“PDC”), is hereby Denied.
SO ORDERED.[4]
The Facts
Under a Deed of Sale with Mortgage dated August 11, 1983, petitioner Pilipinas Development Corporation (“petitioner” / “PDC”) sold to private respondents Magdiwang Realty Corporation and Fil-Homes Realty Development Corporation (“respondents” / “Magdiwang” / “Fil-Homes”) two parcels of land in Parañaque City (“subject properties”) with areas of 50,000 square meters (sq. m.) and 47,042 sq. m., respectively, for a total of 97,042 sq. m.[5] The purchase price was Php300.00 per square meter or a total of Php29,112,600.00.[6] The payment consisted of Php10,000,000.00 in downpayment already received by PDC as vendor-mortgagee, while the balance was to be paid in 24 monthly installments with 14% interest per annum.[7] The Deed of Sale with Mortgage provided that title to the two properties would vest in vendees-mortgagors Magdiwang and Fil-Homes upon the execution of the said deed as well as payment of the downpayment.[8] Consequently, the titles TCT Nos. 21712 and 21713 were issued by the Registry of Deeds of Pasay City in favor of Magdiwang and Fil-Homes.[9] Mortgages, however, were constituted on the properties, to secure the payment of the balance of the purchase price by the mortgagors to the mortgagee.[10]
Then, Magdiwang and Fil-Homes failed to completely pay the balance of the purchase price and the interest agreed upon.[11]
Further, Magdiwang and Fil-Homes filed a suit for specific performance against PDC, with prayers to “compel the latter to take legal measures at its expense to clear the sold two (2) parcels of land (the subject properties) xxx xxx (of) squatters and deliver immediately thereafter possession and occupancy to plaintiffs.”[12] The complaint was filed with the RTC of Makati City, Branch 141, docketed as Civil Case No. 91-759, and captioned “Magdiwang Realty Corporation and Fil-Homes Realty and Development Corporation vs. Pilipinas Development Corporation.”[13]
According to Magdiwang and Fil-Homes, the RTC of Makati City decided the said case on August 31, 1998, in their favor, ordering PDC to “remove or cause to be removed” 17 squatter families on the property for PDC to be considered to have complied with “paragraph 8 of the contract.”[14] The counter-claim of PDC for rescission of the contract was denied.[15]
On June 30, 2004, the City of Parañaque filed a complaint for expropriation of the subject properties.[16] The case was docketed as Civil Case No. CV-04-0245 before the RTC of Parañaque City.[17]
During the pendency of the expropriation case, PDC filed a Motion for Leave to Intervene with attached Complaint-in-Intervention dated November 12, 2012 claiming that it has a legal interest in the expropriation case as a mortgagee of the subject properties.[18]
The City of Parañaque filed a Manifestation that it would not file a Comment or Opposition to PDC’s motion.[19] Meanwhile, Magdiwang filed its Comment/Opposition to PDC’s motion.[20] Fil-Homes then filed a Manifestation adopting the Comment/Opposition filed by Magdiwang.[21]
PDC filed its Reply to the comment/opposition of Magdiwang.[22] It then filed a Supplemental Reply.[23]
The RTC’s Ruling
On May 27, 2013, the public respondent ruled against the motion for intervention filed by PDC, holding that the latter failed to meet the requirements for intervention, to wit: 1) legal interest in the matter in litigation; and 2) consideration must be given as to whether the adjudication of the rights of the original parties may be delayed or prejudiced, or whether the intervenor’s rights may be protected in a separate proceeding or not.[24] The court held that ownership of the subject properties has been transferred to Magdiwang and Fil-Homes and PDC’s only remaining interest is that of an unpaid seller, which is “an indirect one in a case of expropriation.”[25] The unpaid sellers remedies under Article 1191 are to sue for collection or rescission.[26]
The court also found that PDC’s rights were adequately protected in another case, Civil Case No. 91-759, entitled “Magdiwang Realty and Fil-Homes Realty v. Pilipinas Development” and pending before the RTC of Makati City, Branch 141.[27] The said case is a suit for specific performance where it was held that PDC had no right to demand payment of the remaining purchase price until it has complied with its own obligations in the contract.[28] Also, the issues allegedly being raised by PDC are of no concern to the original parties to the expropriation case, so that allowing the intervention would only cause delay, prejudice to the original parties and unnecessary complications.[29]
PDC moved to have the above ruling reconsidered but such was denied.[30]
Hence, the petition.
Petitioner PDC claims that all persons with lawful interest in the property, including mortgagees, need to be impleaded as defendants in an expropriation case.[31] It also claims that it is intervening in its capacity as mortgagee, and not as owner or unpaid seller.[32] As such, it argues that it is an indispensable party who must be impleaded in order to arrive at a final determination of the action.[33] It adds that whatever judgment will be made in the expropriation case, will have a direct and immediate effect on PDC.[34]
Further, PDC states that its intervention merely involves the satisfaction of its mortgage lien from its share in the just compensation; thus it will not unduly delay, complicate nor prejudice the adjudication of the expropriation case.[35] It claims that it only had been paid the downpayment of Php10,000,000.00, with an unpaid balance of Php19,112,600.00, or 2/3 of the purchase price; thus, its interest in the property is allegedly greater than Magdiwang’s or Fil-Homes’.[36] Lastly, PDC states that not allowing it to intervene would lead to grave injustice, unjust enrichment and a multiplicity of suits.[37]
In its Comment to the petition, the respondent City of Parañaque reiterates the stance of the public respondent, by arguing that PDC is not the owner of the subject properties but a mere creditor of Magdiwang and Fil-Homes.[38] The said respondent adds that allowing PDC to intervene would “only unduly delay and prolong” the adjudication of the rights of the original parties.[39]
Respondent Magdiwang, in its own Comment, states that PDC’s claims under the Deed of Sale with Mortgage have prescribed.[40] And even assuming that they have not prescribed, the said respondent argues that PDC’s claims do not warrant an intervention, as its rights are personal and directed against Magdiwang and Fil-Homes and can be pursued in a separate action.[41] Furthermore, PDC allegedly enforces its rights as an unpaid seller, not as a mortgagee, since what it filed was not an Answer-in-Intervention, but a complaint-in-intervention.[42]
The Issue
Did the public respondent gravely abuse her discretion, resulting in a lack or excess of jurisdiction, in denying petitioner’s motion for leave to intervene?
The Court’s Ruling
We grant the petition.
We find that certiorari is in order in the case at bar. A special civil action for certiorari will prosper if grave abuse of discretion is manifested.[43] There is grave abuse of discretion when respondent acts in a capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction.[44]
The public respondent’s bases for denying petitioner’s motion to intervene are whimsical and arbitrary and do not serve the ends of justice.
For one, the public respondent blatantly disregarded the prevailing jurisprudence on the matter, i.e., one which clearly states that among the defendants to be impleaded in a case for eminent domain are not just the named owner of the property, but “all those who have lawful interest in the property to be condemned, including a mortgagee, a lessee and a vendee in possession under an executory contract.” More fully, the Supreme Court held in De Knecht v. Court of Appeals,[45] as follows:
The power of eminent domain is exercised by the filing of a complaint which shall join as defendants all persons owning or claiming to own, or occupying, any part of the expropriated land or interest therein. If a known owner is not joined as defendant, he is entitled to intervene in the proceeding; or if he is joined but not served with process and the proceeding is already closed before he came to know of the condemnation, he may maintain an independent suit for damages.
The defendants in an expropriation case are not limited to the owners of the property condemned. They include all other persons owning, occupying or claiming to own the property. When a parcel of land is taken by eminent domain, the owner of the fee is not necessarily the only person who is entitled to compensation. In the American jurisdiction, the term “owner” when employed in statutes relating to eminent domain to designate the persons who are to be made parties to the proceeding, refers, as is the rule in respect of those entitled to compensation, to all those who have lawful interest in the property to be condemned, including a mortgagee, a lessee and a vendee in possession under an executory contract. Every person having an estate or interest at law or in equity in the land taken is entitled to share in the award. If a person claiming an interest in the land sought to be condemned is not made a party, he is given the right to intervene and lay claim to the compensation.[46]
There is no dispute that the case before public respondent was an expropriation case. Likewise, there is no dispute that in the titles to the subject properties, the mortgage in which PDC was the mortgagee is annotated and therefore serves as an encumbrance thereon. The fact of such mortgage, as well as the rights and obligations which spring therefrom, cannot be just brushed aside, and rendered nullified, by the mere expedient of an expropriation case having been filed that does not implead the unsatisfied mortgagee. As correctly argued by the petitioner, the mortgagee, in fact, and in this situation, is an indispensable party without whom no final determination of the action may be had.[47]
Both the public and private respondents contend that PDC is now an unpaid creditor, and must pursue a separate action as such, and not be allowed to intervene in the expropriation case.
We find no merit in this contention. While it may be true that “where a debt is secured by a mortgage and there is a default in payment on the part of the mortgagor, the mortgagee has a choice of one (1) of two (2) remedies,” only one of which he may exercise to the exclusion of the other, these choices being: 1) foreclosure of the mortgage; or 2) filing an ordinary action to collect the debt,[48] it is important to emphasize that such choice is to be made by the mortgagee, in this case, PDC, and which choice may not be forced upon it by either the mortgagors or the government in the event of an expropriation. To Our mind, excluding or barring PDC, the mortgagee, from intervening in the expropriation case deprives it of such choices, for its exercise of either choice would be made more difficult if not impossible should the court grant the expropriation or condemnation without its participation.
For example, the exercise of the first option, which is foreclosure, would become almost impossible after expropriation is granted as the new owner of the properties would already be the government entity (in this case, the City of Parañaque) that prayed for the expropriation. Even assuming that the mortgage was to be carried over to the new owner’s title, the mortgagee’s exercise of foreclosure against the new owner would be highly disruptive of public services and defeat the very reason why expropriation was done in the first place, which was to take private property for public use. Foreclosing the property while it is already being used for a public purpose, only to force the the government to have to expropriate it again for the second time to continue serving the public purpose is circuitous and is more convoluted than if the mortgagee was just allowed to intervene in the first expropriation case.
Further, should the mortgagee exercise the second option, which is to collect his credit as an unpaid seller, its rights are defined under Article 1191 of the Civil Code, which allows it to either demand outright payment or just choose to rescind the contract (of sale), should payment become impossible. But after the property had been expropriated and become the property of the government, there is no more way for the creditor-mortgagee to exercise rescission, since the delivery of the property back to it is now impossible. Then, with its other options gone, its only remedy is to file a costly, separate action for collection, without guarantee of success at actually getting paid. There is no doubt that this could not have been the intention of the rules.
The above are the sort of evils that are sought to be avoided when We hold that the intervention may be availed of by a mortgagee who was not impleaded in a complaint for expropriation of property over which it has mortgage rights. The requirements for intervention are: 1) legal interest in the matter in litigation; and 2) consideration must be given as to whether the adjudication of the rights of the original parties may be delayed or prejudiced, or whether the intervenor’s rights may be protected in a separate proceeding or not.[49]
It is Our view that PDC as an intervenor satisfies both requirements. Legal interest, which entitles a person to intervene, must be in the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by direct legal operation and effect of the judgment.[50] PDC has legal interest in whatever judgment may be rendered in the expropriation case since, as explained in the foregoing paragraphs, it stands to lose its rights of foreclosure and rights of rescission of the contract of sale should the expropriation be granted without its participation and without the court recognizing its interest in the property. PDC places its interest in the subject properties at almost 2/3 of its value, since it was only paid the Php10,000,000.00 downpayment while the remaining balance of the purchase price, Php19,112,600.00, remains unpaid by private respondents Magdiwang and Fil-Homes. Such is not even disputed by the latter. Hence, the expropriation court is a proper venue to ventilate such matters and order the payment of just compensation to the appropriate parties accordingly. The move is expedient, avoids a multiplicity of suits, and even obviates the possibility of unjust enrichment on the part of the private respondents at petitioner PDC’s expense.
Secondly, will the allowance of PDC’s participation as an intervenor result in a delay or prejudice in the adjudication of the rights of the original parties? It is Our view that it will not. The fact of the mortgage’s existence and validity is not disputed. The mortgage, in fact, is clearly visible in the titles of the subject properties. The issue of how much of the purchase price remains unpaid to PDC is likewise not disputed. Hence, the key issues that need resolution are only those material in the expropriation case, which resolution would not be affected by PDC’s participation as an intervenor. These issues include the validity of the plaintiff’s purposes or reasons for expropriation as well as the proper amount of just compensation that may be given to respondents. PDC’s presence as an intervenor will not complicate the resolutions of such issues; on the contrary, the satisfaction of PDC’s credit in the expropriation case would result in the cancellation of its mortgage and produce a cleaner title with no encumbrance in favor of the expropriation plaintiff, the herein respondent City of Parañaque.
WHEREFORE, considering the foregoing, the petition is GRANTED. The Orders dated May 27, 2013 and March 21, 2014 of the respondent Presiding Judge of the Regional Trial Court of Parañaque City, Branch 195, in Civil Case No. CV-04-0245, are ANNULLED and SET ASIDE. Petitioner’s Motion for Leave to Intervene with Attached Complaint-In-Intervention is granted.
SO ORDERED.
Rosario, and Dimagiba, JJ., concur.
[1] Rollo, pp. 40-42.
[2] Id. at 39.
[3] Id. at 42.
[4] Id. at 39.
[5] Id. at 5-6, 44.
[6] Id.
[7] Id.
[8] Id. at 6.
[9] Id. at 6-7, 50-57.
[10] Id. at 7, 50-57.
[11] Id. at 8.
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] Id. at 8, 58-63.
[17] Id.
[18] Id. at 8-9, 64-70.
[19] Id. at 9, 94-95.
[20] Id. at 9, 96-101.
[21] Id. at 9, 102-104.
[22] Id. at 9, 105-116.
[23] Id. at 9, 117-122.
[24] Id. at 41.
[25] Id. at 42.
[26] Id.
[27] Id.
[28] Id.
[29] Id.
[30] Id. at 39.
[31] Id. at 13-14.
[32] Id. at 14-16.
[33] Id. at 16-21.
[34] Id. at 21.
[35] Id. at 28.
[36] Id.
[37] Id. at 32-33.
[38] Id. at 170.
[39] Id. at 170-171.
[40] Id. at 179.
[41] Id. at 179-180.
[42] Id. at 180.
[43] Microsoft Corporation v. Best Deal Computer Center Corporation, G.R. No. 148029, September 24, 2002.
[44] Id.
[45] G.R. No. 108015, May 20, 1998.
[46] Id.
[47] RULES OF COURT, Rule 3, Sec. 7.
[48] China Banking Corporation v. Court of Appeals, G.R. No. 121158, December 5, 1996, quoting Caltex Philippines, Inc. v. Intermediate Appellate Court, 176 SCRA 741, 751-752.
[49] Nordic Asia Limited v. Court of Appeals, G.R. No. 111159, July 13, 2004.
[50] Id.