I own a parcel of land, which is subject of a mortgage with a government entity. I decided to place it under another mortgage to a private person whom I authorized to collect payment of the rentals in the said property by other persons. The private person collected rental payments more than what I owed her but still decided to foreclose my property. I cannot execute a Deed of Absolute Sale in her favor because the parcel of land was still mortgaged with the government entity which explicitly prohibited any form of cessation of the said property as the same was not yet fully paid. May I know if I can collect damages from the private person, because she dragged me into litigation, and she collected more than what I owed her?
For your information, a situation similar as yours had already been decided in the case of Luz Nicolas v. Leonora Mariano(G.R. No. 201070, 1 August 2016), wherein the Supreme Court, through the Honorable Supreme Court Associate Justice Mariano Del Castillo, clearly resolved that:
“Mariano (the mortgagor) cannot recover damages on account of her claimed losses arising from her entering into contract with Nicolas (mortgagee). Realizing that she is not the owner of the subject property and knowing that she has not fully paid the price therefor, she is as guilty as Nicolas for knowingly mortgaging and thereafter selling what is not hers. As correctly held by the CA, both parties herein are not in good faith; they are deemed in pari delicto or in equal fault, and for this, “[n]either one may expect positive relief from courts of justice in the interpretation of their contract. The courts will leave them as they were at the time the case was filed.” (Emphasis and designation of the parties supplied)
For emphasis, it is stated in this case that:
“When both parties are in pari delicto or in equal fault, none of them may expect positive relief from the courts in the interpretation of their agreement; instead, they shall be left as they were at the time the case was filed.” (Emphasis supplied)
In your situation, as similar to the abovementioned, you alleged that you have mortgaged your property to a private person despite the fact that your property has an existing mortgage with a government entity that prohibits any form of cessation of the said property. Thus, considering that you are equally at fault with the mortgagee, given your situation, you cannot expect a positive relief from the court concerning your agreement with the private person you have transacted with. You, therefore could neither seek reimbursement of the excess in your payment concerning the agreement nor a share in the litigation expenses.
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.
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