EFREN JOHN D.

CELOY
Credit Transactions LLB - 1

C.B. WILLIAMS vs. JOSE MCMICKING G.R. No. L-6079 December 6, 1910 FACTS: Manila, February 12, 1909, Sold to C.B. Williams the following articles of household furniture: 1 piano, No. 16510; 1 oak wardrobe; 1 Singer sewing machine; 1 chiffonier, B. E. maple; 1 double iron bedstead and spring; 1 writing desk, maple; 1 dresser, maple; 1 chest of drawers; 6 American willow chairs; 2 maple wood center tables; 1 oak chair. The above articles were sold for a consideration of six hundred pesos, and Miss Hunter reserved the right to redeem said articles within sixty days on payment to Mr. Williams of six hundred pesos, with interest. This amount covers the rent due Mr. Williams for the month of January, 1909. On the date this document was executed Miss Hunter was the owner of the personal property described therein and owed the plaintiff P600 as rent for the month of January, 1909. In the execution of the said document no attempt was made to defraud creditors. The possession of the personal property described in this private document was never delivered to the plaintiff, but remained in the possession of Miss Hunter and was in her possession when levied upon by the defendant sheriff. After the sheriff had levied upon this property to satisfy an execution which had been issued against Miss Hunter the plaintiff intervened, claiming to be the owner by purchase of the said property. Notwithstanding this claim of the plaintiff the sheriff proceeded to sell the said property at public auction. Subsequently thereto, and on the 19th of May, 1909, the plaintiff commenced this action in one of the Courts of First Instance of the city of Manila to recover the possession of the said personal property, or its value. Judgment was rendered in favor of the plaintiff for the possession of this property or its value, which was fixed at P620.50. The defendant appealed. ISSUE: Whether or not the plaintiff became the owner of this personal property as against third parties by virtue of the document executed between him and Miss Hunter, inasmuch as the actual possession of the said property was never delivered to the plaintiff. HELD: The private document executed by Miss Hunter in favor of the plaintiff cannot be held to be a chattel mortgage in view of the provisions of section 4 of Act No. 1508. It will be noted that this section provides two ways for executing a valid chattel mortgage which shall operate against third persons; first, the property mortgaged must be delivered to and to retained by the mortgage; or, second, the mortgage must be recorded in the office of the register of deeds. The private document executed by Miss Hunter in favor of the plaintiff does not constitute a contract of pledge for the reason that the thing sought to be pledged was not placed in the possession of the creditor or of a third person by common consent.

EFREN JOHN D. CELOY

Credit Transactions LLB - 1

For these reasons the judgment appealed from is, therefore, reversed, and the defendant absolved, without any special ruling as to costs. MARINA D. NARTATES vs. GSIS G.R. No. L-47669 December 7, 1987

FACTS: On November 23, 1967, the GSIS approved a financing loan of P350,000.00 in favor of petitioner, Mrs. Marina D. Nartates the said loan to be repaid within a period of ten (10) years at ten (10%) per cent per annum, compounded monthly. However, only the sum of P323,806.94 was actually released to the petitioner. It turned out that the parcels of land offered as collaterals were encumbered in favor of other persons. To effect the release of TCT 74641, the GSIS made the first release of the loan in the amount of P323,360.00 direct to Dr. Rosendo Llamas but for the account of petitioner Marina D. Nartates. The remaining balance of P27,000.00 was not released to petitioner in view of her failure to submit the titles to the additional collaterals which form part of the security for the approved loan of P350,000.00. On April 29,1970, the GSIS advised petitioner that her account at the amount already released was being closed. On January 31, 1974, PD No. 385 was issued requiring all government financial institutions to mandatorily foreclose all loans with arrearages including interests and charges, of at least 20% of the total outstanding obligations. Based on the statement of account obtained from the GSIS, the petitioner's arrearages as of February 12, 1974 was P409,677.12. The facts as disclosed by the records show that indeed the petitioner was delinquent in the payment of the mortgage loan. Her arrearages as of March 31, 1975 amounted to P450,635.21. She was given by the GSIS seven (7) days to update her account, but to no avail. On November 6, 1975, the GSIS instituted extrajudicial foreclosure of the mortgage, of which notice was given to petitioner on November 11, 1975. The Sheriff of Manila fixed the date of the public auction sale on March 10, 1976, which was reset to March 17, 1976 upon an "Agreement to Postpone" executed between the petitioner and the GSIS. At the foreclosure proceedings held on March 17, 1976, the GSIS was declared the highest bidder for P693,268.93. A certificate of sale was issued to the GSIS on April 5, 1976, and the same was registered on May 6, 1976. ISSUE: WON the foreclosure proceeding was valid HELD: There was nothing irregular in the conduct of the foreclosure proceedings. The foreclosure proceedings were conducted in accordance with the procedures established by the law. It suffices to say that because of the failure of the petitioner to update the loan inspite of the chances given her by the GSIS, the latter had the right to foreclose the mortgage. PD 835 does not give petitioner the right to have her loan restructured upon payment of 20% of the loan. Besides, petitioner was unable to put up such minimum payment, but even if she did, the GSIS as creditor can lay down the terms and conditions for restructuring the loan. Considering that from the standpoint of both law and equity, based on undisputed facts on record, the foreclosure of the building in question suffers from no legal infirmity. Accordingly, the petition is DISMISSED.