Professional Documents
Culture Documents
Issue:
May persons to whom several mortgaged lands were transferred without the
knowledgeand consent of the creditor redeem only several parcels if all the lands were sold
together for asingle price at the foreclosure sale?
Held:
We cannot subscribe to the Yaps' argument on the indivisibility of the mortgage. As held
in the case of Philippine National Bank v. De los Reyes the doctrine of indivisibility of mortgage
does not apply once the mortgage is extinguished by a complete foreclosure thereof asin the
instant case. The Court held:
The parties were accordingly embroiled in a hermeneutic disparity on their aforesaid
contendingpositions. Yet, the rule on the indivisibility of mortgage finds no application to the
case at bar.The particular provision of the Civil Code referred to provides:
Art. 2089. A pledge or mortgage is indivisible, even though the debt may be divided
among thesuccessors in interest of the debtor or of the creditor.Therefore, the debtor's heir who
has paid a part of the debt cannot ask for the proportionateextinguishment of the pledge or
mortgage as long as the debt is not completely satisfied.
Neither can the creditors heir who received his share of the debt return the pledge or
cancel the mortgage, to the prejudice of the other heirs who have not been paid.
From these provisions is accepted the case in which, there being several things given in mortgage
or pledge, each one of these guarantees only a determinate portion of the credit.
The debtor, in this case, shall have a right to the extinguishment of the pledge or mortgage as the
portion of the debt for which each thing is especially answerable is satisfied.
Issue:
whether or not American Home is liable to FF Cruz for P2.2 million representing the face
value of the surety bond it issued to G. Reyes
Held:
Settled is the rule that points of law, theories, issues, and arguments not adequately
brought to the attention of the trial court need not be, and ordinarily will not be, considered by a
reviewing court. They cannot be raised for the first time on appeal. To allow this would be
offensive to the basic rules of fair play, justice and due process.In order, however, to remove
doubt on its liability to FF Cruz, we will discuss the merits of American Homes arguments.
It is undisputed that FF Cruz gave G. Reyes P2.2 million as advance payment. As a
security thereof, G. Reyes posted a surety bond issued by American Home in favor of FF Cruz,
the pertinent portion of which reads:
To guarantee payment for the 15% advance payment made by the obligee
[FF Cruz] to the herein principal [G. Reyes] for the Dredging of Entrance Channel
and Harbor Basin of Cebu International Port Project in the event of the principals
failure to comply with the terms and conditions of the Sub-Contract Agreement
dated June 11, 1990, copy of which is hereto attached and made an integral part
hereof; it being expressly understood that the liability of the surety under this
bond shall in no case exceed the amount of PESOS TWO MILLION TWO
HUNDRED THOUSAND ONLY (P2,200,000.00), Phil. Cy.
It is clear from the foregoing that indeed, the surety bond was issued to guarantee the
payment of the 15% advance payment of P2.2 million made by FF Cruz to G. Reyes. The bond
was not issued to guarantee the completion of the project. However, the above provision shows
that in order for American Homes liability to attach, two conditions must be fulfilled: first, that
the advance payment made by FF Cruz to G. Reyes remains unpaid; and second, G. Reyes fails
to comply with any of the terms and conditions set forth in the sub-contract.
There may be a dispute as to the amount of liability as will be discussed later, but it has
been adequately established that FF Cruz was not yet reimbursed of the advance payment it
made. The fulfillment of the first condition is, therefore, settled.
On November 23, 1992, petitioner filed a Motion to Sell Chattels Seized by Replevin, praying that the
motorized sewing machines and equipment be sold to avoid depreciation and deterioration. However, on May
18,1993, before the RTC could act on the motion, petitioner sold the attached properties for the amount
of P1,350,000.00. Nonwowen moved to cite the officers of petitioner in contempt for selling the attached
properties, but the RTC denied the same on the ground that Union Bank acted in good faith.
Issue:
Whether or not the Court of Appeals seriously erred in holding that(Nonwoven) has a
valid claim over the subject sewing machines.
Held:
Indeed, the un-notarized Chattel Mortgage executed by Juniat, for and in behalf of Wingyan and
Winwood, in favour of petitioner does not bind Nonwoven. However, it must be pointed out that petitioners
primary cause of action isfor a sum of money with prayer for the issuance of ex-parte writs of attachment and
replevin against Juniat, Winwood, Wingyan, and the person in possession of the motorized sewing machines and
equipment.
Thus, the fact that the Chattel Mortgage executed in favor of petitioner was notnotarized does not affect
petitioners cause of action. Petitioner only needed to show that the loan of Juniat, Wingyan and Winwood
remains unpaid and that it is entitled to the issuance of the writs prayed for. Considering that writs of attachment
and replevin were issued by the RTC,
Nonwoven had to prove that it has a better right of possession or ownership over the attached properties.
This it failed to do. A perusal of the Agreement dated May 9, 1992 clearly shows that the sewing
machines, snap machines and boilers were pledged to Nonwoven by Juniat to guarantee his obligation. However,
under Article 2096 of the Civil Code, [a] pledge shall not take effect against third persons if a description of the
thing pledged and the date of the pledge do not appear in a public instrument. Hence, just like the chattel
mortgage executed in favor of petitioner, the pledge executed by Juniat in favor of Nonwoven cannot bind
petitioner.
incidentally, the above-mentioned sugar quedans became the subject of three other cases between
PNB and Noahs Ark, which cases have since reached this Court
Issue:
Whether or not the petitioner assertion of blanket mortgage clause or a dragnet clause
valid?
Held:
As a general rule, a mortgage liability is usually limited to the amount mentioned in the
contract. However, the amounts named as consideration in a contract of mortgage do not limit
the amount for which the mortgage may stand as security if, from the four corners of the
instrument, the intent to secure future and other indebtedness can be gathered. This stipulation is
valid and binding between the parties and is known as the "blanket mortgage clause" (also
known as the "dragnet clause)."
In the present case, the mortgage contract indisputably provides that the subject
properties serve as security, not only for the payment of the subject loan, but also for "such other
loans or advances already obtained, or still to be obtained." The cross-collateral stipulation in the
mortgage contract between the parties is thus simply a variety of a dragnet clause. After agreeing
to such stipulation, the petitioners cannot insist that the subject properties be released from
mortgage since the security covers not only the subject loan but the two other loans as well
Moreover, petitioners reliance on Prudential Bank v. Alviar is sorely misplaced. In
Prudential, the fact that another security was given for subsequent loans did not remove such
loans from the ambit of the dragnet clause in a previous real estate mortgage contract. However,
it was held in Prudential that the special security for subsequent loans must first be exhausted
before the creditor may foreclose on the real estate mortgage. In other words, the creditor is
allowed to hold on to the previous security (the real estate mortgage) in case of deficiency after
resort to the special security given for the subsequent loans. Verily, even under the prudential
ruling cited by petitioners, they are not entitled to the release of the real estate mortgage and the
titles to the properties mentioned therein.