VDA. DE BAUSTISTA v.

MARCOS

FACTS:

Marcos obtained a loan from Bautista secured by a mortgage of an unregistered parcel of

land. It was to last for 3 years and the possession of the land mortgaged was to be turned over
to Bautista by way of usufruct.

Marcos filed an application for the issuance of a free patent over the land. The free patent was
issued to her and the land was registered in her name.

Marcos was unable to pay her debt to Bautista so the latter filed for the foreclosure of her
mortgage on the land given as a security.

ISSUE:

Whether or not Bautista could foreclose the land made as a security for the debt.

HELD:

No, the mortgage was void and ineffective because Marcos was not yet the owner of the land
when the mortgage was executed. Hence, Marcos could not encumber the same to Bautista.

Neither could the subsequent acquisition by Marcos of title over the land through the issuance
of a free patent validate and legalize the mortgage since upon the issuance of the said patent,
the land was brought under the operations of the Public Land Law that prohibits the taking of
said land for the satisfaction of debts contracted prior to the expiration of 5 years from the
issuance of the patent.

Marcos had possessory rights over the land before the title was vested in her name, and these
possessory rights could validly be transferred to Bautista, as Marcos did in the deed of
mortgage.

ALLIED BANKING CORPORATION v SALAS

168 SCRA 414
FACTS:
General Bank and Trust Company granted Gencor Marketing, Inc. a time evidenced by a
Promissory Note executed by the latter through its President, Dr. Clarensio S. Yujuico. As security
for the time loan and pursuant to a resolution of the Board of Directors of Gencor Marketing, a
Deed of Chattel Mortgage was executed by GenCor Marketing in favor of General Bank and Trust
Company involving the personal properties.
 The Deed of Chattel Mortgage was duly recorded in the Chattel Mortgage Registry of
Quezon City.
On maturity date of the Loan and allegedly after several subsequent extensions of time
for Gencor to settle its account, Gencor failed to pay its obligations either to General Bank and
Trust Company or to Allied Banking which took over the affairs and/or acquired all the assets and
assumed the liabilities of General Bank and Trust Company.
Allied Banking extra judicially foreclosed the aforesaid Chattel Mortgage and requested
the City Sheriff of Quezon City to effect the said foreclosure. The City Sheriff of Quezon City,
through Deputy Sheriff A. Tabbada levied upon the afore-descried mortgaged personal properties
in question and issued the corresponding Notice of Sheriffs Sale.
It appears however, that prior to the extrajudicial foreclosure effected by Allied Banking
involving the personal properties in question, Metropolitan Bank and Trust Company filed an
action for a sum of money in the amount of with preliminary attachment against Clarencio Yujuico
and Jesus Yujuico, a writ of preliminary attachment was issued in said case and the Sheriff of the
Court of First Instance of Rizal levied upon the personal properties in question.
Thus, upon teaming of the Notice sent by City Sheriff Tabbada for the sale of eh foreclosed
personal properties in question, MBTC filed an Urgent Motion to Enjoin the Sheriff of Quezon City
form foreclosing and selling at public auction the said properties, alleging that the printing
machineries and equipment previously levied and attached by the Sheriff of Rizal belonged
exclusively to defendant Clarencio S. Yujuico, doing business under the firm name of Gencor
Printing and as such, may not legally be foreclosed and sold at the auction by the Sheriff of
Quezon City.
Meanwhile, Metropolitan Bank and Trust Company files a Third Party claim with the
Quezon City Sheriffs Office over the personal properties in question levied upon and sought to
be sold at public auction by City Sheriff Tabbada, alleging that these same personal properties
had been previously levied upon by the Deputy sheriff of Branch I of Court of First Instance of
Rizal pursuant to a Writ of Attachment issued by herein respondent Judge Emilio V. Salas.
Allegedly to protect Allied Bankings rights over the personal properties in question, Allied
bankings counsel entered a special appearance during the scheduled hearing for the exclusive
purpose of opposing MBTCs motion on jurisdictional grounds and gross irregularity of procedure
amounting to lack of jurisdiction.
However, over Allied Bankings opposition, respondent Judge rendered the assailed
Order, enjoining the public sale of the extra judicially foreclosed properties.
HELD:
The chattel mortgage lien attaches to the property wherever it may be. Thus, private
respondent as attaching creditor acquired the properties in question subject to petitioners
mortgage lien as it existed thereon at the time of the attachment.
The lien of petitioners chattel mortgage over the mortgaged properties in question
superior to the levy on attachment made on the same by MBTC as creditor of chattel mortgagor
Clarencio Yujuico. What may be attached by private respondent as creditor of said chattel
mortgagor is only the equity or right of redemption of the mortgagor.