Professional Documents
Culture Documents
Court
of Appeals, 316 SCRA 488 [1999]; Allied Banking Corp. vs. Lim Sio
Herrera vs Petrophil LOAN
Wan, 549 SCRA 504 [2008].)
Discounting is slightly more expensive for the borrower because
interest is calculated on the amount loaned (P1,000.00) and not on
the amount actually received. In general, discount and interest Tan v. Valdehueza Requisites for recovery of interest. In order
rates for similar loans are identical.3
that interest may be chargeable, the following are the requisites:
A provision for the payment of rentals in advance with the lessee (1) The payment of interest must be expressly stipulated (Tan vs.
getting a rebate or discount cannot be construed as a repayment
of a loan because there is no grant or forbearance of money. The Valdehueza, 66 SCRA 61 [1975]; Jardenil vs. Salas, 73 Phil. 636
difference between a discount and a loan or forbearance is that [1942].)
the former does not have to be repaid, while the latter is subject
(2) The agreement must be in writing (Art. 1956.); and
to repayment. (Herrera vs. Petrophil Corporation, 146 SCRA 385
[1986].) (3) The interest must be lawful. (see, however, note to Arts. 1957
and 1961.)
date the judgment of the court is made, i.e., at which time the BPI v IAC Safekeeping, principal purpose of the contract
Dollars deposited with bank sold by bank which credited peso political prisoner and the entire deposit was confi scated by the
proceeds to depositor’s current account. — Where the government.
document which embodies the contract states that U.S. dollars in
Issue: Should A be made responsible for the loss of the money?
cash were received by the bank for safekeeping, and the
Held: No. By placing the money in the bank and mixing it with his
subsequent acts of the parties also show that the intent was
personal funds, A did not thereby assume an obligation different
really for the bank to safely keep the dollars and return it to the from that under which he would have lain if such deposit had not
plaintiff who demanded the return of the money about fi ve been made nor did he thereby make himself liable to repay the
money at all hazards. If the money had been forcibly taken from
months later, the above arrangement is the contract of deposit his pocket or from his house by the military forces of one of the
defi ned under Article 1962. The bank violates its obligation if it combatants during a state of war, he would have been exempt
from responsibility. The fact that he placed the trust funds in the
sells the dollars and it cannot defeat the plaintiff’s claim by
bank in his personal account did not add to his responsibility.
asserting that the peso proceeds of the sale were properly
Dissenting opinions (Trent, J.) “When A mixed the trust fund with
credited to the latter’s current account. (Bank of the Phil. Islands his own and deposited the whole in the bank to his personal
vs. Intermediate Appellate Court, 164 SCRA 630 [1988]. account, he stamped on the said fund his own private marks and
unclothed it of all the protection it had. If this money had been
deposited in the name of A as trustee or agent of B, the military
Roman Catholic Bishop of Jaro vs dela Pena authorities would not have confi scated it for the reason that they
were looking for insurgent funds only.” (Roman Catholic Bishop of
Trust fund which trustee mixed with his own and deposited in a Jaro vs. De La Peña, 26 Phil. 144 [1913].)
PLEDGE
L E G A L AND J U D I C I A L B O N D S
Dilag vs. Heirs of Resurreccion, 76 Phil. 650
34. People vs. Otiak Omal and Luzon Surety Co. Inc., L-14457,
June 30, 1961 Future property cannot be pledged or mortgaged.
The subsequent arrest of the principal on another charge, or in Future property cannot be object of a contract of mortgage.
other proceedings, while he is out on bail, does not operate ipso (Art. 2085[2].) Thus, a stipulation in a contract of mortgage
facto as a discharge of the original bond. whereby the mortgagor also constituted a mortgage in favor of
the mortgagee and his assignees “on any other property he then
While it is true that a surety may be discharged when the
might have and those he might acquire in the future” did not
performance of the bond is rendered impossible by the act of
constitute a valid mortgage on the properties acquired
God, the act of the obligee, or the act of the law, yet under
subsequent to the constitution of the mortgage because the
these circumstances, there still remains the duty of the surety to
mortgagor could not legally mortgage any property he did not
inform the court of the happening of the event so that it may
yet own. (Dilag vs. Heirs of Resurreccion, 70 Phil. 650 [1940].)
Liability for deficiency. — The pledgor or mortgagor who pledged
or mortgaged his property to guarantee an indebtedness of
Belo vs. PNB, 353 SCRA 359
another person, without expressly assuming personal liability for
Pledgor or mortgagor may be a third person
such debt, is not liable for the payment of any deficiency, should
It is not necessarily void simply because the accommodation the property not be sufficient to cover the debt. (See Parson
pledgor or mortgagor did not benefit from the same. Ordinarily, Hardware Co., Inc. vs. Acosta, [CA] Nos. 1943-44-R, May 5, 1949;
he is not himself a recipient of the loan, otherwise that would be Phil. Trust Co. vs. Echaves, 52 Phil. 852 [1929]; Bank of America vs.
contrary to his designation as such. It is not always necessary that American Realty Corporation, 321 SCRA 659 [1999]; see Wise &
he should be appraised beforehand of the entire amount of the Co. vs. Tanglao, 63 Phil. 372 [1936], under Art. 2058.)
loan.
Under Article 2096 of the Civil Code, “[a] pledge shall not take
Tan Chun Tic vs. West Coast Life, Inc. 54 Phil. 361 effect against third persons if a description of the thing pledged
and the date of the pledge do not appear in a public
Permissible Stipulations
instrument.” Hence, just like the chattel mortgage executed in
If the vendee contributed to the breach of the contract by the
favor of petitioner, the pledge executed by Juniat in favor of
mortgagor, the former, together with the latter, may also be held
Nonwoven cannot bind petitioner.
liable for damages; or if the vendee was guilty of fraud which
It bears stressing that there can be no transfer of ownership if the
would be a ground for rescission of the sale in his favor, the
delivery of the property to the creditor is by way of security. In
mortgagor and not the mortgagee would be the party entitled to
fact, in case of doubt as to whether a transaction is one of
bring the action for annulment.
pledge or dacion en pago, the presumption is that it is a pledge
as this involves a lesser transmission of rights and interests.
PNB vs. Manila Investment & Construction Inc., 38 SCRA 462
event was an act of God or was done solely by third parties and Soriano vs. Galit, 411 SCRA 631
that neither the claimant nor the person alleged to be negligent
The inclusion of “buildings” under Article 415 of the Civil Code,
has any participation. In accordance with the Rules of Evidence,
separate and distinct from the land means that a building is by
the burden of proving that the loss was due to a fortuitous event
itself an immovable property. While a mortgage of land
rests on him who invokes it—which in this case is the private
necessarily includes, in the absence of stipulation, the
respondent. However, other than the police report of the alleged
improvements thereon, a building by itself may be mortgaged
carnapping incident, no other evidence was presented by
apart from the land on which it is built. Possessory rights over said
private respondent to the effect that the incident was not due to
property before title is vested on the grantee may be validly
its fault. A police report of an alleged crime, to which only private
transferred or conveyed as in a deed of mortgage.
respondent is privy, does not suffice to establish the carnapping.
Neither does it prove that there was no fault on the part of
private respondent notwithstanding the parties’ agreement at Mojica vs. CA, GR 94247, September 11, 1991
lt has long been settled by a long line of decisions that mortgages
given to secure future advancements are valid and legal
Hechanova vs. Adil, 144 SCRA 450
contracts; that the amounts named as consideration in said
It is clear from the records of this case that the plaintiff has no
contract do not limit the amount for which the mortgage may
cause of action. Plaintiff has no standing to question the validity
stand as security if from the four corners of the ment the intent to
of the deed of sale executed by the deceased defendant Jose
secure future and other indebtedness can be gathered A
Servando in favor of his co-defendants Hechanova and Masa.
mortgage given to secure advancements is a continuing security
No valid mortgage has been constituted in-plaintiff’s favor, the
and is not discharged by repayment of the amount named in the
alleged deed of mortgage being a mere private document and
mortgage, until the full amount of the advancements are paid.
not registered, moreover, it contains a stipulation (pacto
comisorio) which is null and void under Article 2088 of the Civil
People’s Bank and Trust Co. vs. Dahican Lumber Co., 20 SCRA 84 Code. Even assuming that the property was validly mortgaged
to the plaintiff, his recourse was to foreclose the mortgage, not to
The stipulation in a mortgage contract that properties, which the
seek annulment of the sale.
mortgagor may acquire, construct, install, attach or use in its
lumber concession, shall be subject to the mortgage lien is a
common and logical provision in cases where the original
Bank of Commerce vs. San Pablo, Jr., 522 SCRA 713
properties mortgaged are perishable or subject to inevitable
The Bank of Commerce clearly failed to observe the required
wear and tear or were intended to be sold or used but with the
degree of caution in ascertaining the genuineness and extent of
understanding that they would be replaced with others to be
the authority of Santos to mortgage the subject property. It
thereafter acquired by the mortgagor. Such a stipulation is lawful
should not have simply relied on the face of the documents
and not immoral and is intended to maintain, insofar as possible,
submitted by Santos, as its undertaking to lend a considerable
the original value of the properties given as security.
amount of money required of it a greater degree of diligence.
That the person applying for the loan is other than the registered and public possession of a person other than the mortgagor,
owner of the real property being mortgaged should have constitutes gross negligence amounting to bad faith. Premiere
already raised a red flag and which should have induced the Bank is thus not entitled to have its lien annotated on the genuine
Bank of Commerce to make inquiries into and confirm Santos’ title.
authority to mortgage the Spouses San Pablo’s property. A
person who deliberately ignores a significant fact that could
Asuncion vs. Evangelista, 316 SCRA 848
create suspicion in an otherwise reasonable person is not an
innocent purchaser for value. We hold that private respondent’s insistence that petitioner
execute a formal assumption of mortgage independent and
separate from his own execution of a deed of sale is legally
Premiere Development Bank vs. CA, 453 SCRA 630
untenable, considering that a recorded real estate mortgage is a
It cannot be overemphasized that Premiere Bank, being in the lien inseparable from the property mortgaged and until
business of extending loans secured by real estate mortgage, is discharged, it follows the property. In his testimony, private
familiar with rules on land registration. As such, it was, as here, respondent stated that he would be committing economic
expected to exercise more care and prudence than private suicide if he executed a deed of sale because he would then be
individuals in their dealing with registered lands. Accordingly, transferring his lands to petitioner without the latter first assuming
given inter alia the suspicion-provoking presence of occupants his loan obligations. This posturing is puerile. Even without a formal
other than the owner on the land to be mortgaged, it behooved assumption of mortgage, the mortgage follows the property
Premiere Bank to conduct a more exhaustive investigation on the whoever the possessor may be. It is an elementary principle in
history of the mortgagor’s title. That Premiere Bank accepted in civil law that a real mortgage subsists notwithstanding changes of
mortgage the property in question notwithstanding the existence ownership and all subsequent purchases of the property must
of structures on the property and which were in actual, visible
respect the mortgage, whether the transfer to them be with or the performance of the principal obligation. One of its
without the consent of the mortgagee. characteristics is that it is inseparable from the property. It
adheres to the property regardless of who its owner may
subsequently be. Respondent must have known that even if Lot
Quintanilla vs. CA, 279 SCRA 397
932 is ultimately expropriated by the Republic, still, his right as a
This Court in the “Ajax” case, in upholding the validity of the mortgagee is protected. In this regard, Article 2127 of the Civil
extra-judicial foreclosure of mortgage which included the loans Code provides: “Art. 2127. The mortgage extends to the natural
obtained in excess of the amount fixed in the mortgage contract accessions, to the improvements, growing fruits, and the rents or
as expressed in said proviso, ruled that: “An action to foreclose a income not yet received when the obligation becomes due,
mortgage is usually limited to the amount mentioned in the and to the amount of the indemnity granted or owing to the
mortgage, but where on the four corners of the mortgage proprietor from the insurers of the property mortgaged, or in
contracts, as in this case, the intent of the contracting parties is virtue of expropriation for public use, with the declarations,
manifest that the mortgage property shall also answer for future amplifications, and limitations established by law, whether the
loans or advancements, then the same is not improper as it is estate remains in the possession of the mortgagor or it passes in
valid and binding between the parties.” (Italics supplied). the hands of a third person.”
Republic vs. Lim, 462 SCRA 265 Litonjua vs. L & R Corp. 320 SCRA 405
For respondent’s part, it is reasonable to conclude that he The law considers void any stipulation forbidding the owner from
entered into the contract of mortgage with Valdehueza and alienating the mortgaged property. “Such a prohibition would be
Panerio fully aware of the extent of his right as a mortgagee. A contrary to the public good inasmuch as the transmission of
mortgage is merely an accessory contract intended to secure property should not be unduly impeded.” (Report of the Code
Commission, p. 158.) The mortgagee can simply withhold his foreclosed real estate. Since petitioner-spouses failed to avail of
consent and thereby prevent the mortgagor from selling the appeal without sufficient justification, they cannot conveniently
property. This creates an unconscionable advantage for the resort to the action for annulment for otherwise they would
mortgagee and amounts to a virtual prohibition on the owner to benefit from their own inaction and negligence.
sell his mortgaged property. (Litonjua vs. L & R Corporation, 320
SCRA 405 [1999].)
Sayson vs. Luna, 433 SCRA 502
(b) The sale had not been fairly and regularly conducted; or
Raymundo vs. Sunico, 25 Phil. 365
(c) The price was inadequate, and the inadequacy was so great
Equity of redemption; exercised before confirmation of sale
as to shock the conscience of the court. (United Coconut
In judicial foreclosure, the mortgagor may exercise his equity of
Planters Bank vs. Spouses Beluso, 530 SCRA 567 [2007].)
redemption before but not after the sale is confi rmed by the
court. It is simply the right of the defendant mortgagor to
Maglague vs. Planters Development Bank, 307 SCRA 156 extinguish the mortgage and retain ownership of the property by
paying the secured debt within the 90-day period after the
Issue: The Honorable Court of Appeals erred in not finding that
judgment becomes fi nal in accordance with Rule 68, or even
the Bank should have filed its claim in the settlement of estate of
after the foreclosure sale but prior to its confi rmation. (see Secs.
the deceased mortgagors.
2, 3, Rule 68, Rules of Court; Raymundo vs. Sunico, 25 Phil. 365 General Banking Act (R.A. 337). These laws confer on the
[1913]; Rosales vs. Suba, 408 SCRA 664 [2003].) mortgagor, his successors in interest or any judgment creditor of
the mortgagor, the right to redeem the property sold on
foreclosure—after confirmation by the court of the foreclosure
Phil. Veteran’s Bank vs. Monillas, 550 SCRA 251
sale—which right may be exercised within a period of one (1)
Since foreclosure sale retroacts to the date of the registration of year, counted from the date of registration of the certificate of
the mortgage, it no longer matters that the annotation of the sale in the Registry of Property.
sheriff’s certificate of sale and the affidavit of consolidation of
ownership was made subsequent to the annotation of the notice
Aclon vs. CA, 387 SCRA 415
of lis pendens.
Effect of Exercise of Right
Maluwat vs. Metropolitan Bank and Trust Co. 532 SCRA 124 far as the building is concerned.
WHEREFORE, the orders appealed from are hereby affirmed, with We agree with petitioner that the filing of collection suit barred
costs against plaintiffs Salvador Piansay and Claudia B. Vda. de the foreclosure of the mortgage. x x x The reason for this rule is
Uy Kim. It is so ordered. that: "x x x when, however, the mortgagee elects to file a suit for
collection, not foreclosure, thereby abandoning the chattel
mortgage as basis for relief, he clearly manifests his lack of desire
Tumalad vs. Vicencio, 41 SCRA 143 Owner is estopped
and interest to go after the mortgaged property as security for
The view that parties to a deed of chattel mortgage may agree the promissory note x x x."
to consider a house as personal property for the purposes of said
contract, is good only insofar as the contracting parties are
Lee vs. Trocino, 561 SCRA 178
concerned. It is based, partly, upon the principle of estoppel.
Hence, if a house belonging to a person stands on a rented land Upon the sale of personal property on execution, all ownership
belonging to another person, it may be mortgaged as a personal and proprietary rights leave the judgment debtor and become
property as so stipulated in the document of mortgage. It should vested in the purchaser, and the judgment debtor may no longer
be noted, however, that the principle is predicated on recover the same by redemption, to which he has no right. As the
statements by the owner declaring his house to be a chattel, a new owners of the shares of stock in EQLPI, Manila Polo Club,
conduct that may conceivably estop him from subsequently Manila Golf and Country Club, Sta. Elena Golf and Country Club,
claiming otherwise. and Tagaytay Highlands International Golf Club, Peña, his
assignees, as well as the other purchasers at the execution sale
where these shares were sold, are entitled—without delay—to
Cerna vs. CA, 220 SCRA 517
transfer said shares in their name and exercise ownership over the personal property by reason of his being the owner or of his
same. having a special interest therein. (B.A. Finance Corp. vs. Court of
Appeals, 258 SCRA 102 [1996].)
period after violation of the mortgage condition for the DBP vs. NLRC,
mortgage creditor to cause the sale at public auction of the
The use of the phrase “fi rst preference” in Article 110 of the
mortgaged chattel with at least ten (10)-days notice to the
Labor Code indicates that what it intends to modify is the order
mortgagor and posting of public notice of time, place, and
of preference found in Article 2244, which relates to property of
purpose of such sale, and is a period of grace for the mortgagor,
the insolvent that is not burdened with the liens or encumbrances
to discharge the mortgage obligation. After the sale of the
created or recognized by Articles 2241 and 2242.7
chattel at public auction, the right of redemption is no longer
available to the mortgagor. n the event of bankruptcy or liquidation of an employer's
business, his workers shall enjoy first preference as regards their
unpaid wages and other monetary claims, any provision of law
B.A. Finance Corp. vs. CA, 258 SCRA 102 to the contrary notwithstanding. Such unpaid wages, and
Replevin is so usually described as a mixed action, being partly in monetary claims shall be paid in full before the claims of the
rem and partly in personam — in rem insofar as the recovery of Government and other creditors may be paid." (Italics ours.)