Cred Trans Pledge Digest

7/24/2019 Cred Trans Pledge Digest

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ESTANISLAUA ARENAS V. FAUSTO RAYMUNDO

G.R. No. L-5741

March 13, 1911

Ar !"#5$ R%&'()(%) o* +orac o* %/0% a/ Mor0a0%

Doctrine: Pledger must be owner of the thing to be pledged

FA+TS$

Between end-April or early May 190! "stanislaua Arenas deli#ered$ewelry %gold ring! gold bracelet! gold earring! lady&s comb and ' rosaries!#alued at Php !(00) to her agent "lena de *ega! to be sold on commission+De *ega deli#ered it to ,oncepcion Perello+ nstead of selling the $ewelry!Perello %/0%/the same in the .ondo pawnshop of respondent /austoaymundo! as security for a loan! 2(ho' h% o2%/0% or co)% o*Ar%a).aymundo recei#ed the $ewelry in good faith+

aymundo retained possession of the $ewelry and refused to deli#er thesame unless payment of loan amount was made+ e argues the pledge wasmade with the 2nowledge of Arenas& son! 3abriel 4a 5+ Perello wascon#icted of estafa in a separate case and was unable to redeem the $ewelryby paying the loan amount of Php 1!6'7+

5n 190 August 81! Arenas filed an ac(o *or r%%( %reco#ery ofpersonal property) of the $ewelry+ .he court ordered aymundo to restorethe $ewelry to Arenas+ aymundo filed an answer praying the amount of theloan! or $ewelry be returned+

ISSUE$ 5 aymundo may collect #alue of loan out of #alue of

pledged $ewelry

ELD$ NO

1+ .here was o corac o* %/0%. Ra6'/o ha) o r(0h o%r h%8%2%r6

atio: Art '06 prescribes! as an essential re;uisite! that the thing pledgedor mortgaged must belong to the person who pledges


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ISSUE: hether or not the ,hattel Mortgage ,ontract signed by the Bernal=pouses pro#es that the ownership of the sub$ect motor #ehicle has alreadybeen transferred to them for the reason that under Art '06 of the ew ,i#il,ode! the mortgagor must be the owner of the property+

ELD: nion Motor& reliance on the ,hattel Mortgage ,ontract e?ecutedby the respondent spouses does not helps its assertion that ownership hasbeen transferred to the latter since there was neither deli#ery nor transfer ofpossession of the sub$ect motor #ehicle to respondent spouses+,onse;uently! the said accessory contract of chattel mortgage has no legaleffect whatsoe#er inasmuch as the respondent spouses are not the absoluteowners thereof! ownership of the mortgagor being an essential re;uirementof a #alid mortgage contract+ .he respondent spouses ne#er ac;uiredpossession of the sub$ect motor #ehicle+ .he manifestations of ownershipare control and en$oyment o#er the thing owned+ .he respondent spousesne#er became the actual owners of the sub$ect motor #ehicle inasmuch asthey ne#er had dominion o#er the same+

D: ). r'/%(a ;!""5r'ar6 1, !"""

FA+TS: 5ne odolfo 3uansing obtained a loan in the amount ofP90!000+00 from ,a#ite De#elopment Ban2 %,DB)+ As a security! hemortgaged a parcel of land situated 4a 4oma! Iue@on ,ity and co#ered by

.,. o+ 80009 registered in his name+ 3uansing defaulted on thepayment of the loan! which led ,DB to foreclose the mortgage and later onemerged as the highest bidder and subse;uently! the owner of the lot after3uansing failed to redeem the same+

.he =pouses 4im! through a bro2er! offered to purchase theproperty from ,DB+ .he formal written offer stated a payment of P80!000%10J of P800!000) as option money! pro#ided that the land be cleared ofillegal occupants+ /or payment of the option money! ,DB issued an officialreceipt+ owe#er! after following up on the sale! 4im disco#ered that the

original owner of the land is P"/",.5 3A=3! the father ofodolfo+ n a ci#il case instituted by Perfecto for the cancellation ofodolfo&s title! the =upreme ,ourt ad$udged Perfecto as the real owner afterpro#ing that odolfo fraudulently obtained it+ .hus! odolfo&s title wascancelled and a new one was issued to Perfecto+

Aggrie#ed! the =pouses 4im instituted an action for specific performanceand damages ;uestioning the ability of ,DB! and its mother company /ar"ast Ban2 and .rust ,ompany %/"B.,)! to sell the sub$ect property+

.he egional .rial ,ourt rendered a decision in fa#or of the =pouses 4im!which was affirmed by the ,ourt of Appeals+

ISSUES:

%1) hat is the legal relation between the partiesK

%') hether or not odolfo 3uansing


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L 5"*"! "M5 DA. I5D 5 AB". 5ne cannot gi#ewhat he does not ha#eN+ At the consummation stage! it was impossible for,DB to comply with its legal obligation+

%') 5+ .he sale by ,DB to 4im of the property mortgaged in 198

by odolfo 3uansing must! therefore! be deemed a nullity for ,DB did notha#e a #alid title to the said property+

L ,DB ne#er ac;uired a #alid tit le to the property because theforeclosure sale! by #irtue of which the property had been awarded to ,DBas highest bidder! is li2ewise #oid since the mortgagor was not the owner ofthe property foreclosed

L A Eforced saleF is still a sale within the contemplation of the law+.hus! the principle that the seller must be the owner of the thing sold alsoapplies+

%8) 5+ ,DB cannot be considered as a mortgagee in good faith+

L ,DB was remiss in its duty as ban2 and failed to e?ercise the duediligence re;uired of it+ n short! ,DB was negligent+

L ,iting $urisprudence! it is standard practice for ban2s! beforeappro#ing a loan! to send representati#es to the premises of the land offeredas collateral and to in#estigate who are the real owners thereof! noting thatban2s are e?pected to e?ercise more care and prudence than pri#ateindi#iduals in their dealings! e#en those in#ol#ing registered lands! for theirbusiness is affected with public interest

L o e#idence to the contrary+

o "?tra$udicial =ettlement of the "state ith ai#er! a self-e?ecuteddeed by odolfo! should ha#e placed ,DB on guard+

o eport of the purported ocular inspection by its representati#eswas ne#er admitted into e#idence+

D% L%o ). +aao


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+%>' I%ra(oa F(ac% +orora(o ). +A

G.R. No. 1!3"31 Oco>%r 1!, 1999

FA+TS: acinto Dy e?ecuted a =pecial Power of Attorneyin fa#or ofpri#ate respondent Ang .ay! authori@ing the latter to sell the cargo #essel

owned by Dy and christened 4,. EAsiatic+F .hrough a Deed of Absolute=ale! Ang .ay sold the sub$ect #essel to obert 5ng %5ng)+ 5ng paid thepurchase price by issuing three %8) chec2s owe#er! since the payment wasnot made in cash! it was specifically stipulated in the deed of sale that theE4,. Asiatic shall not be registered or transferred to obert 5ng untilcomplete payment+F .hereafter! 5ng obtained possession of the sub$ect#essel so he could begin deri#ing economic benefits therefrom+ e!li2ewise! obtained copies of the unnotari@ed deed of sale allegedly to beshown to the ban2s to enable him to ac;uire a loan to replenish his %5ng&s)capital+ .he afore;uoted condition! howe#er! which was handwritten on theoriginal deed of sale does not appear on 5ng&s copies+,ontrary to theaforementioned agreements and without the 2nowledge of Ang .ay! 5ng

had his copies of the deed of sale %on which the aforementioned prohibitiondoes not appear) notari@ed 5ng presented the notari@ed deed to thePhilippine ,oast 3uard which subse;uently issued him a ,ertificate of5wnership and a ,ertificate of Philippine egister o#er the sub$ect #essel+5ng also succeeded in ha#ing the name of the #essel changed to 4,.E5rient ope+F

sing the ac;uired #essel! 5ng ac;uired a loan from ,ebu nternational/inance ,orporation to be paid in installments as e#idenced by apromissory note of e#en date+ As security for the loan! 5ng e?ecuted achattel mortgage o#er the sub$ect #essel! which mortgage was registeredwith the Philippine ,oast 3uard and annotated on the ,ertificate of5wnership+

-5ng defaulted in the payment of the monthly installments+ ,onse;uently!,ebu nternational /inance ,orporation sent him a letterN demandingdeli#ery of the mortgaged #essel for foreclosure or in the alternati#e to paythe balance pursuant to paragraph 11 of the deed of chattel mortgage+Meanwhile! the two chec2s paid by 5ng to Ang .ay for the Purchase of thesub$ect #essel bounced+ Ang .ay&s search for the elusi#e 5ng and allattempts to confer with him pro#ed to be futile+ A subse;uent in#estigationand in;uiry with the 5ffice of the ,oast 3uard re#ealed that the sub$ect#essel was already in the name of 5ng! in #iolation of the e?press

underta2ing contained in the original deed of sale+ As a result thereof! Ang.ay and acinto Dy filed a ci#il case for rescission and reple#in withdamages against 5ng and his wife+

ISSUE: hether or not ,ebu nternational /inance ,orporation can #alidly

foreclose the chattel mortgage

ELD: .he pre#ailing $urisprudence is that a mortgagee has a right to relyin good faith on the certificate of title of the mortgagor to the property gi#enas security and in the absence of any sign that might arouse suspicion! hasno obligation to underta2e further in#estigation+ ence! e#en if themortgagor is not the rightful owner of or does not ha#e a #alid title to themortgaged property! the mortgagee or transferee in good faith is nonethelessentitled to protection+ Although this rule generally pertains to real property!particularly registered land! it may also be applied by analogy to personalproperty! in this case specifically! since ship owners are! li2ewise! re;uiredby law to register their #essels with the Philippine ,oast 3uard+

.he chattel mortgage constituted on a #essel by the buyer who was able toregister the #essel in his name despite the agreement with the seller that the#essel would not be so registered until after full payment of the price whichdo not appear in the buyer&s copy of the deed of sale is *A4D! for themortgagee has the right to rely in good faith on the certificate ofregistration+

Er%?a . @'%rr%r-a'**a

GR No. 1=5#53

'% !!, !""=

FA+TS: Dana Iuerrer-Oauffman is the owner of a residential lot with ahouse in B/ esort *illage in 4as PiCas ,ity+ .he property is co#ered by.,. o+ .-76'1+ .he owners duplicate copy and the ta? declarationsco#ering the property were 2ept in a safety deposit bo? in the house+=ometime in 199G! Oauffman entrusted her minor daughter! *ida ose! andthe 2ey to the house to her li#e in partner! "duardo *ictor! as she will go tothe nited =tates+ After a while! both *ida ose and *ictor also left for the=+ *ictor then entrusted the 2ey to his sister! Mira Bernal+

Oauffman then as2ed her sister "#elyn Pares to get the house from Bernalso that she can sell it+ =he sent the 2ey to the safety deposit bo?+ Pares


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wasnt able to recei#e it and thus they hired a professional loc2smith to openit+ pon opening! Pares disco#ered that the owners duplicate title! ta?declarations and pieces of $ewelry were missing+ 4earning this incident!Oauffman immediately returned to the Philippines+ =he and Pares went tothe egister of Deeds of 4as PiCas and they found out that the lot has been

mortgaged to a certian osana "reCa+ t appeared that Oauffman signed areal estate mortgage as owner-mortgagor and ennifer amire@ as atty-in-fact+

Oauffman and Pares were able to locate Bernal+ Bernal confirmed thatamire@! daughter of *ictor! had ta2en the contents of the safety depositbo?+ sing the 2ey entrusted to them by *ictor! they were able to open thehouse and they forced open the deposit bo? and stole the said items+ a#ingin their possession the title! they forged the signature of Oauffman throughan impostor and made a eal "state Mortgage in fa#or of "reCa+ henOauffman told Bernal that she would file suit! Bernal cried and as2ed forforgi#eness+ =he admitted that amire@ had been in a tight financial fi? and

pleaded for time to return the title and the $ewelry+

Oauffman howe#er still filed a complaint against "reCa! Bernal andamire@ for the nullification of eal "state Mortgage and Damages+ "reCacountered that she was a mortgagee in good faith+

ISSUE: hether or not the eal "state Mortgage is #alid

ELD: o+ According to Article '06 %')! a pledgor or mortgagor has to beabsolute owner of the thing pledged or mortgaged for a contract of pledgeand mortgage to be #alid+ Both the trial court and the appellate courts foundthat Oauffman is the true owner of the property and that the signatures onthe =pecial Power of Attorney and eal "state Mortgage are not hergenuine signatures+ .he e#idence on record shows that amire@ and herhusband used an impostor who claimed she was the owner of the property+.his impostor was the one who signed the eal "state Mortgage andshowed to "reCa the owners duplicate copy of the title+

hen the instrument presented for registration is forged! e#en ifaccompanied by the owners duplicate title! the registered owner does notlose his title and neither does the mortgagee ac;uire any right to theproperty+ n such case! the mortgagee based on a forged instrument is note#en a purchaser or a mortgagee for #alue protected by law+ "reCa is not a

mortgagee in good faith+ .he doctrine of mortgagee in good faith does notapply to a situation where the title is still in the name of the rightful ownerand the mortgagor is a different person pretending to be the owner+ n suchcase! the mortgagee is not an innocent mortgagee for #alue and theregistered owner will generally not lose his title+

:N ). AGUDELO 6 GONBAGA

GR No. L-39"37 Oc. 3", 1933

FA+TS:- 5n o#+ 9! 19'0! Pa@ Agudelo e?ecuted a special power of

attorney %"?hibit O) in fa#or of her nephew! Mauro 3arrucho- n the said =PA! 3arrucho is able to sell alienate and mortgage in

whate#er manner or form he might deem con#enient!all Agudelo&s properties in Murcia and Bacolod! egros 5ccidental

- 5n Dec+ ''! 19'0! Amparo 3arrucho e?ecuted a special power ofattorney %"?hibit ) wherein she enabled her brother! Mauro! to

sell! alienate! mortgage or otherwise encumber all her properties inMurcia and Bago! egros 5ccidental- owe#er! nothing in the said =PAs e?pressly authori@ed Mauro A+

3arrucho to contract any loan nor to constitute a mortgage on theproperties belonging to the respecti#e principals! to secure hisobligations

- 5n Dec+ '8! 19'0! a document %"?hibit 3) was e?ecuted by Mauroin fa#or of Philippine ational Ban2 %PB) whereby heconstituted a mortgage on 4ot o+ G under Amparo A+ 3arrucho!to secure the payment of credits! loans! commercial o#erdrafts!etc+! not e?ceeding P(!000! together with interest thereon! which hemight obtain from PB! issuing the corresponding promissory noteto that effect

- /or the years 19'1 and 19''! Mauro maintained a personal creditaccount with PB

- 5n Aug+ '7! 19'1! Mauro e?ecuted another document %"?hibit )in PB&s fa#or whereby he constituted a mortgage on Agudelo&s 'lots! including the buildings and impro#ements to secure thepayment of credits! loans and commercial o#erdrafts which thesaid ban2 might furnish him to the amount of P1(!000! payable onAugust '7! 19''! e?ecuting the corresponding promissory note tothat effect+


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- =aid mortgage contracts and promissory notes were e?ecuted byMauro in his own name and signed by him in his personal capacity!authori@ing PB to ta2e possession of the mortgaged properties!by means of force if necessary! in case he failed to comply withany of the conditions stipulated therein

- .hereafter! PB notified Mauro of his promissory note withinwhich to ma2e a payment- "#entually! Mauro&s commercial credit was closed starting May

''! 19''- PB manager re;uested Mauro to li;uidate his account amounting

to P16!17+16! at the same time notifying him that his promissorynote for P1(!000 gi#ing as security for the commercial o#erdraft in;uestion! had fallen due As a result! another mortgage contract%"?hibit ,) was e?ecuted by Mauro in PB&s fa#or o#er Agudelo&slot in Bacolod and Murcia

- Mauro incurred credits and loans for a total of P'1!000+ A newpromissory note was e?ecuted for P'1!000! thereby no#ating the

first ' notes- =ometime 19'6! Amparo sold 4ot G %which was under e?hibit3) to Pa@ Agudelo %"?hibit M)+

- An affida#it %"?hibit ) was li2ewise signed by Pa@ Agudelowhich states: E??? do hereby agree and consent to the transfer inmy fa#or of lot o+ G of the ,adastre of Murcia! 5ccidentalegros! P+ +! by Miss Amparo A+ 3arrucho! as e#idenced by thepublic instrument dated o#ember '6! 19'6! e?ecuted before thenotary public Mr+ 3enaro B+ Benedicto! and do hereby furtheragree to the amount of the lien thereon stated in the mortgage deede?ecuted by Miss Amparo A+ 3arrucho in fa#or of the Philippineational Ban2+F

- Pursuant to the said sale! the property and title was transferred inPa@&s name

- ,/ uling:- Absol#ed Mauro from the complaint- Pa@ Agudelo is ordered to pay PB

ISSUE:


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mortgage constituted by him in his personal capacity! although onproperties belonging to his principal

- .hus! Mauro e?ceeded his scope of his authority and the principalis not liable for his acts

- n conclusion! when an agent negotiates a loan in his personal

capacity and e?ecutes a promissory note under his own signature!without e?press authority from his principal! gi#ing as securitytherefor real estate belonging to the letter! also in his own nameand not in the name and representation of the said principal! theobligation do constructed by him is personal and does not bind hisaforesaid principal+

MAMERTA VDA. DE AYME VS +A

FA+TS: .he spouses 3raciano and Mamerta ayme are the registeredowners of 4ot 'G00! situated in the Municipality of Mandaue+ 5n anuary !19G8! they entered into a ,ontract of 4ease6 with 3eorge eri! president ofAirland Motors ,orporation %now ,ebu Asian cars nc+)! co#ering one-halfof 4ot 'G00+ .he lease was for twenty %'0) years+ .he terms and conditionsof the lease contract stipulated that ,ebu Asiancars nc+ %hereafter!Asiancars) may use the leased premises as a collateral to secure payment ofa loan which Asiancars may obtain from any ban2! pro#ided that theproceeds of the loan shall be used solely for the construction of a buildingwhich! upon the termination of the lease or the #oluntary surrender of theleased premises before the e?piration of the contract! shall automaticallybecome the property of the ayme spouses %the lessors)+A =pecial Power ofAttorneyRG dated anuary '(! 19G7! was e?ecuted in fa#or of respondent3eorge eri! who used the lot to secure a loan of P800!000 from the3eneral Ban2 and .rust ,ompany+ .he loan was fully paid on August 17!19GGn 5ctober 19GG! Asiancars obtained a loan of P(!000!000 from theMetropolitan Ban2 and .rust ,ompany %MB.,)+ .he entire 4ot 'G00 wasoffered as one of se#eral properties gi#en as collateral for the loan+ Asmortgagors! the spouses signed a Deed of eal "state Mortgage datedo#ember '1! 19GG in fa#or of MB.,+ t stated that the deed was to securethe payment of a loan obtained by Asiancars from the ban2+ .o assure theayme spouses! eri and the other officers of Asiancars! e?ecuted anunderta2ing +n it they promised! in their personal capacities and


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be transferred to the aymes upon termination of the lease or the #oluntarysurrender of the premises+ .he lease was constituted on anuary ! 19G8 andwas to e?pire '0 years thereafter! or on anuary ! 1998+ .he alienation #iadacion en pago was made by Asiancars to MB., on December 1! 190!during the subsistence of the lease+ At this point! the mortgagor! Asiancars!

could #alidly e?ercise rights of ownership! including the right to alienate it!as it did to MB.,+

:%o ) h(((% Na(oa :a

G.R. No. 13433"

March 1, !""1

FA+TS: "duarda Belo owned an agricultural land %((1!') s;uare meterslocated in .impas! Panitan! ,api@+ =he leased a portion of the said tract ofland to spouses Marcos and Arsenia "slabon for their sugar plantationbusiness! effecti#e for G years at a rate of G!000 pesos per year+ .o financetheir business #enture! spouses "slabon obtained a loan from Philippineational Ban2 %PB) secured by a real estate mortgage on their own 7residential houses in o?as ,ity! as well as on the agricultural land ownedby "duarda Belo+ .he assent of "duarda Belo to the mortgage was ac;uiredthrough a special power of attorney which she e?ecuted in fa#or ofrespondent Marcos "slabon on une 16! 19'+=pouses "slabon failed to pay their loan resulting to the e?tra$udicialforeclosure proceedings against the mortgaged properties instituted byrespondent PB+ PB was the highest bidder of the foreclosed properties atP77G!(8'+00+PB through a letter informed "duarda Belo of the sale at public auction ofher agricultural land on une 10! 1991 as well as the registration of the,ertificate of =heriffs =ale in its fa#or on uly 1! 1991! and the one-yearperiod to redeem the landMeanwhile! "duarda Belo sold her right of redemption to petitionersspouses "nri;ue and /lorencia Belo %petitioners) under a deed of absolutesale of proprietary and redemption rights+ Before the e?piration of theredemption period! petitioners spouses Belo tendered payment for theredemption of the agricultural land in the amount of P77!7'+9(! includingthe bid price of PB! plus interest and e?penses as pro#ided under Act o+8186! which subse;uently was re$ected by PB contending that theredemption price should be the total claim of the ban2 on the date of theauction sale and custody of property plus charges accrued and interests

amounting to P'!GG9!9G+G'+ Petitioners spouses disagreed and refused topay the said total claim of respondent PB+

ISSUES:1) hether or not the =PA! the real estate mortgage contract! the

foreclosure proceedings and the subse;uent auction sale in#ol#ing "duardaBelos property are #alid+') hether or not the =ps Belo should pay all the claims of PB%P'!GG9!9G+G') instead of only the amount of the bid price plus interests%P77!7'+9() on "duarda Belo&s property+

ELD:1) T"=+%discussion of the #alidity of the real estate mortgage only as rele#ant to thetopic)t is stipulated in paragraph three %8) of the =PA that "duarda Beloconsented to ha#e her land mortgaged for the benefit of the respondentsspouses "slabon+ .he =PA was not meant to ma2e her a co-obligor to theprincipal contract of loan between respondent PB! as lender! and thespouses "slabon! as borrowers+ .he accommodation real estate mortgageo#er her property! which was e?ecuted in fa#or of PB by the spouses"slabon! in their capacity as her attorneys-in-fact by #irtue of her =PA! ismerely an accessory contract+.he =PA form of the PB was utili@ed to authori@e the spouses "slabon tomortgage "duarda Belos land as additional collateral of the "slabon spousesloan from respondent PB+ Besides! "duarda Belo benefited! in s igning the=PA! in the sense that she was able to collect the rentals on her leasedproperty from the "slabons+An accommodation mortgage is not necessarily #oid simply because theaccommodation mortgagor did not benefit from the same+ .he #alidity of anaccommodation mortgage is allowed under Article '06 of the ew ,i#il,ode which pro#ides that third persons who are not parties to the principalobligation may secure the latter by pledging or mortgaging their ownproperty+ An accommodation mortgagor! ordinarily! is not himself arecipient of the loan! otherwise that would be contrary to his designation assuch+ t is not always necessary that the accommodation mortgagor beappraised beforehand of the entire amount of the loan nor should it first bedetermined before the e?ecution of the =PA+/ourth! the courts a ;uo correctly held that the letter of "duarda Beloaddressed to respondent PB manifesting her intent to redeem the property


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is a wai#er of her right to ;uestion the #alidity of the =PA and the mortgagecontract as well as the foreclosure and the sale of her sub$ect property+

') 5+=ection G of the 3enral Ban2ing Act! as amended! and =ec+ '6 PD

o+ (97 %pro#iding that right to redeem of mortgagors are sub$ect only topaying all claims of the Ban2 against them) are inapplicable toaccommodation mortgagors in the redemption of their mortgagedproperties+

PB has no claim against accommodation mortgagor "duardaBelo inasmuch as she only mortgaged her property to accommodate the"slabon spouses who are the loan borrowers of the PB+ .he principalcontract is the contract of loan between the "slabon spouses! asborrowers


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'+ pon scrutiny of the stipulation of the parties! it can be seen that it is asubtle intention of the creditor to ac;uire the property gi#en as security forloan+ .his is in the nature of PA,.M ,5MM=5M and is therefore*5D+

"lements of pactum commissoriumUa+ there should be a property mortgaged as security for a loanb+ there is a stipulation for automatic appropriation by the creditor of thething mortgaged in case of non-payment of the principal obligation withinthe stipulated period+

Acaara . A(%a

FA+TS$

L Alinea and Belarmino entered into a contract with Alcantara wherethe defendants borrowed from the plaintiff the sum of 70 pesos! payable inanuary of said year 1906 under the agreement that if! at the e?piration ofthe said period! said amount should not be paid it would be understood thatthe house and lot owned by the said defendants be considered as absolutelysold to the plaintiff for the said sum+L After the time for the payment of said sum has e?pired and nopayment has been made and the defendants refuse to deli#er to plaintiff thesaid property+L .herefore Alcantara filed a complaint in the ,ourt of /irst nstanceof 4a 4aguna! praying that $udgment be rendered in his behalf ordering thedefendants to de li#er to him the house and lot claimed! and to pay him inaddition thereto as rent the sum of pesos per month from /ebruary of thatyear! and to pay the costs of the action+

ISSUE

1+ hether the contract is a pledge! mortgage! or antichresis+ 5 toall'+ hether the contract is #alidK

RULING

1+ .he contract is not a pledge! mortgage! or antichresis

.he property does not appear mortgaged in fa#or of the creditor! because inorder to constitute a #alid mortgage it is indispensable that the instrument

be registered in the egister of Property! in accordance with article 1G6 ofthe ,i#il ,ode! and the document of contract! "?hibit A! does not constitutea mortgage! nor could it possibly be a mortgage! for the reason of saiddocument is not #ested with the character and conditions of a publicinstrument+

By the aforesaid document! "?hibit A! said property could not be pledged!not being personal property! and notwithstanding the said double contractthe debtor continued in possession thereof and the said property has ne#erbeen occupied by the creditor+

either was there e#er any contract of antichresis by reason of the saidcontract of loan! as is pro#ided in articles 11 and those following of the,i#il ,ode! inasmuch as the creditor-plaintiff has ne#er been in possessionthereof! nor has he en$oyed the said property! nor for one moment e#errecei#ed its rents+

'+ .he contract is #alid

.he fact that the parties ha#e agreed at the same time! in such a manner thatthe fulfillment of the promise of sale would depend upon the nonpayment orreturn of the amount loaned! has not produced any charge in the nature andlegal conditions of either contract! or any essential defect which would tendto nullify the same+

o article of the ,i#il ,ode! under the rules or regulations of which suchdouble contract was e?ecuted! prohibits e?pressly! or by inference from anyof its pro#isions! that an agreement could not be made in the form in whichthe same has been e?ecutedH on the contrary! article 1'G of the aforesaidcode pro#ides that Qcontracts shall be binding! whate#er may be the form inwhich they may ha#e been e?ecuted! pro#ided the essential conditionsre;uired for their #alidity e?ist+Q .his legal prescription appears firmlysustained by the settled practice of the courts+

.he document of contract has been recogni@ed by the defendant Alinea andby the witnesses who signed same with him! being therefore an authenticand efficacious document! in accordance with article 1''6 of the ,i#il,odeH and as the amount loaned has not been paid and continues in


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possession of the debtor! it is only $ust that the promise of sale be carriedinto effect! and the necessary instrument be e?ecuted by the #endees+

Maho%6 . T'a)o

G.R. No. 141!9

'6 3", 1919

FA+TS:

,ounsel for D++ Mahoney! recei#er of the insol#ency of P+ Blanc! prayedthe ,ourt of /irst nstance of Manila to cite Mariano .uason to appear ande?plain before the court the reason why he had in his custody the $ewelsmentioned in the said petition! and after the hearing! to order him! if proper!to deli#er the said $ewels to the recei#er! in order that they form part of theestate of the insol#ent P+ Blanc+

Mariano .uason guaranteed in fa#or of the insol#ent P+ Blanc! the creditwhich the ,hartered Ban2 of ndia! Australia and ,hina had granted to saidP+ Blanc+ n order to guarantee the said security! P+ Blanc ga#e as pledge the$ewels to Mariano .uason+ P+ Blanc did not pay the debt due to the ban2!wherefore .uason had to pay and did in fact pay to the said ban2 the entiredebt owed by P+ Blanc+

n the pri#ate document containing the contract of pledge appears thee?press agreement that if Blanc should fail to comply with the obligationsstipulated! among other things! that of paying one thousand pesos %P1!000)monthly in ad#ance beginning from une! 1918! till his debt shall ha#e beenpaid together with the stipulated interests and the interests paid to the ban2!the creditor would be entitled to retain the $ewels and other thing gi#en inpledge to the said creditor in an amount which results after deducting thefifty per cent %60J)+

ISSUE:

hether a contract of pledge or of chattel mortgage duly entered into isrendered null and #oid by an additional stipulation among the contractingparties that in case of the debtor&s failure to comply with the conditionsagreed upon! the creditor would be authori@ed to retain the $ewels and

merchandise pledged in half of their #alue and absolutely appropriatingthem to himself+

ELD:

T"=+ .uason has no right to appropriate to himself the merchandisepledged! nor can he ma2e payment by himself and to himself with half orthe total #alue of the same %Art+ 169! ,i#il ,ode)! inasmuch as he is onlypermitted to reco#er his credit! which Blanc owes! from the proceeds of thesale of the $ewels and merchandise deli#ered to him in pledge! and said saleat public auction should be effected! according to Article 1G'! before anotary! and according to =ection 17 of Act o+ 160! in a public place in themunicipality after pre#ious notices and notifications to the debtor throughthe sheriff of the pro#ince+

f the last part of the contract concerning the fact that the creditor .uason isentitled to retain and appropriate to himself the merchandise recei#ed inpledge is null and indefensible! because he can only reco#er his credit!according to law! from the proceeds of the sale of the same! there is nosound reason nor any legal pro#ision which determines the nullity of theprincipal contract by #irtue of which .uason paid Blanc&s debt to the ban2!and according to the stipulation! .uason too2 possession of the $ewels andmerchandise pledged as security for the big sum of money which he hadpaid and which the debtor Blanc had not refunded+

f the creditor .uason could not appropriate to himself the $ewels andmerchandise which he had in his custody! by way of pledge U an acte?pressly prohibited by law U it does not follow that the contract of pledgeor mortgage of the $ewels and the other merchandise which was dulye?ecuted between the said .uason and Blanc was also null! because if thelatter could not pay his debt by refunding to .uason the amount paid to the,hartered Ban2! there is no $ust nor legal reason which pre#ents the creditorfrom reco#ering his credit and other amounts which Blanc was obliged topay from the proceeds of the sale of the $ewels and merchandise pledged+

.he contract of pledge or chattel mortgage entered into between P+ Blancand Mariano .uason on une '0! 1918! and stated in the documents on pp+17 to '1 of the bill of e?ceptions! is #alid and subsistingH that the creditor!Mariano .uason! has the right to reco#er his credit of eighteen thousandeight hundred se#enty pesos %P1!G0) from the proceeds of the public sale


13/18

of the merchandise pledged! which sale should be effected by the sheriff ofthe city of Manila in the manner and with the formalities established by=ection 17 of Act o+ 160H and that the stipulation contained in the lastpart of the document %page '1 of the bill of e?ceptions) whereby the debtorauthori@ed the creditor .uason to retain the $ewels in his possession is null

and #oid+ owe#er! the creditor .uason is obliged to deli#er to the recei#er!D++ Mahoney! the balance of the proceeds of the sale of the $ewels andmerchandise pledged! after deducting his credit! the interests thereon andthe other amounts to which he is entitled to reco#er! according to thestipulation contained in the said contract+

DAYRIT . +OURT OF AEALS

;197", R'(C +a)ro, .a ). SLGT o/(0)

S%%>%r 14, !""7

FA+TS:- A=B De#elopment ,orporation is the defaulting de#eloper of B=A.win .owers ,ondo in 5rtigas+ espondent Dylanco and =43. oldingsare unit buyers of the said pro$ect and Petitioners Metroban2 and ,PB arethe lending-mortgagee ban2s+- Dylanco and =43. each entered into a contract to sell with A=Bfor the purchase of a unit %nit 110( for Dylanco and nit 1'11 for =43.)at B=A .owers then being de#eloped by the latter+- As stipulated! A=B will deli#er the units thus sold upon completionof the construction or before December 1999+ elying on this and otherunderta2ings! Dylanco and =43. each paid in full the contract price of theirrespecti#e units+- .he promised completion date came and went! but A=B failed todeli#er! as the Pro$ect remained unfinished at that time+ .o ma2e mattersworse! they learned that the lots on which the B=A .owers were to beerected had been mortgaged to Metroban2 and ,PB without the priorwritten appro#al of the 4B+- =43. and Dylanco filed with the 4B a complaint for deli#eryof property and title and for the declaration of nullity of mortgage+ At thistime A=B had already filed with =", a petition for rehabilitation and arehabilitation recei#er had in fact been appointed+ According to A=B it

encountered li;uidity problems after Metroban2 and ,PB simultaneouslydemanded payments of their loans+- 5n the other hand! Metroban2 claims that complainants Dylancoand =43.N ha#e no personality to as2 for the nullification of the mortgagebecause they are not parties to the mortgage transaction+ ,PB ;uestionedthe personality of =43. to challenge the #alidity of the mortgage reasoningthat the latter is not party to the mortgage contract V andN maintains thatthe mortgage transaction was done in good faith+- 4B ruled in fa#or of =43. stating that the mortgageconstituted o#er the lots is in#alid for lac2 of mortgage clearance from the


17/18

4B+ .he 5ffice of the President and the ,ourt of Appeals affirmed thedecision+

ISSUE:1+) 5 the declaration of nullity of the entire mortgage constitutedon the pro$ect land site and the impro#ements thereon is #alid+ > T"='+) 5 this nullity e?tends to the entire mortgage contract > T"=%related to Art+ '09)

ELD:1+) .he pro$ect lot


18/18

ISSUE:,an .olentinos real estate mortgage be entirely foreclosed to satisfy the1G!000 debtK

ELD:

" hold that the real estate mortgage of =ulpicio M+ .olentino cannot beentirely foreclosed to satisfy his 1G!000+00 debt+

.he fact that when =ulpicio M+ .olentino e?ecuted his real estate mortgage!no consideration was then in e?istence! as there was no debt yet becausesland =a#ings Ban2 had not made any release on the loan! does not ma2ethe real estate mortgage #oid for lac2 of consideration+

t is not necessary that any consideration should pass at the time of thee?ecution of the contract of real mortgage+ lt may either be a prior orsubse;uent matter+ But when the consideration is subse;uent to themortgage! the mortgage can ta2e effect only when the debt secured by it iscreated as a binding contract to pay+ And! when there is partial failure ofconsideration! the mortgage becomes unenforceable to the e?tent of suchfailure+ here the indebtedness actually owing to the holder of the

mortgage is less than the sum named in the mortgage! the mortgage cannotbe enforced for more than the actual sum due+

=ince sland =a#ings Ban2 failed to furnish the P(8!000+00 balance of theP0!000+00 loan! the real estate mortgage of =ulpicio M+ .olentino becameunenforceable to such e?tent+ P(8!000+00 is G+G6J of P0!000+00! hencethe real estate mortgage co#ering 100 hectares is unenforceable to the e?tentof G+G6 hectares+ .he mortgage co#ering the remainder of '1+'6 hectaressubsists as a security for the P1G!000+00 debt+ '1+'6 hectares is more thansufficient to secure a P1G!000+00 debt+

.he rule of indi#isibility of a real estate mortgage pro#ided for by Article'09 of the ,i#il ,ode is inapplicable to the facts of this case+ .he rule ofindi#isibility of the mortgage presupposes se#eral heirs of the debtor orcreditor which does not obtain in this case+ ence! the rule of indi#isibilityof a mortgage cannot apply

Documents

Cred Trans Pledge Digest