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    1. Mr and Mrs Rancho and Mr and Mrs Lagasca executed a promissory note and mortgage deed for a loan from GSIS, with the Lagascas later assuming the mortgage to release part of the Rancho's land. 2. GSIS foreclosed on the mortgage for nonpayment and auctioned the properties. The Ranchos argued they signed only to allow the Lagascas to use the land, not as guarantors. 3. The court held the documents were not negotiable instruments as they were not payable to bearer or order under the law. Both parties remained liable under the contracts even if only the Lagascas benefited, as their shared land secured the principal obligation

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    1. Mr and Mrs Rancho and Mr and Mrs Lagasca executed a promissory note and mortgage deed for a loan from GSIS, with the Lagascas later assuming the mortgage to release part of the Rancho's land. 2. GSIS foreclosed on the mortgage for nonpayment and auctioned the properties. The Ranchos argued they signed only to allow the Lagascas to use the land, not as guarantors. 3. The court held the documents were not negotiable instruments as they were not payable to bearer or order under the law. Both parties remained liable under the contracts even if only the Lagascas benefited, as their shared land secured the principal obligation

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    © All Rights Reserved
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    4 views1 page

    Government Service Insurance System v. Court of Appeals Doctrine

    Uploaded by

    ckqash
    1. Mr and Mrs Rancho and Mr and Mrs Lagasca executed a promissory note and mortgage deed for a loan from GSIS, with the Lagascas later assuming the mortgage to release part of the Rancho's land. 2. GSIS foreclosed on the mortgage for nonpayment and auctioned the properties. The Ranchos argued they signed only to allow the Lagascas to use the land, not as guarantors. 3. The court held the documents were not negotiable instruments as they were not payable to bearer or order under the law. Both parties remained liable under the contracts even if only the Lagascas benefited, as their shared land secured the principal obligation

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    1. Government Service Insurance System v.

    Court of Appeals

    Doctrine:
    The promissory note and the mortgage deeds did not comply with the fourth requisite to be considered as such under Section 1
    of Act No. 2031 because they are neither payable to order nor to bearer. The note is payable to a specified party, the GSIS.

    Facts:
    Mr and Mrs Isabelo Rancho and Mr and Mrs Flaviano Lagasca- executed a deed of mortgage and a promissory note stating that
    they jointly, severally and solidarily promise to pay the GSIS the sum of P11,500 with interest and in equal monthly installments.
    The Lagasca spouses executed an “Assumption of Mortgage” under which they obligated themselves to assume the aforesaid
    obligation to the GSIS to secure the release of the mortgage covering that portion of the land belonging to the Rancho spouses.

    GSIS - foreclosed the mortgage for failure to pay and caused the said properties to be sold at a public auction.

    Mr and Mrs Isabelo Rancho - alleged that they signed the mortgage contracts not as sureties or guarantors for the Lagasca
    spouses, but they merely gave their common property to the said co-owners who were solely benefited by the loans from the
    GSIS.

    Issue:
    Whether or not the promissory note and the mortgage deeds are negotiable instruments.

    Held:
    No. These documents do not comply with the fourth requisite to be considered as such under Section 1 of Act No. 2031 because
    they are neither payable to order nor to bearer. The note is payable to a specified party, the GSIS.

    The private respondents are liable under the mortgage contracts even if the Lagasca spouses were the only one who were
    benefited from the loan. In consenting thereto, even if they did not assume liability for the debt, their share in the property shall
    nevertheless secure and respond for the performance of the principal obligation.

    [Additional info: An accommodation party is one who has signed an instrument as maker, drawer, acceptor of indorser without
    receiving value therefor, but is held liable on the instrument to a holder for value although the latter knew him to be only an
    accommodation party.]

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