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Credit Transaction: DE Leon
Credit Transaction: DE Leon
Credit Transaction: DE Leon
LEON
PLEDGE, MORTGAGE AND ANTICHRESIS 184K. They were convicted by the trial court and sentenced to
indemnify the PNB in the sum of 184K. CA affirmed. The
CASE DIGEST COMPILATION corresponding writ of execution issued to implement the order
YULIONGUI v. PNB for indemnification was returned unsatisfied as Yuliongsiu was
totally insolvent. Meanwhile, together with the institution of
Facts: Diosdado Yuliongsiu was the owner of two (2) vessels, the criminal action, PNB took physical possession of the three
namely The M/S Surigao (valued at 109K) and the M/S Don pledged vessels while they were at the Port of Cebu, and after
Dino (63K) and operated the FS-203, (210K) which he the first note fell due and was not paid, the PNB Cebu Branch
purchased from the Philippine Shipping Commission, by Manager, acting as attorney-in-fact of Yuliongsiu pursuant to
installment or on account. As of January or February, 1948, he the terms of the pledge contract, executed a document of sale,
had paid to the Philippine Shipping Commission only the sum Exhibit "4", transferring the two pledged vessels and plaintiff’s
of P76,500 and the balance of the purchase price was payable equity in FS-203, to PNB for 30K. The FS-203 was
at P50,000 a year, due on or before the end of the current year. subsequently surrendered by the PNB to the Philippine
He obtained a loan of 50K from the PNB Cebu. To guarantee Shipping Commission which rescinded the sale to Yuliongsiu
its payment, he pledged the M/S Surigao, M/S Don Dino and for failure to pay the remaining installments. The other two
its equity in the FS-203 to PNB, evidenced by the pledge boats, the M/S Surigao and the M/S Don Dino were sold by
contract, Exhibit "A" & "1-Bank", executed on the same day PNB to third parties. Yuliongsiu commenced action in the
and duly registered with the office of the Collector of Customs Court of First Instance of Cebu to recover the three vessels or
for the Port of Cebu. Subsequently, he effected partial payment their value and damages from PNB. The lower court ruled that
of the loan in the amount of 20K. The remaining balance was the bank’s taking of physical possession of the vessels was
renewed by the execution of two (2) promissory notes in the justified by the pledge contract, Exhibit "A" & "1-Bank" and
bank’s favor due on April 16 and June 25, 1948 respectively. the law; (b) that the private sale of the pledged vessels by
These two notes were never paid on their respective due dates. defendant bank to itself without notice to the plaintiff-pledgor
PNB filed criminal charges against Yuliongsiu and two other as stipulated in the pledge contract was likewise valid; and (c)
accused for estafa thru falsification of commercial documents, that the defendant bank should pay to plaintiff the sums of 1K
because Yuliungsiu had, as last indorsee, deposited with PNB, and 8K, as his remaining account balance, or set-off these sums
from March 11 to March 31, 1948, seven BPI checks totalling against the indemnity which he was ordered to pay to it in the
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criminal cases. Yuliongsiu contended that the contract was a property subject to the order of the pledgee." Considering the
chatte mortgage and constructive delivery is insufficient ti circumstances of this case and the nature of the objects
make the pledge effective. pledged, i.e., vessels used in maritime business, such delivery
is sufficient. Since PNB was, pursuant to the terms of the
Issue: Whether or not the contract was pledge pledge contract, in full control of the vessels thru the plaintiff,
Ruling: Yes. The parties stipulated as a fact that Exhibit "A" & the former could take actual possession at any time during the
"1-Bank" is a pledge contract — "3. That a credit line of 50K life of the pledge to make more effective its security.
was extended to the him by PNB, and he obtained and received In a contract of pledge, constructive delivery suffices.
from the said Bank the sum of 50K, and in order to guarantee Hence, PNB's taking of the vessels therefore was not unlawful.
the payment of this loan, the pledge contract, Exhibit "A" &
Exhibit "1-Bank" ; was executed and duly registered with the Llanto v. Alzona
Office of the Collector of Customs for the Port of Cebu on the
date appearing therein;" This judicial admission binds the Facts:
plaintiff. Without any showing that this was made thru palpable Bernardo Sales and Maria Sales were husband and
mistake, no amount of rationalization can offset it. PNB as a wife. They have twelve children, eleven of whom are the
pledgee was therefore entitled to the actual possession of the present petitioners while the remaining child, Estela Sales
vessels. While it is true that Yuliongsiu continued operating the Pelongco, is one of herein respondents. Maria was the
vessels after the pledge contract was entered into, his registered owner of a certain parcel of land which she acquired
possession was expressly made "subject to the order of the under a free patent. Until they died, Maria and Bernardo,
pledgee." There is authority supporting the proposition that the together with some of their children, lived on said land.
pledgee can temporarily entrust the physical possession of the
chattels pledged to the pledgor without invalidating the pledge. On January 29, 1990, a real estate mortgage contract was
In such a case, the pledgor is regarded as holding the pledged purportedly executed by Maria, who was already deceased at
property merely as trustee for the pledgee. Yuliongsu that time, and Bernardo in favor of herein respondent
contended that constructive delivery is insufficient to make Dominador Alzona. Respondent Estela Sales Pelongco signed
pledge effective. The parties here agreed that the vessels be as an instrumental witness to the mortgage contract.
delivered by the "pledgor to the pledgor who shall hold said Respondent Ernesto Alzona admitted that while he was a co-
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mortgagee of his brother, Dominador, his name does not CA rendered a decision affirming the judgment of the RTC
appear in the mortgage contract. The mortgage was but deleting the attorney’s fees awarded to petitioners.
subsequently foreclosed for alleged failure of Bernardo and
Maria to settle their obligation secured by the said mortgage. Issue:
The property was thereafter sold in a mortgage sale conducted Whether or not Ernesto and Dominador are mortgagees in good
on December 20, 1990 wherein Ernesto Alzona was the highest faith
bidder. Consequently, a certificate of sale was awarded to
Ernesto and he executed a Consolidation of Ownership over Held:
the property. Accordingly, Transfer Certificate of Title was
Yes. Petitioners contend that the principle regarding
issued in his name while the OCT in the name of Maria Sales
innocent purchasers for value enunciated by the CA in its
was cancelled. decision is not applicable to the present case because in the
cases cited by the CA there was no question that the
On December 17, 1992, herein petitioners caused the mortgagors were the real owners of the property that was
inscription of an adverse claim on the title to the property. mortgaged, while in the instant case, the mortgagors were
On October 15, 1993, herein petitioners filed before the impostors who pretended as the real owners of the property.
RTC a complaint for Annulment of Mortgage and of Auction We do not agree. The principle of “innocent purchasers
Sale, with Reconveyance of Title and Damages. Respondents for value” is applicable to the present case.
Ernesto and Dominador Alzona and the Register of Deeds filed
their answers, respectively. However, respondent Estela Sales Under Article 2085 of the Civil Code, one of the essential
Pelongco failed to file her answer; as a consequence of which, requisites of the contract of mortgage is that the mortgagor
she was declared in default. should be the absolute owner of the property to be mortgaged;
otherwise, the mortgage is considered null and void. However,
RTC rendered judgment in favor of defendants Dominador an exception to this rule is the doctrine of “mortgagee in good
Alzona and Ernesto Alzona and against Estela Sales dismissing faith.” Under this doctrine, even if the mortgagor is not the
plaintiffs’ complaint with costs against plaintiffs, and ordering owner of the mortgaged property, the mortgage contract and
plaintiffs to pay defendants Dominador Alzona and Ernesto any foreclosure sale arising therefrom are given effect by
Alzona. Aggrieved by the trial court’s decision, petitioners reason of public policy. This principle is based on the rule that
filed an appeal with the CA. all persons dealing with property covered by a Torrens
Certificate of Title, as buyers or mortgagees, are not required to
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go beyond what appears on the face of the title. This is the subject property. It was only in their motion for reconsideration
same rule that underlies the principle of innocent purchasers filed with the CA did petitioners dispute the foregoing claims
for value cited by the CA in its decision. The prevailing of Ernesto. However, their disputation merely consisted in
jurisprudence is that a mortgagee has a right to rely in good denying that Ernesto met Gloria Sales inside the house of
faith on the certificate of title of the mortgagor to the property Bernardo and Maria. They did not contradict Ernestos claim
given as security and in the absence of any sign that might that he also met Conrado and Yolanda inside the said house.
arouse suspicion, has no obligation to undertake further On the contrary, the truth of the abovementioned claims of
investigation. Hence, even if the mortgagor is not the rightful Ernesto is bolstered by the testimonies of Francisco and Gloria
owner of, or does not have a valid title to, the mortgaged Sales to the effect that during the period between 1989 and
property, the mortgagee in good faith is, nonetheless, entitled 1990, Estela, Yolanda, Gloria and Conrado were all living in
to protection. the house built on the subject property. The trial court also
gave credence to Ernestos testimony that prior to the execution
For persons, more particularly those who are engaged in
of the contract of mortgage, he was even shown a copy of the
real estate or financing business like herein respondents
OCT and the tax declaration in the name of Maria Sales.
Ernesto and Dominador Alzona, to be considered as
mortgagees in good faith, jurisprudence requires that they From the foregoing, we find no error in the ruling of the
should take the necessary precaution expected of a prudent CA that Ernesto sufficiently established that he acted in good
man to ascertain the status and condition of the properties faith by exercising due diligence in ascertaining the status of
offered as collateral and to verify the identity of the persons the property mortgaged and the identity of the owners and
they transact business with, particularly those who claim to be occupants of the said property; that it was Estela and the
the registered property owners. persons who represented themselves as Bernardo and Maria
who perpetrated the fraud.
The CA affirmed the findings of the trial court that
petitioners never disputed Ernestos claim that when he While it was also established that petitioners Yolanda,
inspected the subject property on January 26, 1990, he met Gloria and Conrado were present at the time Ernesto conducted
petitioners Yolanda, Gloria and Conrado together with Estela his credit investigation on January 26, 1990, no direct and
and the persons whom he knew as Bernardo and Maria Sales at conclusive evidence was presented to show that they had
the house built inside the premises of the said property. A sufficient knowledge of the fraud that was perpetrated by their
further reading of the transcript of stenographic notes reveals sister Estela and the persons posing as Bernardo and Maria as
that Ernesto even went inside the house and, in the presence of to hold them equally guilty of such fraud.
the aforementioned persons, discussed with Estela the matter
regarding the loan they were seeking and the mortgage of the
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In fine, we hold that respondents Ernesto and Dominador Kauffman learned about this on October 29, 1997 and
Alzona are mortgagees in good faith and, as such, they are returned to the Philippines. She and Pares went to the Register
entitled to the protection of the law. of Deeds of Las Piñas City and found out that the lot had been
mortgaged to Rosana Ereña. It appeared that a "Vida Dana F.
Querrer" had signed the Real Estate Mortgage as owner-
EREÑA v. QUERRER-KAUFFMAN mortgagor, together with Jennifer V. Ramirez, Victor’s
daughter, as attorney-in-fact.
FACTS:
Kauffman and Pares were able to locate Bernal who,
Vida Dana Querrer-Kauffman is the owner of a when asked, confirmed that Ramirez had taken the contents of
residential lot with a house constructed thereon located at Las the safety deposit box. When Kauffman told Bernal that she
Piñas City. The owner’s duplicate copy of the title as well as would file a case against them, Bernal cried and asked for
the tax declaration covering the property, were kept in a safety forgiveness. Bernal admitted that Jennifer Ramirez had been in
deposit box in the house. a tight financial fix and pleaded for time to return the title and
the jewelry.
Sometime in February 1997, as she was going to the
United States, Kauffman entrusted her minor daughter, Vida Kauffman however still filed a complaint against Ereña,
Rose, to her live-in partner, Eduardo Victor. She went back to Bernal and Ramirez for the nullification of Real Estate
the Philippines to get her daughter and again left for the U.S. Mortgage and Damages. Ereña countered that she was a
on the same day. Later on, Victor also left for the U.S. and mortgagee in good faith.
entrusted the house and the key thereto to his sister, Mira ISSUE:
Bernal.
Whether or not the Real Estate Mortgage is valid
On October 25, 1997, Kauffman asked her sister,
Evelyn Pares, to get the house from Bernal so that the property HELD:
could be sold. Pares did as she was told. Kauffman then sent No. According to Article 2085 (2), a pledgor or
the key to the safety deposit box to Pares, but Pares did not mortgagor has to be absolute owner of the thing pledged or
receive it. Kauffman then asked Pares to hire a professional mortgaged for a contract of pledge and mortgage to be valid.
locksmith who could open the safe. When the safe was broken Both the trial court and the appellate courts found that
open, however, Pares discovered that the owner’s duplicate Kauffman is the true owner of the property and that the
title and the tax declarations, including pieces of jewelry were signatures on the Special Power of Attorney and Real Estate
missing. Mortgage are not her genuine signatures. The evidence on
record shows that Ramirez and her husband used an impostor
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who claimed she was the owner of the property. This impostor
was the one who signed the Real Estate Mortgage and showed
to Ereña the owner's duplicate copy of the title. When the [G.R. No. 146997. April 26, 2005]
instrument presented for registration is forged, even if SPOUSES GODOFREDO & DOMINICA
accompanied by the owner's duplicate title, the registered FLANCIA, petitioners, vs. COURT OF APPEALS &
owner does not lose his title and neither does the mortgagee WILLIAM ONG GENATO, respondents.
acquire any right to the property. In such case, the mortgagee
based on a forged instrument is not even a purchaser or a Facts:
mortgagee for value protected by law. Ereña is not a mortgagee This is an action to declare null and void the mortgage
in good faith. The doctrine of mortgagee in good faith does not executed by defendant Oakland Development Resources Corp.
apply to a situation where the title is still in the name of the in favor of defendant William Ong Genato over the house and
rightful owner and the mortgagor is a different person lot which plaintiff spouses Godofredo and Dominica Flancia
pretending to be the owner. In such case, the mortgagee is not purchased from defendant corporation.
an innocent mortgagee for value and the registered owner will Sps. Flancia entered into a CONTRACT TO SELL involving a
generally not lose his title. parcel of land with Oakland Corp. While the contract is
existing, Oakland mortgaged the land to Sps. Genato in
The petition is DENIED consideration of a 2M peso loan. Oakland failed to pay the
mortgage which prompted Sps. Genato to foreclose the
mortgage.
Sps. Flancia filed the case to protect their rights stemming from
NOTE: the Contract to Sell previously executed with Oakland.
Issues:
Doctrine of "mortgagee in good faith" is based on the rule (1) whether or not the registered mortgage constituted
that all persons dealing with the property covered by a Torrens over the property was valid;
Certificate of Title, as buyers or mortgagees, are not required to (2) whether or not the registered mortgage was superior
go beyond what appears on the face of the title. The public to the contract to sell
interest in upholding the indefeasibility of a certificate of title, Held:
1. Yes. Under the Art. 2085 of the Civil Code, the essential
as evidence of lawful ownership of the land or of any
requisites of a contract of mortgage are: (a) that it be
encumbrance thereon, protects a buyer or mortgagee who, in constituted to secure the fulfillment of a principal obligation;
good faith, relied upon what appears on the face of the (b) that the mortgagor be the absolute owner of the thing
certificate of title
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mortgaged; and (c) that the persons constituting the mortgage METROPOLITAN BANK AND TRUST
have the free disposal of their property, and in the absence COMPANY, respondent.
thereof, that they be legally authorized for the purpose. FACTS:
All these requirements are present in this case.
As to the first essential requisite of a mortgage, it is Lydia T. Co, married to Ramon Co, was the registered owner
undisputed that the mortgage was executed on May 15, 1989 as of two parcels of land situated in Poblacion, Municipality of
security for a loan obtained by Oakland from Genato. Catbalogan, Province of Samar under Transfer Certificate of
Title (TCT) Nos. T-6220 and T-6910. Ramon Co mortgaged
2. In the contract between petitioners and Oakland, aside the said parcels of land to Metrobank for a sum
from the fact that it was denominated as a contract to sell, the of P200,000.00.
intention of Oakland not to transfer ownership to petitioners On February 14, 1991, the properties were sold to Metrobank
until full payment of the purchase price was very clear. Acts of in an extrajudicial foreclosure sale under Act No. 3135. One
ownership over the property were expressly withheld by year after the registration of the Certificates of Sale, the titles to
Oakland from petitioner. All that was granted to them by the the properties were consolidated in the name of Metrobank for
“occupancy permit” was the right to possess it. failure of Ramon Co to redeem the same within the one year
In sum, we rule that Genato’s registered mortgage was period provided for by law. TCT Nos. T-6220 and T-6910 were
superior to petitioner’s contract to sell, subject to any liabilities cancelled and TCT Nos. T-8482 and T-8493 were issued in the
Oakland may have incurred in favor of petitioners by name of Metrobank.
irresponsibly mortgaging the property to Genato despite its
On November 29, 1993, Metrobank filed a petition for the
commitments to petitioners under their contract to sell.
issuance of a writ of possession against Ramon Co and Lydia
WHEREFORE, the petition for review is hereby
Co (the spouses Co). However, since the spouses Co were no
DENIED. The decision of the Court of Appeals reinstating the
longer residing in the Philippines at the time the petition was
August 16, 1996 decision of the trial court is hereby
filed.
AFFIRMED.
On May 17, 1994, the brothers Teoco filed an answer-in-
intervention alleging that they are the successors-in-interest of
G.R. No. 162333 December 23, 2008 the spouses Co, and that they had duly and validly redeemed
BIENVENIDO C. TEOCO and JUAN C. TEOCO, the subject properties within the reglementary period provided
JR., petitioners, by law. The brothers Teoco thus prayed for the dismissal of
vs. Metrobank’s petition for a writ of possession, and for the
nullification of the TCTs issued in the name of Metrobank. The
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brothers Teoco further prayed for the issuance in their name of Art. 2129. The creditor may claim from a third person
new certificates of title. in possession of the mortgaged property, the payment
ISSUE: W/N Brothers Teoco can redeem the properties of of the part of the credit secured by the property which
said third person possesses, in the terms and with the
Spouses Co.
formalities which the law establishes.
RULING: The mortgage directly and immediately subjects the property
upon which it is imposed, whoever the possessor may be to the
YES. The Court holds that the fairest resolution is to allow the fulfillment of the obligation for whose security it was
brothers Teoco to redeem the foreclosed properties based on constituted. Otherwise stated, a mortgage creates a real right
the amount for which it was foreclosed (P255,441.14 plus which is enforceable against the whole world. Hence, even if
interest). This is subject, however, to the right of Metrobank to the mortgage property is sold or its possession transferred to
foreclose the same property anew in order to satisfy the another, the property remains subject to the fulfillment of the
succeeding loans entered into by the spouses Co, if they were, obligation for whose security it was constituted.
indeed, covered by the mortgage contract. The right of
Thus, the redemption by the brothers Teoco shall be without
Metrobank to foreclose the mortgage would not be hampered
prejudice to the subsequent foreclosure of same properties by
by the transfer of the properties to the brothers Teoco as a
Metrobank in order to satisfy other obligations covered by the
result of this decision, since Article 2127 of the Civil Code
Real Estate Mortgage.
provides:
Art. 2127. The mortgage extends to the natural
accessions, to the improvements, growing fruits, and G.R. No. 168736. April 19, 2006
the rents or income not yet received when the
SPOUSES ADELINA S. CUYCO and FELICIANO U.
obligation becomes due, and to the amount of the
indemnity granted or owing to the proprietor from the CUYCO, petitioners, vs. SPOUSES RENATO CUYCO and
insurers of the property mortgaged, or in virtue of FILIPINA CUYCO, respondents.
expropriation for public use, with the declarations, PONENTE: YNARES-SANTIAGO, J.
amplifications and limitations established by
law, whether the estate remains in the possession of the FACTS:
mortgagor, or it passes into the hands of a third person. Petitioner obtained a loan in the amount of
Further, Article 2129 of the Civil Code provides: P1,500,000.00 from respondents, payable within one year at
18% interest per annum, and secured by
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a Real Estate Mortgage over a parcel of land with
improvements thereon situated in Cubao, Quezon City. ISSUE:
Subsequently, petitioners obtained additional loans WoN the real estate mortgage executed by petitioner
from the respondents in the aggregate amount of with respect to the first loan secured future loans and
P1,250,000.00, broken down as follows: (1) P150,000.00, (2) advancements, as of in this case, the additional loans obtained
P150,000.00, (3) P500,000.00, (4) P200,000.00, and (5) by the petitioner.
P250,000.00.
Petitioners made payments amounting to P291,700.00, RULING:
but failed to settle their outstanding loan obligations. Thus, The Court ruled in negative.
respondents filed a complaint for foreclosure of mortgage As a general rule, a mortgage liability is usually
with the RTC. They alleged that petitioners’ loans were limited to the amount mentioned in the contract. However,
secured by the real estate mortgage; that their indebtedness the amounts named as consideration in a contract of
amounted to P6,967,241.14, inclusive of the 18% interest mortgage do not limit the amount for which the mortgage
compounded monthly; and that petitioners’ refusal to settle the may stand
same entitles the respondents to foreclose the real estate as security if from the four corners of the instrument the
mortgage. intent to secure future and other indebtedness can be
Petitioners admitted their loan obligations but argued gathered. This stipulation is valid and binding between the
that only the original loan of P1,500,000.00 was secured by the parties and is known in American Jurisprudence as the
real estate mortgage at 18% per annum and that there was no “blanket mortgage clause,” also known as a “dragnet clause.”
agreement that the same will be compounded monthly. A “dragnet clause” operates as a convenience and
RTC ruled in favor of the respondents. Petitioner accommodation to the borrowers as it makes available
appealed, CA partially granted the petition modified the RTC additional funds without their having to execute additional
decision insofar as the amount of the loan obligations secured security documents, thereby saving time, travel, loan closing
by the real estate mortgage. It held that by express intention of costs, costs of extra legal services, recording fees, et cetera.
the parties, the real estate mortgage secured the original While a real estate mortgage may exceptionally secure
P1,500,000.00 loan and the subsequent loans of P150,000.00 future loans or advancements, these future debts must be
and P500,000.00. sufficiently described in the mortgage contract. An obligation
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is not secured by a mortgage unless it comes fairly within the the presence of two witnesses, and acknowledged as his free
terms of the mortgage contract. act and deed before a notary public. A mortgage constituted by
It is clear from the perusal of the real estate means of a private document obviously does not comply with
mortgage of the parties that there is no stipulation that the such legal requirements.
mortgaged realty shall also secure future loans and What the parties could have done in order to bind the
advancements. Thus, what applies is the general rule above realty for the additional loans was to execute a new real estate
stated. mortgage or to amend the old mortgage conformably with the
Even if the parties intended the additional loans of form prescribed by the law. Failing to do so, the
P150,000.00 and P500,00.00 obtained to be secured by the realty cannot be bound by such additional loans, which may be
same real estate recovered by the respondents in an ordinary action for
mortgage, as shown in the acknowledgement receipts, it is collection of sums of money.
not sufficient in law to bind the realty for it was not made
substantially in the form prescribed by law.
In order to constitute a legal mortgage, it must be FORT BONIFACIO DEVELOPMENT
CORPORATION petitioner,
executed in a public document, besides being recorded. A vs.
provision in a private document, although denominating the YLLAS LENDING CORPORATION and JOSE S.
agreement as one of mortgage, cannot be considered as it is not LAURAYA, in his official capacity as President.
susceptible of inscription in the property registry. A mortgage G.R. No. 158997
in legal form is not constituted by a private document, even if October 6, 2008
such mortgage be accompanied with delivery of possession of
the mortgaged property.35 Besides, by express provisions of
FACTS:
Section 127 of Act No. 496, a mortgage affecting land, whether
registered under said Act or not registered at all, is not deemed On 24 April 1998, FBDC executed a lease contract in favor of
Tirreno, Inc. (Tirreno) over a unit at the Entertainment Center -
to be sufficient in law nor may it be effective to encumber or
Phase 1 of the Bonifacio Global City in Taguig. The parties
bind the land unless made substantially in the form therein had the lease contract notarized on the day of its execution.
prescribed. It is required, among other things, that the Tirreno used the leased premises for Savoia Ristorante and La
document be signed by the mortgagor executing the same, in Strega Bar.
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Two provisions in the lease contract are pertinent to the present LESSOR does not want to use said properties, it may
case: Section 20, which is about the consequences in case of instead sell the same to third parties and apply the
default of the lessee, and Section 22, which is about the lien on proceeds thereof against any unpaid rentals, charges
the properties of the lease. The pertinent portion of Section 20 and/or damages.
reads: Tirreno began to default in its lease payments in 1999.
Section 20. Default of the Lessee By July 2000, Tirreno was already in arrears
20.1 The LESSEE shall be deemed to be in default by P5,027,337.91. FBDC and Tirreno entered into a
within the meaning of this Contract in case: settlement agreement on 8 August 2000. Despite the
execution of the settlement agreement, FBDC found
(i) The LESSEE fails to fully pay on time any rental, need to send Tirreno a written notice of termination
utility and service charge or other financial obligation dated 19 September 2000 due to Tirreno's alleged
of the LESSEE under this Contract; failure to settle its outstanding obligations. On 29
20.2 Without prejudice to any of the rights of the September 2000, FBDC entered and occupied the
LESSOR under this Contract, in case of default of the leased premises. FBDC also appropriated the
LESSEE, the lessor shall have the right to: equipment and properties left by Tirreno pursuant to
Section 22 of their Contract of Lease as partial payment
(i) Terminate this Contract immediately upon written
for Tirreno's outstanding obligations.
notice to the LESSEE, without need of any judicial
action or declaration; On 4 March 2002, Yllas Lending Corporation and Jose
S. Lauraya, in his official capacity as President,
Section 22, on the other hand, reads:
(respondents) caused the sheriff of Branch 59 of the
Section 22. Lien on the Properties of the Lessee trial court to serve an alias writ of seizure against
Upon the termination of this Contract or the FBDC. On the same day, FBDC served on the sheriff
expiration of the Lease Period without the rentals, an affidavit of title and third-party claim. FBDC found
charges and/or damages, if any, being fully paid or out that on 27 September 2001, respondents filed a
settled, the LESSOR shall have the right to retain complaint for Foreclosure of Chattel Mortgage with
possession of the properties of the LESSEE used or Replevin against Tirreno, Eloisa Poblete Todaro
situated in the Leased Premises and the LESSEE (Eloisa), and Antonio D. Todaro, in their personal and
hereby authorizes the LESSOR to offset the prevailing individual capacities, and in Eloisa's official capacity as
value thereof as appraised by the LESSOR against President. In their complaint, respondents alleged that
any unpaid rentals, charges and/or damages. If the they lent a total of P1.5 million to Tirreno, Eloisa, and
Antonio and on 9 November 2000, Tirreno, Eloisa and
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Antonio executed a Deed of Chattel Mortgage over the existence of a contract of pledge, however, does not
things inside the Bar which currently under Lien of arise just because FBDC has means of collecting past
FBDC, as security for the loan. due rent from Tirreno other than direct payment. The
The respondents contended that Sec.22 of the Contract trial court concluded that Section 22 constitutes a
of Lease is void being a pactum commissorium under pledge because of the presence of the first three
Art. 2088 of the Civil Code. requisites of a pledge: Tirreno's properties in the leased
premises secure Tirreno's lease payments; Tirreno is the
The RTC ruled in favor of the respondents. absolute owner of the said properties; and the persons
ISSUE: representing Tirreno have legal authority to constitute
the pledge. However, the fourth requisite, that the
Whether or not, Sec. 22 of the Contract of Lease is a
thing pledged is placed in the possession of the
Pactum Commissorium.
creditor, is absent. There is non-compliance with the
RULING: fourth requisite even if Tirreno's personal properties are
No. It is not a matter prohibited under Article 2088. found in FBDC's real property. Tirreno's personal
properties are in FBDC's real property because of the
Articles 2085 and 2093 of the Civil Code enumerate the
Contract of Lease, which gives Tirreno possession of
requisites essential to a contract of pledge: (1) the
the personal properties. Since Section 22 is not a
pledge is constituted to secure the fulfillment of a
contract of pledge, there is no pactum commissorium.
principal obligation; (2) the pledgor is the absolute
owner of the thing pledged; (3) the persons constituting Hence, FBDC can validly retain the things inside the
the pledge have the free disposal of their property or Bar for the satisfaction of the unpaid rent of Tirreno.
have legal authorization for the purpose; and (4) the
thing pledged is placed in the possession of the creditor,
or of a third person by common agreement. Article
2088 of the Civil Code prohibits the creditor from LUISA BRIONES-VASQUEZ vs. COURT OF APPEALS
appropriating or disposing the things pledged, and any and HEIRS OF MARIA MENDOZA VDA DE OCAMPO
contrary stipulation is void. G.R. No. 144882, February 4, 2005
Section 22, as worded, gives FBDC a means to collect
FACTS:
payment from Tirreno in case of termination of the
lease contract or the expiration of the lease period and
Maria Mendoza Vda De Ocampo entered into an
there are unpaid rentals, charges, or damages. The
agreement denominated as a pacto de retro sale with Luisa
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Briones for a parcel of land. Briones reserved the right to ISSUE: WON the 1970 Sale with Right of Repurchase was
repurchase the property up to December 31, 1970. actually an equitable mortgage.
Magna Financial Services Group Inc., vs. Elias Colarina Yes. Article 1484, paragraph 3, provides that if the vendor has
GR No. 158635 availed himself of the right to foreclose the chattel mortgage,
he shall have no further action against the purchaser to recover
Facts: any unpaid balance of the purchase price. Any agreement to the
contrary is void. In other words, in all proceedings for the
Colarina bought a Suzuki multicab from the petitioner on June foreclosure of chattel mortgages executed on chattels which
11, 1997 with P229,284 as down payment and the balance have been sold on the installment plan, the mortgagee is
payable in 36 equal monthly installments. To secure payment, limited to the property included in the mortgage. Since the,
he executed a promissory note and chattel mortgage in favor of petitioner has undeniably elected a remedy of foreclosure under
the petitioner. Beginning 1999, Calorina failed to pay the Art. 1484(3), it is bound by its election and thus may not be
monthly amortization accumulating to P131K. thereafter, allowed to change what it has opted for nor to ask for more.
petitioner file for a foreclosure of chattel mortgage with
replevin. RTC ruled in favor of the petitioner and ordered
Colarina to pay the balance, and upon default, the multicab will GREEN ASIA CONSTRUCTION AND DEVELOPMENT
be sold at public auction to satisfy the judgement. Colarina CORPORATION AND SPS. RENATO AND DELIA
appealed to the CA which ruled in his favor stating that RTC LEGASPI, Petitioners, v. THE HONORABLE COURT OF
erred in ordering Colarina to pay the unpaid balance while the APPEALS AND PCI LEASING AND FINANCE,
complaint was for the foreclosure of the mortgage. Petitioner
INC.,Respondents.
appealed but was denied. Hence, the case was elevated to the
SC.
Facts:
Issue: On June 8, 1995, petitioner Green Asia Construction and
Development Corporation (GACDC), represented by its
president, petitioner Renato Legaspi, obtained a loan
of P2,600,0004 from private respondent PCI Leasing and
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Finance, Inc. (PCILFI). As security, GACDC, executed a real The nullity of the mortgage is not covered by the remedy
estate mortgage5 for P450,000 in favor of PCILFI. The outlined under Section 8 of Act No. 3135. The said provision
mortgage covered three parcels of land located in Barrio specifically lists the following exclusive grounds for a petition
Balibago, Angeles City. When GACDC failed to pay the loan to set aside the sale and cancel the writ of possession: (1) that
on maturity, the mortgage was foreclosed extrajudicially. A the mortgage was not violated; and (2) that the sale was not
certificate of sale7dated February 3, 1998 was accordingly made in accordance with the provisions of Act No. 3135.
issued to PCILFI and duly registered with the Registry of
Deeds of Angeles City. SEC. 8. The debtor may, in the proceedings in which
On April 12, 2000, PCILFI filed a petition for the issuance of a possession was requested, but not later than thirty days after
writ of possession8 with the Regional Trial Court. Trial court the purchaser was given possession, petition that the sale be
granted PCILFI's petition. set aside and the writ of possession cancelled, specifying the
damages suffered by him, because the mortgage was not
GACDC filed an urgent omnibus motion and a supplement to violated or the sale was not made in accordance with the
the urgent omnibus motion, respectively, praying for the setting provisions hereof, and the court shall take cognizance of this
aside of the certificate of sale, cancellation of the writ of petition in accordance with the summary procedure provided
possession, and the suspension of the implementation of the for in section one hundred and twelve of Act Numbered Four
said writ of possession. GACDC's motion for reconsideration hundred and ninety-six; and if it finds the complaint of the
was denied. debtor justified, it shall dispose in his favor of all or part of the
bond furnished by the person who obtained possession. Either
GACDC elevated the case to the Court of Appeals, which of the parties may appeal from the order of the judge in
affirmed the assailed orders of the trial court. accordance with section fourteen of Act Numbered Four
hundred and ninety-six; but the order of possession shall
Issue: Whether or not the CA err in affirming the ruling of the continue in effect during the pendency of the appeal.
RTC.
Any question regarding the validity of the mortgage or its
Ruling: foreclosure cannot be a legal ground for refusing the issuance
of a writ of possession. Indeed, regardless of whether or not
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there is a pending suit for annulment of the mortgage or the No. The proceeding in a petition for a writ of possession is ex
foreclosure itself, the purchaser is entitled to a writ of parte and summary in nature. It is a judicial proceeding
possession.17Petitioners should have filed a separate and brought for the benefit of one party only and without notice by
the court to any person adverse of interest.
independent action for annulment of the mortgage or the
foreclosure.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ The petitioners have not cited any law or rule requiring
The remedy under Section 8 of Act No. 3135 is inapplicable in that documentary and testimonial evidence be first adduced in
this case.The Court of Appeals did not err, nor did it commit support of a petition for a writ of possession before the trial
grave abuse of discretion amounting to lack or excess of court may act upon and grant the same.
jurisdiction, in affirming the assailed Orders of the trial court. Section 7 of Act No. 3135 merely requires that a petition
for the issuance of a writ of possession shall be in the form of
an ex parte motion. Upon the filing of the said petition, the
G.R. No. 147820. March 18, 2005] payment of the requisite fees therefor, and the approval of the
SPOUSES RUBEN SANTIAGO and INOCENCIA trial court if such petition is filed during the period for the
SANTIAGO, petitioners, vs. MERCHANTS RURAL BANK redemption of the property, the court shall order that a writ of
OF TALAVERA, INC., respondent. possession be issued.