1. Marilag v. Martinez, G.R. No. 201892, July 22, 2015 | Interest Rate | Real Estate
Mortgage Exercise of Right to Forclosure or Collection of Payment of Debt Facts: Rafael Rafa el Mart Martinez inez (Rafael! (Rafael! res res"on#e "on#ent$s nt$s father! obtaine#% from "eti "etitione tionerr a loan in the amount of P10,000.00, !ith a "ti#ulate$ monthly intere"t of %ve #er&ent ' 5( ), #aya*le !ithin a #erio$ of ') month". +he loan !a" "e&ure$ *y a real e"tate mortgage over a #ar&el of lan$ & Rafael faile#$& to settle his obligation u"on maturity an#
#es"ite re"eate# #eman#s! "rom"ting "etitioner to 'le a Com"laint for u#icial Foreclosure of Real Estate Mortgage before the R)C of Imus! Ca*ite! +ranch ,-& Rafael faile# to 'le his ans.er .as #eclare# in #efault& /fter an ex "arte "resentation of "etitioner$s e*i#ence! the R)C%l )C%lmus mus issue# a Decision! #eclaring the sti"ulate# 01 monthly interest to be usurious an# re#ucing the same to 231 "er annum ("&a& an# it or#ere# Rafael to "ay "etitioner the amountt of P33,! amoun P33,!3--&3--&--! -! consi consistin sting g of the "rin "rinci"al ci"al of P24-! P24-!---&---&-- an# accr accrue# ue# inte interes restt 2of P0,!3-P0,!3--&-&-- from uly 5-! 2,,3 to 6e"t 6e"tember ember 5-! 2,,0& R Recor ecor#s #s #o not sho. that this Decision ha# alrea#y attaine# 'nality& Mean.hile! "rior to Rafael$s notice of the abo*e #ecision! res"on#ent agree# to "ay Rafael$s obligation to "etitioner .hich .as "egge# at P47,!---&--& /fter ma8ing a total "ayment of P9--!---&--!22 he execute# a "romissory note 23 #ate# February 3-! 2,,7 (subect P;! bin# bi n#in ing g hi hims msel elff to "a "ay y on or be befo forre Ma Marrch 52 52!! 2, 2,,7 ,7 th the e am amou ount nt of P3 P37, 7,!!----&&--! -! > fa fath ther er to 25 ="etitioner>&< /fter learning of the anuary 5-! 2,,7 Decision! res"on#ent refuse# to "ay the amount amount co* co*er ere# e# by the subect subect P; #es #es"it "ite e #em #eman# an#s& s& en&e, #etitioner to %le a 1&om#laint for "um of money an$ $amage" *efore the &ourt & R)C #enie# reco*ery on the subect P;& It foun# that the consi#eration for its execution .as Rafael$s in#ebte#ness to "etitioner! the extinguishment of .hich necessarily results in the? =onse@uen =ons e@uentt exti extinguis nguishment hment of the caus cause e ther therefor efore& e& Cons Consi#er i#ering ing that the R)C )C%Imus %Imus ha# a#u#ge# Rafael liable to "etitioner only for the amount of P33,!3--&--! for .hich a total of P9--!---&-- ha# alrea#y been "ai#! the court a @uo foun# no *ali# or com"elling reason to allo. "etitioner to reco*er further on the subect P;& +here *eing an e&e"" #ayment of Pl /1, /1,000. 000.00, 00, it $e& $e&lare lare$ $ tha thatt a ua ua"i "i&on &ontra tra&t &t 'in the &on &on&e# &e#tt of "ol "oluti ution on in$e*iti) ei"t" *et!een the #artie" an$, a&&or$ingly, a&&or$ingly, $ire&te$ #etitioner to return the "ai$ amount to re"#on$ent, #lu" ( intere"t #.a.18 re&one$ from the $ate of 3u$i&ial #eman# 2, on /ugust 4! 2,,7 until fully "ai#! an# to "ay attorney$s fees an# the
costs of suit&
3-
In an Ar#er! the court a @uo grante# "etitioner$s motion for reconsi#eration! an# recalle# an# set asi#e its /ugust 37! 3--5 Decision& It #eclare# that the &au"e" of a&tion in the &olle&tion an$ fore& &olle&tion fore&lo"ur lo"ure e &a"e" are $i"tin $i"tin&t, &t, an$ re"#on$ent4" re"#on$ent4" failure to &om# &om#ly ly !ith hi" o*ligation un$er the "u*3e&t PN 3u"ti%e" #etitioner to "ee 3u$i&ial relief. It further o"ine# that the "ti#ulate$ 5( monthly intere"t i" no longer u"uriou" an$ i" *in$ing on re"#on$ent &on"i$ering the "u"#en"ion of the "ury 6a! #ur"uant to 7entrall an 7ir&ular 905, "erie" of 1982. /ccor#ingly! it #irecte# res"on#ent to "ay 7entra
the amo amount unt of P37 P37,!,!---& --&--- #ue un# un#er er the sub subec ectt P;! "lus int inter erest est at the leg legal al rat rate e rec8one# from the last extra u#icial #eman# on May 20! 2,,7! until fully "ai#! as .ell as attorney$s fees an# the costs of suit& Res"on#ent 'le# a motion for reconsi#eration 35 .hich
.as #enie# in an Ar#er the C/& 30
39
#ate# anuary 29! 3--9! "rom"ting him to ele*ate the matter to
C/ hel# that the #octrine of res u#icata 'n#s a""lication in the instant case! 3B consi#ering that both the u#icial foreclosure an# collection cases .ere 'le# as a conse@uence of the non%"ayment of Rafael$s loan! .hich .as the "rinci"al obligation secure# by the real estate mortgage an# the "rimary consi#eration for the execution of the subect P;& 6ince res u#icata only re@uir re@uires es substantial! not actual! i#entity of causes of action an#or i#entity of 37 issue! it rul rule# e# tha thatt the u# u#gme gment nt in the u# u#ici icial al for forecl eclosu osure re cas case e re relat lating ing to Ra Rafae fael$s l$s obligation to "etitioner is 'nal an# conclusi*e on the collection case& Petitioner$s motion for reconsi#eration reconsi# eration .as #enie# in a Resol Resolution ution 3, #ate# May 29! 3-23 hence! this "etition& Issues: hether or not the collection case institute# by the "etitioner may "ros"er hether or not the interest im"ose# is Gel#: ;o& ;o& Hn#er Hn#er the Princ Princi"l i"le e of litis pende pendentia, ntia, a" a" a groun$ for the $i"mi""al of a &ivil a&tion, refer" to that "ituation !here in another a&tion i" #en$ing *et!een the "ame #artie" for the "ame &au"e of a&tion, "u&h that the "e&on$ a&tion *e&ome" unne&e""ary an$ veatiou". +o *e "ure, "#litting a &au"e of a&tion i" a mo$e of forum "ho##ing *y %ling multi#le &a"e" *a"e$ on the "ame &au"e of a&tion, *ut !ith $i:erent #rayer", !here the ;roun$ of $i"mi""al i" liti" #en$entia 'or res judicata, a" judicata, a" the &a"e may *e). 59
In loan contracts secure# by a real estate mortgage! the rule is that the cre#itor%mortgagee has a single cause of action against the #ebtor%mortgagor! i&e&! to reco*er the #ebt! through the 'ling of a "ersonal action for collection of sum of money or the institution of a real action to foreclose on the mortgage security& )he t.o reme#ies are alternati*e! 54 not cumulati*e or successi*e! 5B an# each reme#y is com"lete by itself& )hus! if the cre#itor cre#itor%mortgagee %mortgagee o"ts to foreclose the real estate mortgage! he .ai*es the action for the collection of the un"ai# #ebt!57exce"t only for the reco*ery of .hate*er #e'ciency may remain in the outstan#ing obligation of the #ebtor%mortgagor after #e#ucting the bi# "rice in the "ublic auction sale of the mortgage# "ro"erties& 5, /ccor#ingly! a #e'ciency u#gment shall only issue after it is establishe# that the mortgage# "ro"erty .as sol# at "ublic auction for an amount less than the outstan#ing obligation& In the "r "resen esentt case case!! "eti "etitione tioner! r! as cr cre#ito e#itorr%mort %mortgagee gagee!! inst institute itute# # an acti action on for u#i u#icial cial foreclosure foreclosur e "ursuant to the "ro*isions of Rule 47 of the Rul Rules es of Court in or#er to reco*er on Rafael$s #ebt& In light of the foregoing #iscussion! the a*ailment of such reme#y thus bars recourse to the subse@uent 'ling of a "ersonal action for collection of the same #ebt! in this case!! un#e case un#err the "rin "rinci"l ci"le e of liti litis s "en# "en#enti entia! a! cons consi#er i#ering ing that the foreclosur foreclosure e case only remains "en#ing as it .as not sho.n to ha*e attaine# 'nality& hile the ens hile ensuin uing g col colle lecti ction on cas case e .as anc anchor hore# e# on the "r "romi omisso ssory ry not note e ex execu ecute# te# by res"on#ent .ho .as not the original #ebtor! the same #oes not constitute a se"arate an# #istinct contract of loan .hich .oul# ha*e gi*en rise to a se"arate cause of action u"on breach& +he " "u&h "u&h,, there ei"t" only Petitioner oner &annot "#lit one &au"e of a&tion for a "ingle *rea&h of that o*ligation. Petiti her &au"e of a&tion on Rafael4" un#ai$ loan o*ligation *y %ling a #etition for the
3u$i&ial fore&lo"ure of the real e"tate mortgage &overing the "ai$ loan, an$, thereafter, a #er"onal a&tion for the &olle&tion of the un#ai$ *alan&e of "ai$ o*ligation not &om#ri"ing a $e%&ien&y ari"ing from fore&lo"ure, !ithout violating the #ro"&ri#tion again"t "#litting a "ingle &au"e of a&tion, .here the groun# for #ismissal is either res u#icata or litis "en#entia! as in this case& As petitioner had already instituted judicial foreclosure proceedings over the mortgaged property, she is now barred from availing herself of an ordinary action for collection, regar#less of
.hether or not the #ecision in the foreclosure case ha# attaine# 'nality& In 'ne! the #ismissal of the collection case is in or#er& Consi#ering! ho.e*er! that res"on#ent$s claim for return of excess "ayment "arta8es of the nature of a com"ulsory counterclaim an#! thus! sur*i*es the #ismissal of "etitioner$s collection suit! the same shoul# be resol*e# base# on its o.n merits an# e*i#entiary su""ort& 0 es& )he Court 'n#s the sti"ulate# 01 monthly interest to be excessi*e an# unconscionable& In a "lethora of cases! the Court has aJrme# that sti"ulate# interest rates of three "ercent (5Ko "er month an# higher are excessi*e! ini@uitous! unconscionable! an# exorbitant! 02 hence! illegal 03 an# *oi# for being contrary to morals& 6ettle# is the "rinci"le .hich this Court has aJrme# in a number of cases that sti"ulate# interest rates of three "ercent (51 "er month an# higher are excessi*e! ini@uitous! unconscionable! an# exorbitant& hile Central +an8 Circular ;o& ,-0%73! .hich too8 eLect on anuary 2! 2,75! eLecti*ely remo*e# the ceiling on interest rates for both secure# an# unsecure# loans! regar#less of maturity! nothing in the sai# circular coul# "ossibly be rea# as granting carte blanche authority to len#ers to raise interest rates to le*els .hich .oul# either ensla*e their borro.ers or lea# to a hemorrhaging of their assets& 6ince the sti"ulation on the interest rate is *oi# for being contrary to morals! if not against the la.! it is as if there .as no ex"ress contract on sai# interest rate thus! the interest rate may be re#uce# as reason an# e@uity #eman#& /s such! the sti"ulate# 01 monthly interest shoul# be e@uitably re#uce# to l 1 "er month or 231 "&a& rec8one# from the execution of the real estate mortgage on uly 5-! 2,,3& 3& 6ilos *& P;+! &R& ;o& 272-90! uly 3! 3-20 Facts: Spouses Eduardo and Lydia Silos (petitioners) have been in b usiness for about two decades of operating a department store and buying and selling of ready-to-wear apparel. Respondent Philippine ational !an" (P!) is a ban"ing corporation organi#ed and e$isting under Philippine laws. %o secure a one-year revolving credit line of P&'. obtained from P! petitioners constituted in *ugust &+, a Real Estate ortgage' over a /-s0uare meter lot in 1alibo *"lan covered by %ransfer 2ertificate of %itle o. (%2%) %-&34'. 5n 6uly &+,,the credit line was increased to P&., million and the mortgage was correspondingly increased to P&., million.7 *nd in 6uly &+,+ a Supplement to the E$isting Real Estate ortgage was e$ecuted to cover the same credit line which was increased to P4.' million and additional security was given in the form of a &/3s0uare meter lot covered by %2% %-&74,. 5n addition petitioners issued eight Promissory otes, and signed a 2redit *greement.+%his 6uly &+,+ 2redit *greement contained a stipulation on interest which provides as follows8 &./. 5nterest. (a) %he Loan shall be sub9ect to interest at the rate of &+.': per annum. 5nterest shall be payable in advance every one hundred twenty days at the rate prevailing at the time of the renewal.
(b) %he !orrower agrees that the !an" may modify the interest rate in the Loan depending on whatever policy the !an" may adopt in the future including without limitation the shifting from the floating interest rate system to the fi$ed interest rate system or vice versa. ;here the !an" has imposed on the Loan interest at a rate per annum which is e0ual to the !an"n the other hand the &,th up to the 4 7th promissory notes ? including P +4/ which is the 47th promissory note ? carried the following provision8 $ $ $ @or this purpose 5A;e agree that the rate of interest herein stipulated may be increased or decreased for the subse0uent 5nterest Periods with prior notice to the !orrower in the event of changes in interest rate prescribed by law or the onetary !oard of the 2entral !an" of the Philippines or in the !an"ctober 4, &++ ? became past due and despite repeated demands petitioners failed to ma"e good on the note. 5ncidentally P +4/ provided for the p enalty e0uivalent to 43: per annum in case of default as follows8 ;ithout need for notice or demand failure to pay this note or any installment thereon when due shall constitute default and in such cases or in case of garnishment receivership or ban"ruptcy or suit of any "ind filed against meAus by the !an" the outstanding principal of this note at the option of the !an" and without prior notice of demand shall immediately become due and payable and shall be sub9ect to a penalty charge of twenty four percent (43:) per annum based on the defaulted principal amount. $ $ $&+ (Emphasis supplied) P! prepared a Statement of *ccount4 as of >ctober &4 &++, detailing the amount due and Bespite demand petitioners failed to pay the foregoing amount. %hus P! foreclosed on the mortgage and on
6anuary &3 &+++ %2%s %-&34' and %-&74, were sold to it at auction for the amount of P3/43&4.+7.4& %he sheriff
Issue: A; the interest rate im"ose# is unconscionable Gel#: %he unilateral action of the P! in increasing the interest rate on the private respondent
5n order that obligations arising from contracts may have the force of law between the parties there must be mutuality between the parties based on their essential e0uality. * contract containing a condition which ma"es its fulfillment dependent e$clusively upon the uncontrolled will of one of the contracting parties is void . . . . %hese stipulations must be once more invalidated as was done in previous cases. Escalation clauses are not basically wrong or legally ob9ectionable so long as they are not solely potestative but based on reasonable and valid grounds. Dere as clearly demonstrated above not only areF the increases of the interest rates on the basis of the escalation clause patently unreasonable and unconscionable but also there are no valid and reasonable standards upon which the increases are anchored. @or this case this lac" of consent by the petitioners has been made obvious by the fact that they signed the promissory notes in blan" for the respondent to fill. 5nterest rates were fi$ed solely by its %reasury Bepartment in anila which were then simply communicated to all P! branches for implementation. * borrower
?. @+ Realty 7or#. v. 7>, G.R. No. 12/80, Ae*ruary 1/, 2005
Aa&t"B
Pri*ate res"on#ent McNoughlin! an /ustralian businessman%"hilanthro"ist! use# to stay at 6heraton Gotel #uring his tri"s to the Phili""ines "rior to 2,79 .hen he met )an& )an con*ince# McNoughlin to transfer from 6heraton Gotel to )ro"icana .here Nainez! Payam an# Danilo No"ez .ere em"loye#& No"ez ser*e# as manager of the hotel .hile Nainez an# Payam ha# custo#y of the 8eys for the safety #e"osit boxes of )ro"icana& )an too8 care of McNoughlins boo8ing at the )ro"icana .here he starte# staying #uring his tri"s to the Phili""ines from December 2,79 to 6e"tember 2,7B& =5> An 5- Actober 2,7B! McNoughlin arri*e# from /ustralia an# registere# .ith )ro"icana& e rente$ a "afety $e#o"it *o a" it !a" hi" #ra&ti&e to rent a "afety $e#o"it *o every time he regi"tere$ at +ro#i&ana in #reviou" tri#". /s a tourist! McNoughlin .as a.are of the "roce#ure obser*e# by )ro"icana relati*e to its safety #e"osit boxes& +he "afety $e#o"it *o &oul$ only *e o#ene$ through the u"e of t!o ey", one of !hi&h i" given to the regi"tere$ gue"t, an$ the other remaining in the #o""e""ion of the management of the hotel. hen a registere# guest .ishe# to o"en his safety
#e"osit box! he alone coul# "ersonally re@uest the management .ho then .oul# assign one of its em"loyees to accom"any the guest an# assist him in o"ening the safety #e"osit box .ith the t.o 8eys& =9> McNoughlin allege#ly "lace# *arious things in the safety #e"osit box li8e money! "ass"ort! e.elries among others& hen he .ent to Gong Oong he left behin# some money in the #e"osit box an# u"on return to the Phili""ines! he as8e# N/inez as to the allege# loss but sai# that the hotel foun# none of the things #e"osite# an# that none .here turne# o*er to the management& hen he .ent bac8 to /ustralia! #isco*ere# the loss he ha# suLere#& Chen M&6oughlin $i"&overe$ the lo"", he imme$iately &onfronte$ 6ainez an$ Payam !ho a$mitte$ that +an o#ene$ the "afety $e#o"it *o !ith the ey a""igne$ to him &=22> McNoughlin .ent u" to his room .here )an .as staying an# confronte#
her& )an a#mitte# that she ha# stolen McNoughlins 8ey an# .as able to o"en the safety #e"osit box .ith the assistance of No"ez! Payam an# Nainez& =23> No"ez also tol# McNoughlin that )an stole the 8ey assigne# to McNoughlin .hile the latter .as aslee"& =25> McNoughlin re@ueste# the management for an in*estigation of the inci#ent& No"ez got in touch .ith )an an# arrange# for a meeting .ith the "olice an# McNoughlin& hen the "olice #i# not arri*e! No"ez an# )an .ent to the room of McNoughlin at )ro"icana an# thereat! No"ez .rote on a "iece of "a"er a "romissory note #ate# 32 /"ril 2,77& )he "romissory note rea#s as follo.s: I "romise to "ay Mr& Maurice McNoughlin the amount of /H69!---&-- an# H63!---&-- or its e@ui*alent in Phili""ine currency on or before May 0! 2,77& =29> No"ez re@ueste# )an to sign the "romissory note .hich the latter #i# an# No"ez also signe# as a .itness . N> >P>R+M=N+ F+=6 from any lia*ility ari"ing from any lo"" in the &ontent" an$Hor u"e of the "ai$ $e#o"it
*o for any &au"e !hat"oever, in&lu$ing *ut not limite$ to the #re"entation or u"e thereof *y any other #er"on "houl$ the ey *e lo"t ... -. +o return the ey an$ ee&ute the R=6=>I= in favor of +RFP7>N> >P>R+M=N+ F+=6 u#on giving u# the u"e of the *o. D1E
An 2B May 2,77! McNoughlin .ent bac8 to /ustralia an# he consulte# his la.yers as to the *ali#ity of the abo*ementione# sti"ulations& )hey o"ine# that the sti"ulations are *oi# for being *iolati*e of uni*ersal hotel "ractices an# customs& Gis la.yers "re"are# a letter #ate# 5- May 2,77 .hich .as signe# by McNoughlin an# sent to Presi#ent Corazon /@uino& =2B> )he AJce of the Presi#ent referre# the letter to the De"artment of ustice (DA .hich for.ar#e# the same to the estern Police District (PD& =27> /fter recei*ing a co"y of the in#orsement in /ustralia! McNoughlin came to the Phili""ines an# registere# again as a hotel guest of )ro"icana& McNoughlin .ent to MalacaQang to follo. u" on his letter but he .as instructe# to go to the DA& )he DA #irecte# him to "rocee# to the PD for #ocumentation& +ut McNoughlin .ent bac8 to /ustralia as he ha# an urgent business matter to atten# to& McNoughlin left again for /ustralia an# u"on his return to the Phili""ines on 30 /ugust 2,7, to "ursue his claims against "etitioners! the PD con#ucte# an in*estigation .hich resulte# in the "re"aration of an aJ#a*it .hich .as for.ar#e# to the Manila City Fiscals AJce& 6ai# aJ#a*it became the basis of "reliminary in*estigation& Go.e*er! McNoughlin left again for /ustralia .ithout recei*ing the notice of the hearing on 39 ;o*ember 2,7,& )hus! the case at the Fiscals AJce .as #ismisse# for failure to "rosecute& Mcloughlin re@ueste# the reinstatement of the criminal charge for theft& In the meantime! McNoughlin an# his la.yers .rote letters of #eman# to those ha*ing res"onsibility to "ay the #amage& )hen he left again for /ustralia& H"on his return on 33 Actober 2,,-! he registere# at the Echelon )o.ers at Malate! Manila& Meetings .ere hel# bet.een McNoughlin an# his la.yer .hich resulte# to the 'ling of a com"laint for #amages on 5 December 2,,- against G) Realty Cor"oration! No"ez! Nainez! Payam an# )an (#efen#ants for the loss of McNoughlins money .hich .as #isco*ere# on 24 /"ril 2,77& /fter 'ling the com"laint! McNoughlin left again for /ustralia to atten# to an urgent business matter& )an an# No"ez! ho.e*er! .ere not ser*e# .ith summons! an# trial "rocee#e# .ith only Nainez! Payam an# G) Realty Cor"oration as #efen#ants& During the trial of the case! McNoughlin ha# been in an# out of the country to atten# to urgent business in /ustralia! an# .hile staying in the Phili""ines to atten# the hearing! he incurre# ex"enses for hotel bills! airfare an# other trans"ortation ex"enses! long #istance calls to /ustralia! Meralco "o.er ex"enses! an# ex"enses for foo# an# maintenance! among others&=33> /fter trial! the R)C of Manila ren#ere# u#gment in fa*or of McNoughlin an# foun# that McNoughlins allegations as to the fact of loss an# as to the amount of money he lost .ere suJciently sho.n by his #irect an# straightfor.ar# manner of testifying in court an# foun#
him to be cre#ible an# .orthy of belief as it .as establishe# that McNoughlins money! 8e"t in )ro"icanas safety #e"osit box! .as ta8en by )an .ithout McNoughlins consent& )he ta8ing .as eLecte# through the use of the master 8ey .hich .as in the "ossession of the management& Payam an# Nainez allo.e# )an to use the master 8ey .ithout authority from McNoughlin& )he trial court a##e# that if McNoughlin ha# not lost his #ollars! he .oul# not ha*e gone through the trouble an# "ersonal incon*enience of see8ing ai# an# assistance from the AJce of the Presi#ent! DA! "olice authorities an# the City Fiscals AJce in his #esire to reco*er his losses from the hotel management an# )an& =39> )he trial court also foun# that #efen#ants acte# .ith gross negligence in the "erformance an# exercise of their #uties an# obligations as inn8ee"ers an# .ere therefore liable to ans.er for the losses incurre# by McNoughlin& =34> Moreo*er! the trial court rule# that "aragra"hs (3 an# (9 of the Undertaking For The Use Of Safety Deposit Box are not *ali# for being contrary to the ex"ress man#ate of /rticle 3--5 of the ;e. Ci*il Co#e an# against "ublic "olicy& =3B> )hus! there being frau# or .anton con#uct on the "art of #efen#ants! they shoul# be res"onsible for all #amages .hich may be attribute# to the non%"erformance of their contractual obligations& =37> )he Court of /""eals aJrme# the R)C #ecision& Gence! this case at bar& Issue: .hether a hotel may e*a#e liability for the loss of items left .ith it for safe8ee"ing by its guests! by ha*ing these guests execute .ritten .ai*ers hol#ing the establishment or its em"loyees free from blame for such loss Gel#: ;o& /rt& 3--5& )he hotel%8ee"er cannot free himself from res"onsibility by "osting notices to the eLect that he is not liable for the articles brought by the guest& /ny sti"ulation bet.een the hotel%8ee"er an# the guest .hereby the res"onsibility of the former as set forth in /rticles 2,,7 to 3--2=5B> is su""resse# or #iminishe# shall be *oi#& /rticle 3--5 .as incor"orate# in the ;e. Ci*il Co#e as an ex"ression of "ublic "olicy "recisely to a""ly to situations such as that "resente# in this case& )he hotel business li8e the common carriers business is imbue# .ith "ublic interest& Catering to the "ublic! hotel8ee"ers are boun# to "ro*i#e not only lo#ging for hotel guests an# security to their "ersons an# belongings& )he t.in #uty constitutes the essence of the business& )he la. in turn #oes not allo. such #uty to the "ublic to be negate# or #ilute# by any contrary sti"ulation in so%calle# un#erta8ings that or#inarily a""ear in "re"are# forms im"ose# by hotel 8ee"ers on guests for their signature& In an early case! =57> the Court of /""eals through its then Presi#ing ustice (later /ssociate ustice of the Court ose P& +engzon! rule# that to hol# hotel8ee"ers or inn8ee"er liable for the eLects of their guests! it is not necessary that they be actually #eli*ere# to the inn8ee"ers or their em"loyees& It is enough that such eLects are .ithin the hotel or inn& =5,> ith greater reason shoul# the liability of the hotel8ee"er be enforce# .hen the missing items are ta8en .ithout the guests 8no.le#ge an# consent from a safety #e"osit box "ro*i#e# by the hotel itself! as in this case&
Paragra"hs (3 an# (9 of the un#erta8ing manifestly contra*ene /rticle 3--5 of the ;e. Ci*il Co#e for they allo. )ro"icana to be release# from liability arising from any loss in the contents an#or use of the safety #e"osit box for any cause .hatsoe*er&=9-> E*i#ently! the un#erta8ing .as inten#e# to bar any claim against )ro"icana for any loss of the contents of the safety #e"osit box .hether or not negligence .as incurre# by )ro"icana or its em"loyees& )he ;e. Ci*il Co#e is ex"licit that the res"onsibility of the hotel%8ee"er shall exten# to loss of! or inury to! the "ersonal "ro"erty of the guests e*en if cause# by ser*ants or em"loyees of the 8ee"ers of hotels or inns as .ell as by strangers! exce"t as it may "rocee# from any force majeure &=92> It is the loss through force majeure that may s"are the hotel%8ee"er from liability& In the case at bar! there is no sho.ing that the act of the thief or robber .as #one .ith the use of arms or through an irresistible force to @ualify the same as force majeure & In the case at bar! the res"onsibility of securing the safety #e"osit box .as share# not only by the guest himself but also by the management since t.o 8eys are necessary to o"en the safety #e"osit box& ithout the assistance of hotel em"loyees! the loss .oul# not ha*e occurre#& )hus! )ro"icana .as guilty of concurrent negligence in allo.ing )an! .ho .as not the registere# guest! to o"en the safety #e"osit box of McNoughlin! e*en assuming that the latter .as also guilty of negligence in allo.ing another "erson to use his 8ey& )o rule other.ise .oul# result in un#ermining the safety of the safety #e"osit boxes in hotels for the management .ill be gi*en im"rimatur to allo. any "erson! un#er the "retense of being a family member or a *isitor of the guest! to ha*e access to the safety #e"osit box .ithout fear of any liability that .ill attach thereafter in case such "erson turns out to be a com"lete stranger& )his .ill allo. the hotel to e*a#e res"onsibility for any liability incurre# by its em"loyees in cons"iracy .ith the guests relati*es an# *isitors&
-. #artment" 7or#. v. Pioneer n". Iurety 7or#., G.R. No. 1/9-19, January 12, 2011 Aa&t"B
Pioneer Insurance an# 6urety Cor"oration x x x! by right of subrogation! 'le# =.ith the R)C of Ma8ati City> a Com"laint for Reco*ery of Damages against ="etitioner> Durban /"artments Cor"oration! #oing business un#er the name an# style of City ar#en Gotel! an# =#efen#ant before the R)C> icente ustimbaste x x x& =Res"on#ent a*erre#> that: it is the insurer for loss an# #amage of eLrey 6& 6ees =the insure#s> 3--2 6uzu8i ran# itara x x x .ith Plate ;o& S+G%02- un#er Policy ;o& MC%C%GA%-2%---5794%--%D in the amount of P2!2B0!---&-- An /"ril 5-! 3--3! 6ee arri*e# an# chec8e# in at the City ar#en Gotel in Ma8ati corner Oalayaan /*enues! Ma8ati City before mi#night! an# its "ar8ing atten#ant! #efen#ant x x x ustimbaste got the 8ey to sai# itara from 6ee to "ar8 it=& A>n May 2! 3--3! at about 2:-ocloc8 in the morning! 6ee .as a.a8ene# in his room by =a> tele"hone call from the Gotel Chief 6ecurity AJcer .ho informe# him that his itara .as carna""e# .hile it .as "ar8e# unatten#e# at the "ar8ing area of E@uitable PCI +an8 along Ma8ati /*enue bet.een the hours of 23:-- =a&m&> an# 2:-- =a&m> the itara .as lost #ue to the negligence of ="etitioner> Durban /"artments an# =#efen#ant> ustimbaste because it .as #isco*ere# #uring the in*estigation that this .as the secon# time that a similar inci#ent of carna""ing ha""ene# in the *alet "ar8ing ser*ice of ="etitioner> Durban /"artments an# no necessary "recautions .ere ta8en to "re*ent its re"etition ="etitioner> Durban /"artments .as .anting in #ue #iligence in the selection an# su"er*ision of its em"loyees "articularly #efen#ant x x x ustimbaste an# #efen#ant x x x ustimbaste an# ="etitioner> Durban
/"artments faile# an# refuse# to "ay its *ali#! ust! an# la.ful claim #es"ite .ritten #eman#s& H"on ser*ice of 6ummons! ="etitioner> Durban /"artments an# =#efen#ant> ustimbaste 'le# their /ns.er .ith Com"ulsory Counterclaim alleging that: 6ee #i# not chec8 in at its hotel! on the contrary! he .as a guest of a certain Ching Montero x x x #efen#ant x x x ustimbaste #i# not get the ignition 8ey of 6ees itara! on the contrary! it .as 6ee .ho re@ueste# a "ar8ing atten#ant to "ar8 the itara at any a*ailable "ar8ing s"ace! an# it .as "ar8e# at the E@uitable +an8 "ar8ing area! .hich .as .ithin 6ees *ie.! .hile he an# Montero .ere .aiting in front of the hotel they ma#e a .ritten #enial of the #eman# of =res"on#ent> Pioneer Insurance for .ant of legal basis *alet "ar8ing ser*ices are "ro*i#e# by the hotel for the con*enience of its customers loo8ing for a "ar8ing s"ace near the hotel "remises it is a s"ecial "ri*ilege that it ga*e to Montero an# 6ee it $oe" not in&lu$e re"#on"i*ility for any lo""e" or $amage" to motor vehi&le" an$ it" a&&e""orie" in the #aring area an$ the "ame hol$" true even if it !a" Iee him"elf !ho #are$ hi" Kitara !ithin the #remi"e" of the hotel a" evi$en&e$ *y the valet #aring &u"tomer" &laim "tu* i""ue$ to him the carna""er .as able to o"en the itara .ithout
using the 8ey gi*en earlier to the "ar8ing atten#ant an# subse@uently turne# o*er to 6ee after the itara .as stolen #efen#ant x x x ustimbaste sa. the itara s"ee#ing a.ay from the "lace .here it .as "ar8e# he trie# to run after it! an# bloc8e# its "ossible "ath but to no a*ail an# 6ee .as #uly an# imme#iately informe# of the carna""ing of his itara the matter .as re"orte# to the nearest "olice "recinct an# #efen#ant x x x ustimbaste! an# Gorla#or submitte# themsel*es to "olice in*estigation& R)C grante# the motion of =res"on#ent> Pioneer Insurance! #es"ite the o""osition of ="etitioner> Durban /"artments an# ustimbaste! an# allo.e# =res"on#ent> Pioneer Insurance to "resent its e*i#ence ex parte before the +ranch Cler8 of Court& )hereafter! on anuary 3B! 3--4! the R)C ren#ere# a #ecision! or#ering ="etitioner Durban /"artments Cor"oration> to "ay =res"on#ent Pioneer Insurance an# 6urety Cor"oration> the sum of P2!245!30-&-- .ith legal interest thereon from uly 33! 3--5 until the obligation is fully "ai# an# attorneys fees an# litigation ex"enses amounting to P23-!---&--& An a""eal! the a""ellate court aJrme# the #ecision of the trial court& Gence! this recourse by "etitioner& ""ueB .hether "etitioner is liable to res"on#ent for the loss of 6ees *ehicle&
Gel#: es& /rt& 2,43& / #e"osit is constitute# from the moment a "erson recei*es a thing belonging to another! .ith the obligation of safely 8ee"ing it an# returning the same& If the safe8ee"ing of the thing #eli*ere# is not the "rinci"al "ur"ose of the contract! there is no #e"osit but some other contract& /rt& 2,,7& )he #e"osit of eLects ma#e by tra*elers in hotels or inns shall also be regar#e# as necessary& )he 8ee"ers of hotels or inns shall be res"onsible for them as #e"ositaries! "ro*i#e# that notice .as gi*en to them! or to their em"loyees! of the eLects brought by the guests an# that! on the "art of the latter! they ta8e the "recautions .hich sai# hotel%8ee"ers or their substitutes a#*ise# relati*e to the care an# *igilance of their eLects& From the facts foun# by the lo.er courts! the insure# 6ee #e"osite# his *ehicle for safe8ee"ing .ith "etitioner! through the latters em"loyee! ustimbaste& In turn! ustimbaste issue# a claim stub to 6ee& )hus! the contract of #e"osit .as "erfecte# from 6ees #eli*ery! .hen he han#e# o*er to ustimbaste the 8eys to his *ehicle! .hich ustimbaste recei*e# .ith
the obligation of safely 8ee"ing an# returning it& Hltimately! "etitioner is liable for the loss of 6ees *ehicle& 5. JN ugu"t ?1, 2005 Aa&t"B
; De*elo"ment Cor"oration (; an# )ra#ers Royal +an8 ()R+ entere# into an agreement .hereby )R+ .oul# exten# to ; an Ex"ort Pac8ing Cre#it Nine for ).o Million Pesos (P3!---!---&--& )he loan .as co*ere# by se*eral securities! inclu#ing a real estate mortgage=3> an# a letter+AIT of guarantee from res"on#ent Phili""ine Ex"ort an# Foreign Noan uarantee Cor"oration (Philuarantee! no. )ra#e an# In*estment De*elo"ment Cor"oration of the Phili""ines! co*ering se*enty "ercent (B-1 of the cre#it line& =5> ith Philuarantee issuing a guarantee in fa*or of )R+! =9> ;! "etitioner s"ouses Ro#rigo an# of Neonor 6ta& /na=0> an# "etitioner ;arciso Cruz =4> execute# a Deed =B> Undertaking (Hn#erta8ing ) to assure re"ayment to Philuarantee& ; faile# to "ay the loan to )R+ u"on its maturity thus! on 7 Actober 2,7- )R+ re@ueste# Philuarantee to ma8e goo# its guarantee& =7> Philuarantee informe# ; about the call ma#e by )R+! an# in@uire# about the action of ; to settle the loan& =,> Ga*ing recei*e# no res"onse from ;! on 2- March 2,72 Philuarantee "ai# )R+ ;ine Gun#re# )hirty Four )housan# Eight Gun#re# ).enty Four Pesos an# )hirty Four Centa*os (P,59!739&59& =2-> 6ubse@uently! Philuarantee ma#e se*eral #eman#s on ;! but the latter faile# to "ay& An 5- May 2,75! ;! through Ro#rigo 6ta& /na! "ro"ose# to settle the obligation by .ay of #e*elo"ment an# sale of the mortgage# "ro"erty& =22> Philuarantee! ho.e*er! reecte# the "ro"osal& Philuarantee thus 'le# a Complaint =23> for collection of money an# #amages against herein "etitioners& R)C #ismisse# Philuarantees Complaint as .ell as the counterclaim of "etitioners& It rule# that "etitioners are not liable to reimburse Philuarantee .hat it ha# "ai# to )R+& )R+ .as able to foreclose the real estate mortgage execute# by ;! thus extinguishing "etitioners obligation&=25> Moreo*er! there .as no sho.ing that after the sai# foreclosure! )R+ ha# #eman#e# from ; any #e'ciency or the "ayment of the #iLerence bet.een the "rocee#s of the foreclosure sale an# the actual loan& =29> In a##ition! the R)C hel# that since Philuarantees guarantee .as goo# for only one year from 2B December 2,B,! or until 2B December 2,7-! an# since it .as not rene.e# after the ex"iry of sai# "erio#! Philuarantee ha# no more legal #uty to "ay )R+ on 2- March 2,72& =20> )he R)C li8e.ise rule# that Cruz cannot be hel# liable un#er the Hn#erta8ing since he .as not the one .ho signe# the #ocument! in line .ith its 'n#ing that his signature foun# in the recor#s is totally #iLerent from the signature on the Hn#erta8ing&=24> /ccor#ing to the R)C! the failure of )R+ to sue ; for the reco*ery of the loan "reclu#es Philuarantee from see8ing recou"ment from the s"ouses 6ta& /na an# Cruz .hat it "ai# to )R+& )hus! Philuarantees "ayment to )R+ amounts to a .ai*er of its right un#er /rt& 3-07 of the Ci*il Co#e& =2B>
Philuarantee a""eale# to the C/& )he a""ellate court re*erse# the R)C an# or#ere# "etitioners to "ay Philuarantee ;ine Gun#re# )hirty Four )housan# 6ix Gun#re# ).enty Four Pesos an# )hirty Four Centa*os (P,59!439&59! "lus ser*ice charge an# interest& C/ hel# that the R)Cs 'n#ing that the loan .as extinguishe# by *irtue of the foreclosure sale of the mortgage# "ro"erty ha# no factual su""ort!=2,> an# that such 'n#ing is negate# by Ro#rigo 6ta& /nas testimony that ; #i# not recei*e any notice of foreclosure from Philuarantee or from )R+& =3-> Moreo*er! 6ta& /na e*en oLere# the same mortgage# "ro"erty to Philuarantee to settle its obligations .ith the latter& =32> ;s obligation ha# become #ue an# #eman#able .ithin the one%year "erio# of eLecti*ity of the guarantee thus! Philuarantees "ayment to )R+ conforme# .ith its guarantee! although the "ayment itself .as eLecte# one year after the maturity #ate of the loan& 7> rule$ that the &ontra&t of guarantee !a" not etingui"he$ *y the allege$ la& of evi$en&e on PhilGuarantee" &on"ent to the eten"ion" grante$ *y +R to JN. D2?E Inter"reting /rt& 3-07 of the Ci*il Co#e! =39> the a""ellate court ex"laine# that .hile the #rovi"ion "tate" that the guarantor &annot *e &om#elle$ to #ay unle"" the #ro#ertie" of the $e*tor are ehau"te$, the guarantor i" not #re&lu$e$ from !aiving the *ene%t of e&u""ion an$ #aying the o*ligation altogether. Finally! the C/ foun# that ;arciso Cruz
.as unable to "ro*e the allege# forgery of his signature in the Hn#erta8ing! the e*i#ence "resente# not being suJcient to o*ercome the "resum"tion of regularity of the Hn#erta8ing .hich is a notarize# #ocument& =34> Petitioners sought reconsi#eration of the Decision an# "raye# for the a#mission of #ocuments e*i#encing the foreclosure of the real estate mortgage! but .as #enie# for lac8 of merit& )he C/ rule# that the #ocumentary e*i#ence "resente# by "etitioners cannot be consi#ere# as ne.ly #isco*ere# e*i#ence! it being alrea#y in existence .hile the case .as "en#ing before the trial court! the *ery forum before .hich it shoul# ha*e been "resente#& +esi#es! a foreclosure sale per se is not "roof of "etitioners "ayment of the loan to Philuarantee! the C/ a##e#&=3B>
""ueB Chether or not PhilGuarantee "hall *e in$emni%e$ $e"#ite !aiver of the *ene%t of e&u""ion el$B @e". Hn#er a contract of guarantee! the guarantor bin#s himself to the cre#itor to ful'll the
obligation of the "rinci"al #ebtor in case the latter shoul# fail to #o so& =59> )he guarantor .ho "ays for a #ebtor! in turn! must be in#emni'e# by the latter& =50> Go.e*er! the guarantor cannot be com"elle# to "ay the cre#itor unless the latter has exhauste# all the "ro"erty of the #ebtor an# resorte# to all the legal reme#ies against the #ebtor& =54> )his is .hat is other.ise 8no.n as the bene't of excussion& It is clear that excussion may only be in*o8e# after legal reme#ies against the "rinci"al #ebtor ha*e been ex"an#e#& )hus! in or#er that the guarantor may ma8e use of the bene't of excussion! he must set it u" against the cre#itor u"on the latters #eman# for "ayment an# "oint out to the cre#itor a*ailable "ro"erty of the #ebtor .ithin the Phili""ines suJcient to co*er the amount of the #ebt& Chile a guarantor en3oy" the *ene%t of e&u""ion, nothing #revent" him from #aying the o*ligation on&e $eman$ i" ma$e on him.
Excussion! after all! is a right grante# to him by la. an# as such he may o"t to ma8e use of it or .ai*e it& Philuarantees .ai*er of the right of excussion cannot "re*ent it from
#eman#ing reimbursement from "etitioners& )he la. clearly re@uires the #ebtor to in#emnify the guarantor .hat the latter has "ai#& In this case! the guarantee .as only u" to 2B December 2,7-& ;s obligation .ith )R+ fell #ue on 5- une 2,7-! an# #eman# on Philuarantee .as ma#e by )R+ on -7 Actober 2,7-& )hat "ayment .as actually ma#e only on 2- March 2,72 #oes not ta8e it out of the terms of the guarantee& hat is controlling is that #efault an# #eman# on Philuarantee ha# ta8en "lace .hile the guarantee .as still in force& )here is no basis for "etitioners claim that Philuarantee .as a mere *olunteer "ayor an# ha# no legal obligation to "ay )R+& )he la. #oes not "rohibit the "ayment by a guarantor on his o.n *olition! hee#less of the bene't of excussion& In fact! it recognizes the right of a guarantor to reco*er .hat it has "ai#! e*en if "ayment .as ma#e before the #ebt becomes #ue!=95> or if ma#e .ithout notice to the #ebtor! =99> subect of course to some con#itions& . @an 7hiu v. 7>, G.R. No. /8519, Ie#tem*er 2, 1989 Aa&t"B
6ince 2,7-! the "etitioner! ictoria au Chu! ha# been "urchasing cement on cre#it from C/M6 )ra#ing Enter"rises! Inc& (hereafter
In this "etition for re*ie.! she alleges that the Court of /""eals erre#: 2& In not annulling the encashment of her time #e"osit certi'cates as a pactum commissorium an# 3& In not 'n#ing that the obligations secure# by her time #e"osits ha# alrea#y been "ai#& ""ueB Chether or not the en&a"hment of her time $e#o"it" &on"titute" Pa&tum 7ommi""orium el$B No. )he encashment of the #e"osit certi'cates .as not a pacto commissorio .hich is "rohibite# un#er /rt& 3-77 of the Ci*il Co#e& / pacto commissorio is a "ro*ision for the automatic a""ro"riation of the "le#ge# or mortgage# "ro"erty by the cre#itor in "ayment of the loan u"on its maturity& )he "rohibition against a pacto commissorio is
inten#e# to "rotect the obligor! "le#gor! or mortgagor against being o*erreache# by his cre#itor .ho hol#s a "le#ge or mortgage o*er "ro"erty .hose *alue is much more than the #ebt& here! as in this case! the security for the #ebt is also money #e"osite# in a ban8! the amount of .hich is e*en less than the #ebt! it .as not illegal for the cre#itor to encash the time #e"osit certi'cates to "ay the #ebtors$ o*er#ue obligation! .ith the latter$s consent& hether the #ebt ha# alrea#y been "ai# as no. allege# by the #ebtor! is a factual @uestion .hich the Court of /""eals foun# not to ha*e been "ro*en for the e*i#ence .hich the #ebtor sought to "resent on a""eal! .ere recei"ts for "ayments ma#e prior to uly !"# !$"% & 6ince the "etitioner signe# on uly 27! 2,7- a letter a#mitting her in#ebte#ness to be in the sum of P9-9!0--! an# there is no "roof of "ayment ma#e by her thereafter to re#uce or extinguish her #ebt! the a""lication of her time #e"osits! .hich she ha# assigne# to the cre#itor to secure the "ayment of her #ebt! .as "ro"er& )he Court of /""eals #i# not commit a re*ersible error in hol#ing that it .as so&
/. I#". @a# v. I#".
of se*eral "arcels of lan# locate# in /yungon! ;egros Ariental& An December 5! 2,B4! the )irambulos execute# a Real Estate Mortgage 5 o*er Nots 2! 9! 0! 4 an# 7 in fa*or of the Rural +an8 of Dumaguete! Inc&! "re#ecessor of Dumaguete Rural +an8! Inc& (DR+I! to secure a P2-0!--- loan exten#e# by the latter to them& Nater! the )irambulos obtaine# a secon# loan for P37!--- an# also execute# a Real Estate Mortgage 9 o*er Nots 5 an# 794 in fa*or of the same ban8 on /ugust 5! 2,B7& 6ubse@uently! on Actober 3B! 2,B,! the )irambulos sol# all se*en mortgage# lots to the s"ouses Vosimo Dy! 6r& an# ;ati*i#a# Chiu (the Dys an# the s"ouses Marcelino C& Maxino an# Reme#ios Nasola (the Maxinos .ithout the consent an# 8no.le#ge of DR+I& )his sale! .hich .as embo#ie# in a Dee# of /bsolute 6ale! 0 .as follo.e# by a #efault on the "art of the )irambulos to "ay their loans to DR+I& )hus! DR+I extrau#icially foreclose# the December 5! 2,B4 mortgage an# ha# Nots 2! 9! 0! 4 an# 7 sol# at "ublic auction on March 52! 2,73&
/t the auction sale! DR+I .as "roclaime# the highest bi##er an# bought sai# lots for P324!-9-&,5& )he 6heriLTs Certi'cate of 6ale 4 state# that the
Rural +an8 Inc& to 6"s& Francisco an# helma a" .ith res"ect to Not ;o& 5 un#er )C) ;o& )% 3-5-2 as null an# *oi# 3& Declaring the re#em"tion ma#e by 6"ouses Dy an# 6"ouses Maxino .ith regar#s to Not ;o& 4 un#er )C) ;o& )%29B72 an# Not ;o& 2 un#er )C) ;o& =)%>29BBB as *ali# H"on motion for reconsi#eration of the a"s! ho.e*er! the C/ amen#e# its #ecision on March 20! 3--4 as follo.s: 2&Declaring the sale ma#e by Dumaguete Rural +an8 Inc& to 6"s& Francisco an# helma a" .ith res"ect to Not ;o& 5 un#er )C) ;o& )%3-5-2 null an# *oi# 3&Declaring the re#em"tion ma#e by 6"ouses Dy an# 6"ouses Maxino .ith regar#s to Not ;o& 4 un#er )C) ;o& )%29B72 an# Not ;o& 2 un#er )C) ;o& =)%>29BBB as *ali# 5& Con#emning the #efen#ant ban8 to "ay #amages to 6"ouses Dy an# 6"ouses Maxino the amount of P3-!---&-- as moral #amages an# P3--!---&-- as exem"lary #amages an# attorneyTs fees in the amount of P0-!---&--& Gence! the consoli#ate# "etitions assailing the a""ellate courtTs #ecision& ""ueB hether or not the Dys an# Maxinos may *ali#ly re#eem Nots 2 an# 4 el$B @e". +he reui"ite" of a vali$ re$em#tion are #re"ent & )he re@uisites for a *ali#
re#em"tion are: (2 the re#em"tion must be ma#e .ithin t.el*e (23 months from the time of the registration of the sale in the AJce of the Register of Dee#s '2) #ayment of the #ur&ha"e #ri&e of the #ro#erty involve$, #lu" 1( intere"t #er month thereon in a$$ition, u# to the time of re$em#tion, together !ith the amount of any a""e""ment" or tae" !hi&h the #ur&ha"er may have #ai$ thereon after the #ur&ha"e, al"o !ith 1( intere"t on "u&h la"t name$ amount an# (5 .ritten notice of
the re#em"tion must be ser*e# on the oJcer .ho ma#e the sale an# a #u"licate 'le# .ith the Register of Dee#s of the "ro*ince& 95 )here is no issue as to the 'rst an# thir# re@uisites& It is un#is"ute# that the Dys an# the Maxinos ma#e the re#em"tion .ithin the 23%month "erio# from the registration of the sale& Ni8e.ise! the Pro*incial 6heriL .ho ma#e the sale .as "ro"erly noti'e# of the re#em"tion since the Dys an# Maxinos #e"osite# .ith him the re#em"tion money after both DR+I an# the a"s refuse# to acce"t it& +he "e&on$ reui"ite, the #ro#er re$em#tion #ri&e, i" the main "u*3e&t of &ontention of the o##o"ing #artie". /s hel# in the case of Phili""ine ;ational +an8 *& De los Reyes! 99 the $o&trine of in$ivi"i*ility of mortgage #oes not a""ly once the mortgage
is extinguishe# by a com"lete foreclosure thereof as in the instant case& )he Court hel#: )he "arties .ere accor#ingly embroile# in a hermeneutic #is"arity on their aforesai# conten#ing "ositions& et! the rule on the in#i*isibility of mortgage 'n#s no a""lication to the case at bar& )he "articular "ro*ision of the Ci*il Co#e referre# to "ro*i#es: /rt& 3-7,& / "le#ge or mortgage is in#i*isible! e*en though the #ebt may be #i*i#e# among the successors in interest of the #ebtor or of the cre#itor& )herefore! the #ebtorTs heir .ho has "ai# a "art of the #ebt cannot as8 for the "ro"ortionate extinguishment of the "le#ge or mortgage as long as the #ebt is not com"letely satis'e#& ;either can the cre#itorTs heir .ho recei*e# his share of t he #ebt return the "le#ge or cancel the mortgage! to the "reu#ice of the other heirs .ho ha*e not been "ai#&
Arom the"e #rovi"ion" i" e&e#te$ the &a"e in !hi&h, there *eing "everal thing" given in mortgage or #le$ge, ea&h one of the"e guarantee" only a $eterminate #ortion of the &re$it.+he $e*tor, in thi" &a"e, "hall have a right to the etingui"hment of the #le$ge or mortgage a" t he #ortion of the $e*t for !hi&h ea&h thing i" "#e&ially an"!era*le i" "ati"%e$.
)hat the situation obtaining in the case at bar is not .ithin the "ur*ie. of the aforesai# rule on in#i*isibility is ob*ious since the aggregate number of the lots .hich com"rise the collaterals for the mortgage ha# alrea#y been foreclose# an# sol# at "ublic auction& +here i" no #artial #ayment nor #artial etingui"hment of the o*ligation to "#ea of. +he afore"ai$ $o&trine, !hi&h i" a&tually inten$e$ f or the #rote&tion of the mortgagee, "#e&i%&ally refer" to the rele a"e of the mortgage !hi&h "e&ure" the "ati"fa&tion of the in$e*te$ne"" an$ naturally #re"u##o"e" that the mortgage i" ei"ting. Fn&e the mortgage i" etingui"he$ *y a &om#lete fore&lo"ure thereof, "ai$ $o&trine of in$ivi"i*ility &ea"e" to a##ly "in&e, !ith the full #ayment of the $e*t, there i" nothing more to "e&ure.
;othing in the la. "rohibits the "iecemeal re#em"tion of "ro"erties sol# at one foreclosure "rocee#ing& In fact! in se*eral early cases #eci#e# by this Court! the right of the mortgagor or re#em"tioner to re#eem one or some of the foreclose# "ro"erties .as recognize#& Clearly! the Dys an# Maxinos can eLect the re#em"tion of e*en only t.o of the '*e "ro"erties foreclose#& /n# since they can eLect a "artial re#em"tion! they are not re@uire# to "ay the P324!-9-&,5 consi#ering that it is the "urchase "rice for all the '*e "ro"erties foreclose#&
8. Pame&a Coo$ +reatment Plant n&. v. 7>, G.R. No. 10 -?5, July 22, 199 Aa&t"B
An /"ril 2B! 2,7-! "etitioner P/MEC/ oo# )reatment Plant! Inc& (P/MEC/ obtaine# a loan of H634B!772&4B! or the e@ui*alent of P3!---!---&-- from res"on#ent +an8& +y *irtue of this loan! "etitioner P/MEC/! through its Presi#ent! "etitioner Germinio C& )e*es! execute# a "romissory note for the sai# amount! "romising to "ay the loan by installment& /s security for the sai# loan! a chattel mortgage .as also execute# o*er P/MEC/s "ro"erties in Dumaguete City! consisting of in*entories! furniture an# e@ui"ment! to co*er the .hole *alue of the loan& H"on "etitioner P/MEC/s failure to "ay! res"on#ent ban8 extrau#icially foreclose# the chattel mortgage! an#! as sole bi##er in the "ublic auction! "urchase# the foreclose# "ro"erties for a sum of P533!50-&--& An une 3,! 2,79! res"on#ent ban8 'le# a com"laint for the collection of the balance of P9!544!553&94 =5> .ith +ranch 253 of the Regional )rial Court of Ma8ati City against "etitioner P/MEC/ an# "ri*ate "etitioners herein! as soli#ary #ebtors .ith P/MEC/ un#er the "romissory note& R)C of Ma8ati ren#ere# a #ecision or#ering the #efen#ants to "ay ointly an# se*erally "laintiL the (2 sum of P9!544!553&94 re"resenting the #e'ciency claim of the latter as of March 52! 2,79! "lus 321 interest "er annum an# other charges from /"ril 2! 2,79 until the .hole amount is fully "ai# an# (3 the costs of the suit&
)he Court of /""eals aJrme# the R)C #ecision& Gence! this Petition conten#ing that 2 res"on#ent a""ellate court gra*ely erre# in not re*ersing the #ecision of the trial court! an# in not hol#ing that the "ublic auction sale of "etitioner P/MEC/s chattels .ere tainte# .ith frau#! as the chattels of the sai# "etitioner .ere bought by "ri*ate res"on#ent as sole bi##er in only 24 of the mar8et *alue of the "ro"erty! hence unconscionable an# ine@uitable! an# therefore null an# *oi#& ""ueB CFN the $e%&ien&y may *e &olle&te$ in the fore&lo"ure of the 7hattel Mortgage el$B @e". )his Court re*erse# the ruling of the lo.er court an# hel# that the "ro*isions of the
Chattel Mortgage Na. regar#ing the eLects of foreclosure of chattel mortgage! being contrary to the "ro*isions of /rticle 3220! /rticle 3220 in relation to /rticle 3292! may not be a""lie# to the case& 6ection 29 of /ct ;o& 20-7! as amen#e#! or the Chattel Mortgage Na.! states: xxx )he oJcer ma8ing the sale shall! .ithin thirty #ays thereafter! ma8e in .riting a return of his #oings an# 'le the same in the oJce of the Registry of Dee#s .here the mortgage is recor#e#! an# the Register of Dee#s shall recor# the same& )he fees of the oJcer for selling the "ro"erty shall be the same as the case of sale on execution as "ro*i#e# in /ct ;umbere# Ane Gun#re# an# ;inety! an# the amen#ments thereto! an# the fees of the Register of Dee#s for registering the oJcers return shall be taxe# as a "art of the costs of sale! .hich the oJcer shall "ay to the Register of Dee#s& )he return shall "articularly #escribe the articles sol#! an# state the amount recei*e# for each article! an# shall o"erate as a #ischarge of the lien thereon create# by the mortgage& The proceeds of such sale shall &e applied to the payment# 'rst# of the costs and expenses of keeping and sale# and then to the payment of the demand or o&ligation secured &y such mortgage# and the residue shall &e paid to persons holding su&se(uent mortgages in their order# and the &alance# after paying the mortgage# shall &e paid to the mortgagor or persons holding under him on demand (Em"hasis su""lie#
It is clear from the abo*e "ro*ision that the eLects of foreclosure un#er the Chattel Mortgage Na. run inconsistent .ith those of "le#ge un#er /rticle 3220& hereas! in "le#ge! the sale of the thing "le#ge# extinguishes the entire "rinci"al obligation! such that the "le#gor may no longer reco*er "rocee#s of the sale in excess of the amount of the "rinci"al obligation! 6ection 29 of the Chattel Mortgage Na. ex"ressly entitles the mortgagor to the balance of the "rocee#s! u"on satisfaction of the "rinci"al obligation an# costs& 6ince the Chattel Mortgage Na. bars the cre#itor%mortgagee from retaining the excess of the sale "rocee#s there is a corollary obligation on the "art of the #ebtor%mortgagee to "ay the #e'ciency in case of a re#uction in the "rice at "ublic auction&
)o accommo#ate "etitioners "rayer e*en on the basis of e@uity .oul# be to ex"an# the a""lication of the "ro*isions of /rticle 2979 to situations beyon# its s"eci'c "ur*ie.! an# ignore the language an# intent of the Chattel Mortgage Na.& E@uity! .hich has been a"tly #escribe# as ustice outsi#e legality! is a""lie# only in the absence of! an# ne*er against! statutory la. or u#icial rules of "roce#ure& =2,> 9. Pru$ential an v. >lviar, G.R. No. 15019/, July 28, 2005 Aa&t"B
Res"on#ents! s"ouses Don /& /l*iar an# eorgia +& /l*iar! are the registere# o.ners of a "arcel of lan# in 6an uan! Metro Manila! co*ere# by )ransfer Certi'cate of )itle ()C) ;o& 95720B of the Register of Dee#s of Rizal& An 2- uly 2,B0! they execute# a #ee# of real estate mortgage in fa*or of "etitioner Pru#ential +an8 to secure the "ayment of a loan .orth P30-!---&--&=3> )his mortgage .as annotate# at the bac8 of )C) ;o& 95720B& An 9 /ugust 2,B0! res"on#ents execute# the corres"on#ing "romissory note! P; +DWB0C%303! co*ering the sai# loan! .hich "ro*i#es that the loan mature# on 9 /ugust 2,B4 at an interest rate of 231 "er annum .ith a 31 ser*ice charge! an# that the note is secure# by a real estate mortgage as aforementione#&=5> 6igni'cantly! the real estate mortgage containe# a clause that X may eten$ to the Mortgagor an$Hor <=+FR, in&lu$ing intere"t an$ e#en"e" or any other o*ligation o!ing to the Mortgagee ! .hether #irect or in#irect! "rinci"al or secon#ary as a""ears in the accounts! boo8s an# recor#s of the Mortgagee! xxxxY An 33 Actober 2,B4! Don /l*iar execute# another "romissory note! P; +DWB4C%590 for P3!49-!---&--! secure# by D/ 6FDS W23,! signifying that the loan .as secure# by a hol#%out on the mortgagors foreign currency sa*ings account .ith the ban8 un#er /ccount ;o& 23,! an# that the mortgagors "assboo8 is to be surren#ere# to the ban8 until the amount secure# by the hol#%out is settle#& =0> An 3B December 2,B4! res"on#ent s"ouses execute# for Donalco )ra#ing! Inc&! of .hich the husban# an# .ife .ere Presi#ent an# Chairman of the +oar# an# ice Presi#ent! =4> res"ecti*ely! P; +DWB4C%95co*ering P090!---&---& /s "ro*i#e# in the note! the loan is secure# by Clean%Phase out )AD C/ 5,35! .hich means that the tem"orary o*er#raft incurre# by Donalco )ra#ing! Inc& .ith "etitioner is to be con*erte# into an or#inary loan in com"liance .ith a Central +an8 circular #irecting the #iscontinuance of o*er#rafts& =B> An -4 March 2,B,! res"on#ents "ai# "etitioner P3!---!---&--! to be a""lie# to the obligations of &+& /l*iar Realty an# De*elo"ment! Inc& an# for the release of the real estate mortgage for the P90-!---&-- loan co*ering the t.o (3 lots locate# at am +uren an# Ma#ison 6treets! ;orth reenhills! 6an uan! Metro Manila& )he "ayment .as ac8no.le#ge# by "etitioner .ho accor#ingly release# the mortgage o*er the t.o "ro"erties& Fn 15 January 1980, #etitioner move$ for the etra3u$i&ial fore&lo"ure of the mortgage on the #ro#erty, #lu" a""e""e$ #a"t $ue intere"t" an$ #enalty &harge". +he #u*li& au&tion "ale of the mortgage$ #ro#erty !a" "et on 15 January 1980 &=2->
)he trial court #ismisse# the com"laint an# or#ere# the 6heriL to "rocee# .ith the extra% u#icial foreclosure& =25>Res"on#ents sought reconsi#eration of the #ecision& =29> An 39 /ugust 2,,9! the trial court issue# an Order setting asi#e its earlier #ecision an# a.ar#e# attorneys fees to res"on#ents .D15E t foun$ that only the P250,000.00 loan i" "e&ure$ *y the mortgage on the lan$ &overe$ *y +7+ No. -?815/ & An the other han#! the P573!47-&75 loan is secure# by the foreign currency #e"osit account of Don /& /l*iar! .hile the P090!---&-- obligation .as an unsecure# loan! being a mere con*ersion of the tem"orary o*er#raft of Donalco )ra#ing! Inc& in com"liance .ith a Central +an8 circular& >&&or$ing to the trial &ourt, the *lanet mortgage &lau"e relie$ u#on *y #etitioner a##lie" only to future loan" o*taine$ *y the mortgagor", an# not by "arties other
than the sai# mortgagors! such as Donalco )ra#ing! Inc&! for .hich res"on#ents merely signe# as oJcers thereof& )he Court of /""eals aJrme# the Order of the trial court but #elete# the a.ar# of attorneys fees&=2B> It rule# that .hile a continuing loan or cre#it accommo#ation base# on only one security or mortgage is a common "ractice in 'nancial an# commercial institutions! such agreement must be clear an# une@ui*ocal& In the instant case! the "arties execute# #iLerent "romissory notes agreeing to a "articular security for each loan& )hus! the a""ellate court rule# that the extrau#icial foreclosure sale of the "ro"erty for the three loans is im"ro"er& Cour tofAppeal s,howev er ,f oundt hatr espondent shavenotye tpai dt heP250, 000. 00cove r ed by PN BD#75/C252 si nce t he payme ntofP2, 000, 000. 00 adv er t ed t o by r espondent s was i ssued f ort he obl i gat i ons ofG. B.Al vi arReal t y and Devel opment ,I nc. /ggrie*e#! "etitioner
'le# the instant "etition! reiterating the assignment of errors raise# in the Court of /""eals as groun#s herein& ""ueB
2 .hether the blan8et mortgage clause a""lies e*en to subse@uent a#*ancements for .hich other securities .ere inten#e# 3 hether or not the foreclosure of the "ro"erty is "ro"er el$B 1) NF. / blan8et mortgage clause! also 8no.n as a #ragnet clause in /merican uris"ru#ence!
is one .hich is s"eci'cally "hrase# to subsume all #ebts of "ast or future origins& 6uch clauses are carefully scrutinize# an# strictly construe#& =57> Mortgages of this character enable the "arties to "ro*i#e continuous #ealings! the nature or extent of .hich may not be 8no.n or antici"ate# at the time! an# they a*oi# the ex"ense an# incon*enience of executing a ne. security on each ne. transaction& =5,> / #ragnet clause o"erates as a con*enience an# accommo#ation to the borro.ers as it ma8es a*ailable a##itional fun#s .ithout their ha*ing to execute a##itional security #ocuments! thereby sa*ing time! tra*el! loan closing costs! costs of extra legal ser*ices! recor#ing fees! et cetera&=9-> )he suJciency of the 'rst security is a corollary com"onent of the #ragnet clause& +ut of course! there is no "rohibition! as in the mortgage contract in issue! against contractually re@uiring other securities for the subse@uent loans& )hus! .hen the mortgagor ta8es another loan for .hich another security .as gi*en it coul# not be inferre# that such loan .as ma#e in reliance solely on the original security .ith the #ragnet clause! but rather! on the ne. security gi*en& )his is the reliance on the security test& It .as therefore im"ro"er for "etitioner in this case to see8 foreclosure of the mortgage# "ro"erty because of non%"ayment of all the three "romissory notes& hile the existence an# *ali#ity of the #ragnet clause cannot be #enie#! there is a nee# to res"ect the existence of the other security gi*en for P; +DWB4C%590& )he foreclosure of the mortgage# "ro"erty shoul# only be for the P30-!---&-- loan co*ere# by P; +DWB0C%303! an# for any amount not co*ere# by the security for the secon# "romissory note& /s hel# in one case! .here #ee#s absolute in form .ere execute# to secure any an# all 8in#s of in#ebte#ness that might subse@uently become #ue! a balance #ue on a note! after exhausting the s"ecial security gi*en for the "ayment of such note! .as in the absence of a s"ecial agreement to the contrary! .ithin the "rotection of the mortgage! not.ithstan#ing the gi*ing of the s"ecial security& =0-> )his is recognition that .hile the #ragnet clause subsists! the security s"eci'cally execute# for subse@uent loans must 'rst be exhauste# before the mortgage# "ro"erty can be resorte# to& 3& es& the mortgage# "ro"erty coul# still be "ro"erly subecte# to foreclosure "rocee#ings for the un"ai# P30-!---&-- loan! an# as mentione# earlier! for any #e'ciency after
D/ 6FDSW23,! security for P; +DWB4C%590! has been exhauste#! subect of course to #efenses .hich are a*ailable to res"on#ents& 10. 7hina aning 7or#. v. 7>, ??? Phil. 158 D199E Aa&t"B
China +an8ing Cor"oration (China +an8 exten#e# se*eral loans to ;ati*e est International )ra#ing Cor"oration (;ati*e est an# to 6o Ching! ;ati*e ests "resi#ent& ;ati*e est in turn execute# "romissory notes =2> in fa*or of China +an8& 6o Ching! .ith the marital consent of his .ife! Cristina 6o! a##itionally execute# t.o mortgages o*er their "ro"erties& )he "romissory notes mature# an# #es"ite #ue #eman#s by China +an8 neither "ri*ate res"on#ents ;ati*e est nor 6o Ching "ai#& Pursuant to a "ro*ision embo#ie# in the t.o mortgage contracts! China +an8 'le# "etitions for the extra%u#icial foreclosure of the mortgage# "ro"erties before ;otary Public! co"ies of .hich .ere gi*en to the s"ouses 6o Ching an# Cristina 6o& /fter #ue notice an# "ublication! the notaries "ublic sche#ule# the foreclosure sale of the s"ouses real estate "ro"erties on /"ril 25! 2,,5& Eight #ays before the foreclosure sale! ho.e*er! "ri*ate res"on#ents 'le# a com"laint =4>.ith the Regional )rial Court=B>for accounting .ith #amages an# .ith tem"orary restraining or#er against "etitioners alleging the follo.ing causes of action: C& MAR)/AR6 liability limite# to P4!0--!---&-- an# P5!0--!---&-- res"ecti*ely in the Mortgages /nnexes / An /"ril B! 2,,5! the trial court issue# a tem"orary restraining or#er to enoin the foreclosure sale& )hereafter counsels for the res"ecti*e "arties agree# to 'le their "lea#ings an# to submit the case! .ithout further hearing! for resolution& An /"ril 37! 2,,5! the trial court! .ithout "assing u"on the material a*erments of the com"laint! issue# an Ar#er granting the "ri*ate res"on#ents "rayer for the issuance of "reliminary inunction .ith the follo.ing "roLere# usti'cation: From the foregoing! it is @uite a""arent that a @uestion of accounting "oses a thorny issue as bet.een the litigants& ariance in the amounts in*ol*e# relating to the loan agreements must be u#iciously "asse# u"on by the Court an# this is only "ossible if a trial on the merits coul# be ha# as the matters a""urtenant thereto are e*i#entiary in nature& Hn#er the "remises! the accounting issue being e*i#entiary in character calls for an issuance of a .rit of "reliminary inunction "en#ing the a#u#ication of the case& )he issuance thereof at this "articular stage of the case is merely a "re*enti*e reme#y #esigne# to "rotect from irre"arable inury to "ro"erty or other rights "laintiL may suLer! .hich a court of e@uity may ta8e cognizance of by comman#ing acts to be #one or "rohibiting their commission! as in the instant suit! to restrain notaries "ublic Cabusora an# )aguiam as .ell as #efen#ant China +an8ing Cor"oration from continuing .ith the auction sale of the subect "ro"erties! until further or#ers from this Court& herefore! "remises consi#ere#! 'n#ing that the circumstances .arrant the issuance of a "reliminary inunction! "laintiLs "rayer is hereby R/;)ED& Conse@uent thereto! "laintiLs are hereby or#ere# to "ost a bon# amounting to P2 (A;E Million to ans.er for .hate*er #amages #efen#ant may suLer as a conse@uence of the .rit& =,>
Petitioners mo*e# for reconsi#eration! but it .as #enie#& Petitioners ele*ate# the case through certiorari an# "rohibition=2-> before "ublic res"on#ent Court of /""eals& =22> In a #ecision #ate# anuary 2B! 2,,0! res"on#ent Court of /""eals accor#ingly #ismisse# the "etition! as .ell as "etitioners subse@uent motion for reconsi#eration&
""ue"B
(2 .hether or not "etitioners can extrau#icially foreclose the "ro"erties subect of the mortgages el$B 1) es! "etitioners are entitle# to foreclose the mortgages& )he essence of a contract of
mortgage in#ebte#ness is that a "ro"erty has been i#enti'e# or set a"art from the mass of the "ro"erty of the #ebtor%mortgagor as security for the "ayment of money or the ful'llment of an obligation to ans.er the amount of in#ebte#ness! in case of #efault of "ayment& =39> It is a settle# rule that in a real estate mortgage .hen the obligation is not "ai# .hen #ue! the mortgagee has the right to foreclose the mortgage an# to ha*e the "ro"erty seize# an# sol# in *ie. of a""lying the "rocee#s to the "ayment of the obligation& =30> In fact! asi#e from the mortgage contracts! the "romissory notes execute# to e*i#ence the loans also authorize the mortgagee to foreclose on the mortgages& )hus: x x x CGI;/ +/;OI; CARPAR/)IA; is hereby authorize# to sell at "ublic or "ri*ate sales such securities or things of *alue for the "ur"ose of a""lying their "rocee#s to such "ayments&=34> /n# .hile "ri*ate res"on#ents a*er that they ha*e alrea#y "ai# ten million "esos! an allegation .hich has still to be settle# before the trial court! the same cannot be utilize# as a shiel# to enoin the foreclosure sale& / mortgage gi*en to secure a#*ancements! .e re"eat! is a continuing security an# is not #ischarge# by re"ayment of the amount name# in the mortgage! until the full amount of the a#*ancements are "ai#&
11. Pili#ina" Ihell Petroleum 7or#. v. Royal Aerry Iervi&e", n&., G.R. No. 1881-, Ae*ruary 1, 201/ Aa&t"B ""ueB el$B 12. PN v. ene$i&to, et al., G.R. No. 1/185, F&to*er 12, 201 Aa&t"B
6"ouses +ene#icto an# /zucena /lon#ay (6"ouses /lon#ay obtaine# an agricultural loan of P37!---&-- from the "etitioner at its Digos! Da*ao #el 6ur +ranch! an# secure# the obligation by constituting a real estate mortgage on their "arcel of lan# situate# in 6ta& Cruz! Da*ao #el 6ur& An une 22! 2,7-! the 6"ouses /lon#ay obtaine# a commercial loan for Pl4!B--&-- from the "etitioner$s Da*ao City +ranch! an# constitute# a real estate& )he mortgage contract contains a "ro*ision Xxxxx)his mortgage shall also stan# as security for sai# obligations an# any an# all other obligations of the Mortgagor to the Mortgagee of .hate*er 8in# an# nature! .hether such obligations ha*e been contracte# before! #uring or after the
constitution of this mortgage&xxxY )he 6"ouses /lon#ay ma#e "artial "ayments on the commercial loan! .hich they rene.e# on December 35! 2,75 for the balance of Pl 0!,0-&--& )he rene.e# commercial loan! although #ue on December 30! 2,79! .as fully "ai# on uly 0! 2,79& An /ugust 4! 2,79! res"on#ents Mercy an# /lberto /lon#ay! the chil#ren of the 6"ouses /lon#ay! #eman#e# the release of the mortgage o*er the "ro"erty& )he "etitioner informe# them! ho.e*er! that the mortgage coul# not be release# because the agricultural loan ha# not yet been fully "ai#! an# that as the conse@uence of the failure to "ay! it ha# foreclose# the mortgage o*er the "ro"erty an# it a""eare# that not.ithstan#ing such foreclosure! a #e'ciency balance of P, l ! 030&33 remaine#&9 Gence! the "etitioner a""lie# for the extrau#icial foreclosure of the mortgage on the "ro"erty& 6ince the /lon#ays .ere unable to re#eem the "ro"erty! the "etitioner consoli#ate# its o.nershi"& Nater on! the "ro"erty .as sol# for P97!---&-- to one Felix Malmis on ;o*ember 2-! 2,7,& R)C ren#ere# a #ecision in fa*or of the #efen#ant the "etitioner ha# inten#e# to ha*e the secon# mortgage secure the "re%existing agricultural loan! it shoul# ha*e ma#e an ex"ress reser*ation to that eLect that base# on the all%embracing clause! the mortgage .as a contract of a#hesion! an# the ambiguities therein shoul# be construe# strictly against the "etitioner that the last sentence of the all%embracing clause "ro*i#e# that the mortgage .oul# be null an# *oi# u"on the "ayment of the obligations secure# by the mortgage an# that the "etitioner .as guilty of ba# faith in refusing to nullify the mortgage #es"ite full "ayment of the commercial loan "rior to its maturity& C/ aJrme# the R)C an# #enie# the MR 'le# by "etitioner& Gence! this "etition for re*ie. conten#ing that in Moica *& Court of /""eals *ali#ates the use of an all%embracing clause in a mortgage agreement to secure not only the amount in#icate# on the mortgage instrument! but also the mortgagor$s future an# "ast obligations that by #enying the a""licability to the case of Moica *& Court of /""eals an# other similar rulings! the C/ #isregar#e# the "rinci"le of stare #ecisis an# that the C/ in eLect thereby regar#e# all embracing clauses in*ali# as to "rior obligations& ""ueB
hether the all%embracing or #ragnet clause containe# in the 'rst mortgage contract execute# bet.een the "arties for the security of the 'rst loan coul# authorize the foreclosure of the "ro"erty un#er the mortgage to secure a secon# loan #es"ite the full "ayment of the secon# loan el$B
;A& )here is no @uestion! in#ee#! that all%embracing or #ragnet clauses ha*e been recognize# as *ali# means to secure #ebts of both future an# "ast origins& 25 E*en so! .e ha*e li8e.ise em"hasize# that such clauses .ere an exce"tional mo#e of securing obligations! an# ha*e hel# that obligations coul# only be #eeme# secure# by the mortgage if they came fairly .ithin the terms of the mortgage contract& 29 For the all%embracing or #ragnet clauses to secure future loans! therefore! such loans must be suJciently #escribe# in the mortgage contract& 20 If the re@uirement coul# be im"ose# on a future loan that .as uncertain to materialize! there is a greater reason that it shoul# be a""licable to a "ast loan! .hich is alrea#y subsisting an# 8no.n to the "arties& ;onetheless! it .as un#eniable that the
"etitioner ha# the o""ortunity to inclu#e some form of ac8no.le#gement of the "re*iously subsisting agricultural loan in the terms of the secon# mortgage contract& )he mere fact that the mortgage constitute# on the "ro"erty co*ere# by )C) ;o& )% 4425, ma#e no mention of the "re%existing loan coul# only strongly in#icate that each of the loans of the 6"ouses /lon#ay ha# been treate# se"arately by the "arties themsel*es! an# this suJciently ex"laine# .hy the loans ha# been secure# by #iLerent mortgages& /nother in#ication that the secon# mortgage #i# not exten# to the agricultural loan .as the fact that the secon# mortgage .as entere# into in connection only .ith the commercial loan& /s hel# in Pru#ential *s /l*iar! Xthe suJciency of the 'rst security is a corollary com"onent of the <#ragnet clause&< +ut of course! there is no "rohibition! as in the mortgage contract in issue! against contractually re@uiring other securities for the subse@uent loans& )hus! .hen the mortgagor ta8es another loan for .hich another security .as gi*en it coul# not be inferre# that such loan .as ma#e in reliance solely on the original security .ith the <#ragnet clause!< but rather! on the ne. security gi*en& )his is the
