DOCTRINE: It
has been settled in a long line of decisions that mortgages given to secure future advancements are valid and legal contracts, and the amounts named as consideration in said contracts do not limit the amount for which the mortgage may stand as security if from the four corners of the instrument the intent to secure future and other indebtedness can be gathered.
FACTS:
Respondent Excelsa Industries, Inc applied for a packing credit line or a credit export adva advance nce with with petiti petitione onerr Prod Produc ucers ers Bank Bank of the the Phili Philippi ppine nes. s. he he appli applicat cation ion was was supported by !etter of "redit. #wang $u Bank, !td. of %eoul, #orea issued the letter of credit through its correspondent bank, BPI for the account of %hin %ung "ommercial "o., !td., also located in %eoul, #orea. .!. &orld 'evelopment "orporation was the original beneficiary of the letter of credit. (or value received, .!. &orld transferred to respo respond ndent ent all all its rights rights and and oblig obligat ation ions s under under the said said lette letterr of cred credit. it. Petit Petition ioner er approved respondent)s application for a packing credit line. Respondent executed the corresponding promissory notes evidencing the indebtedness. Prior to the application application for the packing credit line, respondent respondent had obtained obtained a loan from petitioner in the form of a bill discounted and secured credit accommodation in which there was an outstanding at the time of the approval of the packing credit line. he loan was secured secured by a real estate estate mortgage mortgage over over respond respondent) ent)s s properti properties. es. Eventua Eventually lly,, Petitioner purchased the drafts and export documents. *owever, #wang $u Bank, !td. informed petitioner that it would be returning the export documents on account of the non+acceptance by the importer. Petitioner demanded from respondent the payment of the export documents. 'ue to respondent)s failure to heed the demand, petitioner moved for the extraudicial foreclosure on the real estate mortgage over respondent)s properties. - "ertificate "ertificate of %ale in favor of petitioner petitioner as the highest bidder and the title was consolid consolidate ated d in its favor. favor. Responde Respondent nt institut instituted ed an action action for the annulme annulment nt of the extraud extraudicia iciall foreclos foreclosure ure with prayer prayer for prelimi preliminary nary inuncti inunction on and damages damages against against petitioner. &hile the petitioner filed a petition for the issuance of a writ of possession. he R" upheld the validity of the extraudicial foreclosure and ordering the issuance of a writ of possession in favor of petitioner. he R" held that the petitioner correctly exercised exercised its right to foreclose the real estate mortgage, mortgage, which provided provided that the same secur secured ed the the paymen paymentt of not not only only the the loans loans alread already y obta obtaine ined d but but also also the the expor exportt advances. advances. *owever, *owever, the "ourt of -ppeals -ppeals reversed the decision. decision. he "ourt invalidated invalidated the extraudicial foreclosure of the real estate mortgage on the ground that the posting and publication of the notice of extraudicial foreclosure proceedings did not comply with the personal notice reuirement. ISSUE/S:
/. &01 the RE2 can also serve serve as security security for the the respondent) respondent)s s drafts3 drafts3 4E% 4E%
5. &01 petitioner complied with the notice reuirement3 4E% 6. &01 the respondent may still uestion the foreclosure sale3 10 HELD:
Respondent executed a real estate mortgage containing a 7blanket mortgage clause,8 also known as a 7dragnet clause.8 Petitioner, therefore, was not precluded from seeking the foreclosure of the real estate mortgage based on the unpaid drafts drawn by respondent. In any case, respondent had admitted that aside from the unpaid drafts, respondent also had due and demandable loans. he "ourt of -ppeals invalidated the extraudicial foreclosure of the mortgage on the ground that petitioner had failed to furnish respondent personal notice of the sale contrary to the stipulation in the real estate mortgage. - perusal of the records of the case shows that a notice of sheriff)s sale was sent by registered mail to respondent and received in due course. 4et, respondent claims that it did not receive the notice but only learned about it from petitioner. In any event, paragraph /5 of the real estate mortgage reuires petitioner merely to furnish respondent with the notice and does not oblige petitioner to ensure that respondent actually receives the notice. 0n this score, the "ourt holds that petitioner has performed its obligation under paragraph /5 of the real estate mortgage. Plaintiff is estopped from uestioning the foreclosure. he plaintiff is guilty of laches and cannot at this point in time uestion the foreclosure of the subect properties. Plaintiff acknowledged such outstanding loans and advances to the defendant bank and committed to liuidate the same. (or failure of the plaintiff to pay its obligations on maturity, defendant bank foreclosed the mortgage on subect properties and there being no redemption made by the plaintiff, title to said properties were consolidated in the name of defendant. 9ndeniably, subect foreclosure was done in accordance with the prescribed rules
