Credit Transactions Chattel Mortgage vs. After-Incurred Obligations (1991) To secure the pa !

ent of an earlier loan of "#$%$$$ as &ellas subse'uent loans &hich her friend (oreen% &oulde)tend to her% *aren e)ecuted in favor of (oreen a chattel!ortgage over her (*aren) car. Is the !ortgage valid+ ,-../,T/0 A(,1/23 A chattel !ortgage cannot effectivel secure afterincurredobligations. 1hile a stipulation to include afterincurredobligations in a chattel !ortgage is itself not invalid% theobligation cannot% ho&ever% be dee!ed auto!aticall secured b that !ortgage until after a ne& chattel !ortgageor an addendu! to the original chattel !ortgage is e)ecutedto cover the obligation after it has been actuall incurred. Accordingl % unless such supple!ents are !ade% the chattel!ortgage in the proble! given &ould be dee!ed to secureonl the loan of "#$%$$$ (,ec 4 Act 14$45 6elgian Catholic Missionaries v Magallanes "ress 79p879) "age 77 of 1$: Chattel Mortgage vs. After-Incurred Obligations (1999) On 0ece!ber 1% 1998% 6orro&er e)ecuted a chattel!ortgage in favor of the 6an; to secure a loan of ":M.In due ti!e the loan &as paid. On 0ece!ber 1% 1999%6orro&er obtained another loan for "#M &hich the 6an; granted under the sa!e securit as that &hich secured thefirst loan.<or the second loan% 6orro&er !erel delivered apro!issor note5 no ne& chattel !ortgage agree!ent &ase)ecuted as the parties relied on a provision in the 1998chattel !ortgage agree!ent &hich included future debtsas a!ong the obligations secured b the !ortgage. Theprovision reads3 =In case pro!issor the Mortgagor e)ecutes subse'uent

!ortgage is !adefor securing the obligation specified in the conditions hereof% and for no other purpose.‖ The after -incurredobligation not being specified in the affidavit% is not securedb !ortgage. ?es. The chattel !ortgage is not valid as againstan person% e)cept the !ortgagor% his e)ecutors andad!inistrators. Chattel Mortgage5 <oreclosure (1999) 2it@ bought a ne& car on install!ents &hich provided foran acceleration clause in the event of default. To securepa !ent of the unpaid install!ents% as and &hen due% heconstituted t&o chattel !ortgages% i.e.% one over his ver old car and the other covering the ne& car that he had Austbought as aforesaid% on install!ents. After 2it@ defaultedon three install!ents% the seller-!ortgagee foreclosed onthe old car. The proceeds of the foreclosure &ere notenough to satisf the due obligation5 hence% he si!ilarl sought to foreclose on the ne& car.

Mercantile Ba& 6ar /)a!ination C D A (199$-#$$8) 1ould the seller-!ortgagee be legall inforeclosing on this second chattel !ortgage+ ,-../,T/0 A(,1/23 (o. The t&o !ortgages &ere e)ecuted to secure thepa !ent of the unpaid install!ents for the purchase of ane& car. 1hen the !ortgage on the old car &as foreclosed%the seller-!ortgagee is dee!ed to have renounced all otherrights. A foreclosure of additional propert % that is% the ne& car covered b the second !ortgage &ould be a nullit . Chattel Mortgage5 O&nership of Thing Mortgaged (199$) Eonee% &ho lives in 6ulacan% bought a 19FF !odel To otaCorolla sedan on Gul 1% 19F9 fro! Anadelaida% &ho livesin Cue@on Cit % for ":$$th% pa ing "14$th asdo&npa !ent and pro!ising to pa the balance in : e'ual'uarterl install!ents beginning October 1% 19F9. Anadelaida e)ecuted a deed of sale of the vehicle in favorof Eonee and% to secure the unpaid balance of thepurchase price% had Eonee e)ecute a deed of chattel !ortgage on the vehicle in AnadelaidaHs favor. Ten da s after the e)ecution of the above!entioneddocu!ents% Eonee had the car transferred and registeredin her na!e. Conte!poraneousl % Anadelaida had thechattel !ortgage on the car registered in the ChattelMortgage 2egistr of the Office of the 2egister of 0eedsof Cue@on Cit .In ,ep 19F9% Eonee sold the sedan to Gi!bo &ithout telling the latter that the car &as !ortgaged to Anadelaida. 1henEonee failed to pa the first install!ent on October 1%19F9% Anadelaida &ent to see Eonee and discovered thatthe latter had sold the car to Gi!bo. a) Gi!bo refused togive up the car on the ground that the chattel !ortgagee)ecuted b Eonee in favor of Anadelaida is not validbecause it &as e)ecuted before the car &as registered in EoneeHs na!e% i.e.% before Eonee beca!e the registered o&ner of the car. Is the said argu!ent !eritorious+ /)plain our ans&er.b) Gi!bo also argued that even if the chattel !ortgage is valid% it cannot affect hi! because it &as not properl registered &ith the govern!ent offices &here it should beregistered. 1hat govern!ent office is Gi!bo referring to+ Austified

note or notes either as a rene&al% as an e)tension% or as ane& loan% this !ortgage shall also stand as securit for thepa !ent of said pro!issor note or notes &ithoutnecessit of e)ecuting a ne& contract and this !ortgageshall have the sa!e force and effect as if the said pro!issor note or notes &ere e)isting on date hereof. ‖ As 6orro&er failed to pa the second loan% the 6an; proceeded to foreclose the Chattel Mortgage.6orro&ersued the 6an; clai!ing that the !ortgage &as no longer inforce. 6orro&er clai!ed that a fresh chattel !ortgageshould have been e)ecuted &hen the second loan &asgranted. a) 0ecide the case and ratiocinate. (7>) b),uppose the chattel !ortgage &as not registered% &ould its validit and effectiveness be i!paired+/)plain. (7>) ,-../,T/0 A(,1/23 The foreclosure of the chattel !ortgage regarding the second loan is not valid. A chattel !ortgage cannot validl secure after incurred obligations. The affidavit of good faith re'uired under the chattel !ortgage la& e)pressl provides that =the foregoing

1

. The ban. If thee)a!inee gives a good ans&er% he should be givenadditional credit. to leaseand deliver free and clear the titles to their respective lots. as the highest bidder. The !ortgage &as dul e)ecuted andregistered &ith the appropriate govern!ental agencies. As the developer failed to pa its loan% the !ortgage &asforeclosed and the &hole subdivision &as ac'uired b theban./. -nder the contract of sale% title to the lot &ould be transferred upon full pa !entof the purchase price. The ban.ince the subAect !atter of these t&o(#) 'uestions is not included &ithin the scope of the 6arCuestions in Mercantile Ba&% as it is &ithin Civil Ba&% it issuggested that &hatever ans&er is given b the e)a!inee%or the lac. It &assub!itted that as the chattel !ortgage &as e)ecuted andregistered ahead% it &as superior to the real estate !ortgage.areal propert . (:>) 1ho has a better clai! to the house% the suret co!pan or the lending investor+ /)plain (:>) 1ould the position of the suret co!pan be bolsteredb the fact that it ac'uired title in a foreclosure sale conducted b the "rovincial . vis-L-vis thosebu ers &ith re!aining unpaid install!ents+ 0iscuss.Onl after the foreclosure sale did the suret co!pan learn of the real estate !ortgage in favor of the lending investor on the lot and the i!prove!ent thereon.I!!ediatel % it filed a co!plaint pra ing for the e)clusionof the house fro! the real estate !ortgage. Thee)ecution of the chattel !ortgage b the bu er in favor of the seller% in fact% can de!onstrate the vesting of sucho&nership to the !ortgagor. has to respect the rights of the bu ers &ith re!aining unpaid install!ents.e thelending investor.1/23 a) The house is al&a s a real propert even though it &asconstructed on a land not belonging to the builder. .b) The lending investor has a better clai! to the house. Onthe other hand% the chattel !ortgage on the housesecuring the credit of the suret co!pan did not affectthe rights of third parties such as the lending investordespite registration of the chattel !ortgage. Accordingl % the house &as a personal propert and aproper subAect of a chattel !ortgage.tela% # .1/23 (o.o!eti!e thereafter% debtor !ortgaged thehouse to secure his obligation arising fro! the issuance of a bond needed in the conduct of his business. dispossessprior purchasers of individual lots or% alternativel % re'uire the! to pa again for the paid lots+ 0iscuss (:>)b) 1hat are the rights of the ban. the lot and i!prove!ent thereon tosecure a loan. Mortgage (1999) 0ebtor purchased a parcel of land fro! a realt co!pan pa able in five earl install!ents. The proble! arose because not&ithstanding prior sales!ostl on install!ents J !ade b the developer to bu ers%developer had !ortgaged the &hole subdivision to aco!!ercial ban.Ko&ever% the parties !a treat it as a personal propert and constitute a chattel !ortgage thereon. Mortgage vs./. Bev (#$$:) "age 78 of 1$: To pa for her loan obtained fro! . The Chattel Mortgage Ba& re'uires the registration to be !ade in the Office of the2egister of 0eeds of the province &here the !ortgagorresides and also in &hich the propert is "age 74 of 1$: situated as &ell as the BTO &here the vehicle is registered..c) (o. The foreclosure of suchchattel !ortgage did not bolster or add an thing to theposition of the suret co!pan ...0iscuss the validit of the position ta. It &illnot bind or affect third parties..0ue to business reverses% debtor failed to pa his creditors.uch !ortgageshall be valid and binding but onl on the parties. The!ortgage &as dul registered &ith the proper chattel!ortgage registr . Thepurchasers have the option to pa the install!ents of the!ortgagee. The ban. And even as thechattel !ortgage on the house &as still subsisting% debtor!ortgaged to a ban. The chattel !ortgage over the house &hich &asforeclosed did not affect the rights of third parties li.T/0 A(. (:>)2eco!!endation3 . of ans&er should be given full credit.T/0 A(. The chattel !ortgage &as foreclosed &hen the debtorfailed to rei!burse the suret co!pan for pa !ents !adeon the bond. The purchaser has theoption to pa the install!ents to the !ortgagee &hoshould appl the pa !ents to the !ortgage indebtedness.b) Gi!bo &as referring to the 2egister of 0eeds of 6ulacan &here Eonee &as a resident.% the religiousl paid theinstall!ents due under their sale contracts.-.6ut even before full pa !ent% debtor constructed a houseon the lot. of the title.On the suggestion that a chattel !ortgage on a house.Ko&ever% as the lot bu ers &ere co!pletel una&are of the!ortgage lien of the ban.ince the third parties are not bound b the chattel !ortgage% the are not also bound b an enforce!ent of its provisions.&as a nullit % the suret co!pan counteredthat &hen the chattel !ortgage &as e)ecuted% debtor &asnot et the o&ner of the lot on &hich the house &as built.ec 7 Chattel Mortgage Ba&) Credit Transactions (1999) Iarious bu ers of lots in a subdivision brought actions toco!pel either or both the developer and the ban.(.heriff.en b the suret co!pan . !a not dispossess the priorpurchasers of the individual lots% !uch less re'uire the!to pa for the said lots.1/23 a) Gi!boHs argu!ent is not !eritorious.. The real estate !ortgage covering the house and lot &asdul registered and binds the parties and third persons. . /)plain (:>) . This real estate !ortgage &as dul registeredand annotated at the bac.T/0 A(. ./.-. a) Ma the ban.-. In the foreclosure sale% the suret co!pan &as a&arded the house as the highest bidder. Eonee beca!e the o&ner of the propert upon deliver 5 registration is notessential to vest that o&nership in the bu er. Mercantile Ba& 6ar /)a!ination C D A (199$-#$$8) <ive ears later after co!pleting pa !ent of the purchaseprice% debtor obtained title to the lot. has to respect the rightsof the prior purchasers of the individual lots.

T/0 A(.-. -nder Art #1#9 of the (CC% the !ortgage e)tends to alli!prove!ents on the !ortgaged propert regardless o &ho and &hen the i!prove!ents &ere introduced. Mercantile Ba& 6ar /)a!ination C D A (199$-#$$8) "age 79 of 1$: B0C countered that it had built on the !ortgagedpropert &ith the prior .tela filed a third part clai!.ince the !ortgagee &asinfor!ed of the lease and did not obAect to it% the!ortgagee beca!e bound b the ter!s of the lease &hen itac'uired the propert as the highest bidder. sued for deficienc ./.-./..T/0 A(. .Cecil opposed the clai!. of ans&er should be given full credit. The !ortgagee has a better right than B0C. .1/23 Mortgage5 /)traAudicial <oreclose (#$$8) A real estate !ortgage !a be foreclosed Audiciall ore)traAudiciall . . . In &hat instance !a a !ortgageee)traAudiciall foreclose a real estate !ortgage+ (4>) .-. Assu!ing that the office condo!iniu! &as dul constituted under the Condo!iniu! Ba&% before B0Ccould validl constitute the sa!e as a condo!iniu!% itshould cause to be recorded in the register of deeds of theprovince or cit &here the land is situated an enabling or!aster deed sho&ing% a!ong others% a certificate of theregistered o&ner and of all registered holders of an lien orencu!brance on the propert that the consent to theregistration of the deed. Mortgage5 <oreclosure (#$$:) Ma the sale at public auction b a ban.-. The price paid for thepropert at the foreclosure sale &as not enough to li'uidatethe obligation. Thecorresponding Certificate of . of a propert !ortgaged to it be nullified because the price &ase)tre!el lo&+ 1h + . Kence% the!ortgagee steps into the shoes of the !ortgagor andac'uires the rights of the lessor under Art 198F of the(CC.. 2ule on their conflicting clai!s. :1:4% asa!ended)./.T/0 A(. The notice given b B0C tothe !ortgagee &as not enough to re!ove the building fro! coverage of the !ortgage considering that thebuilding &as built after the !ortgage &as constituted andthe notice &as onl as regards the lease and not as to theconstruction of the building. . Cecil% a creditor of Bi@a% levied onattach!ent the generator. 1hile the !ortgage &assubsisting% borro&er leased for fift ears the !ortgagedpropert to Band 0evelop!ent Co!pan (B0C). The ban..ale &as e)ecuted and afterthe lapse of one ear% title &as consolidated in the na!e of !ortgagee. (. Ko&ever%the !ortgage e)tends to rentals not et received &hen theobligation beco!es due and the !ortgagee !a ran afterthe said rentals for the pa !ent of the !ortgage debt. The lease rentals belong to the !ortgagor.houldthe lessor refuse to rei!burse said a!ount% the lessee !a re!ove the i!prove!ent even though the land &ill sufferda!age thereb .-.Mortgagee then applied &ith the 2TC for the issuance of a &rit of possession not onl over the land but also thecondo!iniu! building./.ec..ec 7. If the e)a!inee gives a ood ans&er% he should be given additional credit. 2A 79#8).ince the subAect !atter of these t&o(#) 'uestions is not included &ithin the scope of the 6ar uestions in Mercantile Ba&% as it is &ithin Civil Ba&% it is suggested that &hatever ans&er is given b the e)a!inee% or the lac./. . a) Ko& &ould ouresolve the dispute bet&een the!ortgagee and B0C+ (:>) b) Is the !ortgagee entitled tothe lease rentals due fro! B0C under the leaseagree!ent+ (:>) 2eco!!endation3 . 1% Act (o.1/23 a.1/23 Mortgage5 <oreclosure (#$$:) 6ecause of failure of Ganette and Geanne to pa their loanto M 6an. In theirans&er% Ganette and Geanne did not den the e)istence of the loan nor the fact of their default. 1st Alternative Ans&er3 a. This provision gives the lessor the right toappropriate the condo!iniu! building but after pa ing thelessee half of the value of the building at that ti!e. Thereafter% B0Cconstructed on the !ortgaged propert an officecondo!iniu!.T/0 A(. The!ortgagee &as dul advised of the lease.T/0 A(.Bi@a constituted in .T/0 A(. The !ortgagee contended that the!ortgage included all accessions% i!prove!ents andaccessories found on the !ortgaged propert . If noconsent &as given% the condo!iniu! &as included in the!ortgage. The % ho&ever%interposed the defenses that the price at the auction &ase)tre!el lo& and that their loan% despite the loandocu!ents% &as a long-ter! loan &hich had not et!atured. The!ortgage e)tends to the i!prove!ents introduced on theland% &ith the declarations% a!plifications% and li!itationsestablished b la&% &hether the estate re!ains in thepossession of the !ortgagor or passes into the hands of athird person (Art #1#9 (CC). #nd alternative Ans&er3 a. The !ortgagee has a better right to the building.1/23 1hen a sale is !ade under a special po&er inserted orattached to an real-estate !ortgage% thereafter given assecurit for the pa !ent of !one or the fulfill!ent of an other obligation% then the !ortgagee !a e)traAudiciall foreclose the real estate !ortgage (. If ou &ere the Audge% ho& &ould ou rule on thecase+ 1h + (8>) .6orro&er defaulted on his loan and !ortgagee foreclosedthe !ortgage.. B0Ccannot co!plain other&ise% because it .ne& that thepropert it &as leasing &as !ortgaged &hen it built thecondo!iniu!./. At the foreclosure sale% the !ortgagee &asa&arded the propert as the highest bidder.1/23 Mortgage5 <oreclosure of I!prove!ents (1999) 6orro&er obtained a loan against the securit of a!ortgage on a parcel of land.no&ledge of !ortgagee &hichhad received for!al notice of the lease.% the latter foreclosed on the !ortgageconstituted on their propert &hich &as put up b the! assecurit for the pa !ent of the loan.1/23 b.-. If the !ortgageegave its consent thereto% then B0C should prevail. : .telaHs favor a chattel !ortgage over an electric generator..

tate our reasons (4>).-.arage J for !echanical repairs (parts and service) perfor!ed on /d@oHs co!pan car a!ounting to "1$%$$$.-. no& has absoluteo&nership of both properties.1/23 "reference of Credits (#$$#) As of Gune 1% #$$#% /d@o .1/23 1) The ta.. 1hat &ould be ourans&er+ . Ti!bol% also located in Cue@onCit .epte!ber 18% #$$1% the certificates of sale of the t&oproperties in favor of the 6an. Ti!bol &as able to pa the loan./.ear ter! loan fro! -niversal 6an. (the6an.Hs favor.% assigned the instru!entssans recourse to Adelantado <inance Corporation. Ten !onths later% both the 6orro&er and Mr..% but the 6an.ing of possession of !ortgaged assetsdoes not a!ount to foreclosure. Charidefaulted in her obligations. &ere registered &ith the2egister of 0eeds of Cue@on Cit ./.% sold a !otor vehicle on install!ent basisto Chari "aredes.e action against both Car!a.upplies J for various personalco!puters and accessories sold to /d@o on credita!ounting to ":$$%$$$./.% the 6orro&er gave the follo&ing collateralsecurit in favor of the 6an.T/0 A(. The transaction &as reflected on apro!issor note e)ecuted b Chari in favor of Car!a. as the onl bidder in the for unpaid value-added ta)es a!ounting to ":$%$$$. "ri!o Ti!bol% the "resident of the 6orro&er5 and :) a real estate!ortgage over the residential house andlot o&ned b Mr. refused to per!itrede!ption on the ground that the period for rede!ptionhad alread e)pired% so that the 6an.epte!ber 14% #$$#% to find outif the position of the 6an.ers% Inc. In Gune #$$1% the 6an. The !achiner arrived and &as released to the co!pan under a trust receipt agree!ent. Mortgage5 2e!edies (#$$:) Car!a. The note &as secured b a !ortgage over the car. for a Better of Credit (BC) for N#$$th in favorof a foreign ban. Ti!bol ca!e to ou toda % .(#) Kand !an . too.T/0 A(.Hs securit interest. 0acion en pago can onl be considered as having ta. Ti!bol% the period of rede!ption is one (1) ear fro! the date of registration of the certificate of sale% &hichperiod has not et e)pired in this case. "age 7F of 7 .# As to the real estate !ortgage over the residential houseand lot o&ned b Mr.Mortgage5 <oreclosure5 /ffect of !ere ta. did not result in full pa !ent of the obligations o&ing fro! the co!pan and its officers.T/0 A(. As the co!pan defaultedin the pa !ent of its obligations% the ban. As securit for the loan and as re'uired b the 6an.ing b creditor!ortgagor of propert (199#) M D Co obtained a loan fro! a local ban.-. <oreclosure re'uires asale at public auction. Mortgage5 2ede!ption "ropert (#$$#) "eriod5 <oreclosed foreclosure sale. to cover the i!portation of !achiner . ("(6 v "ineda 199 s 1) #) The !ere ta. Ti!bol &ereable to raise sufficient funds to redee! their respectiveproperties fro! the 6an. ste!s Corporation (/d@o) &as indebted to the follo&ing creditors3(1) Ace /'uip!ent .Conte!poraneous &ith the e)ecution of the note and the!ortgage deed% Car!a. is correct. To guarantee pa !ent of the obligation under the BC% theco!pan and its "resident and Treasurer e)ecuted a suret agree!ent in the local ban. At the sa!e ti!e% it sought toforeclose the !ortgaged propert and to hold the co!pan as &ell as its "resident and Treasurer% liable under the.uret Agree!ent. e)traAudiciall foreclosed the t&o real estate !ortgages% &ith the 6an.ing of suchpossession !ust be considered !erel as a !easure in order to protect or further safeguard the ban. The ta.ing of possession of the !achiner b the ban.en place &hen a creditor accepts and appropriates theo&nership of the goods in pa !ent of a due obligation.) in 1998.(7) 6ureau of Internal 2evenue J "ri!eti!e Corporation (the 6orro&er) obtained a "1$Million% five.(:) Gosel n 2e es J for!er e!plo ee of /d@o &hosued /d@o for unla&ful ter!ination of e!plo !ent and &as able to obtain a final Audg!ent against /d@o for"1$$%$$$.3 1) a real estate !ortgage overthe land and building o&ned b the 6orro&er and located in Cue@on Cit 5 #)the Aoint and several pro!issor note of "r.ers% Inc.ers.ubse'uentl % the co!pan applied &ith thesa!e ban.0id the ta. result in the 1) full pa !ent of the obligations of theco!pan and its officers% and #) foreclosure of the!ortgage+ .ing of possession of the !achiner b the ban. Could Adelantado <inancecorporation ta. The 6orro&er and Mr. in the a!ountof "4$$th% !ortgaging as securit therefore its realpropert . Mercantile Ba& 6ar /)a!ination C D A (199$-#$$8) 6ecause of business reverses% neither the 6orro&er nor Mr. On. . The foreclosure% therefore% has notas et been effected.% andChari+ 1h + (8>) .ers Inc.. .1/23 1 1ith respect to the real estate !ortgage over the landand building o&ned b the 6orro&er% "ri!eti!e Corporation% aAuridical bod % the period of rede!ption is onl three (:) !onths% &hich period alread e)pired. possessionof the i!ported !achiner .

/. fell due on Gune 14% #$$#. 7 J clai! of the 6I2 for unpaid value addedta)es(#) (o. The collectionof the loan and the foreclosure of the !ortgage securing said loan constitute one and the sa!e cause of action. (Observation3 /ven if the liabilit of M% ?% and E is solidar % the defense &ould still not be valid) 2e!edies5 Available to Mortgagee-Creditor (1998) <inding a #7-!onth pa !ent plan attractive% AnAopurchased a Ta!ara& <M fro! To ota CC..T/0 A(. 1hen AnAo defaulted%IO.-.uch being the case% E is notan indispensable part . The loan due to Integrit 6an.T/0 A(. If ou &ere the Audge% ho& &ould ou resolve the t&o cases+(4>) ..foreclosed the chattel !ortgage% and sought torecover the deficienc .. ? secured b !ortgageof his properties &orth ":$M. Ma IO. Ke paid ado&n-pa !ent of "1$$th and obtained financing for 4 . As a result% /d@o had hardl an cash left for operations and decided to close its business. (The given facts did not also state e)plicitl &hether AnAoHs default &as a pa !ent default or a default arising fro! a breach of a negative pledge or breach of a &arrant .-.Co toforeclose the chattel !ortgage under the circu!stances is pre!ised on AnAoHs failure to pa # or !ore install!ents.. the respective credits or clai!s of the five (4)creditors !entioned above in ter!s of preference orpriorit against each other+ (4>) .upplies as anunpaid seller5 and(7) (o./. The foreclosure &ould not have been valid if it &ere notso. The loan of "1$M is theprincipal obligation &hile the !ortgage securing the sa!e is!erel an accessor to said loan obligation. -nder Art17F7 of the (CC% in a contract of sale of personal propert the price of &hich is pa able in install!ents% the vendor!a % a!ong several options% foreclose the chattel !ortgageon the thing sold% if one has been constituted% should the vendeeHs failure to pa cover t&o or !ore install!ents./. 1hile the given facts did not e)plicitl state that AnAoHs failure to pa covered # or !ore install!ents% this !a safel be presu!ed because the right of IO. : J clai! of Gosel n 2e es for -nla&fulter!ination(:) (o. .still recover thedeficienc + /)plain. The fact that A did not i!plead E &ill not prevent A fro! collecting the proportionate shareof M and ? in the pa !ent of the loan. "ro!issor (ote3 Biabilit (#$$1) M% ? and E signed a pro!issor stating3 =1e pro!ise to pa A on 0ece!ber :1% #$$1 the su! of "4%$$$.T/0 A(. Ong%/d@o decided to pa up all its obligations to Integrit 6an.1/23 IO. J &hich granted /d@o a loan in #$$1 inthe a!ount of "4$$%$$$.holder% /d@oHs "resident and controlling thebalance fro! IO. . In instituting foreclosure proceedings% after filing a collection caseinvolving the sa!e account or transaction% ban. The liabilit of M% ?% and E underthe pro!issor note is Aoint.$$‖ 1hen the note fell due% A sued M and ? &ho put up the defense that A should have i!pleadedE. ? also filed foreclosureproceedings against A for securit given for the account.. The loan &as not secured b an asset of /d@o% but it &as guaranteed unconditionall and solidaril b stoc. 6ut theforeclosure proceedings have to be dis!issed. de!anded i!!ediate pa !ent. 1 J clai! of Ace e'uip!ent . 6ecause the ban. On Gune #$% #$$#% /d@o paid to Integrit 6an. . The re!aining four (7) clai!s have preference or priorit against each other in the follo&ing order3(1) (o.-. Ong% as acco!!odation suret . In such case% ho&ever% the vendor shall have no furtheraction against the purchaser to recover an unpaid balanceof the price and an agree!ent to the contrar is void. Thefiling of the collection case bars the subse'uent filing of theforeclosure proceedings.2 B-:9F$8 Gan#9%F: 1#$s#78) note in favor of A 2e!edies5 Available to Mortgagee-Creditor (#$$1) 0ebtor =A‖ issued a pro!issor note in the a!ount of "1$M in favor of co!!ercial ban.Co!pan &ould not havebeen able to foreclose the chattel !ortgage validl as suchforeclosure% under the circu!stances conte!plated b thela&% could onl be effected for a pa !ent default covering t&o or !ore install!ents) (Buis 2idad v <ilipinas Invest!ent and <inance Co .Co./.1$: (4) Integrit 6an.-. 1hen A failed to pa hisindebtedness% despite de!ands !ade b ban. threatened to proceed against the suret % /duardo E. ?% the latterinstituted a collection suit to enforce pa !ent of the "1$Maccount.In such case% ho&ever% IO.Ko& &ould ou% as Audge in the insolvenc proceedings%ran. /duardo E. 4 J clai! of Integrit 6an. Is the defense valid+ 1h + (4>) .arage for "1$%$$$ has a specificlien on the car repaired.0espite pleas for e)tension of pa !ent b /d@o% the ban.1/23 The defense is not valid.ubse'uentl % ban. Ke e)ecuted a chattel !ortgage Mercantile Ba& 6ar /)a!ination C D A (199$-#$$8) over the vehicle in favor of IO-.!a no longer recover the deficienc . ? is guilt of splitting a cause of action..1/23 The case for collection &ill be allo&ed to proceed.T/0 A(. thefull principal a!ount of "4$$%$$$% plus accrued interestsa!ounting to "44%$$$. After pa ing the unpaid salaries of its e!plo ees% /d@ofiled a petition for insolvenc on Gul 1% #$$#.1/23 The clai! of Kand !an .

A creditor in such secureddebts !a pursue the re!ed of foreclosure% in part or infull% or file an ordinar action for collection on an a!ountdue. There shouldbe no legal obstacle for a creditor to &aive% in full or inpart% his right to foreclosure on contracts of real securit . filed an ordinar action for thecollection of the deficienc .1/23 If I &ere the Gudge% I &ould dis!iss the action as being pre!ature since the proper re!ed &ould be to co!pletethe foreclosure of the !ortgages and onl thereafter canthere b an action for collection of an deficienc . ABT/2(ATII/ A(. A contended that the !ortgagecontract he e)ecuted &as indivisible and conse'uentl % theban. "age 79 of 1$: -pon his failure to pa the loan on duedate% the ban. If ou &ere theudge% &ould ou sustain the contention of A+ .C i!plied that foreclosure as a re!ed insecured obligations !ust first be availed of b a creditor inpreference to other re!edies that !ight also be invo. In Calte) v IAC (.uria v IAC (:$ Gune F9) are not si!ilar to the facts given in theproble!% the . These re!edies are alternativere!edies% although an action for an deficienc is notprecluded% subAect to certain e)ceptions such as thosestated in Art 17F7 of the Civil Code% b a foreclosure onthe !ortgages.ecured 0ebt (1991) To secure the pa !ent of his loan of "#$$th% A e)ecutedin favor of the Angeles 6an.ing Co in 1 docu!ent% a realestate !ortgage over : lots registered in his na!e and achattel !ortgage over his : cars and 1 Isu@u cargo truc./. foreclosed the !ortgage on the : lots% &hich &ere subse'uentl sold for onl "99th at the foreclosuresale.-. had no legal right to foreclose onl the real estate!ortgage and leave out the chattel !ortgage% and then suehi! for a supposed deficienc Audg!ent.2e!edies5 . A favorable Audg!ent can &arrant an issuance of a &rit of e)ecution on an propert % not e)e!pt fro!e)ecution% belonging to the Audg!ent debtor.ed b hi!. Thereafter% the ban.T/0 A(... 8 .2 979:$% #4 Aug F9) % the re!edies on a secured debt%said the court% are either an action to collect or to foreclosea contract of real securit .1/23 The indivisibilit of a contract of real securit % such as areal estate !ortgage or a chattel !ortgage% onl !eans thata division or a partial pa !ent of a secured obligation doesnot &arrant a corresponding division or proportionatereduction of the securit given. 1hile the factual settings in the case of .

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