You are on page 1of 5

ACMECORP&CHUAPACpetitionersvs.CABPIrespondents.

G.R.No.103576August22,1996

FACTS :
27June1978ChuaPac(generalmanager)ofAcmeShoe,Rubber&Plastic
CorporationexecutedinbehalfofAcme,achattelmortgageinfavourofProducersBank
ofthePhilippines.ThisistosecureacorporateloanofP3M.
ChattelmortgagehadaprovisionthatiftheMORTGAGOR,hisheirs,executorsor
administratorsshallwellandtrulyperformthefullobligationorobligationsabovestated
accordingtothetermsthereof,thenthismortgageshallbenullandvoid....Incasethe
MORTGAGORexecutessubsequentpromissorynoteornoteseitherasarenewalofthe
formernote,asanextensionthereof,orasanewloan,orisgivenanyotherkindof
accommodationssuchasoverdrafts,lettersofcredit,acceptancesandbillsofexchange,
releasesofimportshipmentsonTrustReceipts,etc.,thismortgageshallalsostandas
securityforthepaymentofthesaidpromissorynoteornotesand/oraccommodations
withoutthenecessityofexecutinganewcontractandthismortgageshallhavethesame
forceandeffectasifthesaidpromissorynoteornotesand/oraccommodationswere
existingonthedatethereof.Thismortgageshallalsostandassecurityforsaid
obligationsandanyandallotherobligationsoftheMORTGAGORtotheMORTGAGEE
ofwhateverkindandnature,whethersuchobligationshavebeencontractedbefore,
duringoraftertheconstitutionofthismortgage.
LoanofP3Mpaidwaspaid,butpetitionersobtainedanotherloanin1981P2.7Mand
wasalsopaid,thenon10and11January1984,petitioneragainobtainedloanofP1Min
4promissorynotesof250Keach.Duetofinancialconstraints,theloanwasnotsettled
atmaturity.
Respondentappliedforextrajudicialforeclosureofchattelmortgage.Acmefiledaction
forinjunctionhoweverRTCultimatelydismissedcomplaintandorderedforeclosure
sayingAcmewasboundbystipulations.
CAdismissedappealandaffirmedRTC.

ISSUE:WONitisvalidandeffectivetohaveaclauseinachattelmortgagethatextendsits
coveragetoobligationsyettobecontractedorincurred

HELD:
No.RTCandCAdecisionssetaside.Chattelmortgagecancoveronlyobligations
existingatthetimemortgageisconstituted[Act1508ChattelMortgageLaw]
Whileapledge,realestatemortgage,orantichresismayexceptionallysecure
afterincurredobligationssolongasthesefuturedebtsareaccuratelydescribed,a
chattelmortgage,however,canonlycoverobligationsexistingatthetimethemortgage
isconstituted
Althoughapromiseexpressedinachattelmortgagetoincludedebtsthatareyettobe
contractedcanbeabindingcommitmentthatcanbecompelledupon,thesecurityitself,
however,doesnotcomeintoexistenceorariseuntilafterachattelmortgageagreement
coveringthenewlycontracteddebtisexecutedeitherbyconcludingafreshchattel
mortgageorbyamendingtheoldcontractconformablywiththeformprescribedbythe
ChattelMortgageLaw.
Sec5oftheChattelMortgagelawstatesthatthemortgageismadeforthepurposeof
securingtheobligationspecifiedintheconditionsthereof,andfornootherpurpose,and
thatthesameisajustandvalidobligation,andonenotenteredintoforthepurposeof
fraud.thisclausemakesitobviousthatthedebtreferredtointhelawisacurrent,not
anobligationthatisyetmerelycontemplated.Inthechattelmortgagehereinvolved,the
onlyobligationspecifiedinthechattelmortgagecontractwastheP3,000,000loan
whichpetitionercorporationlaterfullypaidandthereforethecontractwasextinguished.
BelgianCatholicMissionaries,Inc.,vs.MagallanesPress,Inc.,etal.,[14]
In theCourt said
"x x x A mortgage that contains a stipulation in regard to future advances in the credit
will take effect only from the date the same are made and not from the date of the
mortgage."
OnDamages:Acmecannotclaimmoraldamages,beinganartificialperson.

SALDANA,plaintiffappellantvsPHILIPPINEGUARANTYCOMPANY,INCappellees.
G.R.No.L13194January29,1960

Facts :
Saldanathepetitioner,wasthemortgagorofAleazar,athirdpersonwhosepropertywas
subjecttoawritofexecutionissuedbythecourtstobeauctionedinpaymentofherdebt
tothedefendant.Howeverthepropertiesauctionedincludedpropertiesthatwerethe
subjectofSaldanasmortgage.Saldanareceivedsomeofthepropertiesbutnotall,the
restweresold.
Appellantsclaimsthatthephraseinthechattelmortgagecontract"andallother
furnitures,fixturesandequipmentfoundinthesaidpremises",validlyandsufficiently
coveredwithinitstermsthepersonalpropertiesdisposedofintheauctionsale,asto
warrantanactionfordamagesbytheplaintiffmortgagee.

Issue:Doesthelawdemandaminuteandspecificdescriptionofeverychattelmortgagedinthe
dealofmortgage?

Held:
No.Section7oftheChattelMortgageLaw,doesnotdemandaminuteandspecific
descriptionofeverychattelmortgagedinthedealofmortgagebutonlyrequiresthatthe
descriptionofthepropertiesbesuch"astoenablethepartiesinthemortgage,orany
otherperson,afterreasonableinquiryandinvestigationtoidentifythesame".Gaugedby
thisstandard,generaldescriptionhavebeenheldbythisCourt.(SeeStockholdervs.
Ramirez,44Phil.,993PedrodeJesusvs.GuamBeeCo.,Inc.,72Phil.,464).
Inmanyinstancesthecourtshaveheldthedescriptiongoodwhere,thoughotherwise
faulty,themortgageexplicitlystatesthatthepropertyisinthepossessionofthe
mortgagor,andespeciallywhereitistheonlypropertyofthatkindownedbyhim.
Thespecificationsinthechattelmortgagecontractintheinstantcase,webelieve,in
substantialcompliancewiththe"reasonabledescriptionrule"fixedbythechattel
MortgageAct.
Wemaynoticeintheagreement,moreover,thatthephraseinquestionisfoundafteran
enumerationofotherspecificarticles.Itcanthusbereasonablyinferredtherefromthat
the"furnitures,fixtureandequipment"referredtoarepropertiesoflikenature,similarly
situatedorsimilarlyusedintherestaurantofthemortgagorlocatedinfrontoftheSan
JuandeDosHospitalatDeweyBoulevard,PasayCity,whicharticlescanbedefinitely
pointedoutorascertainbysimpleinquiryatoraboutthepremises.Notethatthe
limitationfoundinthelastparagraphofsection7oftheChattelMortgageLawon"likeor
substitutedproperties"makereferencetothose"thereafteracquiredbythemortgagor
andplacedinthesamedepositoryasthepropertyoriginallymortgaged",nottothose
alreadyexistingandoriginallyincludedatthedateoftheconstitutionofthechattel
mortgage.Acontraryviewwouldundulyimposeamorerigidconditionthanwhatthelaw
prescribes,whichisthatthedescriptionbeonlysuchastoenableidentificationaftera
reasonableinquiryandinvestigation.
Moreover,ifthereshouldexistanydoubtsonthequestionswehavejustdiscussed,they
shouldbethreshedoutintheinsolvencyproceedings,whichappearsinconsistentwith
thedefinitivecharacteroftherulingsinvoked.
Wherefore,theordersappealedfromaresetasideandthecaseremandedtothelower
courtforfurtherproceedings.Costsagainstappellee.

PAMECA&TEVESpetitioners,vs.CA&DBP,respondents.

G.R.No.106435|19990714

Facts
:
OnApril17,1980petitionerPAMECAobtainedfromrespondentbankaloanofabout2
millionandbyvirtueofwhichapromissorynotewasexecuted,andasecurityforthe
loanconsistingofcertainequipmentandfurniturewascreatedtocovertheloan.
OnJanuary18,1984,petitionerfailedtopay,respondentbankextrajudiciallyforeclosed
thechattelmortgage,and,assolebidderinthepublicauction,purchasedtheforeclosed
propertiesforasumofP322,350.OnJune29,1984,respondentbankfiledacomplaint
forthecollectionofthebalanceofP4,366,332.463representingthedeficiencyclaimof
respondentbank,inclusiveofinterestcharges,asofMarch31,1984.
RTCofMakatirenderedadecisiononthecaseorderingthedefendantstopayjointly
andseverallyplaintiffP4,366,332.46representingthedeficiencyclaimofthelatter.
TheCourtofAppealsaffirmedtheRTCdecision.Hence,thisPetition.
Pamecaargues:Publicauctionsaleweretaintedwithfraud.Claimsthechattelswere
boughtbyDBPassolebidderinonly1/6ofthemarketvalue,henceunconscionable
andinequitable,andsoitisnullandvoid.(claimsthemarketvaluewasformorethan
P2mil)evidencedfromaninventorydatedMarch1980(valuedataroundP2.5mil),in
accordancewiththetermsofthechattelmortgagecontractthatrequiredthatthe
inventories"bemaintainedatalevelnolessthanP2mil".NCC1484and2115shouldbe
appliedbyanalogyreadingthespiritofthelaw,andtakingintoconsiderationthatthe

PamecabecausetheintentionwasthattheloanisonlyfortheCorpsbenefit
contractofloanwasacontractofadhesionpetitionerswerenotsolidarilyliablewith

Issues :1.)Cananactionbeinstitutedfordeficiencyofadebtafterforeclosureofthechattel
mortgageandonthebasisofequityshouldNCC1484and2115beappliedbyanalogy?
2.)W/NpublicauctionwastaintedwithfraudNO
3.)W/NTeves,Teves,PulidoaresolidarilyliablewithPamecaYES

Held :1.)
Yes,thereisliabilityinthepartofthedebtorofachattelmortgageforthedeficiencyin
theauction,andthereisaninconsistencybetweenNCC2115inrelationtotheChattel
MortgageLaw.ThecourtcitedapreviousunpublishedcourtdecisioninAblazavs.
Ignaciowhichruledthat:
ItisclearfromSec14oftheChattelMortgageLawthattheeffectsofforeclosurerun
inconsistentwiththoseofpledgeunderNCC2115.Inpledge,thesaleofthething
pledgedextinguishestheentireprincipalobligation,suchthatthepledgormaynolonger
recoverproceedsofthesaleinexcessoftheamountoftheprincipalobligation.
Sec14oftheChattelMortgageLawexpresslyENTITLESthemortgagor(debtor)tothe
balanceoftheproceeds,uponsatisfactionoftheprincipalobligationandcosts.Sincethe
ChattelMortgageLawbarsthecreditormortgagefromretainingtheexcessofthesale
proceedsthereisacorollaryobligationonthepartofthedebtormortgageetopaythe
deficiencyincaseofareductioninthepriceatpublicauction.
Thevalueofthechattelschangesgreatlyfromtimetotime,andsometimesveryrapidly.
Ifforexample,thechattelsshouldincreaseinvalueandasaleunderthatcondition
shouldresultinlargelyoverpayingtheindebtedness,andifthecreditorisnotpermitted
toretaintheexcess,thenthesamewouldrequirethedebtortopaythedeficiencyin
caseofareductioninthepriceofthechattelsbetweenthedateofthecontractanda
breachofthecondition.
AlthoughNCC1484,par(3)barsanyactionagainstthepurchasertorecoveranunpaid
balanceoftheprice,wheretheselleroptstoforeclosethechattelmortgage,shouldthe
buyersfailuretopaycover2ormoreinstallments,thisprovisionisspecifically
applicabletoasaleoninstallments.
Equity,"justiceoutsidelegality",isappliedonlyintheabsenceof,andneveragainst,
statutorylaworjudicialrulesofprocedure.

2.)
No,SCunabletofindmeritthatthepublicauctionsaleisvoidongroundsoffraudand
inadequacyofprice.PameconeverassailedthevalidityofthesaleintheRTC,onlyin
theCA.Basicistherulethatpartiesmaynotbringonappealissuesthatwerenotraised
ontrial.
Inanycase,inventoryandchattelmortgagedocumentdonotprovethatthemortgaged
propertieshadamarketvalueofatleastP2milonJan1984,thedateoftheforeclosure
sale.Atbest,thechattelmortgagecontractonlyindicatestheobligationofthe
mortgagordebtortomaintaintheinventoryatavalueofatleastP2mil.
TheinventorywasasofMarch1980,orevenpriortoApril1980,thedateofthe
contractsofloanandchattelmortgage.Itisfarfrombeinganaccurateestimateofthe
marketvalueoftheproperties.ThemerefactthatDBPwasthesolebidderdoesnot
warranttheconclusionthatthetransactionwasattendedwithfraud.
Fraudisaseriousallegationthatrequiresfullandconvincingevidence,andmaynotbe
inferredfromthelonecircumstancethatitwasonlyDBPthatbid.Thesparsenessof
evidenceleavestheSCnodiscretionbuttoupholdthepresumptionofregularityinthe
conductofthepublicsale.

3.)
Yes,TevesesisliablewithPamecointheloan.AsfoundbytheTCandCA,theterms
ofthepromissorynotewasunmistakablysetforththeassolidaryinnature.
ItisclearthatTevesesintendedtobindthemselvessolidarilywithPamecaintheloan.
TheyarenotmadetoanswerforthecorporateactofPameca,butaremadeliable

note.Petitiondenied
becausetheymadethemselvescomakerswithPamecaunderthepromissory