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54. BELGIAN CATHOLIC MISSIONARIES vs.

MAGALLANES without knowledge or consent of the BCM, as 2nd mortgagee, constitutes fraud, thus the
G.R. No. L-25729/November 24, 1926 extension is void.

PETITIONERS: Belgian Catholic Missionaries The Court found that DBP failed to disclose the requisite information in the disclosure
RESPONDENTS: Magallanes Press Inc., Jose Maria Memije statement form. Ordinarily, the lender has no right to collect any interest, charges, or fees
without due notice to the borrower.
DOCTRINE. 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 The increase of P5,900 made by Mimeji in favor of Magallanes Press and the extension of the
mortgage. mortgage thereto, are not only subordinate to the mortgage credit of BCM, being subsequent
in time and in registration, but said increase in the security is also VOID.
FACTS.
 The Magallanes Press obtained 2 loans: The increase of the mortgage security becomes a new mortgage in itself, inasmuch as the
o 1st loan: P14k from J.P. Heilbronn & Co., Inc., evidenced by Promissory Notes original mortgage did not contain any stipulation in regard to the increase of the mortgage
and secured by a chattel mortgage on all printing machinery and its accessories credit, and even if it did, said increase would take effect only from the date of the increase. A
of Magallanes Press. mortgage that contains a stipulation in regard to future advances in the credit will take effect
o 2nd loan: P30,500 from Belgian Catholic Missionaries Co., Inc. (BCM), secured only from the date the same are made and not from the date of the mortgage.
by a chattel mortgage on the same printing machinery and its accessories of
Magallanes Press it had previously mortgaged to JP Heilbronn. In accordance with the provisions of section 5 of Act No. 1508 (Chattel Mortgage Law), the
parties to the original deeds swore that the same was mortgaged "to secure the obligations
 All the Promissory Notes executed by Magallanes Press in favor of JP Heilbronn having specified therein and for no other purpose." Neither the increase in question, nor the
been overdue for non-payment of installments, JP Heilbronn transferred all its mortgage extension of the mortgage to secure the payment of the same is specified in the deed,
credit against the Magallanes Press to Memije for P8,280, the balance of mortgage consequently said extension is void.
credit.
"Where the statute provides that the parties to a chattel mortgage must make oath that the
 Magallanes Press obtained an additional loan of P5,900 from Memije, and executed a debt is a just debt, honestly due and owing from the mortgagor to the mortgagee, it is obvious
deed in favor of Memije, by virtue of which, the original chattel mortgage covering the that a valid mortgage cannot be made to secure a debt to be thereafter contacted."
1st loan was made to cover for the additional loan as well.

 Magallanes Press building caught fire. Some of the printing machinery, its accessories
and other personal property of Magallanes Press were destroyed. Since the property was
insured (JP Heilbronn indorsed the insurance policy to Memije during the transfer or
mortgage credit), Memije sought to claim from the insurance company. Memije also
sought to foreclose the properties subject of the mortgage.

 However, BCM filed a petition for a writ of injunction to stop award of the proceeds of
the insurance to Memije, with an action to nullify the transfer of mortgage credit to
Memije and the extension of mortgage for the additional loan.

 CFI ruled that the transfer of mortgage credit to Mimeji and the extension of mortgage
for the additional loan is null and void in so far as they prejudice rights of BCM.
Preliminary injunction against Mimeji made final and absolute.

ISSUES & RATIO.

WON The mortgage extension was valid? – NO.

The increase made by Mimeji in the mortgage credit acquired by him from JP Heilbronn,
and the extension made by the Magallanes Press of the mortgage to the additional loan