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Makati Leasing v. Wearever Textile Mills Facts: Wearever Textile Mills discounted and assigned several recievables to Makatai Leasing and Finance Corp. To secure the collection of receivables assigned, Wearever executed a chattel mortgage over certain of its raw materials and machinery. Makati Leasing extrajudicially foreclosed the chattel mortgage upon default of Wearever. Issue: Whether or not a chattel mortgage is constituted on a machinery permanently attached to the ground. Ruling: Where a chattel mortgage on machinery permanently attached to the ground, that machinery is to be considered as personal property and the chattel mortgage constituted thereon is null and void, regardless of who owns the land. However, the chattel mortgage is binding on the contracting parties but cannot prejudice innocent third parties. Ruling: For mismanaging the corporation, it is as if the loan was never delivered to it and thus, there was failure on the part of DBP to deliver the consideration for which the mortgage were executed. The foreclosure of Filipinas Marble s properties is not valid. There was no mortgage in the first place because there is no loan to speak of. The mortgage being an accessory contract, its validity is dependent on the validity of the loan secured by it. However, a chattel mortgage that is unregistered is not null and void. Under the Civil Code, registration is necessary only for the purpose of binding third persons.
Allied Banking v. Salas Facts: Gencor executed a chattel mortgage in favor of General Bank and Trust Co., Allied Bank s predecessor. Said chattel mortgage was duly registered. When Gencor failed to pay its obligations, Gen. Bank extrajudicially foreclosed the chattel mortgage. However, prior to the extrajudicial foreclosure involving the personal properties in question were already the subject of a writ of attachment in favor of MetroBank. Upon learning of the foreclosure, Metrobank filed a motion to enjoin the extrajudicial foreclosure of the properties in question. Issue: Whether or not Allied Bank has a better right over Metrobank over the properties in question. Ruling: A registered chattel mortgage lien attaches to the property wherever it may be. A subsequent attaching creditor acquired the properties in question subject to the creditor s mortgage lien as it existed thereon at the time of the attachment. What may be attached in this case is only the equity or right of redemption of the mortgagor.
Filipinas Marble v. IAC Facts: Filipinas Marble applied a loan with DBP which is secured by a chattel mortgage together with DBP s management contract of Filipinas Marble. It was alleged that DBP mismanaged and misspent the loan leaving Filipinas Marble desolate and devastated. Instead of helping Filipinas Marble, DBP abandoned the project and proceeded to foreclose the properties mortgaged. Filipinas contested the foreclosure for there was no loan to speak because there was a failure of consideration. Issue: Whether or not a chattel mortgage can exist even if there is no loan to speak of. Whether or not a chattel mortgage is valid even if it is not registered.
as the assignee of the mortgage lien. Ruling: Where under the terms of the chattel mortgage agreement. which was secured by a chattel mortgage over the motorcycle of Depositario. Because of this. Ruling: Where the obligation is one of loan secured by a chattel mortgage and not a sale where the price is payable in installments. But instead. Said motorcycle was eventually foreclosed by reason of the respondent s failure to pay its debt. Siton executed a Chattel Mortgage over the subject vehicle in favor of Car Traders. The bringin of an action against the principal debtor to enforce payment of the obligation is not inconsistent with. The promissory note and the chattel mortgage were assigned to Servicewide. IAC Facts: Siton purchased from Car Traders a vehicle. he can sell it even if the chattel mortgage agreement prohibits the mortgagor from selling the chattel without the consent of the mortgagee. Issue: Whether or not BA Finance has waived its right to collect the unpaid balance of the Cuady spouses on the promissory note for failure of the former to enforce the total loss provision in the insurance coverage of the motor vehicle subject of the chattel mortgage. BA Finance. The sale however. Bicol Savings made a demand for the deficiency. petitioner filed an action for replevin against Siton. Months after. obtained the renewal of the insurance coverage over the aforementioned vehicle. CA Facts: Bicol Savings v. BA Finance then sued them for the unpaid monthly installments. As further security for the vehicle. and to claim from the insurer the face value of the car insurance policy and apply the same to the payment of their remaining account and give them the surplus thereof. the aforementioned vehicle figured in an accident and was badly damaged. Manuel Cuady obtained a loan from Supercars for the purchase of a vehicle. Supercars later assigned the promissory note together with the chattel mortgage to BA Finance. Inc.Chattel Mortgage Servicewide Specialists. prosecute and settle any insurance claim. BA Finance only have the car repaired. there was a deficiency. the bringing of another action to compel the surety to fulfill his obligation under the agreement. v. Under the terms and conditions of the said insurance. The Cuadys asked BA Finance to consider the same as a total loss. which was later secured by a chattel mortgage over the same vehicle. Alleging Siton failed to pay the part of the installment which fell due. Ruling: Since the mortgagor remains the owner of the chattel. Issue: Whether or not Bicol Savings may recover deficiency from the foreclosure sale. an independent civil action may be instituted for the recovery of said deficiency of after the . The payment of deficiency may be enforced against the principal debtor or his solidary co-maker who also acted as surety. is without prejudice to his criminal prosecution under the permanent provisions of the RPC. if any. the assignee of the mortgage agreement is bound by the extra-judicial foreclosure of such chattel mortgage. any loss under the policy shall be payable to the BA Finance. Guinhawa Facts: Depositario together with Guinhawa took a loan from Bicol Savings & Loan Assoc. the Cuadys stopped paying their monthly installments. BA Finance v. a deficiency exists. the mortgagee was constituted attorney-in-fact to file. and does not preclude. hence. Issue: Whether or not the mortgagor remains the owner of the chattel. As result of the foreclosure. Dumo filed a counterclaim and alleged that he has bought the vehicle from Siton and he has religiously paid the installments.
Acme was not able to settle its obligations with Producer s bank. Delgado defaulted in payment. Ruling: While a pledge. v. The mortgagee.Chattel Mortgage same stipulation and if the assignee failed to file and prosecute the insurance claim when the car was damaged totally. To secure the loan agreement. despite exercise of the appropriate remedy may be held liable for damages if the manner of carrying out the seizure of the property was attended by bad faith. a collection suit was filed against Delgado and Cerna as solidary debtors. may be solidarily liable with the mortgagor. real estate mortgage. Jordan Enterprise assigned the promissory note together with the chattel . the mortgagor is relieved from his obligation to pay as he suffered a loss because of the failure of the mortgagee to file the claim. or antichresis may secure after-incurred obligations so long as these future debts are Filinvest Credit Corp. The chattel mortgage contained a provision that the coverage of the mortgage shall extend to obligations yet to be contracted or incurred. A special power of attorney authorizing another to mortgage one s property as security of the obligation does not in itself make the person executing the same as co-mortgagor thereof. He must bring a civil action for replevin either to recover such possession as preliminary step to the extrajudicial foreclosure of the chattel mortgage or for judicial foreclosure. the mortgagee committed bad faith in violation of the Civil Code. executed a chattel mortgage in favor Producers Bank. the mortgagee cannot take the property by force but must institute the appropriate action in court. If mortgagee cannot obtain possession of a mortgaged property for its sale on foreclosure. however. Delgado executed a chattel mortgage over his jeep. but who turned out to be employees of Filinvest Finance. Ruling: Since a mortgage is merely an accessory contract. For employing subterfuge in seizing the truck by misrepresenting its employees as court appointed sheriffs and then hiding and cannibalizing it. Whether or not Filinvest Finance s act of seizing the truck is valid. a third party who mortgages his motor vehicle to secure the payment of the loan of another does not vecomesolidarily liable with the borrower merely because of the execution of the mortgage. Issue: Whether or not Cerna. he also mortgaged the car of the latter. CA Facts: Spouses Tadiaman purchased a 10-wheeler truck from Jordan Enterprise. mortgage to Filinvest Finance. Acme Shoe v. He is not liable to pay any deficiency. hence. Issue: Whether or not a chattel mortgage can secure after-incurred obligations. The spouses executed a promissory note in favor of Jordan Enterprise and a chattel mortgage over the motor vehicle was executed to secure the promissory note. a third party to the mortgage. CA Facts: Acme Shoe. Rubber & Plastic Corp. When the spouses Tadiaman defaulted in payment. Filinvest Finance seized the truck by person persons who represented themselves to be special sheriffs of the court. And acting as the attorney-in-fact of Cerna. CA Facts: Ruling: Delgado and Leviste entered into a loan agreement. It is only upon default of the principal debtor that the third party mortgagor becomes liable and he is liable only up to the extent of the property mortgaged. which prompted Producers Bank to extrajudicially foreclose the chattel mortgage. Issue: Cerna v.
likewise. Hence. can only cover obligations existing at the time the mortgage is constituted. even if the mortgagor is not the rightful owner of or does not have a valid title to the mortgaged property. irregular for the sheriff not to demand and receive the entire bid price in cash from the winning Issue: Whether or not the mortgagee has a right to rely in good faith on the certificate of title of the mortgagor to the property given as security and in the absence of any sign that might arouse suspicion. has no obligation to undertake further investigation. the security itself. and the residue shall be paid to the mortgagor or person holding 9 under him on demand. Ruling: Under the Chattel Mortgage Law. However. it may also be applied by analogy to personal property. of the costs and expenses of keeping and sale. a chattel mortgage. the officer who conducted the foreclosure must demand and actually receive the cash proceeds of the auction sale from the highest bidder and turn over the balance to the mortgagor.Chattel Mortgage accurately described. Ong successfully acquired a loan from Cebu Int l Finance which was secured by a chattel mortgage over the subject vessel. AngTay and Dy filed a civil case for rescission and replevin against Ong. Although this rule generally pertains to real property. required by law to register their vessels with the Philippine Coast Guard. has no obligation to undertake further investigation. the aforeqouted condition in the original deed of sale does not appear on Ong s copies. the mortgagee or transferee in good faith is 23 nonetheless entitled to protection. Ruling: The prevailing jurisprudence is that a mortgagee has a right to rely in good faith on . does not come into existence or arise until after a chattel mortgage agreement covering the newly contracted debt is executed either by concluding a fresh chattel mortgage or by amending the old contract conformably with the form prescribed by the Chattel Mortgage Law. however. CA Facts: Jacinto Dy executed a special power of attorney in favor of AngTay. in this case specifically. It was. therefore. Ong obtained possession of the vessel and he likewise obtained copies of the unnotarized deed of sale. authorizing the latter to sell the cargo vessel owned by Dy and christened LCT Asiatic . the remaining balance between the sum at which the vehicle was sold and the obligation sought to be satisfied and expenses of the sale. Villanueva Facts: Sheriff Abordaje seized the motor vehicle owned by mortgagee Neeland to be sold at a foreclosure sale. Thereafter. It was stipulated in the deed of sale that LCT Asiatic shall not be registered or transferred to Robert Ong until complete payment . however. the certificate of title of the mortgagor to the property given as security and in the absence of any sign that might arouse suspicion. Ong was able to notarize the deed of sale and subsequently acquired a Certificate of Ownership over the subject vessel. Neeland v. the sheriff conducting the auction sale must receive the winning bid in cash and apply such proceeds "to the payment. However." Thus. Abordaje proceeded to conduct the auction sale and the motor vehicle was sold at the public auction. particularly registered land. first. Although the promise expressed in a chattel mortgage to include debts that are yet to be contracted can be a binding commitment that can be compelled upon. Issue: Whether or not the sheriff is obliged to turn over the excess of the proceeds of the sale to the mortgagor. Cebu Int l Finance v. was not turned over to Neeland. Ong defaulted in payment. AngTay sold the subject vessel to Robert Ong. and then to the payment of the demand or obligation secured by such mortgage. since shipowners are.
the after-acquired properties.Chattel Mortgage bidder. To secure the loan. PBCom commenced extrajudicial foreclosure on the mortgages. entered into a loan agreement for the purchase a vessel. hence. In the case at bar. Issue: Whether or not the machineries mortgaged should be treated as chattels. the Chattel Mortgage law which provides that the chattel mortgage shall be deemed to cover only the property described therein and not the like or substituted property thereafter acquired by the mortgagor and placed in the same depository as the property originally mortgaged anything in the mortgage to the contrary notwithstanding. which would be recovered from the attached vessel. EVERTEX defaulted in its obligations. it would virtually pave the way for any creditor with a secondary lien or junior mortgage to block the claims of a preferred creditor or claimant by simply intervening to oppose such credits or claims. the lesser the amount mortgagee can obtain rom their extrajudicial foreclosure proceedings. The compliant-in-intervention therefore failed to state a cause of action. Whether or not a claimant or creditor should be allowed to intervene in a collection case filed by a co-claimant/co-creditor possessing a superior lien or preferred credit. Nordic Asia Ltd. wages and for manning and provisioning of the vessel. evince the conclusion that the parties intention is to treat the units of machinery as chattels. Sextant Maritime executed a First Preferred Mortgage over the subject vessel. CA Facts: Ever Textile Mills obtained a loan from PBCom. Sextant defaulted on the loan. or to prevent it from being diminished at all since the higher the claims awarded to the crew members in the collection case. Ruling: A mortgage of a vessel should not be allowed to intervene in a collection case filed by a coclaimant/co-creditor ( unpaid crew members) possessing a superior lien or preferred credit than the mortgagee solely for the purpose of opposing such claims so that the share in the mortgaged chattel may not be diminished substantially. The mortgagee was unable to allege what specific act or omission can be attributed to its co-claimant which violated its rights. If mortgagee s tactics were allowed. a fortiori. together with the vessel s 27 crew members. In effect. or to prevent it from being diminished at all. Ruling: When the facts. CA Facts: Nordic Asia. hence. the complaint-inintervention merely alleged that the mortgagee possesses a mortgage lien and it is so situated as to be adversely affected by the crew members collection case. or at the very least. As such. solely for the purpose of opposing such claims in order that the intervenor s share may not be diminished substantially. as lender and Sextant Maritime. the cause of action lies with the vessel and the mortgagor. the compliant-in-intervention is a device to defeat the order of preference of claims enumerated in PD 1512 (The Ship Mortgage Decree). also filed a complaint for a sum of money to claim their preferred maritime liens consisting of unpaid . Nam Ung Marine Co. Nordic Asia intervened in the collection suit filed the vessel s crew members with the only purpose of opposing the claim. which are of the same description as the units referred to earlier must also be referred to as chattels. Being just a mortgagee. Issue: Tsai v. to demand the excess amount and turn it over to the mortgagor. and not with a coclaimant. v. as borrower. On the same date. To secure the loan agreement. EVERTEX executed a real estate and chattel mortgage on its machineries in favor of PBCom. applies.. taken together. an extrajudicial foreclosure of the vessel was instituted by Nordic Asia.
acquisition. Poliand made demands to Galleon and DBP for the satisfaction of the obligation and claimed that it had a preferred maritime lien over the proceeds of the extrajudicial foreclosure sale. a first mortgage on the vessels were executed in favor of DBP. Philbro HK s principal corporation. The vessels were extrajudicially foreclosed by reason of Galleon s failure to fulfill its obligations with DBP. It can not be extended to guarantee the payment of the obligation of another entity which did not participate in the execution of the contract in its own right and was not an assignee thereof. the mortgagee. 1484 of the NCC. otherwise known as the Ship Mortgage Decree f 1978. Nat l Dev t Company Facts: Asian Hardwood extended credit accommodations to Galleon to cover the payment ship provisions and repair of the latter s vessels. Upon enforcement of the preferred mortgage and eventual foreclosure of the vessel. Meanwhile. If the mortgage of the vessel is constituted for the purpose of financing the construction. the mortgagee obtains a preferred status provided the formalities prescribed by law are complied with. This is to secure Sagramco s dollar advances with Philbro HK. it should be deemed automatically extinguished upon the satisfaction of the principal obligation. purchase or initial operation of vessels.Chattel Mortgage Philip Brothers Oceanic v. Ruling: Article 580 of the Code of Commerce providing for the order of payment of creditors in the event of sale of a vessel had been repealed by PD 1521. 17 of the said law are maritime liens arising prior in time to the recording of the preferred mortgage . the proceeds of the sale shall first be applied to the claim of the mortgage creditor unless there are superior or preferential claims under Section 17 of the same law. To finance the acquisition of the vessels. Asian Hardwood assigned its rights over Galleon s outstanding obligation to Poliand. Poliand Industrial v. . Galleon borrowed funds from Japanes lenders whereby DBP guaranteed the prompt and actual payment of Galleon. Philbro Oceanic sought for the judicial foreclosure of the chattel mortgage executed by Sagramco and Philbro HK. PCI leasing Facts: Spouses Rosario purchased a Pick-up vehicle from Car Merchants. To secure the payment of the loan. Issue: Whether or not Philbro Oceanic. a separate entity who did not participate in the execution of the chattel mortgage and was not an assignee thereof may foreclose the chattel mortgage of another entity. as stated in Sec. Aside from the dollar advance obtained from Philbro HK. is a vendor of the chattel mortgage. CA Facts: Sagramco executed a chattel mortgage in favor of Philbro HK over the former s personal properties. Spouses Rosario contends that the chattel mortgage they executed with PCI Leasing is a sale of personal property payable in installments which is governed by Art. Issue: Whether or not PCI Leasing. Ruling: The chattel mortgage is a mere accessory contract. The preferred liens in this case are. The spouses then applied for a loan with PCI Leasing to pay for the balance of the vehicle. Sagramco also received peso advances from Philbro Oceanic. a chattel mortgage was executed in favor of PCI Leasing over the subject vehicle. Spouses Rosario failed to pay its monthly amortizations which prompted PCI Leasing to file a complaint for sum of money together with a prayer for writ of replevin. Rosario v. To secure the guaranty. Issue: Whether or not Poliand has a preferred lien over the proceeds of the extrajudicial foreclosure sale of the subject vessels. Hence.
prompting Chieng to file a criminal case against Eulogio for violation of BP 22. Chieng filed an action for the foreclosure of the subject mortgage. a suit for replevin is not equivalent to an exercise of the remedy of foreclosure under Article 1418 of the New Civil Code. was already barred or precluded from availing himself of the other civil remedy of the foreclosure of the real estate mortgage. Thus. Spouses Santos Facts: Chieng extended a loan in favor of spouses Santos. and as security for such loan. Ruling: Following the rule on the alternative remedies of a mortgagee-creditor. he is deemed to have already availed himself of the remedy of collection suit.Chattel Mortgage Ruling: Article 1418 of the new Civil Code will not apply as against a mortgagee who is not the vendor of the chattel mortgaged. Chieng v. the latter executed in favor of the former a real estate mortgage over a piece of land. Hence. Issue: Whether or not Chieng. Eulogio Santos issued several checks for the payment of the loan but some of these checks were dishonored. . the filing of criminal case for violation of BP 22 by the mortgageecreditor against the mortgagor will bar or preclude the former from availing himself of the other civil remedy of the foreclosure of the real estate mortgage because pursuant to Section 1 (b) f Rule 111 of the 2000 Rules on Criminal Procedure. by filing a criminal case for violation of BP 22. Years later. a vendormortgagee is not barred from making a claim for specific performance against the buyermortgagor by the mere fact that former was already able to secure a writ of replevin.
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