PHILIPPINE NATIONAL BANK v. RBL ENTERPRISES, INC.; RAMON B.

LACSON SR.; and Spouses EDWARDO

and HERMINIA LEDESMA

FACTS: Respondents Ramon Lacson and Sps. Edwardo and Herminia Ledesma
opened a prawn hatchery in San Enrique, Negros Occidental, and for this purpose,
leased from Nelly Bedrejo a parcel of land where the operations were conducted.
Lacson and Sps. Ledesma applied for and was approved a loan of 2 million pesos by
Petitioner PNB. A real estate mortgage over two parcels of land, located at Bago City,
Negros Occidental, and another real estate and chattel mortgage over the buildings,
culture tanks and other hatchery facilities located in the leased property of Nelly
Bedrejo were executed in favour of PNB.

PNB partially released the sum of 1 million. However, during the mid-part of the
construction of the improvements, PNB refused to release the balance of 1 million
because the respondents failed to comply with the bank’s requirement that Nelly
bedrejo should execute an undertaking or a lessor’s conformity. For said alleged failure
to comply with the additional requirement and the demand of PNB to pay the released
amount of 1 million. PNB foreclosed the mortgaged properties. The RTC ruled that
PNB’s partial release of the loan had estopped it from requiring the respondents to
secure the lessor’s signature. The CA affirmed the RTC’s findings adding that Bedrejo,
being a non-party to the Mortgage Contract could not be compelled to affix her
signature.

ISSUE: Whether PNB’s non-release of the loan was justified?

RULING: No. the records show that all the real estate and chattel mortgages were
registered with the Register of Deeds of Bago City, Negros Occidental and annotated
at the back of the mortgaged titles. Thus, PNB had ample security to protect its
interests. Even if the mortgaged property is in the possession of the debtor, the creditor
is still protected. To protect the latter from the former’s possible disposal of the
property, the chattel mortgage is made effective against third persons by the process of
registration.

If the parties truly intended to suspend the release of the balance until the lessor’s
conformity to the Mortgage Contract would have been obtained, such condition should
have been plainly stipulated either in that Contract or in the Credit Agreement. For
these reasons, PNB’s constituted a breach of its reciprocal obligation under the Loan
Agreement.