AUTHORSHIP INFORMATION

Digest Author Grace Ann Tamboon

Topic Mortgage Validity
CASE INFORMATION
Petitioner(s) Manuel Lopez Y Villanueva
Respondent(s) Evaristo Alvarez Y Perez, J. H. Grindrod And Juan
Thomson Casells
Reference G.R. No. L-3438 October 12, 1907
Ponente Justice Torres
DOCTRINE(S)
A creditor who obtains a preliminary attachment for the safety and security of his credit cannot be
considered a third person for the effects of the Mortgage Law. This is because the right of
preference granted to a creditor by the Mortgage Law only applies in respect of property recorded.
Additionally, the transfer of the dominion or ownership of a credit secured by a mortgage is not
hindered by the fact that it was not registered in the property register, as long as the assignment
was done by means of a public instrument, the debtor was informed, and it was recorded in the
register.

CASE SUMMARY
Manuel Lopez y Villanueva filed an amended complaint for
P5,973 with interest against H. Grindrod and Juan
Thomson Casells in the Court of First Instance of Iloilo.
Lopez alleged that Evaristo Alvarez y Perez executed a
Pertinent Facts mortgage deed in favor of Alvarez for P13,300 and some
property. Alvarez then assigned, conveyed, and
transferred to Lopez part of his lien on the property,
totaling P5,973. Grindrod, however, claimed that the credit
was long before established as a partnership credit in
Iloilo, and that Alvarez owed him P15,722.16. Grindrod
also obtained a preliminary attachment on Alvarez's
property, including the mortgaged property, and sold it to
Casells.

Whether the assignment of the mortgage credit in favor of

Relevant Issue(s) Lopez is valid and whether Grindrod has any rights over
the mortgaged property.

Analysis The Supreme Court ruled that the assignment of the

Ruling(s) & Rationale
mortgage credit to Lopez is valid, even though it was not
registered in the property register. Grindrod has no rights
over the mortgaged property and cannot claim the rights of
a third person under the Mortgage Law, as he only has a
personal right without the characteristics of a mortgage.
The Supreme Court held that the assignment of the
mortgage credit in favor of Lopez is valid. The transfer of
the dominion or ownership of a credit secured by a
mortgage is not hindered by the fact that it was not
registered in the property register. Article 152 of the
Mortgage Law requires that the alienation or assignment in
favor of a third party of the whole or any part of a credit
secured by mortgage shall be done by means of a public
instrument, that the debtor be informed thereof, and that
the same be recorded in the register. However, Article
1526 of the Civil Code provides that the assignment of a
credit, right, or action shall produce no effect against a
third person but from the time the date is considered fixed,
in accordance with articles 1218 and 1227. Grindrod
acquired a credit against Alvarez, but it is merely a
personal right without the characteristics of a mortgage. He
cannot claim the rights of the third person referred to in
article 27 of the Mortgage Law in connection with the
contract of transfer or assignment of the credit.

The Court also held that Grindrod has no rights over the
mortgaged property. A creditor who obtained a preliminary
attachment for the safety and security of his credit cannot
be considered a third person for the effects of the
Mortgage Law. This is because Article 44 of the Mortgage
Law grants him the right of preference only in respect of
property recorded. Grindrod's claim, being merely a
personal right, cannot be preferred over the mortgage
credit assigned to Lopez.