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FAUSTO RAYMUNDO
G.R. No. L-5741
March 13, 1911
Art 2085: Requisites of Contract of Pledge and Mortgage
Doctrine: Pledger must be owner of the thing to be pledged
FACTS:
Between end-April or early May 1908, Estanislaua Arenas delivered
jewelry (gold ring, gold bracelet, gold earring, ladys comb and 2
rosaries, valued at Php 8,600) to her agent Elena de Vega, to be sold
on commission. De Vega delivered it to Concepcion Perello. Instead of
selling the jewelry, Perello pledged the same in the Tondo pawnshop
of respondent Fausto Raymundo, as security for a loan, without the
knowledge or consent of Arenas. Raymundo received the jewelry in
good faith.
Raymundo retained possession of the jewelry and refused to deliver
the same unless payment of loan amount was made. He argues the
pledge was made with the knowledge of Arenas son, Gabriel La O.
Perello was convicted of estafa in a separate case and was unable to
redeem the jewelry by paying the loan amount of Php 1,524.
On 1908 August 31, Arenas filed an action for replevin (recovery of
personal property) of the jewelry. The court ordered Raymundo to
restore the jewelry to Arenas. Raymundo filed an answer praying the
amount of the loan, or jewelry be returned.
ISSUE: WON Raymundo may collect value of loan out of value of
pledged jewelry
HELD: NO
1. There was no contract of pledge. Raymundo has no right over
the jewelry
Ratio: Art 2085 prescribes, as an essential requisite, that the thing
pledged or mortgaged must belong to the person who
pledges/mortgages the same.
Perello was not the owner of the jewelry pledged and legitimate owner
Arenas had no knowledge/consent of the pledging of the jewelry at
Raymundos pawnshop. Even if Raymundo acted in good faith, he was
not entitled to retain the same
Lacking an essential requisite, the pledge is void and cannot confer
upon Raymundo any right over the pledged jewelry. The jewelry cannot
serve as security for Perellos loan. Similarly, no obligation is imposed
on Arenas to reimburse Raymundo for the loan value since no
contractual obligation was created and was even deprived possession
of such jewelry via a criminal act.
Other discussion:
Nature of Pawnshop Business Court will not prefer pawnshop owner
over rightful owners
FACTS:
Spouses Bernal purchased from Union Motor one Cimarron jeepney.
The spouses issued a promissory note and a deed of chattel
mortgage in favor of Union Motor. Union Motor then assigned the
promissory note and deed of chattel mortgage to Jardine-Manila
Finance, Inc. Through Unions agent Sosmea, spouses Bernal and
Union agreed that the spouses would pay Jardine, the assignee.
Spouses Bernal paid the obligation in installments and discontinued
their payment on the account of the non-delivery of the vehicle.
According to the spouses, Sosmea allegedly took the jeepney in his
personal capacity.
Jardine-Manila filed a complaint for sum of money. RTC rendered
decision in favor of the spouses Bernal. CA affirmed RTC decision.
ISSUE:
Whether or not the Chattel Mortgage Contract signed by the Bernal
Spouses proves that the ownership of the subject motor vehicle has
already been transferred to them for the reason that under Art 2085 of
the New Civil Code, the mortgagor must be the owner of the property.
HELD:
Union Motor reliance on the Chattel Mortgage Contract executed by
the respondent spouses does not helps its assertion that ownership
has been transferred to the latter since there was neither delivery nor
transfer of possession of the subject motor vehicle to respondent
spouses. Consequently, the said accessory contract of chattel
mortgage has no legal effect whatsoever inasmuch as the respondent
spouses are not the absolute owners thereof, ownership of the
mortgagor being an essential requirement of a valid mortgage contract.
The respondent spouses never acquired possession of the subject
motor vehicle. The manifestations of ownership are control and
enjoyment over the thing owned. The respondent spouses never
became the actual owners of the subject motor vehicle inasmuch as
they never had dominion over the same.
DBP v. Prudential Bank
G.R. No. 143772
November 22, 2005
FACTS:
G. R. No. 131679
February 1, 2000
FACTS:
One Rodolfo Guansing obtained a loan in the amount of
P90,000.00 from Cavite Development Bank (CDB). As a security, he
mortgaged a parcel of land situated La Loma, Quezon City and
covered by TCT No. 300809 registered in his name. Guansing
defaulted on the payment of the loan, which led CDB to foreclose the
mortgage and later on emerged as the highest bidder and
subsequently, the owner of the lot after Guansing failed to redeem the
same.
The Spouses Lim, through a broker, offered to purchase the
property from CDB. The formal written offer stated a payment of
P30,000 (10% of P300,000) as option money, provided that the land
be cleared of illegal occupants. For payment of the option money, CDB
issued an official receipt. However, after following up on the sale, Lim
discovered that the original owner of the land is PERFECTO
GUANSING, the father of Rodolfo. In a civil case instituted by Perfecto
for the cancellation of Rodolfos title, the Supreme Court adjudged
Perfecto as the real owner after proving that Rodolfo fraudulently
obtained it. Thus, Rodolfos title was cancelled and a new one was
issued to Perfecto.
Aggrieved, the Spouses Lim instituted an action for specific
performance and damages questioning the ability of CDB, and its
mother company Far East Bank and Trust Company (FEBTC), to sell
the subject property.
The Regional Trial Court rendered a decision in favor of the
Spouses Lim, which was affirmed by the Court of Appeals.
ISSUES:
(1) What is the legal relation between the parties?
(2) Whether or not Rodolfo Guansing/CDB was the absolute owner of
the subject property as required under Art. 2085 to effect a valid
mortgage/sale?
(3) Whether or not CDB is a mortgagee in good faith?
HELD:
(1) The parties entered into a CONTRACT OF SALE.
The Spouses Lim paid the option money, which left only
the balance of the purchase price to be paid.
(3)
DE LEON V CALALO
FACTS:
This case was brought below by respondent Eduardo Calalo for the
annulment of the mortgage executed by his brother, Augorio Calalo, in
favor of petitioner Roberto de Leon covering a piece of land and the
improvements thereon, consisting of a residential house and a
commercial building located at 45/4th Street, East Tapinac, Olongapo
City. Respondent Eduardo alleged that he was the owner of the
property mortgaged, having bought it for P306,000.00 from the
spouses Federico and Marietta Malit on September 13, 1984. He
claimed that, as he was then a member of the merchant marines and
stayed abroad, the Deed of Absolute Sale covering the land was made
in favor of his brother, Augorio Calalo; that on April 8, 1985, Augorio
executed a Deed of Donation in favor of the minor Julsunthie Calalo,
herein respondents son, who, from the time the property was
purchased until the filing of the complaint, had been receiving the fruits
of the property; that on September 14, 1988, Augorio mortgaged the
said property to petitioner Roberto de Leon without his [respondents]
knowledge and consent; that the mortgage was amended on
September 30, 1988; that Augorio did not have any right to mortgage
the property because he was not the owner thereof; and that he
(respondent Eduardo) learned only in June 1992 that the property was
the subject of an extrajudicial foreclosure. Named defendants in the
action were petitioner Roberto de Leon, Augorio Calalo and Benjamin
Gonzales, the sheriff conducting the foreclosure proceeding.
In due time, petitioner De Leon filed an answer in which he claimed to
be a mortgagee in good faith, having previously ascertained the
ownership of Augorio who occupied and possessed the land in
question and in whose name the land was registered in the Register of
Deeds and in various other documents. He pointed out that even the
deed of sale attached to respondents complaint showed that the land
was in Augorios name, clearly proving that the latter owned the
property. Petitioner De Leon averred that the mortgage in his favor was
registered with the Register of Deeds and that it had been amended
four times.
ISSUE: W/N the mortgage executed by Augorio Calalo in favor of
petitioner De Leon is valid.
HELD:
There is no dispute that the land subject of the mortgage is titled in the
name of Augorio Calalo. Nor is there any question that petitioner De
Leon did not know of the claim of ownership of respondent Eduardo
Calalo until after the present action was instituted. As the trial court
found, petitioner De Leon examined the relevant documents pertaining
to the land, consisting of the transfer certificate of title, the tax
declarations in the City Assessors Office and information on the
records in the barangay, and found that the land was registered in the
name of Augorio Calalo. Upon due inspection of the property, he also
found it to be occupied by Augorio Calalo. Petitioner had no reason to
believe that the land did not belong to Augorio. Persons dealing with
property covered by a torrens certificate of title, as buyers or
mortgagees, are not required to go beyond what appears on the face of
the title. The public interest in upholding the indefeasibility of torrens
titles, as evidence of the lawful ownership of the land or of any
encumbrance thereon, protects buyers or mortgagees who, in good
faith, rely upon what appears on the face of the certificate of
title.4 Petitioner De Leon is a mortgagee in good faith.
Whether the money used in acquiring the property from the original
owners came from respondent Eduardo Calalo and the title to the
property was placed in the name of his brother Augurio Calalo only
because respondent thought he was not qualified to acquire lands in
the Philippines because he had become an American citizen, and that
the land was subsequently donated to respondent Eduardos son,
Julsunthie, are matters not known to petitioner. Hence, whether
Augorio Calalo committed a breach of trust and whether the property
was validly donated to petitioners son Julsunthie are questions which
must be resolved in a separate proceeding.
CEBU INTERNATIONAL v CA
Asiatic
FACTS:
Jacinto Dy executed a Special Power of Attorney in favor
of private respondent Ang Tay, authorizing the latter to sell the
cargo vessel owned by Dy and christened LCT "Asiatic."
Through a Deed of Absolute Sale, Ang Tay sold the subject vessel
to Robert Ong (Ong). Ong paid the purchase price by issuing
three (3) checks However, since the payment was not made in
cash, it was specifically stipulated in the deed of sale that the
"LCT Asiatic shall not be registered or transferred to Robert Ong
until complete payment." Thereafter, Ong obtained possession of
the subject vessel so he could begin deriving economic benefits
therefrom. He, likewise, obtained copies of the unnotarized deed
of sale allegedly to be shown to the banks to enable him to
acquire a loan to replenish his (Ong's) capital. The aforequoted
condition, however, which was handwritten on the original deed of
sale does not appear on Ong's copies.
TC: In favor of Ang Tay and Jacinto Dy. The sale of the subject vessel
was rescinded, the registration of the vessel withthe Office of the Coast
Guard and other government agencies in Ong's name nullified and the
vessel's registration inDy's name revived. Ong was, likewise, ordered to
pay Jacinto Dy and Ang Tay actual damages for lost income,moral
damages, attorney's fees and litigation expenses.
CA: Affirmed in toto TCs decision.
ISSUE: Whether or not Cebu International Finance Corporation is a
mortgagee in good faith whose lien over the mortgaged vessel should
be respected.
HELD:
The chattel mortgage constituted on a vessel by the buyer who
was able to register the vessel in his name despite the agreement
with the seller that the vessel would not be so registered until after
full payment of the price which do not appear in the buyers copy
of the deed of sale is VALID, for the mortgagee has the right to
rely in good faith on the certificate of registration.-The prevailing
jurisprudence is that a 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.
Erea v. Querrer-Kauffman
GR No. 165853
June 22, 2006
Facts:
Dana Querrer-Kauffman is the owner of a residential lot with a house in
BF Resort Village in Las Pias City. The property is covered by TCT
No. T-48521. The owner's duplicate copy and the tax declarations
covering the property were kept in a safety deposit box in the house.
Sometime in 1997, Kauffman entrusted her minor daughter, Vida Rose,
and the key to the house to her live in partner, Eduardo Victor, as she
will go to the United States. After a while, both Vida Rose and Victor
also left for the US. Victor then entrusted the key to his sister, Mira
Bernal.
Kauffman then asked her sister Evelyn Pares to get the house from
Bernal so that she can sell it. She sent the key to the safety deposit
box. Pares wasn't able to receive it and thus they hired a professional
locksmith to open it. Upon opening, Pares discovered that the owner's
duplicate title, tax declarations and pieces of jewelry were missing.
Learning this incident, Kauffman immediately returned to the
Philippines. She and Pares went to the Register of Deeds of Las Pias
and they found out that the lot has been mortgaged to a certian
Rosana Erea. It appeared that Kauffman signed a real estate
mortgage as owner-mortgagor and Jennifer Ramirez as atty-in-fact.
Kauffman and Pares were able to locate Bernal. Bernal confirmed that
Ramirez, daughter of Victor, had taken the contents of the safety
deposit box. Using the key entrusted to them by Victor, they were able
to open the house and they forced open the deposit box and stole the
said items. Having in their possession the title, they forged the
signature of Kauffman through an impostor and made a Real Estate
Mortgage in favor of Erea. When Kauffman told Bernal that she would
file suit, Bernal cried and asked for forgiveness. She admitted that
Ramirez had been in a tight financial fix and pleaded for time to return
the title and the jewelry.
Kauffman however still filed a complaint against Erea, Bernal and
Ramirez for the nullification of Real Estate Mortgage and Damages.
Erea countered that she was a mortgagee in good faith.
Issue: Whether or not the Real Estate Mortgage is valid
Held: No. According to Article 2085 (2), a pledgor or mortgagor has to
be absolute owner of the thing pledged or mortgaged for a contract of
pledge and mortgage to be valid. Both the trial court and the appellate
courts found that Kauffman is the true owner of the property and that
the signatures on the Special Power of Attorney and Real Estate
Mortgage are not her genuine signatures. The evidence on record
shows that Ramirez and her husband used an impostor who claimed
she was the owner of the property. This impostor was the one who
signed the Real Estate Mortgage and showed to Erea the owner's
duplicate copy of the title.
When the instrument presented for registration is forged, even if
accompanied by the owner's duplicate title, the registered owner does
not lose his title and neither does the mortgagee acquire any right to
the property. In such case, the mortgagee based on a forged
instrument is not even a purchaser or a mortgagee for value protected
by law. Erea is not a mortgagee in good faith. The doctrine of
mortgagee in good faith does not apply to a situation where the title is
still in the name of the rightful owner and the mortgagor is a different
person pretending to be the owner. In such case, the mortgagee is not
an innocent mortgagee for value and the registered owner will
generally not lose his title.
PNB v AGUDELO
FACTS:
For the years 1921 and 1922, Mauro maintained a personal credit account with
PNB
Eventually, Mauros commercial credit was closed starting May 22, 1922
Art. 1709 of the Civil Code states that by the contract of agency,
one person binds himself to render some service, or to do
something for the account or at the request of another
On the other hand, Art. 1717 states that when an agent acts in his
own name, the principal shall have no right of action against the
persons with whom the agent has contracted, or such persons
against the principal. In such case, the agent is directly liable to
the person with whom he has contracted, as if the transaction
were his own. Cases involving things belonging to the principal
are excepted xxx
and, therefore, were not binding upon the latter. There was no
showing that the loan obtained was for hisprincipal
What really happened was Mauro obtained such credit for himself
in his personal capacity and secured the paymentthereof by
mortgage constituted by him in his personal capacity, although on
properties belonging to his principal
Thus, Mauro exceeded his scope of his authority and the principal
is not liable for his acts
In conclusion, when an agent negotiates a loan in his personal
capacity and executes a promissory note under his ownsignature,
without express authority from his principal, giving as security
therefor real estate belonging to the letter, alsoin his own name
and not in the name and representation of the said principal, the
obligation do constructed by him ispersonal and does not bind his
aforesaid principal.
Vda. DE JAYME v CA
FACTS:
Spouses Jayme (P) are the registered owners of a parcel of
land. They entered into a contract of lease with Asian Cars
(R) covering half of the lot for 20 years
The contract allows R to mortgage the property as long as
the proceeds will be for the construction of a building on the
land.
R mortgaged the property for P6M to MetroBank, covering
the whole lot, and in which P signed the documents. R also
executed an undertaking wherein the officers of R are liable
personally to the mortgage
R defaulted and MetroBank foreclosed the property.
P filed for annulment of mortgage as it was acquired through
fraud
RTC and CA declared the mortgage and undertaking valid
ISSUE: WON Mortgage allowing R to mortgage the property was valid
SC: YES
It has long been settled that it is valid so long as valid
consent was given. In consenting thereto even granting that
petitioner may not be assuming personal liability for the debt,
her property shall nevertheless secure and respond for the
performance of the principal obligation
The law recognizes instances when persons not directly
parties to a loan agreement may give as security their own
properties for the principal transaction.
In this case, the spouses should not be allowed to disclaim
the validity of a transaction they voluntarily and knowingly
entered into for the simple reason that such transaction
turned out prejudicial to them later on.
Records show that P voluntarily agreed to use their property
as collateral for Rs loan, hence, no fraud
The undertaking made by R and its officers are valid, hence
they are liable to reimburse P for the damages they suffered
by reason of the mortgage
Belo vs Philippine National Bank
G.R. No. 134330
March 1, 2001
Art. 2085: Third persons who are not parties to the principal obligation
may secure the latter by pledging or mortgaging their own property.
FACTS:
ISSUES:
1) Whether or not the SPA, the real estate mortgage
contract, the foreclosure proceedings and the
subsequent auction sale involving Eduarda Belos
property are valid.
2) Whether or not the Sps Belo should pay all the claims of
PNB (P2,779,978.72) instead of only the amount of the bid
price plus interests (P484,482.96) on Eduarda Belos
property.
HELD:
1) YES.
(discussion of the validity of the real estate mortgage only as relevant
to the topic)
It is stipulated in paragraph three (3) of the SPA that Eduarda
Belo consented to have her land mortgaged for the benefit of the
respondents spouses Eslabon. The SPA was not meant to make her a
co-obligor to the principal contract of loan between respondent PNB, as
lender, and the spouses Eslabon, as borrowers. The accommodation
real estate mortgage over her property, which was executed in favor of
PNB by the spouses Eslabon, in their capacity as her attorneys-in-fact
by virtue of her SPA, is merely an accessory contract.
The SPA form of the PNB was utilized to authorize the spouses
Eslabon to mortgage Eduarda Belos land as additional collateral of the
Eslabon spouses loan from respondent PNB. Besides, Eduarda Belo
benefited, in signing the SPA, in the sense that she was able to collect
the rentals on her leased property from the Eslabons.
An accommodation mortgage is not necessarily void simply
because the accommodation mortgagor did not benefit from the
same. The validity of an accommodation mortgage is allowed
under Article 2085 of the New Civil Code which provides that third
persons who are not parties to the principal obligation may
secure the latter by pledging or mortgaging their own property. An
accommodation mortgagor, ordinarily, is not himself a recipient of
the loan, otherwise that would be contrary to his designation as
such. It is not always necessary that the accommodation mortgagor be
appraised beforehand of the entire amount of the loan nor should it first
be determined before the execution of the SPA.
Fourth, the courts a quo correctly held that the letter of Eduarda
Belo addressed to respondent PNB manifesting her intent to redeem
the property is a waiver of her right to question the validity of the SPA
and the mortgage contract as well as the foreclosure and the sale of
her subject property.
2)
NO.
After the time for the payment of said sum has expired and
no payment has been made and the defendants refuse to
deliver to plaintiff the said property.
RULING
1.
FACTS:
Counsel for D.J. Mahoney, receiver of the insolvency of P.
Blanc, prayed the Court of First Instance of Manila to cite Mariano
Tuason to appear and explain before the court the reason why he had
in his custody the jewels mentioned in the said petition, and after the
hearing, to order him, if proper, to deliver the said jewels to the
receiver, in order that they form part of the estate of the insolvent P.
Blanc.
Mariano Tuason guaranteed in favor of the insolvent P. Blanc,
the credit which the Chartered Bank of India, Australia and China had
granted to said P. Blanc. In order to guarantee the said security, P.
Blanc gave as pledge the jewels to Mariano Tuason. P. Blanc did not
pay the debt due to the bank, wherefore Tuason had to pay and did in
fact pay to the said bank the entire debt owed by P. Blanc.
In the private document containing the contract of pledge
appears the express agreement that if Blanc should fail to comply with
the obligations stipulated, among other things, that of paying one
thousand pesos (P1,000) monthly in advance beginning from June,
1913, till his debt shall have been paid together with the stipulated
interests and the interests paid to the bank, the creditor would be
entitled to retain the jewels and other thing given in pledge to the said
creditor in an amount which results after deducting the fifty per cent
(50%).
ISSUE:
2.
The fact that the parties have agreed at the same time, in such a
manner that the fulfillment of the promise of sale would depend upon
the nonpayment or return of the amount loaned, has not produced any
Lanuza v De Leon
FACTS
DAYRIT v CA
HELD:
YES. Tuason has no right to appropriate to himself the
merchandise pledged, nor can he make payment by himself and to
himself with half or the total value of the same (Art. 1859, Civil Code),
inasmuch as he is only permitted to recover his credit, which Blanc
owes, from the proceeds of the sale of the jewels and merchandise
delivered to him in pledge, and said sale at public auction should be
effected, according to Article 1872, before a notary, and according to
Section 14 of Act No. 1508, in a public place in the municipality after
previous notices and notifications to the debtor through the sheriff of
the province.
If the last part of the contract concerning the fact that the
creditor Tuason is entitled to retain and appropriate to himself the
merchandise received in pledge is null and indefensible, because he
can only recover his credit, according to law, from the proceeds of the
sale of the same, there is no sound reason nor any legal provision
which determines the nullity of the principal contract by virtue of which
Tuason paid Blancs debt to the bank, and according to the stipulation,
Tuason took possession of the jewels and merchandise pledged as
security for the big sum of money which he had paid and which the
debtor Blanc had not refunded.
If the creditor Tuason could not appropriate to himself the
jewels and merchandise which he had in his custody, by way of pledge
an act expressly prohibited by law it does not follow that the
contract of pledge or mortgage of the jewels and the other
merchandise which was duly executed between the said Tuason and
Blanc was also null, because if the latter could not pay his debt by
refunding to Tuason the amount paid to the Chartered Bank, there is no
just nor legal reason which prevents the creditor from recovering his
credit and other amounts which Blanc was obliged to pay from the
proceeds of the sale of the jewels and merchandise pledged.
The contract of pledge or chattel mortgage entered into
between P. Blanc and Mariano Tuason on June 20, 1913, and stated in
the documents on pp. 14 to 21 of the bill of exceptions, is valid and
subsisting; that the creditor, Mariano Tuason, has the right to recover
his credit of eighteen thousand eight hundred seventy pesos (P18,870)
from the proceeds of the public sale of the merchandise pledged,
which sale should be effected by the sheriff of the city of Manila in the
manner and with the formalities established by Section 14 of Act No.
1508; and that the stipulation contained in the last part of the document
(page 21 of the bill of exceptions) whereby the debtor authorized the
creditor Tuason to retain the jewels in his possession is null and void.
However, the creditor Tuason is obliged to deliver to the receiver, D.J.
Mahoney, the balance of the proceeds of the sale of the jewels and
merchandise pledged, after deducting his credit, the interests thereon
and the other amounts to which he is entitled to recover, according to
the stipulation contained in the said contract.
TC denied Motion
This also means that the debtor cannot ask for the release of
any portion of the mortgaged property or of one or some of
the several lots mortgaged unless and until the loan thus
secured has been fully paid, notwithstanding the fact that
there has been partial fulfillment of the obligation. Hence, it is
provided that the debtor who has paid a part of the debt
cannot ask for the proportionate extinguishment of the
mortgage as long as the debt is not completely satisfied. In
essence, indivisibility means that the mortgage obligation
cannot be divided among the different lots, that is, each and
every parcel under mortgage answers for the totality of the
debt
banks.
Dylanco and SLGT each entered into a contract to sell with
ASB for the purchase of a unit (Unit 1106 for Dylanco and
Unit 1211 for SLGT) at BSA Towers then being developed by
the latter.
the
2.)
indebtedness
that the debtor who has paid a part of the debt cannot
satisfied.
o
The situation obtaining in the case at bench is
faith.
HLURB ruled in favor of SLGT stating that the mortgage
unless and until the loan thus secured has been fully
Issue:
1.) WON the declaration of nullity of the entire mortgage
The
real
estate
mortgage
voluntarily
mortgage
corresponding
Held:
1.)
of
used
for
the
or
nothing
all
an
loan
is
mortgage
mortgage
the
the
Central Bank v. CA
FACTS:
1. Suplico M. Tolentino loaned 80,000 pesos from Island Savings Bank,
secured by a real estate mortgage over Tolentino's 100-hectare land in
The fact that when Sulpicio M. Tolentino executed his real estate
mortgage, no consideration was then in existence, as there was no
debt yet because Island Savings Bank had not made any release on
the loan, does not make the real estate mortgage void for lack of
consideration.
It is not necessary that any consideration should pass at the time of the
execution of the contract of real mortgage. lt may either be a prior or
subsequent matter. But when the consideration is subsequent to the
mortgage, the mortgage can take effect only when the debt secured by
it is created as a binding contract to pay. And, when there is partial
failure of consideration, the mortgage becomes unenforceable to the
extent of such failure. Where the indebtedness actually owing to the
holder of the mortgage is less than the sum named in the mortgage,
the mortgage cannot be enforced for more than the actual sum due.
Since Island Savings Bank failed to furnish the P63,000.00 balance of
the P80,000.00 loan, the real estate mortgage of Sulpicio M. Tolentino
became unenforceable to such extent. P63,000.00 is 78.75% of
P80,000.00, hence the real estate mortgage covering 100 hectares is
unenforceable to the extent of 78.75 hectares. The mortgage covering
the remainder of 21.25 hectares subsists as a security for the
P17,000.00 debt. 21.25 hectares is more than sufficient to secure a
P17,000.00 debt.
The rule of indivisibility of a real estate mortgage provided for by
Article 2089 of the Civil Code is inapplicable to the facts of this
case. The rule of indivisibility of the mortgage presupposes
several heirs of the debtor or creditor which does not obtain in
this case. Hence, the rule of indivisibility of a mortgage cannot
apply