Title of the case:

SPOUSES FRANCISCO D. YAP and WHELMA S. YAP, Petitioners,

vs.
SPOUSES ZOSIMO DY, SR. and NATIVIDAD CHIU DY, SPOUSES MARCELINO
MAXINO and REMEDIOS L. MAXINO, PROVINCIAL SHERIFF OF NEGROS
ORIENTAL and DUMAGUETE RURAL BANK, INC.,Respondents., G.R. No. 171868,
July 27, 2011
PONENTE: VILLARAMA, JR., J.
Facts:
The spouses Tomas Tirambulo and SalvacionEstorco (Tirambulos) are the registered
owners of several parcels of land located in Ayungon, Negros Oriental, registered under Transfer
Certificate of Title (TCT) Nos. T-14794, T-14777, T-14780, T-14781, T-14783 and T-20301 of
the Registry of Deeds of Negros Oriental, and more particularly designated as lot 1, 3, 4, 5, 6, 8
they likewise own a parcel of land denominated as Lot 846, covered by Tax Declaration No.
08109.
On December 3, 1976, the Tirambulos executed a Real Estate Mortgage3 over Lots 1, 4,
5, 6 and 8 in favor of the Rural Bank of Dumaguete, Inc., predecessor of Dumaguete Rural Bank,
Inc. (DRBI), to secure a P105,000 loan extended by the latter to them. Later, the Tirambulos
obtained a second loan for P28,000 and also executed a Real Estate Mortgage4 over Lots 3 and
846 in favor of the same bank on August 3, 1978.
Subsequently, on October 27, 1979, the Tirambulos sold all seven mortgaged lots to the
spouses ZosimoDy, Sr. and Natividad Chiu (the Dys) and the spouses Marcelino C. Maxino and
Remedios Lasola (the Maxinos) without the consent and knowledge of DRBI. This sale, which
was embodied in a Deed of Absolute Sale,5 was followed by a default on the part of the
Tirambulos to pay their loans to DRBI. Thus, DRBI extrajudicially foreclosed the December 3,
1976 mortgage and had Lots 1, 4, 5, 6 and 8 sold at public auction on March 31, 1982.
At the auction sale, DRBI was proclaimed the highest bidder and bought said lots for
P216,040.93. The Sheriffs Certificate of Sale6 stated that the "sale is subject to the rights of
redemption of the mortgagor (s) or any other persons authorized by law so to do, within a period
of one (1) year from registration hereof."7 The certificate of sale, however, was not registered
until almost a year later, or on June 24, 1983.
On July 6, 1983, or twelve (12) days after the sale was registered, DRBI sold Lots 1, 3
and 6 to the spouses Francisco D. Yap and Whelma D. Yap (the Yaps) under a Deed of Sale with
Agreement to Mortgage.8 It is important to note, however, that Lot 3 was not among the five
properties foreclosed and bought by DRBI at public auction.

Issue:
May persons to whom several mortgaged lands were transferred without the
knowledgeand consent of the creditor redeem only several parcels if all the lands were sold
together for asingle price at the foreclosure sale?
Held:
We cannot subscribe to the Yaps' argument on the indivisibility of the mortgage. As held
in the case of Philippine National Bank v. De los Reyes the doctrine of indivisibility of mortgage
does not apply once the mortgage is extinguished by a complete foreclosure thereof asin the
instant case. The Court held:
The parties were accordingly embroiled in a hermeneutic disparity on their aforesaid
contendingpositions. Yet, the rule on the indivisibility of mortgage finds no application to the
case at bar.The particular provision of the Civil Code referred to provides:
Art. 2089. A pledge or mortgage is indivisible, even though the debt may be divided
among thesuccessors in interest of the debtor or of the creditor.Therefore, the debtor's heir who
has paid a part of the debt cannot ask for the proportionateextinguishment of the pledge or
mortgage as long as the debt is not completely satisfied.
Neither can the creditors heir who received his share of the debt return the pledge or
cancel the mortgage, to the prejudice of the other heirs who have not been paid.
From these provisions is accepted the case in which, there being several things given in mortgage
or pledge, each one of these guarantees only a determinate portion of the credit.
The debtor, in this case, shall have a right to the extinguishment of the pledge or mortgage as the
portion of the debt for which each thing is especially answerable is satisfied.

Title of the case:

AMERICAN HOME INSURANCE CO. OF NEW YORK,Petitioner
vs
F.F. CRUZ & CO., INC.,Respondent, G.R. No. 174926, August 10, 2011
Ponente: PERALTA, J.
Facts:
In June 1990, the Philippine Ports Authority (PPA) conducted a bidding of a project for
the dredging of the entrance channel and harbor basin of the Cebu International Port in Cebu
City. The PPA awarded the contract to the winning bidder, F.F. Cruz & Co., Inc. (FF
Cruz). Pursuant to their earlier agreement, FF Cruz and Genaro Reyes Construction, Inc.
(hereafter referred to as G. Reyes) executed a Sub-Contract Agreementwhereby the latter agreed
to undertake the performance of 50% of the dredging projects estimated volume of 600,000
cubic meters.
FF Cruz gave G. Reyes an advance payment of P2.2 million guaranteed by a surety bond
for the same amount issued by American Home. The surety bond was issued to guarantee
payment of the advance payment made by FF Cruz to G. Reyes for the dredging project in the
event that the latter fail to comply with the terms and conditions of the sub-contract.
As a security for the issuance of the bond, Genaro Reyes, as president of G. Reyes, and
his wife Lydia Reyes, executed an Indemnity Agreement where they agreed to jointly and
severally indemnify American Home and keep the latter harmless against all damages, losses,
costs, stamps, taxes, penalties, charges and expenses of whatever kind and nature which it may
sustain or incur as a consequence of having become a surety, or any extension, renewal,
substitution or alteration made thereof.
On October 21, 1991, G. Reyes complained to the PPA about the great deal of silt and
waste materials that had accumulated in the area which adversely affected its work
accomplishment. In December 1991, G. Reyes informed FF Cruz that the equipment used for the
project had been encountering difficulties because of siltation problems. G. Reyes finally
admitted that continuing the project was no longer a wise investment and called on FF Cruz to
take over the project. FF Cruz thus took over the unfinished project.
Consequently, FF Cruz demanded from American Home the payment of P2.2 million
representing the amount of the bond. American Home, in turn, informed G. Reyes of FF Cruzs
demand. As the claim left unheeded, FF Cruz made a final demand on American Home on July
10, 1993. G. Reyes likewise ignored American Homes demand to fulfill its obligation set forth in
the Indemnity Agreement it executed in favor of the latter.

Issue:
whether or not American Home is liable to FF Cruz for P2.2 million representing the face
value of the surety bond it issued to G. Reyes
Held:
Settled is the rule that points of law, theories, issues, and arguments not adequately
brought to the attention of the trial court need not be, and ordinarily will not be, considered by a
reviewing court. They cannot be raised for the first time on appeal. To allow this would be
offensive to the basic rules of fair play, justice and due process.In order, however, to remove
doubt on its liability to FF Cruz, we will discuss the merits of American Homes arguments.
It is undisputed that FF Cruz gave G. Reyes P2.2 million as advance payment. As a
security thereof, G. Reyes posted a surety bond issued by American Home in favor of FF Cruz,
the pertinent portion of which reads:
To guarantee payment for the 15% advance payment made by the obligee
[FF Cruz] to the herein principal [G. Reyes] for the Dredging of Entrance Channel
and Harbor Basin of Cebu International Port Project in the event of the principals
failure to comply with the terms and conditions of the Sub-Contract Agreement
dated June 11, 1990, copy of which is hereto attached and made an integral part
hereof; it being expressly understood that the liability of the surety under this
bond shall in no case exceed the amount of PESOS TWO MILLION TWO
HUNDRED THOUSAND ONLY (P2,200,000.00), Phil. Cy.

It is clear from the foregoing that indeed, the surety bond was issued to guarantee the
payment of the 15% advance payment of P2.2 million made by FF Cruz to G. Reyes. The bond
was not issued to guarantee the completion of the project. However, the above provision shows
that in order for American Homes liability to attach, two conditions must be fulfilled: first, that
the advance payment made by FF Cruz to G. Reyes remains unpaid; and second, G. Reyes fails
to comply with any of the terms and conditions set forth in the sub-contract.
There may be a dispute as to the amount of liability as will be discussed later, but it has
been adequately established that FF Cruz was not yet reimbursed of the advance payment it
made. The fulfillment of the first condition is, therefore, settled.

Title of the case:

UNION BANK OF THE PHILIPPINES,
vs.
ALAIN* JUNIAT, WINWOOD APPAREL, INC., WINGYAN APPAREL, INC.,
NONWOVEN FABRIC PHILIPPINES, Respondents.
G.R. No. 171569, August 1, 2011
Ponente: DEL CASTILLO, J.
Facts:
Petitioner Union Bank of the Philippines (Union Bank) is a universal banking corporation organized and
existing under Philippine laws. Respondents Winwood Apparel, Inc. (Winwood) and Wingyan Apparel, Inc.
(Wingyan) are domestic corporations engaged in the business of apparel manufacturing. Both respondent
corporations are owned and operated by respondent Alain Juniat (Juniat), a French national based in Hongkong.
Respondent Nonwoven Fabric Philippines, Inc. (Nonwoven) is a Philippine corporation engaged in the
manufacture and sale of various types of nonwoven fabrics. On September 3, 1992, petitioner filed with the
Regional Trial Court (RTC) of Makati, Branch 57, a Complaint with prayer for the issuance of ex-parte writs of
preliminary attachment and replevin against Juniat, Winwood,Wingyan, and the person in possession of the
mortgaged motorized sewing machines and equipment. Petitioner alleged that Juniat, acting for and in behalf of
Winwood and Wingyan, executed a promissory note dated April 11,1992 and a Chattel Mortgage dated March
27, 1992 over several motorized sewing machines and other allied equipment to secure their obligation arising
from export bills transactions to petitioner in the amount of P1,131,134.35; that as additional security for the
obligation, Juniat executed a Continuing Surety Agreement dated April 11, 1992 in favor of petitioner; That
the loan remains unpaid; and that the mortgaged motorized sewing machines are insufficient to answer for the
obligation.
On September 10, 1992, the RTC issued writs of preliminary attachment and replevin in favor
of petitioner. The writs were served by the Sheriff upon Nonwoven as it was in possession of the motorized
sewing machines and equipment. Although Nonwoven was not impleaded in the complaint filed by petitioner, the
RTC likewise served summons upon Nonwoven since it was in possession of the motorized sewing machines and
equipment.
On September 28, 1992, Nonwoven filed an Answer, contending that the unnotarized Chattel Mortgage
executed in favor of petitioner has no binding effect on Nonwoven and that it has a better title over the motorized
sewing machines and equipment because these were assigned to it by Juniat pursuant to their Agreement
dated May 9, 1992. Juniat, Winwood, and Wingyan, on the other hand, were declared in default for failure to file
an answer within the reglementary period.

On November 23, 1992, petitioner filed a Motion to Sell Chattels Seized by Replevin, praying that the
motorized sewing machines and equipment be sold to avoid depreciation and deterioration. However, on May
18,1993, before the RTC could act on the motion, petitioner sold the attached properties for the amount
of P1,350,000.00. Nonwowen moved to cite the officers of petitioner in contempt for selling the attached
properties, but the RTC denied the same on the ground that Union Bank acted in good faith.
Issue:
Whether or not the Court of Appeals seriously erred in holding that(Nonwoven) has a
valid claim over the subject sewing machines.
Held:
Indeed, the un-notarized Chattel Mortgage executed by Juniat, for and in behalf of Wingyan and
Winwood, in favour of petitioner does not bind Nonwoven. However, it must be pointed out that petitioners
primary cause of action isfor a sum of money with prayer for the issuance of ex-parte writs of attachment and
replevin against Juniat, Winwood, Wingyan, and the person in possession of the motorized sewing machines and
equipment.
Thus, the fact that the Chattel Mortgage executed in favor of petitioner was notnotarized does not affect
petitioners cause of action. Petitioner only needed to show that the loan of Juniat, Wingyan and Winwood
remains unpaid and that it is entitled to the issuance of the writs prayed for. Considering that writs of attachment
and replevin were issued by the RTC,
Nonwoven had to prove that it has a better right of possession or ownership over the attached properties.
This it failed to do. A perusal of the Agreement dated May 9, 1992 clearly shows that the sewing
machines, snap machines and boilers were pledged to Nonwoven by Juniat to guarantee his obligation. However,
under Article 2096 of the Civil Code, [a] pledge shall not take effect against third persons if a description of the
thing pledged and the date of the pledge do not appear in a public instrument. Hence, just like the chattel
mortgage executed in favor of petitioner, the pledge executed by Juniat in favor of Nonwoven cannot bind
petitioner.

Title of the case:

RAMONA RAMOS and THE ESTATE OF LUIS T. RAMOS, Petitioners,
Vs.
PHILIPPINE NATIONAL BANK, OPAL PORTFOLIO INVESTMENTS (SPV-AMC),
INC. and GOLDEN DRAGON STAR EQUITIES, INC., Respondents.
G.R. No. 178218, December 14, 2011
Ponente: LEONARDO DE CASTRO, J.
Facts:
In 1973, Luis Ramos obtained a credit line under an agricultural loan account from the
Philippine National Bank (PNB), Balayan Branch, for P83,000.00. To secure the loan, the parties
executed a Real Estate Mortgage[5] on October 23, 1973. The properties included in the mortgage
were the parcels of land covered under Transfer Certificate of Title (TCT) Nos. 17217, (T-262)
RT-644, 259, (T-265) RT-646, (T-261) RT-643[7] of the Registry of Deeds of Batangas. From the
year 1973, Luis Ramos would renew the loan every year after paying the amounts falling due
therein.
On March 31, 1989, Luis Ramos and PNB entered into a Credit Line Agreement in the
amount of P50,000,000.00 under the banks sugar quedan financing program. Pursuant to the
above agreement, Luis Ramos obtained an availment of P7,800,000.00, which was evidenced by a
promissory note dated April 3, 1989. Accordingly, Luis Ramos executed a Contract of Pledge in
favor of PNB on April 6, 1989. Pledged as security for the availment were two official warehouse
receipts (quedans) for refined sugar issued by Noahs Ark Sugar Refinery (Noahs Ark), which bore
the serial numbers NASR RS-18080 and NASR RS-18081. The said quedans were duly indorsed
to PNB.
On June 6, 1989, Luis Ramos procured another availment of P7,800,000.00 that was
likewise contained in a promissory note[14] and for which he executed another Contract of
Pledge[15] on the aforementioned quedans on even date.
Thereafter, Luis Ramos was granted a renewal on the promissory notes dated April 3,
1989 and June 6, 1989. Hence, he executed in favor of PNB the promissory notes dated October
3, 1989 and October 9, 1989.
Luis Ramos eventually failed to settle his sugar quedan financing loans amounting
to P15,600,000.00. On December 28, 1989, he issued an Authorization in favor of PNB.

incidentally, the above-mentioned sugar quedans became the subject of three other cases between
PNB and Noahs Ark, which cases have since reached this Court
Issue:
Whether or not the petitioner assertion of blanket mortgage clause or a dragnet clause
valid?
Held:
As a general rule, a mortgage liability is usually limited to the amount mentioned in the
contract. However, the amounts named as consideration in a contract of mortgage do not limit
the amount for which the mortgage may stand as security if, from the four corners of the
instrument, the intent to secure future and other indebtedness can be gathered. This stipulation is
valid and binding between the parties and is known as the "blanket mortgage clause" (also
known as the "dragnet clause)."
In the present case, the mortgage contract indisputably provides that the subject
properties serve as security, not only for the payment of the subject loan, but also for "such other
loans or advances already obtained, or still to be obtained." The cross-collateral stipulation in the
mortgage contract between the parties is thus simply a variety of a dragnet clause. After agreeing
to such stipulation, the petitioners cannot insist that the subject properties be released from
mortgage since the security covers not only the subject loan but the two other loans as well
Moreover, petitioners reliance on Prudential Bank v. Alviar is sorely misplaced. In
Prudential, the fact that another security was given for subsequent loans did not remove such
loans from the ambit of the dragnet clause in a previous real estate mortgage contract. However,
it was held in Prudential that the special security for subsequent loans must first be exhausted
before the creditor may foreclose on the real estate mortgage. In other words, the creditor is
allowed to hold on to the previous security (the real estate mortgage) in case of deficiency after
resort to the special security given for the subsequent loans. Verily, even under the prudential
ruling cited by petitioners, they are not entitled to the release of the real estate mortgage and the
titles to the properties mentioned therein.