Producers Bank of The Philippines, Petitioner, EXCELSA INDUSTRIES, INC., Respondent

3/1/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 587
G.R. No. 152071. May 8, 2009.*
PRODUCERS BANK OF THE PHILIPPINES, petitioner,

vs. EXCELSA INDUSTRIES, INC., respondent.
Real Estate Mortgage; Mortgages; Negotiable Instruments

Law; Where the drawer executes a separate letter of undertaking in
consideration for the bank’s negotiation of its sight drafts, the
Court held that the drawer can still be made liable under the letter
of undertaking even if he is discharged due to the bank’s failure to
protest the non-acceptance of the drafts.—In Velasquez v.
Solidbank Corporation, 550 SCRA 119 (2008), where the drawer
therein also executed a separate letter of undertaking in
consideration for the bank’s negotiation of its sight drafts, the
Court held that the drawer can still be made liable under the
letter of undertaking even if he is discharged due to the bank’s
failure to protest the non-acceptance of the drafts. The Court
explained, thus: Petitioner, however, can still be made liable
under the letter of undertaking. It bears stressing that it is a
separate contract from the sight draft. The liability of petitioner
under the letter of undertaking is direct and primary. It is
independent from his liability under the sight draft. Liability
subsists on it even if the sight draft was dishonored for non-
acceptance or non-payment.
Same; Same; It has been settled in a long line of decisions that
mortgages given to secure future advancements are valid and legal
contracts, and the amounts named as consideration in said
contracts 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.—
Respondent executed a real estate mortgage containing a “blanket
mortgage clause,” also known as a “dragnet clause.” It has been
settled in a long line of decisions that mortgages given to secure
future advancements are valid and legal contracts, and the
amounts named as consideration in said contracts 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.
_______________
www.central.com.ph/sfsreader/session/0000017096c44a3fa1c3f438003600fb002c009e/t/?o=False 1/15
* SECOND DIVISION.
371
VOL. 587, MAY 8, 2009 371

Procedures Bank of the Philippines vs. Excelsa Industries,
Inc.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Pangilinan, Britanico, Sarmiento & Franco Law Offices
for petitioners.
Ricardo J.M. Rivera Law Office for respondent.
TINGA, J.:
This is a petition for review on certiorari1 under Rule 43
of the 1997 Rules of Civil Procedure, assailing the decision2
and resolution3 of the Court of Appeals in CA-G.R. CV No.
59931. The Court of Appeals’ decision4 reversed the
decision of the Regional Trial Court (RTC), Branch 73,
Antipolo, Rizal, upholding the extrajudicial foreclosure of
the mortgage on respondent’s properties, while the
resolution denied petitioner’s motion for reconsideration.5
As borne by the records of the case, the following factual
antecedents appear:
Respondent Excelsa Industries, Inc. is a manufacturer
and exporter of fuel products, particularly charcoal
briquettes, as an alternative fuel source. Sometime in
January 1987, respondent applied for a packing credit line
or a credit export advance with petitioner Producers Bank
of the Philippines, a banking institution duly organized
and existing under Philippines laws.6
_______________
1 Rollo, pp. 10-38.

2 Dated 30 May 2001 and penned by Justice Oswaldo D. Agcaoili and
concurred in by Justices Cancio C. Garcia, Chairman of the First Division,
and Elvi John S. Asuncion; id., at pp. 47-75.
3 Dated 29 January 2002; id., at pp. 77.
4 Id., at pp. 117-125.
5 Id., at pp. 126-137.
6 Id., at p. 48.
372
372 SUPREME COURT REPORTS ANNOTATED


Inc.
The application was supported by Letter of Credit No.

M3411610NS2970 dated 14 October 1986. Kwang Ju Bank,
Ltd. of Seoul, Korea issued the letter of credit through its
correspondent bank, the Bank of the Philippine Islands, in
the amount of US$23,000.00 for the account of Shin Sung
Commercial Co., Ltd., also located in Seoul, Korea. T.L.
World Development Corporation was the original
beneficiary of the letter of credit. On 05 December 1986, for
value received, T.L. World transferred to respondent all its
rights and obligations under the said letter of credit.
Petitioner approved respondent’s application for a packing
credit line in the amount of P300,000.00, of which about
P96,000.00 in principal remained outstanding.7
Respondent executed the corresponding promissory notes
evidencing the indebtedness.8
Prior to the application for the packing credit line,
respondent had obtained a loan from petitioner in the form
of a bill discounted and secured credit accommodation in
the amount of P200,000.00, of which P110,000.00 was
outstanding at the time of the approval of the packing
credit line. The loan was secured by a real estate mortgage
dated 05 December 1986 over respondent’s properties
covered by Transfer Certificates of Titles (TCT) No. N-
68661, N-68662, N-68663, N-68664, N-68665 and N-68666,
all issued by the Register of Deeds of Marikina.9
Significantly, the real estate mortgage contained the
following clause:
“For and in consideration of those certain loans, overdraft and/or

other credit accommodations on this date obtained from the
MORTGAGEE, and to secure the payment of the same, the
principal of all of which is hereby fixed at FIVE HUNDRED
THOUSAND PESOS ONLY (P500,000.00) Pesos, Philippine
Currency, as well as those that the MORTGAGEE may hereafter
extend to the MORT-
_______________
7 Id.
8 Records, pp. 340-350.
9 Rollo, p. 48.
373
VOL. 587, MAY 8, 2009 373

Procedures Bank of the Philippines vs. Excelsa Industries, Inc.
GAGOR, including interest and expenses or any other obligation

owing to the MORTGAGEE, the MORTGAGOR does hereby
transfer and convey by way of mortgage unto the MORTGAGEE,
its successors or assigns, the parcel(s) of land which is/are
described in the list inserted on the back of this document, and/or
appended hereto, together with all the buildings and
improvements now existing or which may hereafter be erected or
constructed thereon, of which the MORTGAGOR declares that
he/it is the absolute owner, free from all liens and
encumbrances.”10
On 17 March 1987, respondent presented for negotiation

to petitioner drafts drawn under the letter of credit and the
corresponding export documents in consideration for its
drawings in the amounts of US$5,739.76 and US$4,585.79.
Petitioner purchased the drafts and export documents by
paying respondent the peso equivalent of the drawings. The
purchase was subject to the conditions laid down in two
separate undertakings by respondent dated 17 March 1987
and 10 April 1987.11
On 24 April 1987, Kwang Ju Bank, Ltd. notified
petitioner through cable that the Korean buyer refused to
pay respondent’s export documents on account of
typographical discrepancies. Kwang Ju Bank, Ltd.
returned to petitioner the export documents.12
Upon learning about the Korean importer’s non-
payment, respondent sent petitioner a letter dated 27 July
1987, informing the latter that respondent had brought the
matter before the Korea Trade Court and that it was ready
to liquidate its past due account with petitioner.
Respondent sent another letter dated 08 September 1987,
reiterating the same assurance. In a letter 05 October
1987, Kwang Ju Bank, Ltd. informed petitioner that it
would be returning the export documents on account of the
non-acceptance by the importer.13
_______________
10 Records, p. 366.
11 Id., at p. 121; id., pp. 335-337.
12 Rollo, p. 48.
13 Records, pp. 361-365.
374

Inc.
Petitioner demanded from respondent the payment of

the peso equivalent of the export documents, plus interest
and other charges, and also of the other due and unpaid
loans. Due to respondent’s failure to heed the demand,
petitioner moved for the extrajudicial foreclosure on the
real estate mortgage over respondent’s properties.
Per petitioner’s computation, aside from charges for
attorney’s fees and sheriff’s fees, respondent had a total
due and demandable obligation of P573,225.60, including
interest, in six different accounts, namely:
1) EBP-PHO-87-1121 (US$4,585.97 x =

21.212) P119,165.06
2) EBP-PHO-87-1095 (US$ 5,739.76 x =
21.212) 151,580.97
3) BDS-001-87 = 61,777.78
4) BDS-030/86 A =
123,555.55
5) BDS-PC-002-/87 = 55,822.91
6) BDS-005/87 = 61,323.33
P573,225.6014

The total approved bid price, which included the

attorney’s fees and sheriff fees, was pegged at P752,074.63.
At the public auction held on 05 January 1988, the Sheriff
of Antipolo, Rizal issued a Certificate of Sale in favor of
petitioner as the highest bidder.15 The certificate of sale
was registered on 24 March 1988.16
On 12 June 1989, petitioner executed an affidavit of
consolidation over the foreclosed properties after
respondent failed to redeem the same. As a result, the
Register of Deeds of Marikina issued new certificates of
title in the name of petitioner.17
_______________
14 Id., at pp. 369-370.

15 Id.
16 Rollo, p. 124.
17 Id., at pp. 48-49.
375
VOL. 587, MAY 8, 2009 375

Inc.
On 17 November 1989, respondent instituted an action

for the annulment of the extrajudicial foreclosure with
prayer for preliminary injunction and damages against
petitioner and the Register of Deeds of Marikina. Docketed
as Civil Case No. 1587-A, the complaint was raffled to
Branch 73 of the RTC of Antipolo, Rizal. The complaint
prayed, among others, that the defendants be enjoined
from causing the transfer of ownership over the foreclosed
properties from respondent to petitioner.18
On 05 April 1990, petitioner filed a petition for the
issuance of a writ of possession, docketed as LR Case No.
90-787, before the same branch of the RTC of Antipolo,
Rizal. The RTC ordered the consolidation of Civil Case No,
1587-A and LR Case No. 90-787.19
On 18 December 1997, the RTC rendered a decision
upholding the validity of the extrajudicial foreclosure and
ordering the issuance of a writ of possession in favor of
petitioner, to wit:
“WHEREFORE, in Case No. 1587-A, the court hereby rules

that the foreclosure of mortgage for the old and new obligations of
the plaintiff Excelsa Industries Corp., which has remained unpaid
up to the time of foreclosure by defendant Producers Bank of the
Philippines was valid, legal and in order; In Case No. 787-A, the
court hereby orders for the issuance of a writ of possession in
favor of Producer’s Bank of the Philippines after the properties of
Excelsa Industries Corp., which were foreclosed and consolidated
in the name of Producers Bank of the Philippines under TCT No.
169031, 169032, 169033, 169034 and 169035 of the Register of
Deeds of Marikina.
SO ORDERED.”20
The RTC held that petitioner, whose obligation consisted

only of receiving, and not of collecting, the export proceeds
for
_______________
18 Records, p. 1.
19 Rollo, pp. 1-5.
20 Id., at pp. 125.
376

Inc.
the purpose of converting into Philippine currency and

remitting the same to respondent, cannot be considered as
respondent’s agent. The RTC also held that petitioner
cannot be presumed to have received the export proceeds,
considering that respondent executed undertakings
warranting that the drafts and accompanying documents
were genuine and accurately represented the facts stated
therein and would be accepted and paid in accordance with
their tenor.21
Furthermore, the RTC concluded that petitioner had no
obligation to return the export documents and respondent
could not expect their return prior to the payment of the
export advances because the drafts and export documents
were the evidence that respondent received export
advances from petitioner.22
The RTC also found that by its admission, respondent
had other loan obligations obtained from petitioner which
were due and demandable; hence, petitioner correctly
exercised its right to foreclose the real estate mortgage,
which provided that the same secured the payment of not
only the loans already obtained but also the export
advances.23
Lastly, the RTC found respondent guilty of laches in
questioning the foreclosure sale considering that petitioner
made several demands for payment of respondent’s
outstanding loans as early as July 1987 and that
respondent acknowledged the failure to pay its loans and
advances.24
The RTC denied respondent’s motion for
25
reconsideration. Thus, respondent elevated the matter to
the Court of Appeals, reiterating its claim that petitioner
was not only a collection agent but was considered a
purchaser of the export.
_______________
21 Id., at pp. 49-50.

22 Rollo, at p. 51.
23 Id., at pp. 51-52.
24 Id., at p. 52.
25 Records, pp. 279-280.
377
VOL. 587, MAY 8, 2009 377

Inc.
On 30 May 2001, the Court of Appeals rendered the

assailed decision, reversing the RTC’s decision, thus:
“WHEREFORE, the appeal is hereby GRANTED. The decision

of the trial court dated December 18, 1997 is REVERSED and
SET ASIDE. Accordingly, the foreclosure of mortgage on the
properties of appellant is declared as INVALID. The issuance of
the writ of possession in favor of appellee is ANNULLED. The
following damages are hereby awarded in favor of appellant:
(a) Moral damages in the amount of P100,000.00;
(b) Exemplary damages in the amount of P100,000.00;
and
(c) Costs.
SO ORDERED.”26
The Court of Appeals held that respondent should not be

faulted for the dishonor of the drafts and export documents
because the obligation to collect the export proceeds from
Kwang Ju Bank, Ltd. devolved upon petitioner. It cited the
testimony of petitioner’s manager for the foreign currency
department to the effect that petitioner was respondent’s
agent, being the only entity authorized under Central Bank
Circular No. 491 to collect directly from the importer the
export proceeds on respondent’s behalf and converting the
same to Philippine currency for remittance to respondent.
The appellate court found that respondent was not
authorized and even powerless to collect from the importer
and it appeared that respondent was left at the mercy of
petitioner, which kept the export documents during the
time that respondent attempted to collect payment from
the Korean importer.
The Court of Appeals disregarded the RTC’s finding that
the export documents were the only evidence of
respondent’s export advances and that petitioner was
justified in refusing to return them. It opined that granting
petitioner had no obligation to return the export
documents, the former should
_______________
26 Rollo, pp. 74-75.
378

Inc.
have helped respondent in the collection efforts instead of

augmenting respondent’s dilemma.
Furthermore, the Court of Appeals found petitioner’s
negligence as the cause of the refusal by the Korean buyer
to pay the export proceeds based on the following: first,
petitioner had a hand in preparing and scrutinizing the
export documents wherein the discrepancies were found;
and, second, petitioner failed to advise respondent about
the warning from Kwang Ju Bank, Ltd. that the export
documents would be returned if no explanation regarding
the discrepancies would be made.
The Court of Appeals invalidated the extrajudicial
foreclosure of the real estate mortgage on the ground that
the posting and publication of the notice of extrajudicial
foreclosure proceedings did not comply with the personal
notice requirement under paragraph 1227 of the real estate
mortgage executed between petitioner and respondent. The
Court of Appeals also overturned the RTC’s finding that
respondent was guilty of estoppel by laches in questioning
the extrajudicial foreclosure sale.
Petitioner’s motion for reconsideration28 was denied in a
Resolution dated 29 January 2002. Hence, the instant
petition, arguing that the Court of Appeals erred in finding
peti-
_______________
27 12. All correspondence relative to this mortgage, including demand

letters, summonses, subpoenas, or notifications of any judicial or
extrajudicial action shall be sent to the mortgagor at x x x, or at the
address that may hereafter be given in writing by the MORTGAGOR to
the MORTGAGEE. The mere act of sending any correspondence by mail
or by personal delivery to the said address shall be valid and effective
notice to the MORTGAGOR for all legal purposes, and the fact that any
communication is not actually received by the MORTGAGOR or that it
has been returned unclaimed to the MORTGAGEE, or that no person was
found at the address given, or that the address is fictitious or cannot be
located, shall not excuse or relieve the MORTGAGOR from the effects of
such notice.
28 CA Rollo, pp. 126-137.
379
VOL. 587, MAY 8, 2009 379

Inc.
tioner as respondent’s agent, which was liable for the

discrepancies in the export documents, in invalidating the
foreclosure sale and in declaring that respondent was not
estopped from questioning the foreclosure sale.29
The validity of the extrajudicial foreclosure of the
mortgage is dependent on the following issues posed by
petitioner: (1) the coverage of the “blanket mortgage
clause;” (2) petitioner’s failure to furnish personal notice of
the foreclosure to respondent; and (3) petitioner’s obligation
as negotiating bank under the letter of credit.
Notably, the errors cited by petitioners are factual in
nature. Although the instant case is a petition for review
under Rule 45 which, as a general rule, is limited to
reviewing errors of law, findings of fact being conclusive as
a matter of general principle, however, considering the
conflict between the factual findings of the RTC and the
Court of Appeals, there is a need to review the factual
issues as an exception to the general rule.30
Much of the discussion has revolved around who should
be liable for the dishonor of the draft and export
documents. In the two undertakings executed by
respondent as a condition for the negotiation of the drafts,
respondent held itself liable if the drafts were not accepted.
The two undertakings signed by respondent are similarly-
worded and contained respondent’s express warranties, to
wit:
“In consideration of your negotiating the above described

draft(s), we hereby warrant that the said draft(s) and
accompanying documents thereon are valid, genuine and
accurately represent the facts stated therein, and that
such draft(s) will be accepted and paid in accordance with
its/their tenor. We further undertake and agree, jointly and
severally, to defend and hold you free and harmless from any and
all
_______________
29 Id., at pp. 18-19.

30 Agasen v. Court of Appeals, 382 Phil. 391; 325 SCRA 504 (2000).
380

actions, claims and demands whatsoever, and to pay on demand

all damages actual or compensatory including attorney’s fees,
costs and other awards or be adjudged to pay, in case of suit,
which you may suffer arising from, by reason, or on account of

your negotiating the above draft(s) because of the following
discrepancies or reasons or any other discrepancy or reason
whatever.
We hereby undertake to pay on demand the full amount
of the above draft(s) or any unpaid balance thereof, the
Philippine peso equivalent converted at the prevailing selling rate
(or selling rate prevailing at the date you negotiate our draft,
whichever is higher) allowed by the Central Bank with interest at
the rate prevailing today from the date of negotiation, plus all
charges and expenses whatsoever incurred in connection
therewith. You shall neither be obliged to contest or dispute any
refusal to accept or to pay the whole or any part of the above
draft(s), nor proceed in any way against the drawee, the issuing
bank or any endorser thereof, before making a demand on us for
the payment of the whole or any unpaid balance of the draft(s).”
(Emphasis supplied)31
In Velasquez v. Solidbank Corporation,32 where the

drawer therein also executed a separate letter of
undertaking in consideration for the bank’s negotiation of
its sight drafts, the Court held that the drawer can still be
made liable under the letter of undertaking even if he is
discharged due to the bank’s failure to protest the non-
acceptance of the drafts. The Court explained, thus:
“Petitioner, however, can still be made liable under the letter of

undertaking. It bears stressing that it is a separate contract from
the sight draft. The liability of petitioner under the letter of
undertaking is direct and primary. It is independent from his
liability under the sight draft. Liability subsists on it even if the
sight draft was dishonored for non-acceptance or non-payment.
Respondent agreed to purchase the draft and credit petitioner
its value upon the undertaking that he will reimburse the amount
in case the sight draft is dishonored. The bank would certainly not
have
_______________
31 Id., at p. 335.
32 G.R. No. 157309, 28 March 2008, 550 SCRA 119.
381
VOL. 587, MAY 8, 2009 381

agreed to grant petitioner an advance export payment were it not

for the letter of undertaking. The consideration for the letter of
undertaking was petitioner’s promise to pay respondent the value

of the sight draft if it was dishonored for any reason by the Bank
of Seoul.”33
Thus, notwithstanding petitioner’s alleged failure to

comply with the requirements of notice of dishonor and
protest under Sections 8934 and 152,35 respectively, of the
Negotiable Instruments Law, respondent may not escape
its liability under the separate undertakings, where
respondent promised to pay on demand the full amount of
the drafts.
The next question, therefore, is whether the real estate
mortgage also served as security for respondent’s drafts
that were not accepted and paid by the Kwang Ju Bank,
Ltd.
Respondent executed a real estate mortgage containing
a “blanket mortgage clause,” also known as a “dragnet
clause.” It has been settled in a long line of decisions that
mortgages given to secure future advancements are valid
and legal contracts, and the amounts named as
consideration in said contracts do not limit the amount for
which the mortgage may stand as security if from the four
corners of the instrument
_______________
33 Id., at p. 129.
34 SEC. 89. TO WHOM NOTICE OF DISHONOR MUST BE GIVEN.
—Except as herein otherwise provided, when a negotiable instrument has
been dishonored by non-acceptance or non-payment, notice of dishonor
must be given to the drawer and to each indorser and any drawer or
indorser to whom such notice is not given is discharged.
35 SEC. 152. IN WHAT CASES PROTEST NECESSARY.—Where a
foreign bill appearing on its face to be such is dishonored by non-
acceptance, it must be duly protested for non-acceptance, and where such
a bill which has not previously been dishonored by non-acceptance, is
dishonored by non-payment, it must be duly protested for non-payment. If
it is not so protested, the drawer and indorsers are discharged. Where a
bill does not appear on its face to be a foreign bill, protest thereof in case
of dishonor is unnecessary.
382

Inc.
the intent to secure future and other indebtedness can be

gathered.36
In Union Bank of the Philippines v. Court of Appeals,37
the nature of a dragnet clause was explained, thus:
“Is one which is specifically phrased to subsume all debts of

past and future origins. Such clauses are “carefully scrutinized
and strictly construed.” Mortgages of this character enable the
parties to provide continuous dealings, the nature or extent of
which may not be known or anticipated at the time, and they
avoid the expense and inconvenience of executing a new security
on each new transaction. A “dragnet clause” operates as a
convenience and accommodation to the borrowers as it makes
available additional funds without their having to execute
additional security documents, thereby saving time, travel, loan
closing costs, costs of extra legal services, recording fees, et
cetera.38
x x x”
Petitioner, therefore, was not precluded from seeking

the foreclosure of the real estate mortgage based on the
unpaid drafts drawn by respondent. In any case,
respondent had admitted that aside from the unpaid drafts,
respondent also had due and demandable loans secured
from another account as evidenced by Promissory Notes
(PN Nos.) BDS-001-87, BDS-030/86 A, BDS-PC-002-/87 and
BDS-005/87.
However, the Court of Appeals invalidated the
extrajudicial foreclosure of the mortgage on the ground
that petitioner had failed to furnish respondent personal
notice of the sale contrary to the stipulation in the real
estate mortgage.
Petitioner, on the other hand, claims that under
paragraph 1239 of the real estate mortgage, personal notice
of the foreclo-
_______________
36 Prudential Bank v. Alviar, G.R. No. 150197, 28 July 2005, 464
SCRA 353, 363.
37 G.R. No. 164910, 30 September 2005, 471 SCRA 751.
38 Id., at pp. 758-759.
39 Supra.
383
VOL. 587, MAY 8, 2009 383

Inc.
sure sale is not a requirement to the validity of the

foreclosure sale.
A perusal of the records of the case shows that a notice
of sheriff’s sale40was sent by registered mail to respondent
and received in due course.41 Yet, respondent claims that it
did not receive the notice but only learned about it from
petitioner. In any event, paragraph 12 of the real estate
mortgage requires petitioner merely to furnish respondent
with the notice and does not oblige petitioner to ensure
that respondent actually receives the notice. On this score,
the Court holds that petitioner has performed its obligation
under paragraph 12 of the real estate mortgage.
As regards the issue of whether respondent may still
question the foreclosure sale, the RTC held that the sale
was conducted according to the legal procedure, to wit:
“Plaintiff is estopped from questioning the foreclosure. The

plaintiff is guilty of laches and cannot at this point in time
question the foreclosure of the subject properties. Defendant bank
made demands against the plaintiff for the payment of plaintiff’s
outstanding loans and advances with the defendant as early as
July 1997. Plaintiff acknowledged such outstanding loans and
advances to the defendant bank and committed to liquidate the
same. For failure of the plaintiff to pay its obligations on
maturity, defendant bank foreclosed the mortgage on subject
properties on January 5, 1988 the certificate of sale was
annotated on March 24, 1988 and there being no redemption
made by the plaintiff, title to said properties were consolidated in
the name of defendant in July 1989. Undeniably, subject
foreclosure was done in accordance with the prescribed rules as
may be borne out by the exhibits submitted to this Court which
are Exhibit “33,” a notice of extrajudicial sale executed by the
Sheriff of Antipolo, Exhibit “34” certificate posting of extrajudicial
sale, Exhibit “35” return card evidencing receipt by plaintiff of the
notice of extrajudicial sale and Exhibit “21” affidavit of
publication.”
_______________
40 Records, p. 113.
41 Id., at p. 416. The registry return card evidencing receipt of the copy
of the notice of sheriff’s sale set for 05 January 1988 on 21 December 1987
is marked as Exhibit 35.
384

Inc.
The Court adopts and approves the aforequoted findings

by the RTC, the same being fully supported by the evidence
on record.
WHEREFORE, the instant petition for review on
certiorari is GRANTED and the decision and resolution of
the Court of Appeals in CA-G.R. CV No. 59931 are
REVERSED and SET ASIDE. The decision of the Regional
Trial Court Branch 73, Antipolo, Rizal in Civil Case No.
1587-A and LR Case No. 90-787 is REINSTATED.
SO ORDERED.
Carpio-Morales,** Velasco, Jr., Leonardo-De Castro***

and Brion, JJ., concur.
Petition granted, judgment and resolution reversed and

set aside.
Note.—It is settled that personal notice to the

mortgagor in extrajudicial foreclosure proceedings is not
necessary, hence, not a ground to set aside the foreclosure
sale. (Ardiente vs. Provincial Sheriff, 436 SCRA 655 [2004])
——o0o——
_______________
** Acting Chairperson in lieu of Senior Associate Justice Leonardo A.

Quisumbing, who is on official leave, per Special Order No. 618.
*** Designated as an additional member of the Second Division in lieu
of Senior Associate Justice Leonardo A. Quisumbing, who is on official
leave, per Special Order No. 618.
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3/1/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 587

G.R. No. 152071. May 8, 2009.*

PRODUCERS BANK OF THE PHILIPPINES, petitioner,

Real Estate Mortgage; Mortgages; Negotiable Instruments

VOL. 587, MAY 8, 2009 371

PETITION for review on certiorari of the decision and

1 Rollo, pp. 10-38.

372 SUPREME COURT REPORTS ANNOTATED

Procedures Bank of the Philippines vs. Excelsa Industries,

The application was supported by Letter of Credit No.

“For and in consideration of those certain loans, overdraft and/or

VOL. 587, MAY 8, 2009 373

GAGOR, including interest and expenses or any other obligation

On 17 March 1987, respondent presented for negotiation

374 SUPREME COURT REPORTS ANNOTATED

Petitioner demanded from respondent the payment of

1) EBP-PHO-87-1121 (US$4,585.97 x =

The total approved bid price, which included the

14 Id., at pp. 369-370.

VOL. 587, MAY 8, 2009 375

On 17 November 1989, respondent instituted an action

“WHEREFORE, in Case No. 1587-A, the court hereby rules

The RTC held that petitioner, whose obligation consisted

376 SUPREME COURT REPORTS ANNOTATED

the purpose of converting into Philippine currency and

21 Id., at pp. 49-50.

VOL. 587, MAY 8, 2009 377

On 30 May 2001, the Court of Appeals rendered the

“WHEREFORE, the appeal is hereby GRANTED. The decision

The Court of Appeals held that respondent should not be

26 Rollo, pp. 74-75.

378 SUPREME COURT REPORTS ANNOTATED

have helped respondent in the collection efforts instead of

27 12. All correspondence relative to this mortgage, including demand

VOL. 587, MAY 8, 2009 379

tioner as respondent’s agent, which was liable for the

“In consideration of your negotiating the above described

29 Id., at pp. 18-19.

380 SUPREME COURT REPORTS ANNOTATED

actions, claims and demands whatsoever, and to pay on demand

which you may suffer arising from, by reason, or on account of

In Velasquez v. Solidbank Corporation,32 where the

“Petitioner, however, can still be made liable under the letter of

VOL. 587, MAY 8, 2009 381

agreed to grant petitioner an advance export payment were it not

undertaking was petitioner’s promise to pay respondent the value

Thus, notwithstanding petitioner’s alleged failure to

382 SUPREME COURT REPORTS ANNOTATED

the intent to secure future and other indebtedness can be

“Is one which is specifically phrased to subsume all debts of

Petitioner, therefore, was not precluded from seeking

VOL. 587, MAY 8, 2009 383

sure sale is not a requirement to the validity of the

“Plaintiff is estopped from questioning the foreclosure. The

384 SUPREME COURT REPORTS ANNOTATED

Procedures Bank of the Philippines vs. Excelsa Industries,

The Court adopts and approves the aforequoted findings

Carpio-Morales,** Velasco, Jr., Leonardo-De Castro***

Petition granted, judgment and resolution reversed and

Note.—It is settled that personal notice to the

** Acting Chairperson in lieu of Senior Associate Justice Leonardo A.

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Carpio-Morales, Velasco, Jr., Leonardo-De Castro*