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    Prudential Vs Alviar

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    Ken Marcaida
    The spouses Alviar mortgaged a property to secure a P250,000 loan from Prudential Bank. They later obtained additional loans from the bank for over P3 million, secured by other assets. When the spouses paid P2 million to Prudential Bank, the bank acknowledged payment and released the mortgage on the original property. However, Prudential Bank then tried to foreclose on the original mortgaged property, claiming the spouses still owed over P1.6 million. The court ruled that the original mortgage only secured the first P250,000 loan and not the subsequent loans, which were secured by other assets. While dragnet clauses can secure future debts, the reliance on separate securities

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    Prudential Vs Alviar

    Uploaded by

    Ken Marcaida
    62 views2 pages
    The spouses Alviar mortgaged a property to secure a P250,000 loan from Prudential Bank. They later obtained additional loans from the bank for over P3 million, secured by other assets. When the spouses paid P2 million to Prudential Bank, the bank acknowledged payment and released the mortgage on the original property. However, Prudential Bank then tried to foreclose on the original mortgaged property, claiming the spouses still owed over P1.6 million. The court ruled that the original mortgage only secured the first P250,000 loan and not the subsequent loans, which were secured by other assets. While dragnet clauses can secure future debts, the reliance on separate securities

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    The spouses Alviar mortgaged a property to secure a P250,000 loan from Prudential Bank. They later obtained additional loans from the bank for over P3 million, secured by other assets. When the spouses paid P2 million to Prudential Bank, the bank acknowledged payment and released the mortgage on the original property. However, Prudential Bank then tried to foreclose on the original mortgaged property, claiming the spouses still owed over P1.6 million. The court ruled that the original mortgage only secured the first P250,000 loan and not the subsequent loans, which were secured by other assets. While dragnet clauses can secure future debts, the reliance on separate securities

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    62 views2 pages

    Prudential Vs Alviar

    Uploaded by

    Ken Marcaida
    The spouses Alviar mortgaged a property to secure a P250,000 loan from Prudential Bank. They later obtained additional loans from the bank for over P3 million, secured by other assets. When the spouses paid P2 million to Prudential Bank, the bank acknowledged payment and released the mortgage on the original property. However, Prudential Bank then tried to foreclose on the original mortgaged property, claiming the spouses still owed over P1.6 million. The court ruled that the original mortgage only secured the first P250,000 loan and not the subsequent loans, which were secured by other assets. While dragnet clauses can secure future debts, the reliance on separate securities

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PRUDENTIAL BANK VS ALVIAR

    FACTS: Spouses Alviar are the registered owners of a parcel of land in San Juan,
    Metro Manila They executed a deed of real estate mortgage of the said property in favor
    of petitioner PrudentialBank to secure the payment of a loan worth P250,000.00 was
    then issued covering the said loan, which provides that the loan matured on 4 August
    1976 at an interest rate of 12% per annum with a 2% service charge, and that the note
    is secured by a real estate mortgage as aforementioned with a “blanket mortgage
    clause” or the “dragnet clause” .
    The spouses thereafter issued other promissory notes (PN): o PN BD#76/C-345 for
    P2,640,000.00, secured by D/A SFDX #129, signifying that the loan was secured by a
    “hold - out” on the mortgagor’s foreign currency savings account withthe bank under
    Account No. 129 o In the name of Donalco Trading, Inc., PN BD#76/C-430 covering
    P545,000.000 to be secured by “Clean -Phase out TOD CA 3923. Bank also mentioned
    in their approval letter that additional securities for the loan were the deed of
    assignment on two PNs executed by Bancom Realty and the chattel mortgage on
    various heavy and transportation equipment.
    Spoused Alviar paid petitioner P2,000,000.00, to be applied to the obligations of G.B.
    Alviar Realty and Development, Inc. and for the release of the real estate mortgage for
    the P450,000.00loan covering the two (2) lots in San Juan, Metro Manila. The payment
    was acknowledged by petitioner who accordingly released the mortgage over the two
    properties. Prudential Bank moved for the extrajudicial foreclosure of the mortgage on
    the property since respondents had the total obligation of P1,608,256.68, covering the
    three (3) promissory notes. Respondents then filed a complaint for damages with a
    prayer for the issuance of a writ of preliminary injunction with the RTC of Pasig,
    claiming that they have paid their principal loan secured by the mortgaged property, and
    thus the mortgage should not be foreclosed RTC, on its final decision, favored
    respondents saying that the extrajudicial foreclosure was improper for the mortgage
    only covers the first loan of P250,000. CA affirmed the decision of the RTC.
    ISSUE: WON real estate mortgage secures only the first loan of P250,000.
    RULING: Yes. While the existence and validity of the “dragnet clause” cannot be
    denied, there is a need to respect the existence of the other securities given for the two
    other promissory notes. The foreclosure of the mortgaged property should only then be
    for theP250,000.00 loan covered by PN BD#75/C-252, and for any amount not covered
    by the security for the second promissory note. Petitioner and respondents intended the
    real estate mortgage to secure not only the P250,000.00 loan from the petitioner, but
    also future credit facilities and advancements that may be obtained by the respondents.
    However, the subsequent loans obtained by respondents were secured by other
    securities. When the mortgagor takes another loan for which another security was given
    it could not be inferred that such loan was made in reliance solely on the original
    security with the “dragnet clause,” but rather, on the new security given. This is the
    “reliance on the security test.” If the parties intended that the “blanket mortgage clause”
    shall cover subsequent advancement secured by separate securities, then the same
    should have been indicated in the mortgage contract.
    Consequently, any ambiguity is to be taken contra proferentum, that is, construed
    against the party who caused the ambiguity which could have avoided it by the exercise
    of a little more care. To be more emphatic, any ambiguity in a contract whose terms are
    susceptible of different interpretations must be read against the party who drafted it,55
    which is the petitioner in this case.

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