Case Digest (G.R. No. 103576) Core Legal Reasoning Model
Facts:
On June 27, 1978, Chua Pac, acting as President and General Manager of Acme Shoe, Rubber & Plastic Corporation, executed a chattel mortgage in favor of Producers Bank of the Philippines to secure a ₱3,000,000 corporate loan. The instrument expressly stated that it would stand as security not only for that existing obligation but also for any subsequent promissory notes, renewals, overdrafts, letters of credit, trust receipts, and “any and all other obligations” of the mortgagor, regardless of when they arose. After full payment of the initial ₱3,000,000 debt, the corporation obtained additional accommodations—₱2,700,000 in 1981 (also fully paid) and a ₱1,000,000 loan in January 1984 evidenced by four ₱250,000 promissory notes, which went unpaid at maturity. Producers Bank then applied for extrajudicial foreclosure before the Regional Trial Court of Caloocan City (Civil Case No. C-12081). The trial court dismissed Acme Shoe’s injunction complaint and ordered foreclosure. The
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Case Digest (G.R. No. 103576) Expanded Legal Reasoning Model
Facts:
- Parties and Mortgage Agreement
- Petitioners: Acme Shoe, Rubber & Plastic Corporation (the “Corporation”) and its president/general manager, Chua Pac.
- Private respondent: Producers Bank of the Philippines (“Bank”).
- On June 27, 1978, the Corporation executed a chattel mortgage in favor of the Bank securing a ₱3,000,000 corporate loan.
- Stipulation for Future Obligations
- The mortgage contained a clause extending security to:
- Renewals, extensions, or new loans (promissory notes, overdrafts, letters of credit, acceptances, bills of exchange, trust receipts, etc.).
- “Any and all other obligations of the MORTGAGOR to the MORTGAGEE… whether such obligations have been contracted before, during or after the constitution of this mortgage.”
- No separate mortgage document or amendment was executed for subsequent accommodations.
- Subsequent Loans and Defaults
- 1981: Additional accommodations totaling ₱2,700,000, fully paid on due date.
- January 10–11, 1984: New loan of ₱1,000,000 (four promissory notes of ₱250,000 each), defaulted at maturity.
- Foreclosure and Litigation
- Bank applied for extrajudicial foreclosure with the Caloocan City Sheriff.
- The Corporation filed for injunctive relief (RTC Civil Case No. C-12081); RTC dismissed complaint and ordered foreclosure.
- Court of Appeals affirmed on August 14, 1991; motion for reconsideration denied January 24, 1992.
- Supreme Court petition initially denied (March 4, 1992), later reinstated on second motion for reconsideration; petition for certiorari filed.
Issues:
- Whether a chattel mortgage may validly and effectively extend its security to obligations not existing at the time of its constitution.
- Whether the prior full payment of the original ₱3,000,000 loan terminated the chattel mortgage, thus precluding its application to later debts.
- Whether petitioners are entitled to damages (moral or otherwise) for the Bank’s foreclosure actions.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)