G.R. No. 26236 - Compania General de Tabacos de Filipinas vs. Jalandoni

The case involves an action to recover money due on a mortgage executed by Eduarda Benedicto in her lifetime, in favor of Compania General de Tabacose de Filipinas.
The mortgage was executed on November 23, 1921 and notarized before Notary Public Don Felix Gurrea at the Notarial Office in Iloilo, recorded under No. 286, folio 18, Libro 6.
The mortgage was delivered by Eduarda Benedicto to the plaintiff on the same day of its execution and was later duly registered in the Registry of Property of the Province of Iloilo (registered on February 9, 1923).

The mortgage secured properties located in the Municipality of Dingle, Province of Iloilo, specifically in the sitios of Aliputos and Matanharon.
Detailed descriptions include:

A parcel known as Hacienda "Aliputos" with buildings and improvements, bounded on the north and west by the Jalaud River; on the east by a trail and properties of various owners; and on the south by other private properties and the river, covering approximately 1,566,460 square meters.
A second parcel also referred to as part of Hacienda "Aliputos" with boundaries delineated by adjacent property owners (Tomas Juanico, Juan Bolivar, etc.) and covering about 7,275 square meters.
A third parcel within the same hacienda, with boundaries defined by neighboring parcels of Simplicio Habalos, Gabino Tiongko, and others, covering about 261,132 square meters.
A separate hacienda in the sitio of Matanharon, composed of twenty “cavanes” (a type of land unit), detailed by its specific linderos and measured at approximately 76 hectares, equipped with a mill and other light structures.

The mortgage was executed to secure a credit over sugar with a maturity date of June 30, 1922, which was renewable annually but was not renewed as of June 30, 1925, making the debt immediately due.
The principal amount and corresponding interest calculations were clearly stipulated in the mortgage contract:

As of December 31, 1925, the outstanding amount (capital) was P57,314.36.
Accrued interest on the principal from December 31, 1923 to the filing of the complaint totaled P1,067.77.
Additional interest rates of P15.70 per day on the principal and P0.2925 per day on the accrued interest were provided for purposes of delay.

The contract also contained a penalty clause of P5,000 that applied in case of non-payment in accordance with the agreed terms.

The plaintiff initiated the action on March 9, 1926 in the Court of First Instance of Iloilo, demanding:

Payment of the capital sum, accrued interests up to December 31, 1925, subsequent daily interests until settlement, and the penalty clause.
An order for the defendant, in his capacity as judicial administrator of the estate of the deceased Eduarda Benedicto, to deposit the required sums within three months.
Alternatively, an order for the sale of the mortgaged properties to satisfy the debt, interests, penalty, and court costs.

The defendant, Santiago Jalandoni, denied all allegations and pleaded for his absolution from liability.

The case was tried in court where the sole witness, Mr. Federico Garcia Perez (representative of the plaintiff), testified to the execution and delivery of the mortgage and its subsequent registration.
Documentary evidence was introduced:

Exhibit A: The mortgage instrument.
Exhibit D: The Torrens system Certificate of Title No. 335, confirming that the property was duly registered in Eduarda Benedicto’s name.

No conflicting evidence or objections were raised by the defendant during the trial.

Auxiliary Judge Leopoldo Rovira rendered a judgment in favor of the plaintiff, ordering:

Payment of the capital sum, accrued interest up to December 31, 1925, and daily accruing interests from the filing of the complaint until full payment.
Inclusion of the P5,000 penalty clause.
Payment of court costs.

The judgment ordered the defendant, as judicial administrator of the ab intesto estate of Eduarda Benedicto, to deposit the total sums within three months or, failing such deposit, to sell the mortgaged properties to satisfy the debt.

The appellate court examined the evidence showing the proper execution and registration of the mortgage, as well as the clear contractual provision of the penalty.
The appellate court found no merit in the defendant’s challenges and affirmed the lower court's judgment.

Whether the mortgage executed by Eduarda Benedicto on November 23, 1921 was validly executed, notarized, and duly registered, thereby creating a valid lien on the described properties.
Whether ordering the sale of the mortgaged properties was a proper and legal remedy in the event of non-payment of the secured debt and accrued interests.
Whether the penalty clause amount of P5,000, as stated in the mortgage contract, was legally enforceable and appropriately included in the judgment.