Case Digest (G.R. No. 20482)
Case Digest (G.R. No. 20482)
Facts:
The Philippine Industrial Co. v. El Hogar Filipino and Salvador Vallejo, G.R. No. 20482, October 25, 1923, the Supreme Court, Villamor, J., writing for the Court. The plaintiff and appellee was The Philippine Industrial Co.; the defendants were El Hogar Filipino (the appellant) and Salvador Vallejo.The parties submitted the case to the trial court on a stipulation of facts. Vallejo, owner of a Torrens-registered parcel, executed a mortgage in favor of El Hogar Filipino. That mortgage contained (a) a prohibitory clause by which the mortgagor agreed not to create any real right in favor of a third person or to make a lease registrable under law or collect rents in advance for more than one month without the prior written consent of El Hogar Filipino; and (b) a clause authorizing the association’s manager, upon certain defaults and publication of notice, to effect an extrajudicial sale at public auction and to execute, as agent of the borrower, the deed of sale in favor of the highest bidder (with a thirty-day redemption period).
After the mortgage was noted on the Torrens title, Vallejo presented a second mortgage in favor of the plaintiff to the Register of Deeds. The Register refused to register the second mortgage because the first mortgage contained the prohibitory clause. The matter was the subject of an administrative proceeding, and the trial court (on the stipulation) held that the validity of the prohibiting clause should be litigated in an ordinary action. When the first mortgage fell due, El Hogar Filipino advertised foreclosure by public auction. The plaintiff then sued, asking the court to declare the prohibiting clause void and to enjoin the defendants from carrying out the advertised sale.
On the stipulated record the trial court held the prohibitory clause ineffective, ordered the Register of Deeds to register the second mortgage, and made a previously issued preliminary injunction final. El Hogar Filipino appealed, assigning as errors the trial court’s ruling that (1) the no-second-mortgage clause was of no effect; (2) the finding as to property value without proof; (3) making the preliminary injunction final thereby preventing foreclosure; and (4) failure to dismiss the complaint with costs. The case reached the Supreme Court on appeal from the trial court’s judgment.
Issues:
- Is the stipulation in the first mortgage prohibiting the mortgagor from creating subsequent real rights (including a second mortgage) without the prior consent of the first mortgagee valid and binding as to a Torrens-registered property?
- Did the Register of Deeds properly refuse to register the second mortgage and did the trial court err in ordering registration?
- Should the preliminary injunction against foreclosure be dissolved and the plaintiff’s complaint dismissed?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)