14 ALPHA INSURANCE AND SURETY CO., INC. vs. ESPERANZA C. AUTHOR : TAN REYES, REYES, ARTURO R. REYES and DEVELOPMENT DEVELOPMENT BANK OF THE NOTES: PHILIPPINES An appeal from the e!"#"on of the Co$rt of F"r#t %n#tan!e of Man"la !ert"f"e !.R. N". L#$%$&4 ' ()*+ 1, 1-1./ &' the Co$rt of Appeal# to the SC for the rea#on that the #ole a##"(nment a##"(nment of error of appellant ra"#e# p$rel' a le(al )$e#t"on. TOPIC: FORECLOSURE OF REAL ESTATE MORTGAGE PONENTE: BARREDO, J. CASE LA0 DOCTRINE : Nothing may may be done to favor a mere mere second mortgagee until after the obligations obligations of the the debtors with the first first mortgagee mortgagee have been fully satisfied satisfied and settled. FACTS' • Sp#. E#peran*a an Art$ro Re'e# e+e!$te "n faor of Alpha %n#$ran!e a #e!on mort(a(e oer the"r t-o par!el# of lan an the &$"l"n(# thereon, "n !on#"erat"on of Alpha %n#$ran!e# $nerta/"n( to a!t a# #$ret' of the #a" #po$#e# "n !erta"n loan# to &e o&ta"ne from &an/# or f"nan!"al "n#t"t$t"on#. • The t-o lot# -ere pre"o$#l' mort(a(e to the Deelopment Ban/ of the 0h"l"pp"ne# a# #e!$r"t' for a loan • %n 1234, E#peran*a &orro-e 03,555.55 from the 0r$ent"al Ban/ an Tr$#t Compan'. %n 1232, #he &orro-e 03,555.55 from the 0h"l"pp"ne Ban/"n( Corporat"on. Alpha %n#$ran!e -a# her #$ret' an !o6ma/er "n t-o prom"##or' note# !oer"n( the #a" loan#. She an her h$#&an e+e!$te "nemn"t' a(reement# "n faor of Alpha %n#$ran!e "n a"t"on to the #e!on mort(a(e. • D$e to the efa$lt of E#peran*a C. Re'e#, Alpha %n#$ran!e, a# #ol"ar' e&tor, ha to pa' the t-o loan#. • A# the #po$#e# " not ma/e an' re"m&$r#ement to Alpha %n#$ran!e, the latter f"le a fore!lo#$re a!t"on a(a"n#t the #po$#e# an the DB0 -"th the Co$rt of F"r#t %n#tan!e of Man"la. • DB0: o %t ha a f"r#t mort(a(e on the t-o lot# -h"!h -a# #$per"or to Alpha %n#$ran!e# mort(a(e. o %n !a#e of fore!lo#$re, the pro!ee# of the #ale #ho$l &e f"r#t appl"e to "t# !re"t. • The Re'e# #po$#e# " not f"le an an#-er an -ere e!lare "n efa$lt. • J$(e Mo'a #"mpl' orere the #po$#e# to pa' Alpha an "(nore the pra'er for the fore!lo#$re of Alpha %n#$ran!e# #e!on mort(a(e. Alpha %n#$ran!e f"le a mot"on for re!on#"erat"on, pra'"n( that the fore!lo#$re of the #e!on mort(a(e &e orere. • J$(e Mo'a he hel that the #e!on mort(a(e !o$l not &e re!o(n"*e a# an en!$m&ran!e &e!a$#e the DB0 " not !on#ent to "t# e+e!$t"on. • • J$(e Mo'a rel"e on the r$l"n( "n A##o!"ate %n#$ran!e 7 S$ret' Co., %n!. #. Re("#ter of Dee# of 0ampan(a, -h"!h !on#tr$e the follo-"n( pro"#"on# pro"#"on# of Common-ealth A!t No. 832, the la- !reat"n( the A(r"!$lt$ral an %n$#tr"al Ban/: 9SEC. ;. Se!$r"t"e# on loan# (rante &' the A(r"!$lt$ral A(r"!$lt$ral an %n$#tr"al Ban/ #hall not &e #$&a? "fferent "nterpretat"on -o$l efeat the er' p$rpo#e of the la- -h"!h "# to ma"nta"n $nhampere the al$e of the propert' $nt"l the en!$m&ran!e #hall hae &een relea#e.= • Alpha %n#$ran!e f"le a mot"on for re!on#"erat"on -here"n "t alle(e that the #e!on mort(a(e -a# approe &' DB0 Goernor Ro&erto S. Bene"!to an that "t -a# re("#tere &e!a$#e of that approal an &e!a$#e the DB0 el"ere the o-ner# $pl"!ate of the t"tle to Alpha %n#$ran!e "n orer to effe!t the re("#trat"on. • Neerthele##, Neerthele##, J$(e Mo'a Mo'a en"e the the mot"on. • Alpha %n#$ran!e appeale to the SC.
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ISSUE2S3: @hether fore!lo#$re of the #e!on mort(a(e "# proper. HELD: ES o-eer, the pro!ee# of the #ale #ho$l f"r#t &e appl"e to DB0# >f"r#t mort(a(ee? !re"t. RATIO: • Een "f the DB0 -ere <$#t an or"nar' f"r#t mort(a(ee -"tho$t an' preferent"al l"en# $ner Rep$&l"! A!t No. 43 or Common-ealth A!t 832, the #tat$te# ment"one "n the A##o!"ate %n#$ran!e %n#$ran!e !a#e rel"e $pon &' the tr"al !o$rt, "t -o$l &e $n)$e#t"ona&le that noth"n( ma' &e one to faor pla"nt"ff6appellant, pla"nt"ff6appellant, a mere #e!on mort(a(ee, $nt"l after the o&l"(at"on# of the e&tor#6appellee# -"th the f"r#t mort(a(ee hae &een f$ll' #at"#f"e an #ettle. %n la-, #tr"!tl' #pea/"n(, -hat -a# mort(a(e &' the Re'e#e# to Alpha -a# no more than the"r e)$"t' of reempt"on. • Th$#, -hat "# mo#t appropr"ate to o at th"# late #ta(e "# to #ee to "t that the o&l"(at"on# "n )$e#t"on are pa" #oone#t. • o-eer, to "n#"#t no-, after #o man' -a#te 'ear#, on follo-"n( "n th"# !a#e the or"nar' fore!lo#$re pro!e$re pro"e &' la- -o$l onl' !a$#e f$rther $nne!e##ar' ela' "n the term"nat"on of the "n#$&#tant"al !ontroer#' amon( the part"e# here"n. • All that ha# to &e one here "# to hae the propert' here"n "nole orere &' the tr"al !o$rt #ol at p$&l"! a$!t"on "mme"atel', the pro!ee# thereof to &e $#e to pa' the o$t#tan"n( o&l"(at"on, o&l"(at"on, "f #t"ll there &e an', of the efenant#6appellee# efenant#6appellee# E#peran*a Re'e# an Art$ro Re'e# to the Deelopment Deelopment Ban/ of the 0h"l"pp"ne# 0h"l"pp"ne# "f there &e an' e+!e## thereafter, the #ame &e $#e to pa' the"r o&l"(at"on to the pla"nt"ff6appellant, an #ho$l there #t"ll &e an ' f$rther e+!e##, the #ame #ho$l &e ("en to the #a" Defenant#6Appellee#. DISSENTIN!CONCURRIN! OPINION2S3:
