Loan Breach: PNB vs. RBL Enterprises
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Jona Myka DugayoLoan Breach: PNB vs. RBL Enterprises
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Jona Myka Dugayo- Introduction and Case Facts: Presents the background of the legal case between Philippine National Bank and RBL Enterprises, including facts and issues raised.
- Detailed Analysis and Rulings: Explores the legal analysis, citing contractual obligations and judicial rulings affecting the outcome of the case.
PHILIPPINE NATIONAL BANK v. RBL ENTERPRISES, GR No.
149569, 2004-05-28
PANGANIBAN, J.:
FACTS:
RBL instituted an action against PNB and the Provincial Sheriff of Negros Occidental
alleging that RBL opened a prawn hatchery in San Enrique, Negros Occidental, and leased
from Nelly Bedrejo a parcel of land and applied for and was approved a loan of
P2,000,000.00, by PNB. To secure its payment, RBL executed in favor of PNB, a real estate
mortgage over two (2) parcels of land located at Bago City, Negros Occidental and another
real estate and chattel mortgage over the buildings, culture tanks and other hatchery
facilities located in the leased property of Nelly Bedrejo.
PNB partially released P1,000,000.00 to RBL.
During the mid-part of the construction of the improvements, PNB refused to release the
balance of P1,000,000.00 because RBL failed to comply with the bank's requirement that
Nelly Bedrejo should execute an undertaking or a 'lessors' conformity' provided in Real
Estate and Chattel Mortgage contract
For said alleged failure of RBL to comply with the additional requirement and the demand
of PNB to pay the released amount of P1,000,000.00, PNB foreclosed the mortgaged
properties that led to the closure of RBL’s business.
The RTC ruled that PNB had breached its obligation under the Contract of Loan and should
therefore be held liable for the consequential damages suffered by respondents.
CA affirmed the RTC’s decision.
ISSUE:
Whether the non-release of the balance of the loan by PNB is justified.
RULING:
The petition was PARTLY GRANTED. The CA’s decision was AFFIRMED with
MODIFICATION that the award of actual and exemplary damages was deleted.
RATIO DECIDENDI:
If the parties truly intended to suspend the release of the P1,000,000 balance of the loan
until the lessor's conformity to the Mortgage Contract would have been obtained, such
condition should have been plainly stipulated either in that Contract or in the Credit
Agreement. The tenor of the language used in paragraph 9.07, as well as its position
relative to the whole Contract, negated the supposed intention to make the release of the
loan subject to the fulfillment of the clause.
Nowhere did PNB explicitly state that the release of the second half of the loan
accommodation was subject to the mortgagor's procurement of the lessor's conformity to
the Mortgage Contract. Absent such a condition, the efficacy of the Credit Agreement stood,
and petitioner was obligated to release the balance of the loan. Its refusal to do so
constituted a breach of its reciprocal obligation under the Loan Agreement.
The records show that all the real estate and chattel mortgages were registered with the
Register of Deeds of Bago City, Negros Occidental, and annotated at the back of the
mortgaged titles. Thus, petitioner had ample security to protect its interest. As correctly
held by the... appellate court, the lessor's nonconformity to the Mortgage Contract would
not cause petitioner any undue prejudice or disadvantage, because the registration and the
annotation were considered sufficient notice to third parties that the property was subject
to an encumbrance.
Article 2126 of the Civil Code describes the real nature of a mortgage: it is a real right
following the property, such that in subsequent transfers by the mortgagor, the transferee
must respect the mortgage. A registered mortgage lien is considered inseparable from the
property inasmuch as it is a right in rem. The mortgage creates a real right or a lien which,
after being recorded, follows the chattel wherever it goes. Under Article 2129 of the same
Code, the mortgage on the property may still be foreclosed despite the transfer.
Indeed, even if the mortgaged property is in the possession of the debtor, the creditor is
still protected. To protect the latter from the former's possible disposal of the property, the
chattel mortgage is made effective against third persons by the process of registration.
Since PNB failed to release the P1,000,000 balance of the loan, the Real Estate and Chattel
Mortgage Contract became unenforceable to that extent.
in Central Bank of the Philippines v. Court of Appeals:
"The consideration of the accessory contract of real estate mortgage is the same as that of the
principal contract. For the debtor, the consideration of his obligation to pay is the existence of
a debt. Thus, in the accessory contract of real estate mortgage, the consideration of the
debtor in furnishing the mortgage is the existence of a valid, voidable, or unenforceable debt.
W]hen there is partial failure of consideration, the mortgage becomes unenforceable to the
extent of such failure. Where the indebtedness actually owing to the holder of the mortgage is
less than the sum named in the mortgage, the mortgage cannot be enforced for more than the
actual sum due."
