FILIPINAS MABLE CORPORATION vs. IAC et al [G.R. No. L-68010. May 0! 1"86.# GUTIERREZ, JR.

, J p: FACTS$ Filipinas Marble Corporation (FMC) applied for a loan in the a o!nt of "# illion $ith respondent %e&elop ent 'an( of the )hilippines (%')) in its desire to de&elop the f!ll potentials of its inin* +lai s and deposits. %') *ranted the loan s!b,e+t, ho$e&er, to si-t. onero!s +onditions, a on* $hi+h is the ana*e ent a*ree ent that the affairs of the petitioner $ere pla+ed !nder the +o plete +ontrol of %') and 'an+o in+l!din* the disposition and disb!rse ent of the said loan. )etitioners alle*es that the respondents and their dire+tors/offi+ers is ana*ed and isspent the loan and instead of helpin* petitioner *et ba+( on its feet, %') +o pletel. abandoned the petitioner0s pro,e+t and pro+eeded to fore+lose the properties ort*a*ed to it b. petitioner $itho!t pre&io!s de and or noti+e. In essen+e, the petitioner in its +o plaint see(s the ann!l ent of the deeds of deed of assi*n ent $hi+h it e-e+!ted in fa&or of %') in order to se+!re the loan. ort*a*e and

Respondent %') opposed the iss!an+e of a $rit of preli inar. in,!n+tion statin* that !nder )residential %e+ree 1o. 23#, %')0s ri*ht to fore+lose is andator. as FMC0s arreara*es had alread. rea+hed at least t$ent. per+ent of its total obli*ations4 that !nder the sa e de+ree, no +o!rt +an iss!e an. restrainin* order or in,!n+tion a*ainst it to stop the fore+los!re The trial +o!rt de+ided in fa&or of respondents and a*ainst FMC. The appellate +o!rt affir ed said de+ision. 5en+e this petition for re&ie$. ISS%ES$ as assi*ned b. FMC: 6. There bein* 7pers!asi&e0 e&iden+e that the "# illion pro+eeds of the loan $ere not re+ei&ed and did not benefit the petitioner per findin* of the lo$er +o!rt $hi+h sho!ld not be dist!rbed !nless there is *ra&e ab!se of dis+retion, it !st follo$ that )% 23# does not and +annot appl.4 8. If there $as no &alid loan +ontra+t for fail!re of +onsideration, the ort*a*e +annot e-ist or stand b. itself bein* a ere a++essor. +ontra+t. 9dditionall., the +hattel ort*a*e has not been re*istered. Therefore, the sa e is n!ll and &oid !nder 9rti+le 868# of the 1e$ Ci&il Code4 and &EL'$ )etition is GR91TE%. The orders of the I9C are hereb. 911U::E% and ;ET 9;I%E. The trial +o!rt is ordered to pro+eed $ith the trial on the erits of the ain +ase. In the eanti e, the TR< iss!ed b. this Co!rt on shall re ain in for+e !ntil the erits of the ain +ase are resol&ed. 6. ;e+tions 6 and 8 of ).%. 1o. 23# respe+ti&el. pro&ide: ;e+tion 6. It shall be andator. for *o&ern ent finan+ial instit!tions after the lapse of si-t. (=>) da.s fro the iss!an+e of this %e+ree, to fore+lose the +ollaterals and/or se+!rities for an. loan, +redit a++o odation, and/or *!arantees *ranted b. the $hene&er the arreara*es on s!+h a++o!nt, in+l!din* a++r!ed interest and other +har*es, a o!nt to at least t$ent. (8>?) of the total o!tstandin* obli*ations, in+l!din* interest and other +har*es, as appearin* in the boo( of a++o!nts and/or related re+ords of the finan+ial instit!tion +on+erned. This shall be $itho!t pre,!di+e to the e-er+ise b. the *o&ern ent finan+ial instit!tion of s!+h ri*hts and/or re edies a&ailable to the !nder their respe+ti&e +ontra+ts $ith their debtors, in+l!din* the ri*ht to fore+lose on loans, +redits, a++o odations, and/or

*!arantees on $hi+h the arreara*es are less than t$ent. per+ent (8>?). ;e+tion 8. 1o restrainin* order, te porar. or per anent in,!n+tion shall be iss!ed b. the +o!rt a*ainst an. *o&ern ent finan+ial instit!tion in an. a+tion ta(en b. s!+h instit!tion in +o plian+e $ith the andator. fore+los!re pro&ided in ;e+tion 6 hereof, $hether s!+h restrainin* order, te porar. or per anent in,!n+tion is so!*ht b. the borro$er(s) or an. third part. or parties, e-+ept after d!e hearin* in $hi+h it is established b. the borro$er, and ad itted b. the *o&ern ent finan+ial instit!tion +on+erned that t$ent. per+ent (8>?) of the o!tstandin* arreara*es has been paid after the filin* of fore+los!re pro+eedin*s. )% 1o. 23# $as iss!ed pri aril. to see to it that *o&ern ent finan+ial instit!tions are not denied s!bstantial +ash inflo$s, $hi+h are ne+essar. to finan+e de&elop ent pro,e+ts all o&er the +o!ntr., b. lar*e borro$ers $ho, $hen the. be+o e delin@!ent, resort to +o!rt a+tions in order to pre&ent or dela. the *o&ern ent0s +olle+tion of their debts and loans. The *o&ern ent, ho$e&er, is bo!nd b. basi+ prin+iples of fairness and de+en+. !nder the d!e pro+ess +la!se of the 'ill of Ri*hts. ).%. 23# $as ne&er eant to prote+t offi+ials of *o&ern ent lendin* instit!tions $ho ta(e o&er the ana*e ent of a borro$er +orporation, lead that +orporation to ban(r!pt+. thro!*h is ana*e ent or isappropriation of its f!nds, and $ho, after r!inin* it, !se the andator. pro&isions of the de+ree to a&oid the +onse@!en+es of their isdeeds. The desi*nated offi+ers of the *o&ern ent finan+in* instit!tion +annot si pl. $al( a$a. and then state that sin+e the loans $ere obtained in the +orporation0s na e, then ).%. 23# !st be pere ptoril. applied and that there is no $a. the borro$er +orporation +an pre&ent the a!to ati+ fore+los!re of the ort*a*e on its properties on+e the arreara*es rea+h t$ent. per+ent (8>?) of the total obli*ation no atter $ho $as responsible. '!t +annot, at this point, +on+l!de that respondent %') to*ether $ith the 'an+o people a+t!all. isappropriated and isspent the "# illion loan in $hole or in part altho!*h the trial +o!rt fo!nd that there is Apers!asi&eB e&iden+e that s!+h a+ts $ere +o itted b. the respondent. This atter sho!ld ri*htf!ll. be liti*ated belo$ in the ain a+tion. <nl. after trial on the erits of the ain +ase +an the tr!e a o!nt of the loan $hi+h $as applied $isel. or not, for the benefit of the petitioner be deter ined. Conse@!entl., the e-tent of the loan $here there $as no fail!re of +onsideration and $hi+h a. be properl. satisfied b. fore+los!re pro+eedin*s !nder ).%. 23# $ill ha&e to a$ait the presentation of e&iden+e in a trial on the erits. 8. 9s re*ards the se+ond assi*n ent of error, $e a*ree $ith the petitioner that a ort*a*e is a ere a++essor. +ontra+t and, th!s, its &alidit. $o!ld depend on the &alidit. of the loan se+!red b. it. Ce, ho$e&er, re,e+t the petitioner0s ar*! ent that sin+e the +hattel ort*a*e in&ol&ed $as not re*istered, the sa e is n!ll and &oid. 9rti+le 868# of the Ci&il Code +learl. pro&ides that the nonDre*istration of the ort*a*e does not affe+t the i ediate parties. It states: 9rt. 868#. In addition to the re@!isites stated in arti+le 8>3#, it is indispensable, in order that a ort*a*e a. be &alidl. +onstit!ted that the do+! ent in $hi+h it appears be re+orded in the Re*istr. of )ropert.. If the instr! ent is not re+orded, the ort*a*e is ne&ertheless bindin* bet$een the parties.