Case #1

A MORTGAGEE CANNOT APPROPRIATE THINGS GIVEN BY WAY OF PLEDGE AND

MORTGAGE, OR DISPOSE OF THEM. OWNERSHIP IS RETAINED BY THE MORTGAGOR.
LAO v. CA
G.R. No. 115307. July 8,1997

FACTS

On June 24, 1992, private respondent Better Homes Realty and Housing Corporation, filed
with Metropolitan Trial Court of Quezon City, a complaint for unlawful detainer on the ground
that they are the owner of the premises situated in Domingo Street Quezon City. And that
petitioner Manuel Lao occupied the property without rent but on respondent’s pure liberality with
the understanding that he would vacate the property upon demand but then petitioner refused to
vacate the premises.

Petitioner claimed that he is the real owner of the property and that he purchased it from N.
Domingo Realty but the agreement was actually a loan secured by mortgage. MeTC rendered a
decision ordering the petitioner to vacate the property and to pay private respondent the sum of
300 php as a reasonable rent for the use and occupation of the premises. On appeal, the RTC
rendered a decision reversing the MeTC ruling, but then the CA upon appeal of the RTC
decision reversed the ruling and affirmed the decision of the MeTC.

ISSUE

Whether or not private respondent had acquired ownership over the property in question
and petitioner should be ejected from the premises.

HELD

In the case at bar, a determination of the issue of ownership is indispensable to resolving

the rights of both parties over the property in controversy, and is inseparable from the
determination of who between them has the right to possess the same.

Private respondent anchored its right in the ejectment suit on a contract of sale in which
petitioner transferred the title of the property in question. Petitioner contends that their
transaction was not an absolute sale but an equitable mortgage.

In determining the nature of a contract, the Court looks at the intent of the parties and not
the terms used to describe it. And after examining the contract, the Court finds that the
agreement was manifestly one of equitable mortgage. First, the property remained in
possession of petitioner Manuel Lao who was the beneficial owner of the property. Second, the
option given to Lao to purchase the property had been extended twice executed by Mr. Tan
(President and Chairman of the Board of Better Homes and Realty Corporation). Third,
petitioner and his brother were in such dire of money that they mortgaged their property to
private respondent.
 Based on the conduct of the petitioner and private respondent and even the terminology of
the second option to purchase, the Supreme Court ruled that it was undoubtedly one of
equitable mortgage and not of sale.

And therefore, petitioner should not be ejected in the property in question. Being a
mortgagee, private respondent has no right to eject petitioner. Private respondent cannot
appropriate things given by way of pledge and mortgage, or dispose of them. And any
stipulation to the contrary is null and void.

Case #2
UNREGISTERED RIGHT OVER THE LAND IS MORE SUPERIOR THAN THE REGISTERED
MORTGAGE
STATEMENT INVESTMENT HOUSE v. COURT OF APPEALS
G.R. No. 115548, March 5, 1996

FACTS

On October 15, 1969, contract to sell no. 36 was executed by spouses Canuto and Oreta
and the Solid Homes, Inc., involving a parcel of land identified as Blk. 8 Lot 1 Phase 1 of the
Capitol Park Homes containing 511 sq m for a consideration of 39, 347 php. Upon signing of the
contract, souses Oreta made payment amounting to 7, 869 php with agreements that the
balance shall be payable in monthly installemts of 451.70 at 12% interest per annum.

On November 1976, Solid executed several real estate mortgage in favor of petitioner. For
failure of Solid to comply with its mortgage obligations, petitioner extra judicially foreclosed the
mortgaged properties the mortgaged lots including the above mentioned property. Spouses
then filed a complaint against Solid and State for failure on the part of Solid to execute the
necessary absolute deed of sale as well as to deliver title to said property in violation of the
contract to sell despite full payment.

Office of Appeals Adjudication and Legal Affairs rendered a decision ordering Solid to
execute a Deed of Conveyance in favor of spouses, to pay State that portion of loan
corresponding to the value of the lot as collateral.

ISSUE

Whether or not private respondent spouses Oreta’s unregistered rights over the subject
property are superior to the registered mortgage rights of petitioner State

HELD

The Supreme Court ruled that State’s registered mortgage right over the property is inferior
to that of respondent spouses’ unregistered right. The unrecorded sale between spouses and
Solid is preferred for the reason that if the original owner had parted with his ownership of the
thing sold then he no longer had ownership and free disposal of that thing so as to be able to
mortgage it again. Registration of the mortgage is of no moment since it is understood to be
without prejudice to the better right of third parties.

Petitioner’s constructive knowledge of the defect in the legal title of the subject property or
lack of it due to its negligence takes the place of registration of the rights of the spouses.
Respondent court thus correctly ruled that petitioner was not a purchaser or mortgagee in good
faith; hence petitioner cannot solely rely on what merely appears on the face of the Torrens
Title.

Case #3
DISTINGUISHING CONTRACT OF SALE FROM REAL ESTATE MORTGAGE
SPOUSES FLANCIA v. COURT OF APPEALS
G.R. No. 146997. April 26, 2005

FACTS

Plaintiffs alleged that they purchased from Oakland Development a parcel of land
containing an area of 128.78 sq. m situated in Prater Village Old Balara, Quezon City. That by
virtue of the contract of sale, Oakland authorized plaintiffs to transport all their personal
belongings to their house. On December 1992, plaintiffs received a copy of the execution
foreclosing the mortgage thus they allege that the mortgage of the subject lot is null and void.

Defendant Genato averred that defendant Oakland Development mortgaged the lots as
security and guaranty for the payment of a loan in the sum of 2M php.

The RTC rendered a decision ordering Oakland to pay P10k for the option to purchase lot,
P140k for the 1st down payment, P20,520.80 for the 5 monthly amortizations plus other sums
for payment of damages. On a motion for reconsideration the TC granted the same but then the
Court of Appeals reinstated the ruling of RTC.

ISSUES

1. Whether or not the registered mortgage constituted over the property was valid.
2. Whether or not the registered mortgage superior to the contract to sell.

HELD

1. Under the Art. 2085 of the Civil Code, the essential requisites of a contract of mortgage are:
(a) that it be constituted to secure the fulfillment of a principal obligation; (b) that the mortgagor
be the absolute owner of the thing mortgaged; and (c) that the persons constituting the
mortgage have the free disposal of their property, and in the absence thereof, that they be
legally authorized for the purpose.|||

As to the first essential requisite of a mortgage, it is undisputed that the mortgage was
executed on May 15, 1989 as security for a loan obtained by Oakland from Genato.
 As to the second and third requisites, we need to discuss the difference between a
contract of sale and a contract to sell.
In a contract of sale, title to the property passes to the vendee upon the delivery of the
thing sold; in a contract to sell, ownership is, by agreement, reserved by the vendor and is not to
pass to the vendee until full payment of the purchase price.
Otherwise stated, in a contract of sale, the vendor loses ownership over the property and
cannot recover it unless and until the contract is resolved or rescinded; in a contract to sell, title
is retained by the vendor until full payment of the price.
In the contract between petitioners and Oakland, the intention of Oakland not to transfer
ownership to petitioners until full payment of the price was very clear. Acts of ownership over
the property were expressly withheld by Oakland. All that was granted to them by the
occupancy was the right to possess it. Thus, when the property was mortgaged to Genato in
May 1989, what was in effect was a contract to sell, not a contract of sale. Oakland retained
absolute ownership over the property.

2. The Supreme Court held that Genato’s registered mortgage was superior to petitioner’s
contract to sell, subject to any liabilities Oakland may have incurred in favor of petitioners by
irresponsibly mortgaging the property to Genato despite its commitment to petitioners under
their contract to sell.

In this case, the Supreme Court held that a registered mortgage is superior to a contract to
sell. As distinguished from the case of State Investment Fund where the contract involved is a
contract of sale.

Case #4
EXCEPTION TO THE MORTGAGEE IN GOOD FAITH RULE
PREMIERE DEVP. BANK v. COURT OF APPEALS
G.R. No. 128122. March 18, 2005

FACTS

Two (2) different persons with exactly the same name, Vicente T. Garaygay, each
claimed exclusive ownership of Lot 23 in Matandang Balara, Quezon City by virtue of an
owner's duplicate certificate each had possession of during the period material covering said lot.
One held TCT No. 9780, supra, and the other, TCT No. 9780 (693), supra. The technical
description of the land appearing in one copy corresponds exactly with that in the other. The
date "June 14, 1944" appears on the face of both copies as a common date of entry. One,
however, contained certain features, markings, and/or entries not found in the other and vice
versa.

On April 17, 1979, one of the two Vicente T. Garaygays, a resident of Cebu City,
executed a deed of sale over the lot described in and covered by his TCT No. 9780 (693) in
favor of his nephew, Joselito P. Garaygay. The sale notwithstanding, the owner's duplicate
certificate remained for some time in the seller's possession.
 In another transaction, the other Vicente T. Garaygay, a resident of Rizal, sold to Liberto
G. Yambao and Jesus B. Rodriguez the same property described in TCT 9780. "YCM
Compound, Angono, Rizal" is set out in the February 11, 1986 conveying deed as the seller's
residence. Buyers Yambao and Rodriguez would later sell a portion of their undivided interests
on the land to Jesus D. Morales.

A fire gutted a portion of the Quezon City hall and destroyed in the process the original
copy of TCT No. 9780 (693) on file with the Registry of Deeds of Quezon City. Barely a month
later, a certain Engr. Hobre led an application, signed by Garaygay of Cebu, for the
reconstitution of the burned original on the basis of the latter's owner's duplicate certificate. After
due proceedings, the LRA issued an order of reconstitution, by virtue of which Garaygay of
Cebu acquired reconstituted TCT No. RT-1764 (9780) (693).

Meanwhile, or on May 26, 1989, the deed of sale executed by Garaygay of Cebu in favor
of his nephew Joselito was registered. Thereafter, Lot 23 was subdivided into three (3) lots,
namely: Lot 23-A, Lot 23-B and Lot 23-C for which TCT Nos. 14414, 14415 and 14416,
respectively, were issued. Joselito posthaste sold Lot 23-A to Lilian Toundjis. The other two (2)
lots were mortgaged by Joselito to Premiere Development Bank, Inc. to secure a P2.5 Million
loan.

Yambao, Rodriguez and Morales as pro indiviso buyers of Lot No. 23, caused the
annotation on December 17, 1990, January 16, 1991 and February 15, 1991 of their respective
adverse claims on Joselito's TCT. They then led with the Regional Trial Court at Quezon City
suit against Joselito, Century Realty and Premiere Bank for quieting of title and annulment of
said defendants' fake titles with prayer for damages.

ISSUE

Whether or not petitioner bank is an innocent mortgagee.

HELD

Premiere Bank cannot be accorded the status of an innocent mortgagee for value vis-à-
vis the mortgage of the lots constituted in its favor by Century Realty.

It cannot be overemphasized, that Premiere Bank, being in the business of extending

loans secured by real estate mortgage, is familiar with rules on land registration. As such, it
was, as here, expected to exercise more care and prudence than private individuals in their
dealing with registered lands. Accordingly, given inter alia the suspicion-provoking presence of
occupants other than the owner on the land to be mortgaged, it behooved Premiere Bank to
conduct a more exhaustive investigation on the history of the mortgagor's title. That Premiere
Bank accepted in mortgage the property in question notwithstanding the existence of structures
on the property and which were in actual, visible and public possession of a person other than
the mortgagor, constitutes gross negligence amounting to bad faith. Premier Bank is thus not
entitled to have its lien annotated on the genuine title.
Case #5

EXCEPTION TO THE MORTGAGEE IN GOOD FAITH RULE

DE LA MERCED v. GSIS
G.R. No. 140398. September 11, 2001

FACTS

Governor Jose C. Zulueta and his wife Soledad Ramos were the owners of parcels of
land consisting of 100,986 square meters, known as the Antonio Village Subdivision, Oranbo,
Pasig City. The parcels of land were registered in their names under Transfer Certificates of
Title Nos. 26105, 37177 and 50256.

The Zuluetas obtained a loan of P520,000.00 from the Government Service Insurance
System, as security for which they mortgaged the lands covered by TCT No. 26105. It was
expressly stipulated in the mortgage deed that certain lots within TCT No. 26105 shall be
excluded from the mortgage because they have been either previously sold to third parties or
donated to the government.

The Zulueta spouses obtained two additional loans from the GSIS in the amount of
P190,000.00 and P1,000,000.00 as security for which they mortgaged the other lands. They
then executed a contract to sell whereby they undertook to sell to Francisco dela Merced and
Evarista Mendoza several lots by TCT No. 26105. After pull payment by Col. dela Merced of the
purchase price, a Deed of Absolute Sale was executed by the Zuluetas in his favor.
The Zuluetas defaulted in the payment of their loans. Thus, GSIS extrajudicially
foreclosed the mortgages and, at the foreclosure sale, where GSIS was awarded the mortgaged
properties as the highest bidder. Since the Zuluetas did not redeem the properties within the
reglementary period, title to the properties was consolidated to GSIS.

On August 22, 1984, a complaint for declaratory relief, injunction and damages,
docketed as Civil Case No. 51410, was filed with the Regional Trial Court of Pasig, Branch 160,
by Victor Lemonsito and several others, against private respondents. Petitioners alleged that the
Zulueta spouses were no longer the owner of the subject lots when they were mortgaged to
respondent GSIS on October 15, 1957 since the said properties were already sold to petitioner
Francisco dela Merced on September 3, 1957. Hence, the mortgage was void from its inception
and respondent GSIS, as mortgagee, acquired no better right notwithstanding the registration of
the mortgage. Petitioner also claimed that respondent GSIS knew that they had been in
continuous and open possession of the subject lots since 1955 up to the present. Petitioners
also claimed that respondent GSIS was a mortgagee in bad faith.

Respondent GSIS maintained that the subject lots were included in the real estate
mortgage executed by the Zuluetas in their favor. Respondent GSIS further asserted that as
mortgagee of land registered under the Torrens System, it was not required to do more than rely
upon the certificate of title.
 On the other hand, respondent spouses Manlongat claimed that their daughter Elizabeth
Manlongat, as purchaser of Lot 6, Block 2 at the auction sale conducted by respondent GSIS,
has a better right than petitioners since the contract to sell and deed of absolute sale executed
between the Zuluetas and petitioner dela Merced were unregistered.

ISSUES

1. Whether or not the registered right of GSIS as mortgagee of the property is inferior to the
unregistered right of petitioners
2. Whether or not GSIS is not required to look further that what appears on the face of the
title

HELD

1. The Supreme Court held that the registered right of GSIS as mortgagee of the property is
inferior to the unregistered right of petitioners. The unrecorded sale between petitioner dela
Merced as the vendee of the property and the Zuluetas, the original owners, is preferred for the
reason that if the original owner had parted with his ownership of the thing sold then he no
longer had ownership and free disposal of that thing so as to be able to mortgage it again.
Registration of the mortgage is of no moment since it is understood to be without prejudice to
the better right of third parties.

2. Moreover, the Court held that the general rule that a purchaser or mortgagee of land is not
required to look further that what appears on the face of the title does not apply when the
purchaser or mortgagee is a financing institution, such as respondent GSIS.

Respondents cannot even assert that as mortgagee of land registered under the Torrens
system, GSIS was not required to do more than rely upon the certificate of title. As a general
rule, where there is nothing on the certificate of title to indicate any cloud or vice in the
ownership of the property, or any encumbrance thereon, the purchaser is not required to
explore further than what the Torrens Title upon its face indicates in quest for any hidden defect
or inchoate right that may subsequently defeat his right thereto. This rule, however, admits of an
exception as where the purchaser or mortgagee has knowledge of a defect or lack of title in the
vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire
into the status of the property in litigation. In the case at bar, GSIS is admittedly a financing
institution. In its answer to the complaint filed with the trial court, GSIS admitted knowledge that
the spouses Jose C. Zulueta and Soledad B. Ramos owned the Antonio Subdivision when they
mortgaged the same with GSIS. In Sunshine Finance and Investment Corp. v. Intermediate
Appellate Court, we held that when the purchaser or mortgagee is a financing institution, the
general rule that a purchaser or mortgagee of land is not required to look further than what
appears on the face of the title does not apply. Nevertheless, we have to deviate from the
general rule because of the failure of petitioner in this case to take the necessary precautions to
ascertain if there was any flaw in the title of the Nolascos and to examine the condition of the
property they sought to mortgage. The petitioner is an investment and financing corporation. We
presume it is experienced in its business. Ascertainment of the status and condition of
properties offered to it as security for the loans it extends must be a standard and indispensable
part of its operations. Surely it cannot simply rely on an examination of a Torrens certificate to
determine what the subject property looks like as its condition is not apparent in the document.
The land might be in a depressed area. There might be squatters on it. It might be easily
inundated. It might be an interior lot without convenient access. These and other similar factors
determine the value of the property and so should be of practical concern to the petitioner.

Case #9
DRAGNET CLAUSE
PRUDENTIAL BANK v. ALVIAR
G.R. No. 150197. July 28, 2005
TINGA, J.

FACTS
Spouses Alviar are the registered owners of a parcel of land in San Juan, Metro Manila
(TCT. 438157). They executed a deed of real estate mortgage of the said property in favor of
petitioner Prudential Bank to secure the payment of a loan worth P250,000.00. A promissory
note was then issued covering the said loan, with an interest rate of 12% per annum, and that
the note is secured by a real estate mortgage as aforementioned with a “blanket mortgage
clause” or the “dragnet clause.”

The spouses thereafter issued two more promissory notes. One for P2,640,000 which
was secured by a “hold-out” on the mortgagor’s foreign currency savings account. The other in
the name of Donalco Trading, Inc., covering P545,000.000. The Bank approved the loans of the
Spouses and also mentioned in their approval letter that the securities for the loan were the
deed of assignment on two PNs executed by Bancom Realty and the chattel mortgage on
various heavy and transportation equipment.

The spouses paid petitioner P2,000,000.00, to be applied to the obligations of G.B.

Alviar Realty and Development, Inc. and for the release of the real estate mortgage for the
P450,000.00 loan covering the two (2) lots in San Juan. The payment was acknowledged by
petitioner who accordingly released the mortgage over the two properties. However, Prudential
Bank moved for the extrajudicial foreclosure of the mortgage on the property since respondents
had the total obligation of P1,608,256.68, covering the three (3) promissory notes.
 The spouses then filed a complaint for damages with claiming that they have paid their
principal loan secured by the mortgaged property, and thus the mortgage should not be
foreclosed. The RTC favored the Spouses saying that the extrajudicial foreclosure was improper
for the mortgage only covers the first loan of P250,000. CA affirmed the said decision.

ISSUE
Whether or not the deed of real estate mortgage covers only the first loan of P250,000.

HELD
A "blanket mortgage clause," also known as a "dragnet clause" in American
jurisprudence, is one which is specifically phrased to subsume all debts of past or future origins.
Such clauses are "carefully scrutinized and strictly construed." Mortgages of this character
enable the parties to provide continuous dealings, the nature or extent of which may not be
known or anticipated at the time, and they avoid the expense and inconvenience of executing a
new security on each new transaction. A "dragnet clause" operates as a convenience and
accommodation to the borrowers as it makes available additional funds without their having to
execute additional security documents, thereby saving time, travel, loan closing costs, costs of
extra legal services, recording fees, et cetera. Indeed, it has been settled in a long line of
decisions that mortgages given to secure future advancements are valid and legal
contracts, and the amounts named as consideration in said contracts do not limit the amount
for which the mortgage may stand as security if from the four corners of the instrument the
intent to secure future and other indebtedness can be gathered.

As the deed of REM between the parties contained a “dragnet clause,” petitioner and
respondents intended the real estate mortgage to secure not only the P250,000.00 loan from
the petitioner, but also future credit facilities and advancements that may be obtained by the
respondents. The terms of the above provision being clear and unambiguous, there is neither
need nor excuse to construe it otherwise.

NOTES
Under American jurisprudence, two schools of thought have emerged on this question.
One school advocates that a "dragnet clause" so worded as to be broad enough to cover all
other debts in addition to the one specifically secured will be construed to cover a different debt,
although such other debt is secured by another mortgage. The contrary thinking maintains that
a mortgage with such a clause will not secure a note that expresses on its face that it is
otherwise secured as to its entirety, at least to anything other than a deficiency after exhausting
the security specified therein, such deficiency being an indebtedness within the meaning of the
mortgage, in the absence of a special contract excluding it from the arrangement.

The latter school represents the better position. The parties having conformed to the
"blanket mortgage clause" or "dragnet clause," it is reasonable to conclude that they also
agreed to an implied understanding that subsequent loans need not be secured by other
securities, as the subsequent loans will be secured by the first mortgage. In other words, the
sufficiency of the first security is a corollary component of the "dragnet clause." But of course,
there is no prohibition, as in the mortgage contract in issue, against contractually requiring other
securities for the subsequent loans. Thus, when the mortgagor takes another loan for which
another security was given it could not be inferred that such loan was made in reliance solely on
the original security with the "dragnet clause," but rather, on the new security given. This is the
"reliance on the security test."

In another case, it was held that a mortgage with a "dragnet clause" is an "offer" by the
mortgagor to the bank to provide the security of the mortgage for advances of and when they
were made. Thus, it was concluded that the "offer" was not accepted by the bank when a
subsequent advance was made because (1) the second note was secured by a chattel
mortgage on certain vehicles, and the clause therein stated that the note was secured by such
chattel mortgage; (2) there was no reference in the second note or chattel mortgage indicating a
connection between the real estate mortgage and the advance; (3) the mortgagor signed the
real estate mortgage by her name alone, whereas the second note and chattel mortgage were
signed by the mortgagor doing business under an assumed name; and (4) there was no
allegation by the bank, and apparently no proof, that it relied on the security of the real estate
mortgage in making the advance.

Indeed, in some instances, it has been held that in the absence of clear, supportive
evidence of a contrary intention, a mortgage containing a "dragnet clause" will not be extended
to cover future advances unless the document evidencing the subsequent advance refers to the
mortgage as providing security therefor. (DI KO ALAM KUNG ISASAMA BA TO HAHAHAHA)

Case #10
DRAGNET CLAUSE
UNION BANK v. COURT OF APPEALS
G.R. No. 164910. September 30, 2005
Ynares-Santiago, J.

FACTS
In a memorandum of agreement dated May 27, 1992, D'Rossa Incorporated (DRI)
agreed to mortgage its two parcels of land in favor of Union Bank of the Philippines
(Union Bank) as security for the credit facility of Josephine Marine Trading Corporation (JMTC).
JMTC availed P3 million from the credit line. Subsequently, Union Bank increased the credit
facility of JMTC to P27 million, from which JMTC availed US$700,503.64 or P18,318,170.18.
Upon JMTC's failure to pay its obligation, Union Bank instituted foreclosure proceedings on
DRI's properties. DRI's properties were auctioned where Union Bank was declared the highest
bidder for P15,300,000.00.

DRI filed a supplemental complaint seeking to declare the public sale as null. It claimed
that its liability is only P3 million which was the liability incurred by JMTC under its first
agreement with Union Bank. However, Union Bank alleged that DRI was liable to JMTC's total
outstanding obligations, regardless of whether it was incurred during or subsequent to the first
agreement. The RTC ruled in favor of the Union Bank. The CA reversed the said decision.
ISSUE
Whether or not DRI’s liability is only limited to the amount of its first agreement with Union Bank.

HELD
NO. As the MOA between DRI and Union Bank provides that, “The obligations secured
by this Mortgage (the "Secured Obligations") are the following: a) All the obligations of the
Borrower and/or the Mortgagor under: … (ii) any and all instruments or documents issued upon
the renewal, extension, amendment or novation of the Notes, the Agreement and this Mortgage,
irrespective of whether such obligations as renewed, extended, amended or novated are in the
nature of new, separate or additional obligations;” it can clearly show the parties' intent to
constitute DRI's real estate properties as continuing securities, liable for the current as well as
the future obligations of JMTC. Indeed, a mortgage liability is usually limited to the amount
mentioned in the contract, but where the intent of the contracting parties is manifest that the
mortgage property shall also answer for future loans or advancements, the same is valid and
binding between the parties. 12 In this case, DRI expressly agreed to secure all the
obligations of JMTC, whether presently owing or subsequently incurred. Thus, its liability is not
limited to P8.61 million only.|||
A "blanket mortgage clause," also known as a "dragnet clause" in American jurisprudence, is
one which is specifically phrased to subsume all debts of past or future origins. Such clauses are
"carefully scrutinized and strictly construed." Mortgages of this character enable the parties to
provide continuous dealings, the nature or extent of which may not be known or anticipated at
the time, and they avoid the expense and inconvenience of executing a new security on each
new transaction. A "dragnet clause" operates as a convenience and accommodation to the
borrowers as it makes available additional funds without their having to execute additional
security documents, thereby saving time, travel, loan closing costs, costs of extra legal services,
recording fees, et cetera. Indeed, it has been settled in a long line of decisions that mortgages
given to secure future advancements are valid and legal contracts, and the amounts named as
consideration in said contracts do not limit the amount for which the mortgage may stand as
security if from the four corners of the instrument the intent to secure future and other
indebtedness can be gathered.

Even if DRI is considered as an accommodation mortgagor only, its liability would still exceed
P8.61 million. It is well to note that DRI, through its President, Rose D. Teodoro, agreed to
secure not only the present obligations of JMTC but also those that may be incurred after the
execution of the mortgage contract. DRI also actively participated in facilitating the increase of
JMTC's credit facility.