Cuyco v.
Cuyco loans were intended by the parties to be
FACTS:
Petitioner Sps. Adelina & Feliciano Cuyco,
obtained a loan of 1.5 million from
respondents, Sps Renato and Filipina Cuyco.
The loan was payable within 1 year at 18%
per annum, and was secured by a Real Estate
Mortgage (REM).
Subsequently, Pets. Obtained an additional
loan from resps. In the aggregated amount of
1.25 million.
1. 150k May 30,1992
2. 150k July 1, 1992
3. 500k Sept 5, 1992
4. 200k Oct 29, 1992
5. 250k Jan 13, 1993
Pets. Failed to pay their loan obligation. Thus,
on Sept 10, 1997 resps filed a complaint for
foreclosure of mortgage with the RTC of QC.
Resps alleged that pets loans were secured
by the REM
- That their indebtedness amounted to
6.9 million, inclusive with the 18%
interest compounded monthly.
Pets, in their answer admitted their loan
obligations
- but argued that only the original loan
of 1.5 million was secured by the REM
at 18% per annum
- and that there was no agreement that
the same will be compounded
monthly.
RESPONDENTS ARGUMENT:
With regard what loans were secured by the
REM, they contended that all 5 additional
secured by the REM.
By express intention of the mortgagors, the
REM secures
- 1.5 million
- 150k July 1, 1992
- 500k Sept 5,1992
All these loans are subject to the
stipulated interest interest of 18% per
annum provided in the REM.
RULING:
No dragnet clause. The REM did not stipulate
that the mortgaged realty shall also secure
future loans and advancements.
Even if the parties intended the additional
loans, it is not sufficient in law to bind the
realty for it was not made substantially in the
form prescribed by law.
In order to constitute a legal mortgage, it must
be executed in a public document, besides
being recorded.
By express provision of Section 127 of Act.
469, a mortgage affecting land, whether
registered under said act or not registered at
all, is not deemed to be sufficient in law nor
may it be effective to encumber or bind the
land unless made substantially in the form
therein prescribed.
It is required among other thing, that the REM
be signed by the mortgagor executing the
same, in the presence of 2 witnesses, and
acknowledged as his free act & deed before a
notary public.