Var||a 8ar||rg Corporal|or vs. Teodoro, Jr.

Jaruary 13, 1989

[0RN 53955 Jaruary 13, 1989.|
TlE VANlLA 8ANKlN0 C0RP0RATl0N, p|a|rl|ll-appe||ee, vs. ANA3TACl0 TE000R0, JR. ard 0RACE ANNA TE000R0, delerdarls-appe||arls.
APPEAL lror lre dec|s|or ol lre Courl ol F|rsl lrslarce ol Var||a, 8r. 1Z. Ve|erc|o-lerrera, J.
Tre lacls are slaled |r lre op|r|or ol lre Courl.
Forroso & 0u|roo LaW 0ll|ce lor p|a|rl|ll-appe||ee.
3eral|r P. R|vera lor delerdarls-appe||arls.
8l0lN, J.:
Tr|s |s ar appea| lror lre dec|s|or ol lre Courl ol F|rsl lrslarce ol Var||a, 8rarcr Xvll |r C|v|| Case No. Z81Z8 lor co||ecl|or ol sur ol rorey oased or pror|ssory roles execuled oy
lre delerdarls-appe||arls |r lavor ol p|a|rl|ll-appe||ee oar|. Tre d|spos|l|ve porl|or ol lre appea|ed dec|s|or (Record or Appea|, p. 33) reads as lo||oWs:
wlEREF0RE judgrerl |s rereoy rerdered (a) serlerc|rg delerdarls, Araslac|o Teodoro, Jr. ard 0race Arra Teodoro jo|rl|y ard severa||y, lo pay p|a|rl|ll lre sur ol P15,03Z.11 p|us
12 |rleresl par arrur lror 3epleroer 30, 199 url|| lu||y pa|d, |r payrerl ol Pror|ssory Noles No. 1118Z, p|us lre sur ol P1,000.00 as allorrey's lees; ard (o) serlerc|rg delerdarl
Araslac|o Teodoro, Jr. lo pay p|a|rl|ll lre sur ol P8,931.Z1, p|us |rleresl al 12 per arrur lror 3epleroer 30, 199 url|| lu||y pa|d, |r payrerl ol Pror|ssory Noles Nos. 11515 ard
1199, p|us lre sur ol P500.00 as allorrey's lees.
w|lr Cosls aga|rsl delerdarls.
Tre lacls ol lre case as lourd oy lre lr|a| courl are as lo||oWs:
0r Apr|| 25, 19, delerdarls, logelrer W|lr Araslac|o Teodoro, 3r., jo|rl|y ard severa||y, execuled |r lavor ol p|a|rl|ll a Pror|ssory Nole (No. 1118Z) lor lre sur ol P10,120.00 payao|e
|r 120 days, or or Augusl 25, 19 al 12 |rleresl per arrur. 0elerdarls la||ed lo pay lre sa|d arourl |rsp|le ol repealed derards ard lre oo||gal|or ar ol 3epleroer 30, 199 slood
al P15,13Z.11 |rc|ud|rg accrued |rleresl ard serv|ce crarge.
0r Vay 3, 19 ard Jure 20, 19, delerdarls Araslac|o Teodoro, 3r. (Falrer) ard Araslac|o Teodoro. Jr. (3or) execuled |r lavor ol p|a|rl|ll lWo Pror|ssory Noles (Nos. 11515 ard
1199) lor P8,000.00 ard P1,000.00 respecl|ve|y, payao|e |r 120 days al 12 |rleresl per arrur. Falrer ard 3or rade a parl|a| payrerl or lre Vay 3, 19 Pror|ssory Nole oul
rore or lre Jure 20, 19 Pror|ssory Nole, |eav|rg sl||| ar urpa|d oa|arce ol P8,931.Z1 as ol 3epleroer 30, 199 |rc|ud|rg accrued |rleresl ard serv|ce crarge.

Tre lrree Pror|ssory Noles sl|pu|aled lral ary |rleresl due |l rol pa|d al lre erd ol every rorlr sra|| oe added lo lre lola| arourl lrer due, lre Wro|e arourl lo oear |rleresl al lre rale
ol 12 per arrur url|| lu||y pa|d; ard |r case ol co||ecl|or lrrougr ar allorrey. al-|aW, lre ra|ers sra||, jo|rl|y ard severa||y, pay 10 ol lre arourl over-due as allorrey's lees, Wr|cr
|r ro case sra|| oe |ess lrar P200.00.
ll appears lral or Jaruary 21, 191, lre 3or execuled |r lavor ol p|a|rl|ll a 0eed ol Ass|grrerl ol Rece|vao|es lror lre Erergercy Erp|oyrerl Adr|r|slral|or |r lre sur ol
P11,35.00. Tre 0eed ol Ass|grrerl prov|ded lral |l Was lor ard |r cors|deral|or ol cerla|r cred|ls, |oars, overdralls ard olrer cred|l accorrodal|ors exlerded lo delerdarls as
secur|ly lor lre payrerl ol sa|d sur ard lre |rleresl lrereor, ard lral delerdarls do rereoy rer|se, re|ease ard qu|lc|a|r a|| |ls r|grls, l|l|e, ard |rleresl |r ard lo lre arourls
rece|vao|es.' Furlrer:
'(1) Tre l|l|e ard r|grl ol possess|or lo sa|d accourls rece|vao|e |s lo rera|r |r lre ass|gree, ard |l sra|| rave lre r|grl lo co||ecl lre sare lror lre deolor, ard Wralsoever lre Ass|gror
does |r correcl|or W|lr lre co||ecl|or ol sa|d accourls, |l agrees lo do as agerl ard represerlal|ve ol lre Ass|gree ard |r lrusl lor sa|d Ass|gree x x x;
() Tre Ass|gror guararlees lre ex|slerce ard |ega||ly ol sa|d accourls rece|vao|e, ard lre due ard purclua| payrerl lrereol urlo lre ass|gree, x x x or derard, x x x ard lurlrer, lral
Ass|gror Warrarls lre so|vercy ard cred|l Worlr|ress ol eacr ard every accourl.
(Z) Tre Ass|gror does rereoy guararlee lre payrerl Wrer due or a|| surs payao|e urder lre corlracls g|v|rg r|se lo lre accourls rece|vao|e x x x |rc|ud|rg reasorao|e allorreys lees
|r erlorc|rg ary r|grls aga|rsl lre deolors ol lre ass|gred accourls rece|vao|e ard W||| pay upor derard, lre erl|re urpa|d oa|arce ol sa|d corlracl |r lre everl ol ror-payrerl oy lre
sa|d deolors ol ary rorlr|y sur al |ls due dale or ol ary olrer delau|l oy sa|d deolors x x x.
(9) x x x Tr|s Ass|grrerl sra|| a|so slard as a corl|ru|rg guararlee lor ary ard a|| Wralsoever lrere |s or |r lre lulure lrere W||| oe jusl|y oW|rg lror lre Ass|gror lo lre Ass|gree
x x x.
lr lre|r sl|pu|al|ors ol Facl, |l |s adr|lled oy lre parl|es lral p|a|rl|ll exlerded |oars lo delerdarls or lre oas|s ard oy reasor ol cerla|r corlracls erlered |rlo oy lre delurcl Erergercy
Erp|oyrerl Adr|r|slral|or (EEA) W|lr delerdarls lor lre laor|cal|or ol l|sr|rg ooals, ard lral lre Pr|||pp|re F|srer|es Corr|ss|or succeeded lre EEA aller |ls aoo||l|or; lral ror-
payrerl ol lre roles Was due lo lre la||ure ol lre Corr|ss|or lo pay delerdarls aller lre |aller rad corp||ed W|lr lre|r corlraclua| oo||gal|ors; ard lral lre Pres|derl ol p|a|rl|ll 8ar|
loo| sleps lo co||ecl lror lre Corr|ss|or, oul ro co||ecl|or Was ellecled.
For la||ure ol delerdarls lo pay lre surs due or lre Pror|ssory Nole, lr|s acl|or Was |rsl|luled or Noveroer 13, 199, or|g|ra||y aga|rsl lre Falrer, 3or, ard lre |aller's W|le. 8ecause
lre Falrer d|ed, roWever, dur|rg lre perdercy ol lre su|l, lre case as aga|rsl r|r Was d|sr|ssed urder lre prov|s|ors ol 3ecl|or 21, Ru|e 3 ol lre Ru|es ol Courl. Tre acl|or, lrer |s
aga|rsl delerdarls 3or ard r|s W|le lor lre co||ecl|or ol lre sur ol P15,03Z.11 or Pror|ssory Nole No. 1118Z; ard aga|rsl delerdarl 3or lor lre recovery ol P8,391.Z1 or Pror|ssory
Noles Nos. 11515 ard 1199, p|us |rleresl or oolr arourls al 12 per arrur lror 3epleroer 30, 199 url|| lu||y pa|d, ard 10 ol lre arourls due as allorrey's lees.
Ne|lrer ol lre parl|es preserled ary lesl|ror|a| ev|derce ard suor|lled lre case lor dec|s|or oased or lre|r 3l|pu|al|ors ol Facl ard or lre|r docurerlary ev|derce.
Tre |ssues, as del|red oy lre parl|es are: (1) Wrelrer or rol p|a|rl|lls c|a|r |s a|ready cors|dered pa|d oy lre 0eed ol Ass|grrerl ol Rece|vao|es oy lre 3or; ard (2) Wrelrer or rol |l |s
p|a|rl|ll Wro srou|d d|recl|y sue lre Pr|||pp|re F|srer|es Corr|ss|or lor co||ecl|or. (Record or Appea|, p. 29-32).
0r Apr|| 1Z, 19Z2, lre lr|a| courl rerdered |ls judgrerl adverse lo delerdarls. 0r Jure 8, 19Z2, delerdarls l||ed a rol|or lor recors|deral|or (Record or Appea|, p. 33) Wr|cr Was
der|ed oy lre lr|a| courl |r |ls order ol Jure 11, 19Z2 (Record or Appea|, p. 3Z). 0r Jure 23, 19Z2, delerdarls l||ed W|lr lre |oWer courl lre|r rol|ce ol appea| logelrer W|lr lre appea|
oord (Record or Appea|, p. 38). Tre record ol appea| Was lorWarded lo lre Courl ol Appea|s or Augusl 22, 19Z2 (Record or Appea|, p. 12).
lr lre|r appea| (8r|el lor lre Appe||arls, Ro||o, p. 12), appe||arls ra|sed a s|rg|e ass|grrerl ol error, lral |s TlAT TlE 0ECl3l0N lN 0uE3Tl0N AV0uNT3 T0 A Ju0lClAL
REVAKlN0 0F TlE C0NTRACT 8ETwEEN TlE PARTlE3, lNvl0LATl0N 0F LAw; lENCE, TANTAV0uNT T0 LACK 0R EXCE33 0F JuRl30lCTl0N.'
As lre appea| |rvo|ves a pure quesl|or ol |aW, lre Courl ol Appea|s, |r |ls reso|ul|or proru|galed or Varcr , 1980, cerl|l|ed lre case lo lr|s Courl (Ro||o, p. 21). Tre record or Appea|
Was lorWarded lo lr|s Courl or Varcr 31, 1980 (Ro||o, p. 1).
lr lre reso|ul|or ol Vay 30, 1980, lre F|rsl 0|v|s|or ol lr|s Courl ordered lral lre case oe doc|eled ard dec|ared suor|lled lor dec|s|or (Ro||o, p. 33).
0r Varcr Z, 1988, cors|der|rg lre |erglr ol l|re lral lre case ras oeer perd|rg W|lr lre Courl ard lo delerr|re Wrelrer superver|rg everls ray rave rerdered lre case rool ard
acader|c, lre Courl reso|ved (1) lo requ|re lre parl|es lo V0vE lN TlE PREVl3E3 W|lr|r lr|rly days lror rol|ce, ard |r case lrey la|| lo ra|e lre proper rar|leslal|or W|lr|r lre
requ|red per|od, (2) lo cors|der lre case lerr|raled ard c|osed W|lr lre erlry ol judgrerl accord|rg|y rade lrereor (Ro||o, p. 10).
0r Apr|| 2Z, 1988, appe||ee roved lor a reso|ul|or ol lre appea|/rev|eW |rlerposed oy delerdarls-appe||arls (Ro||o, p. 11).
Tre rajor |ssues ra|sed |r lr|s case are as lo||oWs. (1) Wrelrer or rol lre ass|grrerl ol rece|vao|es ras lre ellecl ol payrerl ol a|| lre |oars corlracled oy appe||arls lror appe||ee
oar|; ard (2) Wrelrer or rol appe||ee oar| rusl l|rsl exrausl a|| |ega| rered|es aga|rsl lre Pr|||pp|re F|srer|es Corr|ss|or oelore |l car proceed aga|rsl appe||arls lor co||ecl|ors ol
|oar urder lre pror|ssory roles Wr|cr are p|a|rl|lls oases |r lre acl|or lor co||ecl|or |r C|v|| Case No. Z81Z8.
Ass|grrerl ol cred|l |s ar a||eererl oy v|rlue ol Wr|cr lre oWrer ol a cred|l, |roWr as lre ass|gror, oy a |ega| cause, sucr as sa|e, dal|or |r payrerl, excrarge or doral|or, ard
W|lroul lre reed ol lre corserl ol lre deolor, lrarslers r|s cred|l ard |ls accessory r|grls lo arolrer, |roWr as lre ass|gree, Wro acqu|res lre poWer lo erlorce |l lo lre sare exlerl as
lre ass|gror cou|d rave erlorced |l aga|rsl lre deolor. x x x ll ray oe |r lre lorr ol a sa|e, oul al l|res |l ray corsl|lule a dal|or |r payrerl, sucr as Wrer a deolor, |r order lo oola|r a
re|ease lror r|s deol, ass|grs lo r|s cred|lor a cred|l re ras aga|rsl a lr|rd persor, or |l ray corsl|lule a doral|or as Wrer |l |s oy gralu|lous l|l|e; or |l ray ever oe rere|y oy Way ol
guararly, as Wrer lre cred|lor g|ves as a co||alera|, lo secure r|s oWr deol |r lavor ol lre ass|gree, W|lroul lrarsr|ll|rg oWrersr|p. Tre craracler lral |l ray asssure delerr|res |ls
requ|s|les ard ellecls. |ls regu|al|or, ard lre capac|ly ol lre parl|es lo execule |l; ard |r every case, lre oo||gal|ors oelWeer ass|gror ard ass|gree W||| deperd upor lre jud|c|a| re|al|or
Wr|cr |s lre oas|s ol lre ass|grrerl: (To|erl|ro, Correrlar|es ard Jur|spruderce or lre C|v|| Code ol lre Pr|||pp|res, vo|. 5, pp. 15-1).
Trere |s ro quesl|or as lo lre va||d|ly ol lre ass|grrerl ol rece|vao|es execuled oy appe||arls |r lavor ol appe||ee oar|. Tre |ssue |s W|lr regard lo |ls |ega| ellecls.
l
ll |s ev|derl lral lre ass|grrerl ol rece|vao|es execuled oy appe||arls or Jaruary 21, 191 d|d rol lrarsler lre oWrersr|p ol lre rece|vao|es lo appe||ee oar| ard re|ease appe||arls lror
lre|r |oars W|lr lre oar| |rcurred urder pror|ssory roles Nos. 1118Z, 11515 ard 1199.
Tre 0eed ol Ass|grrerl prov|ded lral |l Was lor ard |r cors|deral|or ol cerla|r cred|ls, |oars, overdralls, ard lre|r cred|l accorrodal|ors |r lre sur ol P10,000.00 exlerded lo
appe||arls oy appe||ee oar|, ard as secur|ly lor lre payrerl ol sa|d sur ard lre |rleresl lrereor; lral appe||arls as ass|grors, rer|se, re|ease, ard qu|lc|a|r lo ass|gree oar| a|| lre|r
r|grls, l|l|e ard |rleresl |r ard lo lre accourls rece|vao|e ass|gred (|sl paragrapr). ll Was lurlrer sl|pu|aled lral lre ass|grrerl W||| a|so slard as a corl|ru|rg guararly lor lulure |oars ol
appe||arls lo appe||ee oar| ard correspord|rg|y lre ass|grrerl sra|| a|so exlerd lo a|| lre accourls rece|vao|e; appe||arls sra|| a|so oola|r |r lre lulure, url|| lre cors|deral|or or lre
|oars secured oy appe||arls lror appe||ee oar| sra|| rave oeer lu||y pa|d oy lrer (No. 9).
Tre pos|l|or ol appe||arls, roWever, |s lral lre deed ol ass|grrerl |s a qu|lc|a|r |r cors|deral|or ol lre|r |rdeoledress lo appe||ee oar|, rol rere guararly, |r v|eW ol lre lo||oW|rg
prov|s|ors ol lre deed ol ass|grrerl:
x x x lre Ass|gror do rereoy rer|ss, re|ease ard qu|l-c|a|r urlo sa|d ass|gree a|| |ls r|grls, l|l|e ard |rleresl |r lre accourls reoe|vao|e descr|oed rereurder. (lla||cs supp||ed oy
appe||arls, l|rsl par., 0eed ol Ass|grrerl).
x x x lral lre l|l|e ard r|grl ol possess|or lo sa|d accourl rece|vao|e |s lo rera|r |r sa|d ass|gree ard |l sra|| rave lre r|grl lo co||ecl d|recl|y lror lre deolor, ard Wralsoever lre
Ass|gror does |r correcl|or W|lr lre co||ecl|or ol sa|d accourls, |l agrees lo do so ar agerl ard represerlal|ve ol lre Ass|gree ard |l lrusl lor sa|d Ass|gree x x x (lo|d. par. 2 ol 0eed
ol Ass|grrerl). (Record or Appea|, p. 2Z)
Tre craracler ol lre lrarsacl|ors oelWeer lre parl|es |s rol, roWever, delerr|red oy lre |arguage used |r lre docurerl oul oy lre|r |rlerl|or. Trus, lre Courl, quol|rg lror lre
Arer|car Jur|spruderce (8 2d, 3ecured Trarsacl|or, 3ecl|or 50) sa|d:
Tre craraclers ol lre lrarsacl|or oelWeer lre parl|es |r lo oe delerr|red oy lre|r |rlerl|or, regard|ess ol Wral |arguage Was used or Wral lre lorr ol lre lrarsler Was. ll |l Was |rlerded
lo secure lre payrerl ol rorey, |l rusl oe corslrued as a p|edge. loWever, ever lrougr a lrarsler, |l regarded oy |lse|l, appears lo rave oeer aoso|ule, |ls oojecl ard craracler r|grl
sl||| oe qua||l|ed ard exp|a|red oy a corlerporareous Wr|l|rg dec|ar|rg |l lo rave oeer a depos|l ol lre properly as co||alera| secur|ly. ll ras oeer sa|d lral a lrarsler ol properly oy lre
deolor lo a cred|lor, ever |l sull|c|erl or |ls lace lo ra|e ar aoso|ule corveyarce, srou|d oe lrealed as a p|edge |l lre deol corl|rues |r ex|slerce ard |s rol d|scrarged oy lre lrarsler,
ard lral accord|rg|y, lre use ol lre lerrs ord|rar||y |rporl|rg corveyarce, ol aoso|ule oWrersr|p W||| rol oe g|ver lral ellecl |r sucr a lrarsacl|or |l lrey are a|so corror|y used |r
p|edges ard rorlgages ard lrerelore do rol urqua||l|ed|y |rd|cale a lrarsler ol aoso|ule oWrersr|p, |r lre aoserce ol c|ear ard aro|guous |arguage or olrer c|rcurslarces exc|ud|rg ar
|rlerl lo p|edge. (Lopez v. Courl ol Appea|s, 111 3CRA Z1 [1982|).
0el|r|le|y, lre ass|grrerl ol lre rece|vao|es d|d rol resu|l lror a sa|e lrarsacl|or. ll carrol oe sa|d lo rave oeer corsl|luled oy v|rlue ol a dal|or |r payrerl lor appe||arls' |oars W|lr lre
oar| ev|derced oy pror|ssory role Nos. 1118Z, 11515 ard 1199 Wr|cr are lre suojecl ol lre su|l lor co||ecl|or |r C|v|| Case No. Z81Z8. Al lre l|re lre deed ol ass|grrerl Was
execuled, sa|d |oars Were ror-ex|slerl yel. Tre deed ol ass|grrerl Was execuled or Jaruary 21, 191 (Exr. 0), Wr||e pror|ssory role No. 1118Z |s daled Apr|| 25, 19 (Exr. Ar),
pror|ssory role 11515, daled Vay 3, 19 (Exr. 8), pror|ssory role 1199, or Jure 20, 19 (Exr. C). Al rosl, |l Was a dal|or |r payrerl lor P10,000.00, lre arourl ol cred|l lror
appe||ee oar| |rd|caled |r lre deed ol ass|grrerl. Al lre l|re lre ass|grrerl Was execuled, lrere Was ro oo||gal|or lo oe exl|rgu|sred excepl lre arourl ol P10,000.00. Voreover, |r
order lral ar oo||gal|or ray oe exl|rgu|sred oy arolrer Wr|cr suosl|lules lre sare, |l |s |rperal|ve lral |l oe so dec|ared |r urequ|voca| lerrs, or lral lre o|d ard lre reW oo||gal|ors oe
or every po|rl |rcorpal|o|e W|lr eacr olrer (Arl|c|e 1292, NeW C|v|| Code).
0ov|ous|y, lre deed ol ass|grrerl Was |rlerded as co||alera| secur|ly lor lre oar| |oars ol appe||arls, as a corl|ru|rg guararly lor Wralever surs Wou|d oe oW|rg oy delerdarls lo
p|a|rl|ll, as slaled |r sl|pu|al|or No. 9 ol lre deed.
lr case ol douol as lo Wrelrer a lrarsacl|or |s a p|edge or a dal|or |r payrerl, lre presurpl|or |s |r lavor ol p|edge, lre |aller oe|rg lre |esser lrarsr|ss|or ol r|grls ard |rleresls (Lopez
v. Courl ol Appea|s, supra).
lr ore case, lre ass|grrerls ol r|grls, l|l|e ard |rleresl ol lre delerdarl |r lre corlracls ol |ease ol lWo ou||d|rgs as We|| as rer r|grls, l|l|e ard |rleresl |r lre |ard or Wr|cr lre ou||d|rgs
Were corslrucled lo secure ar overdrall lror a oar| arourl|rg lo P110,000.00 Wr|cr Was |rcreased lo P150,000.00, lrer lo P15,000.00 Was cors|dered oy lre Courl lo oe docurerls
ol rorlgage corlracls |rasrucr as lrey Were execuled lo guararlee lre pr|rc|pa| oo||gal|ors ol lre delerdarl cors|sl|rg ol lre overdralls or lre |rdeoledress resu|l|rg lrerelror. Tre
Courl ru|ed lral ar ass|grrerl lo guararlee ar oo||gal|or |s |r ellecl a rorlgage ard rol ar aoso|ule corveyarce ol l|l|e Wr|cr corlers oWrersr|p or lre ass|gree (Peop|es 8ar| & Trusl
Co. v. 0dor, 1 Pr||. 12 [193Z|).
ll
As lo Wrelrer or rol appe||ee oar| rusl rave lo exrausl a|| |ega| rered|es aga|rsl lre Pr|||pp|re F|srer|es Corr|ss|or oelore |l car proceed aga|rsl appe||arls lor co||ecl|or ol |oars
urder lre|r pror|ssory roles, rusl a|so oe arsWered |r lre regal|ve.
Tre oo||gal|or ol appe||arls urder lre pror|ssory roles rol rav|rg oeer re|eased oy lre ass|grrerl ol rece|vao|es, appe||arls rera|r as lre pr|rc|pa| deolors ol appe||ee oar| ralrer
lrar rere guararlors. Tre deed ol ass|grrerl rere|y guararlees sa|d oo||gal|ors. Tral lre guararlor carrol oe corpe||ed lo pay lre cred|lor ur|ess lre |aller ras exrausled a|| lre
Properly ol lre deolor, ard ras resorled lo a|| lre |ega| rered|es aga|rsl lre deolor, urder Arl|c|e 2058 ol lre NeW C|v|| Code does rol lrerelore app|y lo lrer. ll |s ol course ol lre
esserce ol a corlracl |l p|edge ol rorlgage lral Wrer lre pr|rc|pa| oo||gal|or oecores due, lre lr|rgs |r Wr|cr lre p|edge or rorlgage cors|sls ray oe a||eraled lor lre payrerl lo lre
cred|lor (Arl|c|e 208Z, NeW C|v|| Code). lr lre |rslarl case, appe||arls are oolr lre pr|rc|pa| deolors ard lre p|edgors or rorlgagors. Resorl lo ore |s, lrerelore, resorl lo lre olrer.
Appe||ee oar| d|d lry lo co||ecl or lre p|edged rece|vao|es. As lre Erergercy Erp|oyrerl Agercy (EEA) Wr|cr |ssued lre rece|vao|es r|d oeer aoo||sred, lre co||ecl|or rad lo oe
coursed lrrougr lre 0ll|ce ol lre Pres|derl Wr|cr d|sapproved lre sare (Record or Appea|, p. 1). Tre rece|vao|e oecare v|rlua||y Worlr|ess |eav|rg appe||arls' |oars lror appe||ee
oar| ursecured. ll |s oul proper lral aller lre|r repealed derards rade or appe||arls lor lre sell|ererl ol lre|r oo||gal|ors, appe||ee oar| srou|d proceed aga|rsl appe||arls. ll Wou|d oe
ar exerc|se |r lul|||ly lo proceed aga|rsl a delurcl oll|ce lor lre co||ecl|or ol lre rece|vao|es p|edged.
wlEREF0RE, lre appea| |s 0|sr|ssed lor |ac| ol rer|l ard lre appea|ed dec|s|or ol lre lr|a| courl |s all|rred |r lolo.
30 0R0ERE0.
Ferrar (C.J.). 0ul|errez. Jr.. Fe||c|aro ard Corls, JJ., corcur.
FELlClAN0, J., Corcurr|rg:
l qu|le agree W|lr lre gerera| reasor|rg ol ard lre resu|ls reacred oy ry d|sl|rgu|sred orolrer 8|d|r |r respecl ol oolr ol lre pr|rc|pa| |ssues re addressed |r r|s op|r|or.
l Wou|d rere|y W|sr lo add a leW ||res |r respecl ol lre po|rl rade oy 8|d|r, J., lral lre craracler ol lre lrarsacl|ors oelWeer lre parl|es |s rol, roWever, delerr|red oy lre |arguage
used |r lre docurerl oul oy lre|r |rlerl|or. Tr|s slalererl |s oas|ca||y rol excepl|orao|e, so lar as |l goes. ll r|grl, roWever, oe oorre |r r|rd lral lre |rlerl ol lre parl|es lo lre
lrarsacl|or |s lo oe delerr|red, |r lre l|rsl |rslarce, oy lre very |arguage Wr|cr lrey used. Tre deed ol ass|grrerl corla|rs |arguage Wr|cr suggesl lral lre parl|es |rlerded lo ellecl a
corp|ele a||eral|or ol l|l|e lo ard r|grls over lre rece|vao|es Wr|cr are lre suojecl ol lre ass|grrerl. Tr|s |arguage |s corpr|sed ol Wor|s |||e rer|se, re|ease ard qu|lc|a|r ard
c|auses |||e lre l|l|e ard r|grl ol possess|or lo a|d accourls rece|vao|e |s lo rera|r |r sa|d ass|gree Wro sra|| rave lre r|grl lo co||ecl d|recl|y lror lre deolor. Tre sare |rlerl |s a|so
suggesled oy lre use ol lre Words agerl ard represerlal|ve ol lre ass|gree |r relerr|rg lo lre ass|gror.
Tre po|rl lral appears lo re lo oe Worlr ra||rg |s lral a|lrougr |r |ls lorr, lre deed ol ass|grrerl ol rece|vao|es parla|es ol lre ralure ol a corp|ele a||eral|or ol lre rece|vao|es
ass|gred, sucr lorr srou|d oe la|er |r corjurcl|or W|lr, ard |rdeed rusl oe qua||l|ed ard corlro||ed oy, olrer |arguage sroW|rg ar |rlerl ol lre parl|es lral l|l|e lo lre rece|oao|es sra||
pass lo lre ass|gree lor lre ||r|led purpose ol secur|rg arolrer, pr|rc|pa|; oo||gal|or oWed oy lre ass|gror lo lre ass|gree. T|l|e roves lror ass|gror lo ass|gree oul lral l|l|e |s
deleas|o|e oe|rg des|gred lo co||alera||ze lre pr|rc|pa| oo||gal|or. 0peral|ora||y, Wral lr|s rears |s lral lre ass|gree |s ourdered W|lr ar oo||gal|or ol la||rg lre proceeds ol lre
rece|vao|es ass|gred ard app|y|rg sucr proceeds lo lre sal|slacl|or ol lre pr|rc|pa| oo||gal|or ard relurr|rg ary oa|arce rera|r|rg lrerealler lo lre ass|gror.
Tre parl|es gaved lre deed ol ass|grrerl lre lorr ol ar aoso|ule corveyarce ol l|l|e over lre rece|vao|es ass|gred, esserl|a||y lor lre corver|erce ol lre ass|gree. w|lroul sucr
lorra||y ur||r|led corveyarce ol l|l|e, lre ass|gree Wou|d rave lo lreal lre deed ol ass|grrerl as ro rore lrar a deed ol p|edge or ol cralle| rorlgage. lr olrer Words, |r sucr
rypolrel|ca| case, srou|d lre ass|gree see| lo rea||ze upor lre secur|ly g|ver lo r|r lrrougr lre deed ol ass|grrerl (Wr|cr Wou|d lrer rave lo corp|y W|lr lre docurerlal|or ard
reg|slral|or requ|rererls ol a p|edge or cralle| rorlgage), lre ass|gree Wou|d rave lo lorec|ose upor lre secur|l|es or cred|ls ass|gred ard p|ace lrer or puo||c sa|e ard lrere acqu|re
lre sare. ll srou|d oe reca||ed lral urder lre pr|rc|p|e Wr|cr loro|ds a paclur corr|sor|ur Arl|c|e 2088, C|v|| Code), a rorlgages or p|edgee |s pror|o|led lror s|rp|y la||rg ard
appropr|al|arg lre persora| properly lurred over lo r|r as secur|ly lor lre payrerl ol a pr|rc|pa| oo||gal|or. A deed ol ass|grrerl oy Way ol secur|ly avo|ds lre recess|ly ol a puo||c sa|e
|rposed oy lre ru|e or paclur corr|sor|ur, oy |r ellecl p|ac|rg lre sa|e ol lre co||alera| up lrorl.
Tre lorego|rg |s app||cao|e Wrere, as |r lre preserl |rslarce, lre deed ol ass|grrerl ol rece|vao|es coro|res e|ererls ol oolr a corp|ele or aoso|ule a||eral|or ol lre cred|ls oe|rg
ass|gred ard a secur|ly arrargererl lo assure payrerl ol a pr|rc|pa| oo||gal|or. wrere lre secord e|ererl |s aoserl, lral |s, Wrere lrere |s rolr|rg lo |rd|cale lral lre parl|es |rlerded
lre deed ol ass|grrerl lo lurcl|or as a secur|ly dev|ce, |l Wou|d ol course lo||oW lral lre s|rp|e aoso|ule corveyarce erood|ed |r lre deed ol ass|grrerl Wou|d oe operal|ve; lre
ass|grrerl Wou|d corsl|lule esserl|a||y a rode ol payrerl or dac|or er pago. Pul a ||ll|e d|llererl|y, |r order lral a deed ol ass|grrerl ol rece|vao|es Wr|cr |s |r lorr ar aoso|ule
corveyarce ol l|l|e lo lre cred|ls oe|rg ass|gred, ray oe qua||l|ed ard lrealed as a secur|ly arrargererl, |arguage lo sucr ellecl rusl oe lourd |r lre docurerl |lse|l ard lral |arguage,
prec|se|y, |s erood|ed |r lre deed ol ass|grrerl |r lre |rslarl case. F|ra||y, |l r|grl oe roled lral lral deed s|rp|y lo||oWs a lorr |r slardard use |r correrc|a| oar||rg.
0ec|s|or all|rred