Philippine Supreme Court Resolutions

G.R. No. 196490 (Leonardo Igot v. Banco San Juan). � Before this Court is a Motion for Reconsideration dated 13 February 2012 filed by petitioner Leonardo Igot (Igot), assailing this Court's 5 December 2011 Resolution, which denied the Petition on technical grounds and for failure to show any reversible error on the part of the Court of Appeals (CA).

In the instant Motion for Reconsideration, petitioner insists that the case should not be resolved based solely on technicalities. What petitioner fails to observe, however, is that the denial of his Petition was also because the CA did not commit any reversible error.

First, Igot contended in his Petition that he did not intend to cross-collateralize the mortgaged parcel of land covered by Transfer Certificate of Title (TCT) No. 346795, as allegedly evidenced by the following: (1) his consistent demand on respondent Banco San Juan (BSJ) to release the title after his full settlement of his second loan, and (2) the absence of any specific stipulation in the Mortgage Agreement dated 12 August 2004 that it would secure both the first and the second loans he obtained. These arguments cannot be sustained.

The validity of a cross-collateral stipulation in a mortgage contract, even when some of the loans secured by it were likewise secured by other mortgages, has been upheld by this Court in Banate v. Philippine Countryside Rural Bank,^[1] quoted below: 

Before we resolve the issues directly posed, we first dwell on the determination of the nature of the cross-collateral stipulation in the mortgage contract. As a general rule, a mortgage liability is usually limited to the amount mentioned in the contract. However, the amounts named as consideration in a contract of mortgage 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. This stipulation is valid and binding between the parties and is known as the "blanket mortgage clause" (also known as the "dragnet clause)." 

In the present case, the mortgage contract indisputably provides that the subject properties serve as security, not only for the payment of the subject loan, but also for "such other loans or advances already obtained, or still to be obtained." The cross-collateral stipulation in the mortgage contract between the parties is thus simply a variety of a dragnet clause. After agreeing to such stipulation, the petitioners cannot insist that the subject properties be released from mortgage since the security covers not only the subject loan but the two other loans as well.^[2] (Emphasis supplied.)

In this case, there is no dispute that the subject Mortgage Agreement contains a dragnet clause. Thus, the repeated demand of Igot for the release of TCT No. 346795 did not, as he argued, consist of "contemporaneous and subsequent actions wherein one can infer [his] true intention.. .which is, not to cross-collateralize the subject." The reason is that the contract plainly and simply provides that the mortgage secures his obligations "obtained or incurred from or may be obtain or incur (sic) from or become indebted to [BSJ]." Since the Mortgage Agreement contained a dragnet clause or a cross-collateral stipulation, there was precisely no need to list all the specific obligations covered by it.

Second, Igot argued in his Petition that the dragnet clause in the Mortgage Agreement should only be applied to future loans, and not to past obligations. This contention deserves no merit, considering that in the long line of cases upholding the validity of a dragnet clause or a blanket mortgage clause, this Court has repeatedly held that this stipulation subsumes "all debts of past and future origins."^[3]  cralaw

WHEREFORE, the Motion for Reconsideration is  DENIED. The 30 November 2010 Decision and 10 March 2011 Resolution of the Court of Appeals are hereby AFFIRMED WITH FINALITY. No further pleadings shall be allowed.

Very truly yours, 

(Sgd.) TERESITA AQUINO TUAZON
Deputy Division Clerk of Court

Endnotes:

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^[1] G.R. No. 163825, 13 July 2010, 625 SCRA 21.

^[2] Id. at 30-31. 

^[3] Traders Royal Bank v. Casta�ares, G.R. No. 172020, 6 December 2010, 636 SCRA 519, 528.