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    MARQUEZ v. ELISAN CREDIT CORPORATION

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    Emmanuel Princess Zia Salomon
    The petitioner obtained two separate loans from the respondent. The first loan was secured by a chattel mortgage over a motor vehicle. After fully paying the first loan, the petitioner obtained a second loan. However, the chattel mortgage did not specify securing future loans and only referenced the first loan. The respondent tried to foreclose on the motor vehicle for non-payment of the second loan, claiming it was covered by the chattel mortgage. However, the court ruled that the chattel mortgage ceased to exist after full payment of the first loan and could not be used to secure subsequent loans without a new or amended agreement. Therefore, the foreclosure order had no legal basis.

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    MARQUEZ v. ELISAN CREDIT CORPORATION

    Uploaded by

    Emmanuel Princess Zia Salomon
    2K views2 pages
    The petitioner obtained two separate loans from the respondent. The first loan was secured by a chattel mortgage over a motor vehicle. After fully paying the first loan, the petitioner obtained a second loan. However, the chattel mortgage did not specify securing future loans and only referenced the first loan. The respondent tried to foreclose on the motor vehicle for non-payment of the second loan, claiming it was covered by the chattel mortgage. However, the court ruled that the chattel mortgage ceased to exist after full payment of the first loan and could not be used to secure subsequent loans without a new or amended agreement. Therefore, the foreclosure order had no legal basis.

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    law case digest MARQUEZ v. ELISAN CREDIT CORPORATION

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    The petitioner obtained two separate loans from the respondent. The first loan was secured by a chattel mortgage over a motor vehicle. After fully paying the first loan, the petitioner obtained a second loan. However, the chattel mortgage did not specify securing future loans and only referenced the first loan. The respondent tried to foreclose on the motor vehicle for non-payment of the second loan, claiming it was covered by the chattel mortgage. However, the court ruled that the chattel mortgage ceased to exist after full payment of the first loan and could not be used to secure subsequent loans without a new or amended agreement. Therefore, the foreclosure order had no legal basis.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views2 pages

    MARQUEZ v. ELISAN CREDIT CORPORATION

    Uploaded by

    Emmanuel Princess Zia Salomon
    The petitioner obtained two separate loans from the respondent. The first loan was secured by a chattel mortgage over a motor vehicle. After fully paying the first loan, the petitioner obtained a second loan. However, the chattel mortgage did not specify securing future loans and only referenced the first loan. The respondent tried to foreclose on the motor vehicle for non-payment of the second loan, claiming it was covered by the chattel mortgage. However, the court ruled that the chattel mortgage ceased to exist after full payment of the first loan and could not be used to secure subsequent loans without a new or amended agreement. Therefore, the foreclosure order had no legal basis.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    D.2.1. G.R. No.

    194642 April 06, 2015


    NUNELON R. MARQUEZ, Petitioner, v.
    ELISAN CREDIT CORPORATION, Respondents.

    FACTS:
    Nunelon R. Marquez (petitioner) obtained a (first loan) from Elisan Credit
    Corporation (respondent) payable in 180 days. The petitioner signed a promissory
    note which provided that it is payable in weekly installments and subject to 26%
    annual interest. In case of non-payment, the petitioner agreed to pay 10% monthly
    penalty based on the total amount unpaid and another 25% of such amount for
    attorney's fees exclusive of costs, and judicial and extrajudicial expenses.
    To further secure payment of the loan, the petitioner executed a chattel
    mortgage over a motor vehicle. The petitioner obtained another loan (second loan).
    The respondent filed a complaint for judicial foreclosure of the chattel
    mortgage because the petitioner allegedly failed to settle the balance of the second
    loan despite demand. Before the petitioner could file an answer, the respondent
    applied for the issuance of a writ of replevin. The MTC issued the writ and by
    virtue of which, the motor vehicle covered by the chattel mortgage was seized
    from the petitioner and delivered to the respondent.

    ISSUE:
    Whether or not the chattel mortgage could cover the second loan.

    RATIO DECIDENDI:
    No. The chattel mortgage could not validly cover the second loan. The order
    for foreclosure was without legal and factual basis.
    the Chattel Mortgage Law requires the parties to the contract to attach an
    affidavit of good faith and execute an oath that -" x x x (the) mortgage is made for
    the purpose of securing the obligation specified in the conditions thereof, and
    for no other purposes, and that the same is a just and valid obligation, and one not
    entered into for the purposes of fraud."
    It is obvious therefore that the debt referred in the law is a current, not an
    obligation that is yet merely contemplated.
    The only obligation specified in the chattel mortgage contract was the first
    loan which the petitioner later fully paid. By virtue of Section 3 of the Chattel
    Mortgage Law, the payment of the obligation automatically rendered the chattel
    mortgage terminated; the chattel mortgage had ceased to exist upon full payment
    of the first loan. Being merely an accessory in nature, it cannot exist independently
    of the principal obligation.
    The parties did not execute a fresh chattel mortgage nor did they amend the
    chattel mortgage to comply with the Chattel Mortgage Law which requires that the
    obligation must be specified in the affidavit of good faith. Simply put, there no
    longer was any chattel mortgage that could cover the second loan upon full
    payment of the first loan. The order to foreclose the motor vehicle therefore had no
    legal basis.

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