CREDIT TRANSACTION CASE DIGEST/ TORRES VS. LIMJAP, 56 PHIL. 141, G.R. NO. 34385, 21 SEPTEMBER 1931
TORRES VS. LIMJAP,
56 PHIL. 141, G.R. NO. 34385, 21 SEPTEMBER 1931
TOPIC/DOCTRINE
A stipulation in the chattel mortgage, extending its scope
and effect to after-acquired property, is valid and binding where the
after-acquired property is in renewal of, or in substitution for, goods on hand
when the mortgage was executed, or is purchased with the proceeds of the sale
of such goods.
FACTS
These two actions were commenced in the Court of First
Instance of Manila on April 16, 1930, for the purpose of securing from the
defendant the possession of two drug stores located in the City of Manila,
covered by two chattel mortgages executed by the deceased Jose B. Henson in
favor of the plaintiffs. In both cases the plaintiffs alleged that the
defendant violated the terms of the mortgage and that, in consequence thereof
they became entitled to the possession of the chattels and to foreclose their
mortgages thereon. Upon the petition of the plaintiffs and after the filing of
the necessary bonds, the court issued in each case an order directing the
sheriff of the City of Manila to take immediate possession of said drug stores.
The defendant filed practically the same answer to both
complaints. He denied generally and specifically the plaintiffs' allegations,
and set up the following special defenses: (1) That the chattel mortgages
(Exhibit A, in G. R. No. 34385 and Exhibit A, in G. R. No. 34386) are null and
void for lack of sufficient particularity in the description of the property
mortgaged; and (2) That the chattels which the plaintiffs sought to recover
were not the same property described in the mortgage. In his second assignment
of error the appellant attacks the validity of the stipulation in said
mortgages authorizing the mortgagor to sell the goods covered thereby and to
replace them with other goods thereafter acquired. He insists that a
stipulation authorizing the disposal and substitution of the chattels mortgaged
does not operate to extend the mortgage to after-acquired property.
ISSUE
Whether the agreement authorizing the disposal and
substitution of the chattels mortgaged does not operate to extend the mortgage
to after-acquired property.
RULING
Yes.
The court held that a stipulation in the chattel mortgage,
extending its scope and effect to after-acquired property, is valid and binding
where the after-acquired property is in renewal of, or in substitution for,
goods on hand when the mortgage was executed, or is purchased with the proceeds
of the sale of such goods. A mortgage may, by express stipulations, be drawn to
cover goods put in stock in place of others sold out from time to time. A
mortgage may be made to include future acquisitions of goods to be added to the
original stock mortgaged, but the mortgage must expressly provide that such
-future acquisitions shall be held as included in the mortgage. Where a
mortgage covering the stock in trade, furniture, and fixtures in the
mortgagor's store provides that "all goods, stock in trade, furniture, and
fixtures hereafter purchased by the mortgagor shall be included in and covered
by the mortgage," the mortgage covers all after-acquired property of the
classes mentioned, and, upon foreclosure, such property may be taken and sold
by the mortgagee the same as the property in possession of the mortgagor at the
time the mortgage was executed.
