GR 42630; (August, 1935) (Digest)
G.R. No. 42630 ; August 9, 1935
B.A. BATTERTON, plaintiff-appellee, vs. CONSUELO CARRATALA VIUDA DE VELOSO, administratrix of the estate of the deceased Mariano G. Veloso, and GAVINO M. VELOSO, defendants. CONSUELO CARRATALA VIUDA DE VELOSO, appellant.
FACTS
Plaintiff B.A. Batterton sued to recover a debt of P15,600 with interest and to foreclose a real estate mortgage securing a promissory note. The note was executed on December 1, 1927, by Gabino M. Veloso as principal and Mariano G. Veloso as surety, in favor of Roberto Manulat. The mortgage was executed on December 7, 1927. On February 21, 1928, Manulat assigned the note and mortgage to Batterton for value. The defendant administratrix of Mariano Veloso’s estate contended she should be absolved because no notice of the assignment was given to Mariano Veloso during his lifetime and payments were made to Manulat after the assignment. She also argued the mortgage’s execution constituted a novation of the note.
ISSUE
1. Whether notice of the assignment of the negotiable promissory note and its mortgage to the mortgagor/debtor was necessary to bind the estate.
2. Whether the execution of the real estate mortgage constituted a novation that extinguished the promissory note.
RULING
1. No. Notice of the assignment was not necessary to bind the estate. The promissory note was a negotiable instrument assigned for value before maturity. Under Section 114 of the Code of Civil Procedure, defenses against an assignee of a negotiable instrument transferred in good faith and for consideration before maturity are cut off, and the provision on set-off or defense existing before notice of assignment does not apply. Furthermore, Article 153 of the Spanish Mortgage Law provides that for a mortgage securing negotiable obligations, the mortgage interest is transferred with the obligation without need of notice to the debtor or recording. Jurisprudence also holds that for a mortgage securing a negotiable note, actual notice is not necessary to charge the mortgagor. The record also showed the principal maker knew of the assignment and the deceased had made interest payments after it.
2. No. The court found the contention that the mortgage constituted a novation of the note to be absurd. A mortgage executed expressly to secure a promissory note does not extinguish that note.
The trial court’s judgment in favor of the plaintiff was affirmed.
AI Generated by Armztrong.