GR 34960; (September, 1931) (Digest)
G.R. No. 34960; September 25, 1931
LA COMPAÑIA GENERAL DE TABACOS DE FILIPINAS, plaintiff-appellee, vs. MABALACAT SUGAR CO., and GEO. C. SELLNER, defendants-appellants.
FACTS
Mabalacat Sugar Co. (MSC) obtained advances from La Compañia General de Tabacos de Filipinas (Tabacalera) and obligated itself to deliver sugar. MSC failed to fully deliver, leaving a balance. To secure its obligation to Tabacalera, MSC assigned to Tabacalera a chattel mortgage deed executed by Geo. C. Sellner in favor of MSC. Under this mortgage, Sellner mortgaged his 1929-1930 sugar crop and other personal property on Hacienda Concepcion to secure a P110,000 advance from MSC. The mortgage condition was that it secured Sellner’s delivery of the 1929-1930 crop, with a stipulation that if the proceeds from that crop were insufficient, Sellner would mortgage the 1930-1931 crop. When MSC failed to pay its debt, Tabacalera filed an action to foreclose Sellner’s mortgage.
ISSUE
Whether the chattel mortgage executed by Sellner can be foreclosed based solely on MSC’s failure to pay its debt to Tabacalera, without proof that Sellner failed to fulfill his own obligation (to deliver the 1929-1930 crop) which was the condition secured by the mortgage.
RULING
No. The Supreme Court reversed the trial court’s decision ordering foreclosure. The obligations of MSC and Sellner are distinct. The mortgage executed by Sellner guaranteed his own obligation to deliver the 1929-1930 crop to MSC, not MSC’s obligation to pay Tabacalera. Foreclosure of Sellner’s mortgage is proper only if he failed to deliver the 1929-1930 crop, a fact which was not established by evidence during the trial. The case was remanded for a new trial to allow the parties to present evidence on the fulfillment or non-fulfillment of Sellner’s obligation and on other defenses.
AI Generated by Armztrong.