China Banking Corporation… · G.R. 121158

Petitioner: China Banking Corporation
Respondent: Court of Appeals
Citation: G.R. No. 121158
Court: Supreme Court
Division: Third Division
Ponente: Francisco, J.
Decided: December 5, 1996

Summary

China Banking Corporation sought to foreclose mortgages securing loans to Native West International Trading Corp. and spouses So Ching after default. Borrowers obtained preliminary injunction claiming additional loans beyond mortgage amounts were unsecured and procedural violations occurred. The Supreme Court reversed, applying comprehensive contract interpretation to hold that mortgage language created continuing security for future advances beyond stated amounts. The Court ruled Act No. 3135, not Administrative Order No. 3, governs extrajudicial foreclosure as contractually stipulated. The preliminary injunction was nullified as borrowers admitted default, giving bank clear foreclosure rights. This case establishes important precedent on mortgage contract interpretation and continuing security provisions in banking transactions.

Statutes applied

Civil Code, Art. 1374

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By the Intellegal Editorial Board · December 5, 1996

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