- Petitioner
- Allied Banking Corporation
- Respondent
- Cheng Yong
- Citation
- G.R. No. 151040
- Court
- Supreme Court
- Division
- Third Division
- Ponente
- Garcia, J.
- Decided
- October 5, 2005
Summary
This consolidated case involved Allied Banking Corporation's attempts to collect on a restructured loan originally extended to Philippine Pacific Fishing Company. The central legal issue concerned whether a promissory note executed on August 12, 1981, required prior approval from an SEC-created management committee to be valid. The Supreme Court applied the parol evidence rule, holding that the clear terms of the promissory note could not be varied by oral testimony claiming conditional validity. The Court validated both the promissory note and the chattel mortgage over fishing vessel 'Jean III', ruling that the vessel's subsequent sinking must be borne by the mortgagors as uninsured owners. However, the Court affirmed that a separate real estate mortgage could not be extended beyond its original purpose of securing a different company's loan. The decision reinforced the principles of contract interpretation, mortgage law under the Civil Code, and the parol evidence rule in commercial banking disputes.