Agricultural v. Manuel Tambunting

Summary

This case established the validity of mortgage contract provisions allowing mortgagees to take possession of mortgaged property upon foreclosure. Manuel Tambunting challenged a stipulation in his 1935 mortgage with Agricultural and Industrial Bank that authorized the mortgagee to take possession without court proceedings upon default. After Tambunting defaulted on his P17,000 loan, the bank pursued judicial foreclosure and sought possession based on the contractual provision. The Supreme Court upheld the stipulation as legally valid, distinguishing it from prohibited appropriation of ownership and finding it analogous to antichresis and receiver appointments. The decision clarified that such provisions serve legitimate property preservation interests during litigation and do not violate Civil Code prohibitions against creditor appropriation of pledged or mortgaged property, as they grant possession for administration rather than ownership transfer.