Lydia Arriola v. Bank of the Philippine Islands

Summary

This case involved a dispute over the extent of valid real estate mortgage security for consolidated bank loans. Lydia Arriola and Salvador Alcantara obtained multiple loans from BPI totaling P530,000, with P210,000 remaining after payments. Three real estate mortgages secured the loans for P100,000, P50,000, and P60,000 respectively. When BPI sought to foreclose all mortgages for the full P210,000, Arriola claimed only P110,000 in mortgages were valid, arguing the P100,000 mortgage was extinguished through loan consolidation. The trial court granted an injunction, but the Court of Appeals reversed, finding all mortgages remained valid. The Supreme Court affirmed the foreclosure decision, holding that properly executed real estate mortgages continue as security for consolidated loans when such intent is evident from the contract terms, but reinstated co-debtor Salvador Alcantara's obligation to reimburse Arriola P60,000 that was credited to his account.