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    Prudential Bank V Panis (1987) : DOCTRINE: A Building by Itself May Be Mortgaged Apart From The Land On

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    Maria Alyssa Rodriguez
    1. The Magcales took out two loans from Prudential Bank, securing the first with a mortgage on a building and mentioning a pending land sales patent, and the second also using the same property as collateral after the patent was issued. 2. The lower court ruled both mortgages invalid but the Supreme Court found the first valid as it was made before the land title was granted, while the second, made after the title issued, violated restrictions on encumbering land for a period of time under the Public Land Act. 3. The Court modified the lower court's decision, upholding the first mortgage but invalidating the second as it was executed in violation of the land title restrictions.

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    Prudential Bank V Panis (1987) : DOCTRINE: A Building by Itself May Be Mortgaged Apart From The Land On

    Uploaded by

    Maria Alyssa Rodriguez
    45 views1 page
    1. The Magcales took out two loans from Prudential Bank, securing the first with a mortgage on a building and mentioning a pending land sales patent, and the second also using the same property as collateral after the patent was issued. 2. The lower court ruled both mortgages invalid but the Supreme Court found the first valid as it was made before the land title was granted, while the second, made after the title issued, violated restrictions on encumbering land for a period of time under the Public Land Act. 3. The Court modified the lower court's decision, upholding the first mortgage but invalidating the second as it was executed in violation of the land title restrictions.

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    Digest of Prudential vs Panis (Land Titles)

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    PrudentialvPanis.docx

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    1. The Magcales took out two loans from Prudential Bank, securing the first with a mortgage on a building and mentioning a pending land sales patent, and the second also using the same property as collateral after the patent was issued. 2. The lower court ruled both mortgages invalid but the Supreme Court found the first valid as it was made before the land title was granted, while the second, made after the title issued, violated restrictions on encumbering land for a period of time under the Public Land Act. 3. The Court modified the lower court's decision, upholding the first mortgage but invalidating the second as it was executed in violation of the land title restrictions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    45 views1 page

    Prudential Bank V Panis (1987) : DOCTRINE: A Building by Itself May Be Mortgaged Apart From The Land On

    Uploaded by

    Maria Alyssa Rodriguez
    1. The Magcales took out two loans from Prudential Bank, securing the first with a mortgage on a building and mentioning a pending land sales patent, and the second also using the same property as collateral after the patent was issued. 2. The lower court ruled both mortgages invalid but the Supreme Court found the first valid as it was made before the land title was granted, while the second, made after the title issued, violated restrictions on encumbering land for a period of time under the Public Land Act. 3. The Court modified the lower court's decision, upholding the first mortgage but invalidating the second as it was executed in violation of the land title restrictions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Digest Author: Alyssa Rodriguez

    Prudential Bank v Panis (1987)



    Petition: Petition for Review on Certiorari
    Petitioner: Prudential Bank
    Respondent: Judge Domingo Panis, CFI of Zambales and Olongapo City,
    AND Fernando Magcale & Teodula Baluyut-Magcale
    Ponencia: Paras, J.


    DOCTRINE: A building by itself may be mortgaged apart from the land on
    which it has been built.

    FACTS:

    1. The Magcales secured a P70,000 loan from the Prudential Bank. As
    security, they executed a Real Estate Mortgage (REM) over a two-
    storey, semi-concrete, residential building

    2. Along with this, the spouses included the information about the
    Miscellaneous Sales Patent (sales patent) applied for by them for the lot
    on which the said building stood. This first mortgage was registered
    under the Registry of Deeds of Zambales.

    *** What is a Miscellaneous Sales Patent?
    RA 730 permits the sale of alienable and disposable lands of the public
    domain for residential purposes without public auction. This application to
    purchase the land is called the Miscellaneous Sales Application and the
    corresponding patent is called the Miscellaneous Sales Patent.

    3. The sales patent was then issued by the Secretary of Agriculture over
    the parcel of land, possessory rights over which were mortgaged to
    Prudential Bank, in favor or plaintiffs.

    4. The spouses thenafter secured a second loan of P20,000 from the
    Prudential Bank and mortgaged the same property. This was registered
    in the Registry of Deeds of Olonggapo.

    5. For failure to pay, Prudential Bank moved to foreclose the mortgaged
    property.

    6. The lower court ruled that the deeds of REM were null and void.





    ISSUES:
    1. W/N a valid REM can be constituted on the building erected on the
    land belonging to another.
    2. W/N, in connection with the Public Land Act (the law dealing with
    sales patents), the first and second mortgages were vaild

    PROVISION:
    Public Land Act
    Sec. 118. Except in favor of the Government or any of its branches,
    units or institutions, or legally constituted banking corporations, lands
    acquired under free patent or homestead provisions shall not be subject to
    encumbrance or alienation from the date of the approval of the application
    and for a term of five years from and after the date of issuance of the patent
    or grant nor shall they become liable to the satisfaction of any debt
    contracted prior to the expiration of said period; but the improvements or
    crops on the land may be mortgaged or pledged to qualified persons,
    associations, or corporations.

    No alienation, transfer, or conveyance of any homestead after five years and
    before twenty-five years after issuance of title shall be valid without the
    approval of the Secretary of Agriculture and Natural Resources, which
    approval shall not be denied except on constitutional and legal grounds.

    RULING + RATIO:
    1. YES.
    While it is true that a mortgage of land necessarily includes, in the absence
    of stipulation of the improvements thereon, buildings, still the building by itself
    may be mortgaged apart from the land on which it has been built.

    It is obvious from Article 415 of the Civil Code that the inclusion of building
    separate and distinct from the land can only mean that a building is by itself
    an immovable property.

    2. As to the first mortgage, YES.
    As to the second mortgage, NO.
    The first mortgage was executed before the sales patent was granted and
    thus the Public Land Act finds no application in this matter. It is valid.

    The second mortgage was executed after the issuance of the sales patent
    which thus makes it fall under the prohibition stated in the Public Land Act
    and Section 2 pf RA 730. It is null and void.

    DISPOSITION: Petition granted.
    The CFI decision is modified declaring that the Deed of REM for P70,000 is
    valid but ruling that the Deed of REM for P20,000 is null and void.

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