The chattel mortgage constituted over the subject vehicle is an accessory contract to the loan obligation as embodied in the promissory note. It cannot exist as an independent contract since its consideration is the same as that of the principal contract.

SPOUSES NORA SAGUID and ROLANDO P. SAGUID vs. SECURITY FINANCE, INC., G.R. No. 159467, December 9, 2005

“x x x.

As to the alleged signature of petitioner Nora Saguid in the promissory note, evidence points that she could not have signed the document she being in Australia when she allegedly executed said document on 23 April 1996 as established by a certification^[42] from the Bureau of Immigration that she left for Sydney, Australia, on 30 September 1995 and returned to the country on 15 June 1996.

From the foregoing, the Court is convinced that petitioners allegation of absence of consideration has been substantiated and the presumption of consideration disproved and overcome. We are of the mind that petitioners bought the car with their own money. There being no cause or consideration in the contract of loan allegedly entered into by the parties, the promissory note is not binding on the petitioners.

As regards the chattel mortgage, it is settled that a mortgage is a mere accessory contract and its validity would depend on the validity of the loan secured by it.^[43] The chattel mortgage constituted over the subject vehicle is an accessory contract to the loan obligation as embodied in the promissory note. It cannot exist as an independent contract since its consideration is the same as that of the principal contract. A principal obligation is an indispensable condition for the existence of an accessory contract.^[44] Since it has been sufficiently established that there was no cause or consideration for the promissory note, it follows that the chattel mortgage has no leg to stand on. Hence, it must be extinguished and cannot have any legal effect on petitioners.

Having ruled that both promissory note and chattel mortgage are not binding on petitioners, the return of the subject vehicle to petitioners is in order. In case the vehicle can no longer be delivered in the condition when it was seized, respondent shall pay petitioners the amount of P150,000.00^[45] plus interest of 6% per annum to be computed from 13 October 1998,^[46] the date when said vehicle was seized, until finality of judgment after which interest rate shall become 12% per annum until actual payment.

X x x.”