284300563-credit-transactions-digests.docx

G.R. No. 106435, July 14, 1999, 310 SCRA 281 PAMECA Wood Treatment Plant, Inc. v. Court of Appeals FACTS: PAMECA loaned P2M from DBP and executed a promissory note, secured by its inventory of furniture and equipment. PAMECA defaulted thus DBP extrajudicially foreclosed on the chattels. DBP was the only bidder so it was able to buy said property for P322K. Subsequently for the deficiency, it filed a complaint against PAMECA and its solidary debtors, according to the promissory note it signed. ISSUE: Whether an action be instituted for deficiency of a debt after foreclosure of the chattel mortgage. RULING: Yes. Chattel Mortgage Law expressly entitles the mortgagor to the balance of the proceeds, upon satisfaction of the principal obligation and costs. Since the Chattel Mortgage Law bars the creditor-mortgagee from retaining the excess of the sale proceeds, there is a corollary obligation on the part of the debtor-mortgagee to pay the deficiency in case of a reduction in the price at public auction.

MANUEL D. YNGSON, JR. vs PHILIPPINE NATIONAL BANK

G.R. No. 171132

August 15, 2012

Digest of digest: ARCAM entered into a loan with PNB secured by several property mortgages. ARCAM failed to pay hence PNB foreclosed the properties. Before the auction sale of the properties, SEC issued a TRO and subsequently a writ of preliminary injunction enjoining PNB and RTC’s sheriff from proceeding with the foreclosure. 6 years had passed but ARCAM was not rehabilitated because its expected investor did not push through with its promise. SEC then decreed petitioner Yngson as liquidator of ARCAM.

PNB then proceeded with the foreclosure sale. After the sale, petitioner filed motion to nullify the sale on the ground that all actions against companies under liquidation are suspended because liquidation is a continuation of the suspension proceedings. SEC ruled in favor of PNB; CA also denied petitioner’s appeal. Issue is whether foreclosure sale of PNB is valid. Yes, NCC and FRIA provide that a secured creditor enjoys preference over a specific mortgaged property.

Facts: ARCAM is engaged in the operation of a sugar mill in Pampanga. Between 1991 and 1993, ARCAM applied for and was granted a loan by respondent PNB. To secure the loan, ARCAM executed a Real Estate Mortgage to its personal and real properties.

ARCAM defaulted hence PNB initiated extrajudicial foreclosure proceedings in the Office of the Clerk of Court/Ex Officio Sheriff of the RTC of Guagua, Pampanga. The public auction was scheduled on December 29, 1993 for the mortgaged real properties and December 8, 1993 for the mortgaged personal properties.

The SEC issued a TRO and subsequently a writ of preliminary injunction, enjoining PNB and the Sheriff of the RTC of Guagua, Pampanga from proceeding with the foreclosure sale of the mortgaged properties. An interim management committee was also created.

On February 9, 2000, the SEC ruled that ARCAM can no longer be rehabilitated. The SEC noted that the petition for suspension of payment was filed in December 1993 and six years had passed but the potential white knight investor had not infused the much needed capital to bail out ARCAM from its financial difficulties. Thus, the SEC decreed that ARCAM be dissolved and placed under liquidation. SEC appointed Atty. Manuel D. Yngson, Jr. & Associates as Liquidator for ARCAM.

Petitioner filed with the SEC a Motion for the Issuance of a TRO and/or Writ of Preliminary

Injunction to enjoin the foreclosure sale of ARCAM’s assets. The SEC en banc issued a TRO effective for 72 hours, but said TRO lapsed without any writ of preliminary injunction being issued by the SEC.

Consequently, on July 28, 2000, PNB resumed the proceedings for the extrajudicial foreclosure sale of the mortgaged properties. PNB emerged as the highest winning bidder in the auction sale, and certificates of sale were issued in its favor.

Petitioner filed with the SEC a motion to nullify the auction sale. Petitioner posited that all actions against companies that are under liquidation are suspended because liquidation is a continuation of the petition for suspension proceedings. Petitioner argued that the prohibition against foreclosure subsisted during liquidation because payment of all of ARCAM’s obligations was proscribed except those authorized by the Commission.

SEC denied petitioner’s motion to nullify the foreclosure sale. CA denied the appeal of petitioner mainly on procedural grounds.

Issue: WON SEC erred in ruling that PNB was not barred from foreclosing on the mortgages

Decision: No, PNB, as a secured creditor, enjoys preference over a specific mortgaged property and has a right to foreclose the mortgage under Section 2248 of the Civil Code. The creditor-mortgagee has the right to foreclose the mortgage over a specific real property whether or not the debtormortgagor is under insolvency or liquidation proceedings.

The right to foreclose such mortgage is merely suspended upon the appointment of a management committee or rehabilitation receiver or upon the issuance of a stay order by the trial court. However, the creditor-mortgagee may exercise his right to foreclose the mortgage upon the termination of the rehabilitation proceedings or upon the lifting of the stay order.

SEC. 114 (Rights of Secured Creditors) of the FRIA Law provides that the Liquidation Order shall not affect the right of a secured creditor to enforce his lien in accordance with the applicable contract or law.

PNB elected to maintain its rights under the security or lien; hence, its right to foreclose the

mortgaged properties should be respected.