Case Digest (G.R. No. L-22973)
Facts:
Mambulao Lumber Company v. Philippine National Bank and Anacleto Heraldo, G.R. No. L-22973, January 30, 1968, Supreme Court En Banc, Angeles, J., writing for the Court.The plaintiff-appellant Mambulao Lumber Company obtained an industrial loan from the Naga Branch of defendant-appellee Philippine National Bank (PNB) in 1956, secured by a real estate mortgage (Transfer Certificate of Title No. 381, Jose Panganiban, Camarines Norte) and a chattel mortgage covering sawmill machinery, trucks and other equipment. The bank released portions of an approved loan by promissory notes dated August 2 and October 19, 1956, each bearing interest at 6% per annum. The borrower defaulted on annual amortizations and ceased operations around late 1957 or early 1958.
On September 27, 1961 the PNB requested the Provincial Sheriff of Camarines Norte to take possession and sell the real property extrajudicially under Act No. 3135; notice fixed the public auction for November 21, 1961 at the courthouse in Daet. On November 6, 1961 the PNB likewise requested foreclosure and sale of the mortgaged chattels, with notice that the sale would be held on November 21, 1961 at the mortgagor’s compound in Jose Panganiban; the deputy sheriff took possession and inventoried the chattels on November 8–9, 1961.
Despite protests and letters from the mortgagor dated November 19, 1961 (asserting that foreclosure required a court order and that venue for sale was Manila per the contracts), the real property was sold on November 21, 1961 to PNB for P56,908.00 (subject to one-year redemption). Thereafter the mortgagor sent a draft for P738.59 (December 14, 1961) and notified the sheriff it had paid its indebtedness; the bank replied on December 18, 1961 asserting a larger balance (including a 10% attorney’s fee and guarding expenses) and advised the chattel sale would proceed unless a larger remittance was made.
The chattel foreclosure was held on December 21, 1961; the chattels were sold in bulk and awarded to PNB for P4,200.00, which PNB later resold to Mariano Bundok. In May 1962 PNB employees and the buyer took possession of the chattels from the mortgagor’s compound, aided by local police and PC soldiers; a security officer was detained. The mortgagor filed s...(Subscriber-Only)
Issues:
- Did the trial court err in allowing the PNB to compound interest on the loan (i.e., charge interest on accrued interest) prior to judicial demand?
- Were the attorney’s fees and sale expenses awarded to PNB properly allowed and reasonable?
- Did the proceeds of the extrajudicial sale of the real property plus the mortgagor’s remittance extinguish the debt so that the subsequent chattel foreclosure was unlawful?
- Was the foreclosure sale of the chattels valid when it was held at Jose Panganiban rather than in Manila as the parties had agreed, and when the chattels were sold in gross rather than article by article?
- Is PNB (and the deputy sheriff) liable for conversion, exemplary damages and attorney’s fees for proceedi...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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