Case Digest (G.R. No. 163935)
Facts:
In Metropolitan Bank and Trust Company v. S.F. Naguiat Enterprises, Inc. (G.R. No. 178407, decided November 30, 2015), Metrobank, as secured creditor, held a real estate mortgage executed in April 1997 by Spouses Rommel and Celestina Naguiat and S.F. Naguiat Enterprises, Inc. over two parcels (TCT Nos. 58676 in Angeles City and 310523 in Marikina) to secure P17 million. On March 3, 2005, the corporation obtained an additional P1,575,000 loan from Metrobank, likewise secured by the existing mortgage. On July 7, 2005, S.F. Naguiat Enterprises filed a petition for voluntary insolvency under Act No. 1956 in the Regional Trial Court of Angeles City (Branch 56). On July 12, 2005, Judge Buan declared it insolvent, took possession of its assets, and restrained all transfers. Metrobank manifested its intention to withdraw from the insolvency proceedings and proceed with extrajudicial foreclosure. On November 8, 2005, Metrobank initiated foreclosure of the Angeles property, which was auctCase Digest (G.R. No. 163935)
Facts:
- Mortgage and Loan Transactions
- In April 1997, spouses Rommel and Celestina Naguiat and S.F. Naguiat Enterprises, Inc. executed a real estate mortgage in favor of Metrobank to secure credit accommodations totaling ₱17 million, covering:
- TCT No. 58676 – 489 sqm in Pulung Bulu, Angeles, Pampanga
- TCT No. 310523 – 1,200.10 sqm in Marikina, Rizal
- On March 3, 2005, S.F. Naguiat obtained an additional loan of ₱1,575,000 from Metrobank, secured by the same mortgage via an “Agreement on Existing Mortgage(s)” dated March 15, 2004.
- Insolvency Proceedings and Foreclosure Efforts
- July 7, 2005: S.F. Naguiat filed a Petition for Voluntary Insolvency with application for a receiver before RTC Angeles City (SP No. 7248).
- July 12, 2005: Insolvency court declared the corporation insolvent, took custody of its properties, and enjoined any transfer or payment; creditors were directed to file comments.
- September 5, 2005: Metrobank filed a Manifestation and Motion to withdraw from insolvency proceedings to pursue extrajudicial foreclosure.
- November 8, 2005: Metrobank commenced extrajudicial foreclosure of TCT No. 58676; December 9, 2005: public auction; Phoenix Global Energy, Inc. emerged as highest bidder.
- December 15, 2005 & April 24, 2006: Executive Judge Gabitan-Erum refused to approve the Certificate of Sale, citing the pending insolvency order.
- June 22, 2006: Metrobank filed a petition for certiorari and mandamus with the Court of Appeals; S.F. Naguiat manifested no objection.
- November 15, 2006: CA Decision dismissed Metrobank’s petition for lack of insolvency-court leave; June 14, 2007: CA denied reconsideration.
- Metrobank elevated the case to the Supreme Court via Rule 45 petition for review.
Issues:
- Insolvency-Court Leave Requirement
- Whether Act No. 1956 requires a secured creditor to secure prior approval of the insolvency court before extrajudicial foreclosure of mortgaged property.
- Executive Judge’s Discretion
- Whether Executive Judge Gabitan-Erum abused her discretion in refusing to approve the Certificate of Sale.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)