Case Digest (G.R. No. 179756)
Facts:
Rizal Commercial Banking Corporation v. Royal Cargo Corporation, G.R. No. 179756, October 02, 2009, the Supreme Court Second Division, Carpio Morales, J., writing for the Court.Terrymanila, Inc. filed a petition for voluntary insolvency with the Regional Trial Court (RTC) of Bataan on February 13, 1991. One creditor was Rizal Commercial Banking Corporation (RCBC), which held a P3 million obligation secured by a chattel mortgage executed February 16, 1989 and duly recorded in the notarial register in Bataan. Another creditor was Royal Cargo Corporation (respondent), which filed a separate collection action in the Manila RTC and obtained a judgment; to secure satisfaction it had preliminarily attached some of Terrymanila’s personal properties on March 5, 1991.
The Bataan RTC declared Terrymanila insolvent on April 12, 1991. RCBC sought and obtained leave from the insolvency court to extrajudicially foreclose its chattel mortgage by Order of February 3, 1992; a motion for reconsideration filed by Royal Cargo and its union was denied March 20, 1992. The provincial sheriff scheduled the public auction for June 16, 1992; RCBC was the sole bidder and purchased the mortgaged chattels for P1.5 million, later selling them to third parties.
On July 30, 1992 Royal Cargo filed Civil Case No. 92-62106 in the Manila RTC seeking annulment of the auction sale, alleging (inter alia) that it was not given the ten-day prior notice required by Section 14 of Act No. 1508 (the Chattel Mortgage Law) because its counsel received a mailed notice only on the day of the sale. RCBC moved to dismiss the annulment suit (Dec. 3, 1992), but Branch 16, Manila RTC denied the motion. RCBC sought certiorari relief with the Court of Appeals (CA-G.R. SP No. 31125), which dismissed the petition on Feb. 21, 1994 as the trial court had not acted with grave abuse of discretion in denying dismissal. RCBC then filed an Answer ex abundante cautelam with a compulsory counterclaim for damages and attorney’s fees, and elevated an interlocutory appellate matter to the Supreme Court (G.R. No. 115662), which denied relief by minute resolution on Nov. 7, 1994.
Trial on the merits in Manila RTC resulted in a decision (Oct. 15, 1997) ordering RCBC to pay Royal Cargo P296,662.16 plus P8,000 attorney’s fees; RCBC appealed. The Court of Appeals (Apr. 17, 2007) denied RCBC’s appe...(Subscriber-Only)
Issues:
- Was Royal Cargo entitled to a ten-day prior notice of the June 16, 1992 foreclosure sale under Section 14 of Act No. 1508?
- Did the trial court and the Court of Appeals err in finding RCBC guilty of constructive fraud for proceeding with the foreclosure sale without giving Royal Cargo a ten-day prior notice?
- Was RCBC correctly held liable to pay Royal Cargo P296,662.16 plus interest, exemplary damages and attorney’s fees?
- Is RCBC entitled to an award of atto...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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