October 2009 - Philippine Supreme Court Decisions/Resolutions
Philippine Supreme Court Jurisprudence
G.R. No. 179756 - Rizal Commercial Banking Corporation v. Royal Cargo Corporation
SECOND DIVISION
[G.R. NO. 179756 : October 2, 2009]
RIZAL COMMERCIAL BANKING CORPORATION, Petitioner, v. ROYAL CARGO CORPORATION, Respondent.
D E C I S I O N
CARPIO MORALES, J.:
Terrymanila, Inc.1 (Terrymanila) filed a petition for voluntary insolvency with the Regional Trial Court (RTC) of Bataan on February 13, 1991.2 One of its creditors was Rizal Commercial Banking Corporation (petitioner) with which it had an obligation of P3 Million that was secured by a chattel mortgage executed on February 16, 1989. The chattel mortgage was duly recorded in the notarial register of Amado Castano, a notary public for and in the Province of Bataan.3
Royal Cargo Corporation (respondent), another creditor of Terrymanila, filed an action before the RTC of Manilafor collection of sum of money and preliminarily attached "some" of Terrymanila's personal properties on March 5, 1991 to secure the satisfaction of a judgment award of P296,662.16, exclusive of interests and attorney's fees.4
On April 12, 1991, the Bataan RTC declared Terrymanila insolvent.
On June 11, 1991,5 the Manila RTC, by Decision of even date, rendered judgment in the collection case in favor of respondent.
In the meantime, petitioner sought in the insolvency proceedings at the Bataan RTC permission to extrajudicially foreclose the chattel mortgage which was granted by Order of February 3, 1992.6 It appears that respondent, together with its employees' union, moved to have this Order reconsidered but the motion was denied by Order of March 20, 1992 Order.7
The provincial sheriff of Bataan thereupon scheduled on June 16, 1992 the public auction sale of the mortgaged personal properties at the Municipal Building of Mariveles, Bataan. At the auction sale, petitioner, the sole bidder of the properties, purchased them for P1.5 Million. Eventually, petitioner sold the properties to Domingo Bondoc and Victoriano See.8
Respondent later filed on July 30, 1992 a petition before the RTC of Manila, docketed as Civil Case No. 92-62106, against the Provincial Sheriff of the RTC Bataan and petitioner, for annulment of the auction sale (annulment of sale case). Apart from questioning the inclusion in the auction sale9 of some of the properties which it had attached, respondent questioned the failure to duly notify it of the sale at least 10 days before the sale, citing Section 14 of Act No. 1508 or the Chattel Mortgage Law which reads:
Sec. 14. The mortgagee, his executor, administrator or assign, may, after thirty days, from the time of condition broken, cause the mortgaged property, or any part thereof, to be sold at public auction by a public officer at a public place in the municipality where the mortgagor resides, or where the property is situated, provided at least ten days notice of the time, place, and purpose of such sale has been posted at two or more public places in such municipality, and the mortgagee, his executor, administrator or assignee shall notify the mortgagor or person holding under him and the persons holding subsequent mortgages of the time and place of sale, either by notice in writing directed to him or left at his abode, if within the municipality, or sent by mail if he does not reside in such municipality, at least ten days previous to the date. (Emphasis and underscoring supplied),
it claiming that its counsel received a notice only on the day of the sale.10
Petitioner, alleging that the annulment of sale case filed by respondent stated no cause of action, filed on December 3, 1992 a Motion to Dismiss11 which was, however, denied by Branch 16 of the Manila RTC.12
Petitioner appealed the denial of the Motion to Dismiss via certiorari to the Court of Appeals, docketed as CA-G.R. SP No. 31125. The appellate court dismissed the petition, by Decision of February 21, 1994, it holding that respondent's petition for annulment "prima facie states a sufficient cause of action and that the [trial court] in denying [herein petitioner RCBC's] motion to dismiss, had acted advisedly and well within its powers and authority."13
Petitioner thereupon filed before the Manila RTC its Answer Ex Abundante Cautelam14 in the annulment of sale case in which it lodged a Compulsory Counterclaim by seeking P1 Million for moral damages, P500,000 for exemplary damages, and P250,000 for attorney's fees. It thereafter elevated the case to this Court via Petition for Review on Certiorari, docketed as G.R. 115662. This Court by minute Resolution of November 7, 1994,15 denied the petition for failure to show that a reversible error was committed by the appellate court.16
Trial on the merits of the annulment of sale case thereupon ensued. By Decision17 of October 15, 1997, Branch 16 of the Manila RTC rendered judgment in favor of respondent, disposing as follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:
1. ORDERING . . . RCBC to pay plaintiff [heein respondent Royal Cargo] the amount of
P296,662.16 andP8,000.00 as reasonable attorney's fees.2. No pronouncement as to costs.
3. DISMISSING the petition as to respondents Provincial Sheriff of Balanga, Bataan RTC;
SO ORDERED.
Both parties appealed to the Court of Appeals which, by Decision18 of April 17, 2007, denied herein petitioner's appeal and partly granted herein respondent's by increasing to P50,000 the attorney's fees awarded to it and additionally awarding it exemplary damages and imposing interest on the principal amount payable to it. Thus it disposed:
WHEREFORE, the foregoing considered, the appeal instituted by appellant RCBC is hereby DENIED for lack of merit while the appeal of appellant Royal Cargo is PARTLY GRANTED in that the amount of attorney's fees awarded by the RTC is increased to P50,000.00.
In addition, RCBC is ordered to pay Royal Cargo the amount of P100,000.00 as exemplary damages. The principal amount of P296,662.18 [sic] to be paid by RCBC to Royal Cargo shall likewise earn 12% interest per annum from the time the petition was filed in the court a quo until fully paid. The rest of the decision is AFFIRMED.
SO ORDERED. (Emphasis and underscoring supplied)cralawlibrary
In partly granting respondent's appeal from the Decision of Br. 16 of RTC Manila, the appellate court ratiocinated that respondent had a right to be "timely informed" of the foreclosure sale.
RCBC's citations [sic] of numerous rulings on the matter more than supports the fact that as mortgagee, it had preferential right over the chattels subject of the foreclosure sale. This however is not at issue in this case. What is being contested is the right of Royal Cargo to be timely informed of the foreclosure sale as it too had interests over the mortgagee Terrymanila, Inc.'s assets. We note that this matter had already been passed upon by this Court on February 21, 1994 in CA-G.R. SP No. 31125 as well as by the Supreme Court on November 7, 1994 in G.R. No. [1]15662. RCBC, by arguing about its preferential right as mortgagee in the instant appeal merely reiterates what had already been considered and ruled upon in earlier proceedings.
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