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PNB vs. Castalloy Technology Corporation G.R. No. 178367, March 19, 2012

PNB granted Castalloy Technology Corporation a credit line and loan that was secured by real estate mortgages on properties from Alinsu Steel Foundry Corporation and Allied Industrial Corporation. Castalloy defaulted on its loan obligations. PNB filed for extrajudicial foreclosure on the mortgaged properties. Castalloy argued the correct amount owed was in dispute and sought a preliminary injunction on the foreclosure from the RTC, which was granted. PNB appealed. The Supreme Court ruled in favor of PNB, finding that as the mortgagee, PNB had the right to foreclose on the properties due to non-payment, regardless of the disputed amounts.

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Rey Almon Tolentino Alibuyog
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112 views2 pages

PNB vs. Castalloy Technology Corporation G.R. No. 178367, March 19, 2012

PNB granted Castalloy Technology Corporation a credit line and loan that was secured by real estate mortgages on properties from Alinsu Steel Foundry Corporation and Allied Industrial Corporation. Castalloy defaulted on its loan obligations. PNB filed for extrajudicial foreclosure on the mortgaged properties. Castalloy argued the correct amount owed was in dispute and sought a preliminary injunction on the foreclosure from the RTC, which was granted. PNB appealed. The Supreme Court ruled in favor of PNB, finding that as the mortgagee, PNB had the right to foreclose on the properties due to non-payment, regardless of the disputed amounts.

Uploaded by

Rey Almon Tolentino Alibuyog
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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PNB vs.

CASTALLOY TECHNOLOGY CORPORATION


G.R. No. 178367, March 19, 2012

FACTS:
Respondent Castalloy Technology Corporation was granted by petitioner
PNB a credit line in the amount of ₱4,000,000.00, later increased to
₱45,000,000.00. To secure payment of the loans obtained by Castalloy,
respondents Alinsu Steel Foundry Corporation and Allied Industrial
Corporation constituted in favor of PNB a real estate mortgage over four
parcels of land, all issued by the Register of Deeds of Mandaue City. To further
secure the loan, respondents Gloria C. Ngo and Tomas C. Ngo, Jr. executed a
joint and solidary agreement in favor of PNB. In addition to the three
promissory notes, PNB claimed that Castalloy had executed two other
promissory notes. These two loans were denied by Castalloy, which argued
that the signature of Gloria in the two notes was forged, and that the proceeds
thereof were not deposited to the corporation’s bank account.
After Castalloy defaulted in the payment of its obligations under the
promissory notes, PNB filed a petition for extrajudicial foreclosure of real estate
mortgage against Castalloy, Allied and Alinsu.
In the meantime, a complaint for determination of correct obligation and
injunction with application for writ of preliminary injunction/temporary
restraining order was filed with the RTC by Castalloy, Allied, Alinsu, Gloria and
Tomas against PNB and Sheriff Julbert E. Opada.
The respondents claimed that the sale at the public auction of the mortgaged
properties had to be held in abeyance pending judicial determination of the
correct amount of Castalloy’s obligation to PNB. In its opposition to the
application for injunction, PNB argued that the parties’ dispute on the loan’s
computation was not a valid ground to restrain the mortgage’s foreclosure.
The RTC, issued an Order granting the respondents’ application for a writ
of preliminary injunction. PNB filed a motion for reconsideration, but the same
was denied for lack of merit. Unsatisfied, PNB questioned the RTC’s orders
before the CA through a petition for certiorari under Rule 65 of the Rules of
Court. The CA rendered its decision denying the petition, finding no grave
abuse of discretion on the part of the RTC.
ISSUE:
Whether or not petitioner can foreclose the properties.
HELD:
In the instant case, the respondents admit that to secure the loan
obligations of Castalloy, Alinsu and Allied constituted a real estate mortgage on
their properties in favor of PNB. The respondents also do not dispute that they
were unable to fully settle their loan obligation to the mortgagee-bank. There is
an unpaid obligation to PNB, even granting that we disregard the disputed
promissory notes dated November 27, 2006 and January 29, 2007, or consider
the variance in the parties’ respective formula for the loan’s computation. This
failure to pay has given PNB, as the mortgagee, the clear right to foreclose the
mortgage constituted to secure the loan. Foreclosure is but a necessary
consequence of non-payment of mortgage indebtedness. In a real estate
mortgage, when the principal obligation is not paid when due, the mortgagee
has the right to foreclose the mortgage and to have the property seized and
sold with the view of applying the proceeds to the payment of the obligation.
Availment of said remedy cannot be deemed violative of the mortgagors’ right
over the mortgaged properties. The respondents, as mortgagors, should be
mindful of the effects and implications of a mortgage on their rights over the
properties given as collaterals, especially when the loan secured thereby
remains unpaid.

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