Star Two v. Paper City
Petitioner: Star Two (SPV-AMC), Inc.,
Respondent: Paper City Corporation of the
Philippines
Ponente: Perez, J.
Short Facts and Doctrine/s: Paper City obtained loans
from RCBC (substituted by Star Two) secured by a
chattel mortgage over Paper City’s machineries and
equipment. This CM was unilaterally cancelled by
RCBC. Subsequently, Paper City entered into a
Mortgage Trust Indenture with RCBC and 2 other banks.
In the MTI, Paper City obtained additional loans secured
by a deed of real estate mortgage plus real and personal
property which was annexed. This necessarily included
the machineries and equipment of Paper City.
Defaulted. Foreclosed. They were arguing over whether
the machineries and equipment are to be considered as
real property and thus included in the foreclosure.
RCBC poses that Paper City gave its consent to
consider the disputed machineries and equipment as
real properties. Paper City contends that the
machineries and equipment are chattels by agreement
thru the deeds of CM Held: SC said that the parties
stipulated in the MTI that the properties mortgaged are
various parcels of land including buildings and existing
improvements thereon as well as the machineries and
equipment. The real estate mortgage over the
machineries and equipment is even in full accord with
the classification of such properties by the NCC as
immovable property (Art. 415. Par 5. Machinery,
receptacles, instruments or implements…).
Facts:
 Paper City was granted loans and credit
accommodations by RCBC. The loans were
secured by Deeds of Continuing Chattel
Mortgages on Paper City's machineries and
equipment. However, RCBC unilaterally
cancelled the deeds.
 Subsequently, RCBC, together with
Metrobank and Union Bank, entered into a
Mortgage Trust Indenture with Paper City. In
the said MTI, Paper City acquired additional
loans secured by Deeds of Real Estate
Mortgage, plus real and personal properties in
an annex to the MTI, which covered the
machineries and equipment of Paper City.
 Paper City defaulted. RCBC filed a petition for
extra-judicial foreclosure against the real
estate executed by Paper City – including all
the improvements. As highest bidders, the
three banks were issued a Certificate of Sale.
 Paper City filed with the trial court a motion to
remove machinery out of the foreclosed land
and building, saying that the same were not
included in the foreclosure of the real estate
mortgage.
 RCBC contends that 1.)That Paper City gave
its consent to consider the disputed
machineries and equipment as real properties
when they signed the MTI.
 Paper City argued: 1.) The machineries and
equipment are chattels by agreement thru
the Deeds of Continuing Chattel Mortgages
and they did not consent to consider the
disputed machineries and equipment as real
property. 2) They also contend that the
cancellation of the chattel mortgage was
invalid because it was done unilaterally hence
such chattel mortgage remains subsisting.
Issues: 1. Whether the subject machineries and
equipment were considered real properties and should
therefore be included in the extra-judicial foreclosure
which in turn were sold to the banks.
Ruling:
1. Yes
Ratio:
1. Explanation of Answer to Issue 1
 The SC said that repeatedly in the MTI's, the
parties stipulated that the properties
mortgaged by Paper City to RCBC are various
parcels of land including buildings and existing
improvements thereon as well as the
machineries and equipment.
 The MTI is clear. The plain language and
literal interpretation of the MTI's must be
applied. The petitioner, other creditor banks,
and Paper City intended from the very first
indenture that the machineries and equipment
in the annex in the MTI's are included.
 Considering that the MTI which is the
instrument of the mortgage that was
foreclosed exactly states through the Deed of
Amendment that the machineries and
equipments listed in Annexes "A" and "B" form
part of the improvements listed and located on
the parcels of land subject of the mortgage,
such machineries and equipments are surely
part of the foreclosure of the "real estate
properties, including all improvements
thereon" as prayed for in the petition.
 The real estate mortgages which specifically
included the machineries and equipments
were subsequent to the chattel mortgages.
Without doubt, the real estate mortgages
superseded the earlier chattel mortgages.
 The real estate mortgage over the
machineries and equipment are even in full
accord with the classification of such
properties by the Civil Code of the Philippines
as immovable property. Thus:
Article 415. The following are immovable
property:
(5) Machinery, receptacles, instruments or
implements intended by the owner of the
tenement for an industry or works which may
be carried on in a building or on a piece of
land, and which tend directly to meet the
needs of the said industry or works;
Disposition: WHEREFORE, the petition is GRANTED.
Accordingly, the Decision and Resolution of the Court of
Appeals dated 8 March 2005 and 8 August 2005
upholding the 15 August 2003 and 1 December 2003
Orders of the Valenzuela Regional Trial Court are
hereby REVERSED and SET ASIDE and the original
Order of the trial court dated 28 February 2003 denying
the motion of respondent to remove or dispose of
machinery is hereby REINSTATED.
RCBC vs ROYAL CARGO
FACTS:
 Terrymanila filed a petition for voluntary
insolvency with the RTC of Bataan on
February 13, 1991.
 One of its creditors was RCBC 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.
 Royal Cargo another creditor of
Terrymanila, filed an action with RTC
Manila for collection of sum of money and
preliminarily attached "some" of
Terrymanila's personal properties on
March 5, 1991.
 On April 12, 1991, the Bataan RTC
declared Terrymanila insolvent.
 On June 11, 1991, Manila RTC, rendered
judgment in the collection case in favor of
Royal Cargo.
 In the meantime, RCBC 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.
 The provincial sheriff of Bataan thereupon
scheduled on June 16, 1992 the public
auction sale of the mortgaged personal
properties.
 At the auction sale, RCBC was the sole
bidder of the properties and purchased
them for P1.5 Million. Eventually, RCBC
sold the properties to Domingo Bondoc
and Victoriano See.
 Royal Cargo filed on July 30, 1992 a
petition before the RTC of Manila against
the Provincial Sheriff of the RTC Bataan
and RCBC, for annulment of the auction
sale . Apart from questioning the inclusion
in the auction sale 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.
ISSUE:
WON Royal Cargo should have been given a ten
day prior notice of the foreclosure sale.
RULING:
Section 13 of the Chattel Mortgage Law allows the
would-be redemptioner thereunder to redeem the
mortgaged property only before its sale. [T]here is
no law in our statute books which vests the right of
redemption over personal property. the right of
redemption applies to real properties, not personal
properties, sold on execution. , the redemption cited
in Section 13 partakes of an equity of redemption,
which is the right of the mortgagor to redeem the
mortgaged property after his default in the
performance of the conditions of the mortgage but
before the sale of the property to clear it from the
encumbrance of the mortgage. It is not the same
as right of redemption which is the right of the
mortgagor to redeem the mortgaged property after
registration of the foreclosure
sale, and even after confirmation of the sale.
While respondent had attached some of
Terrymanila's assets to secure the satisfaction of a
judgment what it effectively attached was
Terrymanila's equity of redemption. Having thus
attached Terrymanila's equity of redemption,
respondent had to be informed of the date of sale of
the mortgaged assets for it to exercise such equity
of redemption over some of those foreclosed
properties, as provided for in Section 13.
Recall, however, that respondent filed a motion to
reconsider the February 3, 1992 Order of the RTC
Bataan-insolvency court which granted leave to
petitioner to foreclose the chattel mortgage. Thus,
even prior to receiving, through counsel, a mailed
notice of the auction sale on the date of the auction
sale itself on June 16, 1992, respondent was already
put on notice of the impending foreclosure sale of the
mortgaged chattels. It could thus have expediently
exercised its equity of redemption, at the earliest
when it received the insolvency court's Order of
March 20, 1992 denying its Motion for
Reconsideration of the February 3, 1992 Order.
In any event, even if respondent would have
participated in the auction sale and matched
petitioner's bid, the superiority of petitioner's lien over
the mortgaged assets would preclude respondent
from recovering the chattels. "the right of those
who acquire said properties should not and can
not be superior to that of the creditor who has in
his favor an instrument of mortgage executed
with the formalities of the law, in good faith, and
without the least indication of fraud
It bears noting that the chattel mortgage in favor of
petitioner was registered more than two
years before the issuance of a writ of attachment
over some of Terrymanila's chattels in favor of
respondent. Since the registration of a chattel
mortgage is an effective and binding notice to other
creditors of its existence and creates a real right or
lien that follows the property wherever it may
be, 47 the right of respondent, as an attaching
creditor or as purchaser, had it purchased the
mortgaged chattel at the auction sale, is
subordinate to the lien of the mortgagee who has in
his favor a valid chattel mortgage.
 PCI LEASING & FINANCE vs.
TROJAN METAL INDUSTRIES et. al.
J. Carpio, 2010
FACTS: TMI came to PCI to seek a loan. Instead of
extending a loan, PCI offered to buy various
equipment TMI owned, in exchange for P2.8M.
Deeds of sale were executed.
PCI and TMI then entered into a lease agreement:
- lease the equipment it previously owned
- postdated checks for 24 monthly
installments
- guaranty deposit of P1.03M (security for
timely performance of TMI's obligations under the
lease agreement, to be automatically forfeited should
TMI return the leased equipment before expiration of
the lease agreement)
- Sps. Dizon (President and Vice-President
of TMI) also executed in favor of PCI a Continuing
Guaranty of Lease Obligations (agreed to
immediately pay obligations in case TMI failed, under
the lease agreement)
However, to obtain additional loan from another
financing company, TMI used the leased equipment
as temporary collateral.
PCI considered the 2nd mortgage a violation of the
lease agreement. PCI sent TMI a demand letter for
payment of the latter's outstanding obligation, which
was unheeded.
PCI filed in the RTC a complaint against TMI and sps.
Dizon for recovery of sum of money and personal
property, with prayer for the issuance of a writ of
replevin.
RTC issued the writ of replevin. PCI sold the leased
equipment to a third party and collected the proceeds
amounting to P1.025M
Respondent claimed that the sale with lease
agreement was a mere scheme to facilitate the
financial lease between PCI and TMI, and that the
true agreement between them was a loan secured by
a chattel mortgage.
RTC: Lease agreement is valid; judgment in favor of
PCI
CA: Set aside the decision of the RTC; sale with
lease was a loan secured by chattel mortgage
Directed PCI to refund P1.1M to TMI
ISSUE/HELD: WON the sale with lease agreement
the parties entered into was a financial lease or a
loan secured y the chattel mortgage -
Petitioner (PCI): transaction between the parties
was a sale and leaseback financing arrangement,
which is not contrary to law, morals, good customs,
public order or public policy; guaranty deposit should
be forfeited in its favor, as provided in the lease
agreement
Respondents (TMI): transfer of ownership to PCI
was never the intention of the parties; guaranty
deposit will only be forfeited if TMI returned the
leased equipment to PCI before expiration of the
lease agreement. Since TMI never returned the
lease property voluntarily, but through writ of
replevin, the guaranty deposit should not be forfeited.
SC: In a true financial leasing, a finance company
purchases on behalf of a cash-strapped lessee the
equipment the latter wants to buy, but, due to
financial limitations, is incapable of doing so. The
finance company then leases the equipment to the
lessee in exchange for the latter's periodic payment
of a fixed amount of rental.
HERE, TMI already owned the subject equipment
before it transacted with PCI. Therefore the
transaction between the parties cannot be deemed
to be in the nature of a financial leasing as defined in
law.
* "Where the client already owned the equipment, but
needed additional working capital and the finance
company purchased such equipment with the
intention of leasing it back to him, the lease
agreement was simulated to disguise the true
transaction that was a loan with security."
* "The intention of the parties was not to enable the
client to acquire and use the equipment, but to
extend to him a loan."
* Financial leasing contemplates the extension of
credit to assist a buyer in acquiring movable property
which he can use and eventually own.
The transaction between the parties was simply
a loan secured by chattel mortgage. Thus upon
TMI's default, PCI was entitled to seize the
mortgaged equipment, not as owner but as creditor-
mortgagee for the purpose of foreclosing the chattel
mortgage.
PCI's sale to a third party of the mortgaged
equipment and collection of the proceeds of the sale
can be deemed in the exercise of its right to foreclose
the chattel mortgage as creditor-mortagee
 UNION BANK v. JUNIAT
G.R No. 171569, August 1, 2011
Facts:
 Petitioner: Union Bank of the Philippines
(Union Bank) is a universal banking
corporation organized and existing under
Philippine laws.
 Respondent/s:
1. Winwood Apparel, Inc. (Winwood)
and Wingyan Apparel, Inc.
(Wingyan) are domestic
corporations engaged in the
business of apparel
manufacturing.
2. Both respondent corporations are
owned and operated by
respondent Alain Juniat (Juniat),
a French national based in
Hongkong.
3. Nonwoven Fabric Philippines, Inc.
(Nonwoven) is a Philippine
corporation engaged in the
manufacture and sale of various
types of nonwoven fabrics.
 Union Bank filed with RTC of Makati a
Complaint with prayer for the issuance
of ex-parte writs of preliminary
attachment and replevin against Juniat,
Winwood, Wingyan, and the person in
possession of the mortgaged motorized
sewing machines and equipment.
 Union Bank alleged that:
1. Juniat, acting in behalf of Winwood
and Wingyan, executed a promissory
note (on April 11, 1992) and a Chattel
Mortgage (on March 27, 1992) over
several motorized sewing machines
and other allied equipment to secure
their obligation arising from export bills
transactions to Union Bank in the
amount of P1,131,134.35;
2. Juniat executed a Continuing Surety
Agreement as additional security for
the obligation in favor of Union Bank;
3. The loan remains unpaid; and
4. The mortgaged motorized sewing
machines are insufficient to answer for
the obligation.
 RTC of Makati issued writs of preliminary
attachment and replevin in favor of Union
Bank and that such writs were served by
the Sheriff to Nonwoven as it was in
possession of the motorized sewing
machines and equipment.
 Nonwoven filed an Answer contending that
unnotarized Chattel Mortgage executed in
favor of Union Bank has no binding effect
on Nonwoven and that it has a better title
over the motorized sewing machines and
equipment because these were assigned
to it by Juniat pursuant to their Agreement.
 Union Bank filed a Motion to Sell Chattels
Seized by Replevin, praying that the
motorized sewing machines and
equipment be sold to avoid depreciation
and deterioration.
 However, before the RTC could act on the
motion, Union Bank sold the attached
properties for the amount of
P1,350,000.00.
 Nonwoven moved to cite the officers of
Union Bank in contempt for selling the
attached properties, but the RTC denied
the same on the ground that Union Bank
acted in good faith.
 RULING OF RTC MAKATI:
 ruled in favor of Union Bank
 ruled that both the Chattel Mortgage in
favor of Union Bank and the
Agreement in favor of Nonwoven have
no obligatory effect on third persons
because these documents were not
notarized.
 Since the Chattel Mortgage in favor of
Union Bank was executed earlier,
Union Bank has a better right over the
motorized sewing machines and
equipment under the doctrine of "first
in time, stronger in right" (prius
tempore, potior jure).
 declared Union Bank entitled to the
proceeds of the sale of the subject
machineries.
 declared respondents to be jointly and
severally liable to Union Bank, for the
deficiency between the proceeds of
the sale of the machineries and
original claim of Union Bank
 Ruling of CA:
 reversed the ruling of RTC.
 ruled that the contract of pledge
entered into between Juniat and
Nonwoven is valid and binding, and
that the motorized sewing machines
and equipment were ceded to
Nonwoven by Juniat by virtue of a
dacion en pago. Thus, CA declared
Nonwoven entitled to the proceeds of
the sale of attached properties.
Issue/s:
1. Whether Union Bank had a better right
over the machineries seized or levied upon
in the proceedings before the trial court
and/or the proceeds of the sale thereof.
 2. Whether Nonwoven has a valid claim over subsequently sold to it by way of a dacion
the subject sewing machines. en pago. Also, there is nothing in the
Agreement dated May 9, 1992 to indicate
Held: that the motorized sewing machines, snap
 PETITION IS GRANTED. machines and boilers were ceded to
Nonwoven as payment for the Wingyan’s
 Union bank's Arguments: and Winwood’s obligation. It bears
stressing that there can be no transfer of
1. It insists that it has a better title to the ownership if the delivery of the property to
proceeds of the sale. the creditor is by way of security.
2. It also insists that although the Chattel
Mortgage executed in its favor was  In case of doubt as to whether a
not notarized, it is nevertheless valid, transaction is one of pledge or dacion en
and thus, has preference over a pago, the presumption is that it is a pledge
subsequent unnotarized Agreement. as this involves a lesser transmission of
3. It claims that no other evidence was rights and interests.
presented by Nonwoven to show that
the motorized sewing machines and  Nonwoven is not entitled to the proceeds
equipment were indeed transferred to of the sale of the attached properties
them by Juniat/Winwood/Wingyan. because it failed to show that it has a
better title over the same.
 Nonwoven's Arguments:
1. It claims ownership over the proceeds
of the sale pursuant to Art. 1544 of the
Civil Code on double sale.
2. It contends that since its prior
possession over the motorized sewing
machines and equipment was in good
faith, it has a better title over the
proceeds of the sale.
3. It also contends that Union Bank has
no right over the proceeds of the sale
because the Chattel Mortgage
executed in its favor was unnotarized,
unregistered, and without an affidavit
of good faith.

 The unnotarized Chattel Mortgage

executed by Juniat, for and in behalf of
Wingyan and Winwood, in favor of Union
Bank does not bind Nonwoven. Thus, the
fact that the Chattel Mortgage executed in
favor of Union Bank was not notarized
does not affect Union Bank’s cause of
action.

 A perusal of the Agreement dated May 9,

1992 clearly shows that the sewing
machines, snap machines and boilers
were pledged to Nonwoven by Juniat to
guarantee his obligation. However, under
Article 2096 of the Civil Code, "[a] pledge
shall not take effect against third persons if
a description of the thing pledged and the
date of the pledge do not appear in a
public instrument." Hence, just like the
chattel mortgage executed in favor of
petitioner, the pledge executed by Juniat in
favor of Nonwoven cannot bind petitioner.

 No evidence was presented by Nonwoven

to show that the attached properties were
PARAY v. RODRIGUEZ, ET AL., G.R. No. 132287
(JANUARY 24, 2006)
FACTS:
Respondents were the owners of shares of
stock in Quirino-Leonor-Rodriguez Realty Inc. In
1979 to 1980, respondents secured by way of pledge
of some of their shares of stock to petitioners
Bonifacio and Faustina Paray (“Parays”) the
payment of certain loan obligations.
When the Parays attempted to foreclose the
pledges on account of respondents’ failure to pay
their loans, respondents filed complaints with RTC of
Cebu City. The actions sought the declaration of
nullity of the pledge agreements, among others.
However the RTC dismissed the complaint and gave
due course to the foreclosure and sale at public
auction of the various pledges. This decision attained
finality after it was affirmed by the Court of Appeals
and the Supreme Court.
Respondents then received Notices of Sale
which indicated that the pledged shares were to be
sold at public auction. However, before the
scheduled date of auction, all of respondents caused
the consignation with the RTC Clerk of Court of
various amounts. It was claimed that respondents
had attempted to tender payments to the Parays, but
had been rejected.
Notwithstanding the consignations, the public
auction took place as scheduled, with petitioner Vidal
Espeleta successfully bidding for all of the pledged
shares. None of respondents participated or
appeared at the auction.
Respondents instead filed a complaint with the
RTC seeking the declaration of nullity of the
concluded public auction.
Respondents’ argument:
Respondents argued that their tender of
payment and subsequent consignations served to
extinguish their loan obligations and discharged the
pledge contracts.
Petitioners’ argument:
Petitioners countered that the auction sale
was conducted pursuant to a final and executory
judgment and that the tender of payment and
consignations were made long after their obligations
had fallen due.
They pointed out that the amounts
consigned could not extinguish the principal loan
obligations of respondents since they were not
sufficient to cover the interests due on the debt. They
likewise argued that the essential procedural
requisites for the auction sale had been satisfied.
Ruling of RTC:
The RTC dismissed the complaint,
expressing agreement with the position of the
Parays. It held that respondents had failed to tender
or consign payments within a reasonable period after
default and that the proper remedy of respondents
was to have participated in the auction sale.
Ruling of CA:
The Court of Appeals however reversed the
RTC on appeal, ruling that the consignations
extinguished the loan obligations and the subject
pledge contracts; and the auction sale as null and
void. It (CA) chose to uphold the sufficiency of the
consignations owing to an imputed policy of the law
that favored redemption and mandated a liberal
construction to redemption laws. The attempts at
payment by respondents were characterized as
made in the exercise of the right of redemption.
CA likewise found fault with the auction
sale, holding that there was a need to individually sell
the various shares of stock as they had belonged to
different pledgors.
ISSUES:
1. WON right of redemption exists over personal
properties (such as the subject pledged shares).
2. WON the consignations made by respondents
prior to the auction sale are sufficient to
extinguish the loan obligations and the subject
pledged contracts.
3. WON the act of respondents in consigning the
payments should be deemed done in the
exercise of their right of redemption owing to an
imputed policy of the law that favored
redemption and mandated a liberal construction
to redemption laws.
4. WON a buyer at a public auction ipso
facto becomes the owner of the pledged shares
pending the lapse of the one-year redemptive
period
5. WON there is a need to individually sell the
various shares of stock as they had belonged to
different pledgors.
HELD:
1. No.
No law or jurisprudence establishes or
affirms such right. Indeed, no such right exists.
The right of redemption over mortgaged
real property sold extrajudicially is established by Act
No. 3135, as amended. The said law does not extend
the same benefit to personal property. In fact, there
is no law in our statute books which vests the right of
redemption over personal property. Act No. 1508, or
the Chattel Mortgage Law, ostensibly could have
served as the vehicle for any legislative intent to
bestow a right of redemption over personal property,
since that law governs the extrajudicial sale of
mortgaged personal property, but the statute is
definitely silent on the point.
The right of redemption as affirmed under
Rule 39 of the Rules of Court applies only to
execution sales, more precisely execution sales of
real property.
It must be clarified that the subject sale of
pledged shares was an extrajudicial sale, specifically
a notarial sale, as distinguished from a judicial sale
as typified by an execution sale. Under the Civil
Code, the foreclosure of a pledge occurs
extrajudicially, without intervention by the courts. All
the creditor needs to do, if the credit has not been
satisfied in due time, is to proceed before a Notary
Public to the sale of the thing pledged.
In this case, petitioners attempted to
proceed extrajudicially with the sale of the pledged
shares by public auction. However, extrajudicial sale
was stayed with the filing of Civil Cases which sought
to annul the pledge contracts. The final and
executory judgment in those cases affirmed the
pledge contracts and disposed them. Said judgment
did not direct the sale by public auction of the
pledged shares, but instead upheld the right of the
Parays to conduct such sale at their own volition.
2. No.
There is no doubt that if the principal
obligation is satisfied, the pledges should be
terminated as well. Article 2098 of the Civil Code
provides that the right of the creditor to retain
possession of the pledged item exists only until the
debt is paid. Article 2105 of the Civil Code further
clarifies that the debtor cannot ask for the return of
the thing pledged against the will of the creditor,
unless and until he has paid the debt and its interest.
At the same time, the right of the pledgee to foreclose
the pledge is also established under the Civil Code.
When the credit has not been satisfied in due time,
the creditor may proceed with the sale by public
auction under the procedure provided under Article
2112 of the Code.
In order that the consignation could have
the effect of extinguishing the pledge contracts, such
amounts should cover not just the principal loans, but
also the monthly interests thereon.
In the case at bar, while the amounts consigned
by respondents could answer for their respective
principal loan obligations, they were not sufficient to
cover the interests due on these loans, which were
pegged at the rate of 5% per month or 60% per
annum.
3. No.
The pledged shares in this case are not
subject to redemption. Thus, the consigned
payments should not be treated with liberality, or
somehow construed as having been made in the
exercise of the right of redemption.
4. Yes.
Obviously, since there is no right to redeem
personal property, the rights of ownership vested
unto the purchaser at the foreclosure sale are not
entangled in any suspensive condition that is implicit
in a redemptive period.
5. No.
This concern is obviously rendered a non-
issue by the fact that there can be no right to
redemption in the first place. Rule 39 of the Rules of
Court does provide for instances when properties
foreclosed at the same time must be sold separately,
such as in the case of lot sales for real property under
Section 19. However, these instances again pertain
to execution sales and not extrajudicial sales. No
provision in the Rules of Court or in any law requires
that pledged properties sold at auction be sold
separately.
On the other hand, under the Civil Code, it
is the pledgee, and not the pledgor, who is given the
right to choose which of the items should be sold if
two or more things are pledged. No similar option is
given to pledgors under the Civil Code. Moreover,
there is nothing in the Civil Code provisions
governing the extrajudicial sale of pledged properties
that prohibits the pledgee of several different pledge
contracts from auctioning all of the pledged
properties on a single occasion, or from the buyer at
the auction sale in purchasing all the pledged
properties with a single purchase price. The relative
insignificance of ascertaining the definite
apportionments of the sale price to the individual
shares lies in the fact that once a pledged item is sold
at auction, neither the pledgee nor the pledgor can
recover whatever deficiency or excess there may be
between the purchase price and the amount of the
principal obligation.
RULING:
Decision of the Court of Appeals is SET
ASIDE and the decision of the RTC Cebu City is
REINSTATED.