Sie sind auf Seite 1von 2

STAR TWO VS.

PAPER CITY
FACTS
Paper City was granted loans and credit accommodations by RCBC,
Metrobank and Union Bank. The loans were secured by 4 Deeds of Continuing
Chattel Mortgages on its machineries and equipments found inside its power
plants.
RCBC eventually executed a Unilateral Cancellation of Deed of Contining
Chattel Mortgage.
Creditor banks with RCBC instituted as the trustee bank entered into a
Mortgage Trust Indenture (MTI) with Paper City. In the said MTI Paper City
acquired another loan. The old loan was partly secured by 5 Deeds of Real
Estate Mortgage and the new loan would be secured by the same 5 Deeds of
Real Estate Mortgage and additional real and personal properties described
in an annex to the MTI, which covered the machineries and equipment of
Paper City.
MTI was later on amended and supplemented 3 times, wherein the loan was
increased and included the same mortgages with an additional building and
other improvements in the plant site.
Paper City was able to comply with the loans only until 1997 due to an
economic crisis. And because of the default in the payment, RCBC filed a
petition for extra-judicial foreclosure against the real estate executed by
Paper City including all the improvements. Creditor banks were the highest
bidder and Certificate of Sale was issued in favor of them
Paper City filed a complaint alleging that the sale was null and void due to
lack of prior notice.
During the pendency of the complaint, Paper City filed with the RTC a motion
to remove machineries out of the foreclosed land and building, saying that
the same were not included in the foreclosure of the real estate mortgage
RTC denied the motion, ruling that the machineries and equipment were
included.
In Paper City's Motion for Reconsideration, the RTC granted the same and
justified the reversal by finding that the machineries and equipment are
chattels by agreement thru the 4 Deeds of Continuing Chattel Mortgages; and
that the deed of cancellation executed by RCBC of said mortgage was not
valid because it was one unilaterally.
RCBC's own Motion for Reconsideration was denied.
The case was elevated to the CA. CA affirmed the orders of the trial court
because it relied on the plain language of the MTI's.

ISSUE:
Whether or not the machineries and equipments were included in the Real
Estate Mortgage and the subsequent sale during public auction?

HELD:
Yes.
Machineries permanently located in a building, either useful or ornamental, or
for service of some industry even though they were placed there after the
creation of the mortgage shall be considered as mortgage with the estate.
(Art. 2127)
Real estate mortgages which specifically included the machineries and
equipments were subsequent to the chattel mortgages. Without doubt, real
estate mortgages superseded the earlier chattel mortgages

Das könnte Ihnen auch gefallen