RCBC v. ROYALCARGO CORPORATIONTerrymanila, Inc. filed a petition for voluntary insolvency with theRTC of BataanonFebruary 13, 1991. One of its creditors was petitioner with which it had an obligation ofP3 Million that was secured by achattelmortgage executed onFebruary 16, 1989.Royal Cargo, another creditor of Terrymanila, filed before the RTC of for collection of sum of money and preliminarily attached some of Terrymanilas personal propertiesonMarch 5, 1991to secure the satisfaction of a judgment award ofP296,662.16.OnApril 1991, the Bataan RTC declared Terrymanila insolvent.The Manila RTC 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 extra-judicially foreclose the chattel mortgage. At the auction sale, petitioner, the sole bidder of the properties, purchased them forP1.5 Million. Respondent later filed forannulment of the auction sale.Issue: Who should be given preference over the subject properties?

HELD: RCBC

Despite its window of opportunity to exercise its equity of redemption, however, respondent chose to be technically shrewd about its chances, preferring instead to seek annulment of the auction sale, which was the result of the foreclosure of the mortgage, permission to conduct which it had early on opposed before the insolvency court.Its negligence or omission to exercise its equity of redemption within a reasonable time, or even on the day of the auction sale, warrants a presumption that it had either abandoned it or opted not to assert it.

It bears noting that the chattel mortgage in favor of petitioner was registered more than two yearsbeforethe issuance of a writ of attachment over some of Terrymanilas 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, 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.MANOLO P. CERNA vs. THE HONORABLE COURT OF APPEALS and CONRAD C. LEVISTE

On or about October 16, 1972, Celerino Delgado (Delgado) and Conrad Leviste (Leviste) entered into a loan agreement which was evidenced by a promissory note. On the same date, Delgado executed a chattel mortgage 2 over a Willy's jeep owned by him. And acting as the attorney-in-fact of herein petitioner, Manolo P. Cerna (petitioner), he also mortgage a "Taunus' car owned by the latter.The period lapsed without Delgado paying the loan. This prompted Leviste to a file a collection suit CFI of Rizal against Delgado and petitioner as solidary debtors. Petitioner claimed that the claim should be filed in the proceedings for the settlement of Delgado's estate as the action did not survive Delgado's death. Moreover, he also stated that since Leviste already opted to collect on the note, he could no longer foreclose the mortgage. CA and TC: Denied the Motion to Dismiss

ISSUES:

Whether or not a third party, who is not a debtor under the note but mortgaged his property to secure the payment of the loan of another is solidarily liable with the principal debtor.Whether or not a mortgagee who opted to collect may still foreclose the mortgage.HELD:

There is also no legal provision nor jurisprudence in our jurisdiction which makes a third person who secures the fulfillment of another's obligation by mortgaging his own property to be solidarily bound with the principal obligor. A chattel mortgage may be "an accessory contract" to a contract of loan, but that fact alone does not make a third-party mortgagor solidarily bound with the principal debtor in fulfilling the principal obligation that is, to pay the loan.The signatory to the principal contract loan remains to be primarily bound. It is only upon the default of the latter that the creditor may have been recourse on the mortgagors by foreclosing the mortgaged properties in lieu ofan action for the recovery of the amount of the loan. And the liability of the third-party mortgagors extends only to the property mortgaged. Should there be any deficiency, the creditors has recourse on the principal debtor.- The Special Power of Attorney did not make petitioner a mortgagor. All it did was to authorized Delgado to mortgage certain properties belonging to petitioner.Hence, Leviste having chosen to file the collection suit, could not now run after petitioner for the satisfaction of the debt. This is even moretrue in this case because of the death of the principal debtor, Delgado. Leviste was pursuing a money claim against a deceased person.