Pameca Wood Treatment Plant v. Teves

Summary

PAMECA obtained a loan secured by chattel mortgage from Development Bank of the Philippines. After default, DBP foreclosed and purchased the mortgaged properties as sole bidder for P322,350.00, then sued for the deficiency of P4,366,332.46. The Supreme Court affirmed the lower courts' decisions, establishing key principles: (1) the Chattel Mortgage Law allows deficiency claims unlike pledge under Article 2115 of the Civil Code; (2) inadequacy of price alone does not invalidate foreclosure sales without proof of fraud; (3) corporate officers who sign promissory notes as co-makers are solidarily liable with the corporation; and (4) equity cannot override clear statutory provisions. The case clarifies the distinct legal effects of chattel mortgage foreclosure versus pledge, confirming that deficiency claims remain allowable under Act No. 1508 even when the foreclosure sale price is significantly below the original property valuation.