Manuel D. Yngson v. Philippine National Bank

Summary

This case involved ARCAM & Company, Inc., a sugar mill operator that defaulted on loans secured by real estate and chattel mortgages with Philippine National Bank (PNB). After ARCAM's rehabilitation failed and the SEC ordered its dissolution and liquidation in 2000, PNB proceeded with extrajudicial foreclosure of the mortgaged properties. The court liquidator challenged this foreclosure, arguing it violated liquidation rules and preference of credits provisions. The Supreme Court ruled in favor of PNB, establishing that secured creditors retain the right to foreclose on mortgaged properties during corporate liquidation proceedings. The Court distinguished between credit preferences (which apply to general claims) and liens (which attach to specific properties), holding that secured creditors' rights are only suspended during rehabilitation but may be exercised upon its termination. This decision clarified the interplay between corporate liquidation proceedings and secured creditor rights under Philippine law.