Philippine Bank of Commerce v. de Vera

33. Philippine Bank of Commerce v.
De Vera resulting from the price obtained in the sale of the real
property at public auction and the outstanding obligation
Facts: at the time of the foreclosure proceedings.
Respondent De Vera is indebted to the plaintiff in the Further, under the Rules of Court (Sec. 6, Rule 70),
total amount of P127,312.24, guaranteed by a real Upon the sale of any real property, under an order for a
estate mortgage of the land. sale to satisfy a mortgage or other encumbrance thereon,
Upon maturity of the respondent De Veras obligation if there be a balance due to the plaintiff after applying the
on March 15, 1956, and despite several demands, the proceeds of the sale, the court, upon motion, should
defendant failed to pay the outstanding balance of his render a judgment against the defendant for any such
obligation in the amount of P99,033.20 as of January balance for which, by the record of the case, he may be
31, 1958 personally liable to the plaintiff. It is true that this refers
Philippine Bank filed a petition with the Sheriff of to a judicial foreclosure, but the underlying principle
Pasay City to sell the properties, subject to the Real is the same, that the mortgage is but a security and
Estate Mortgage executed and duly recorded in the not a satisfaction of indebtedness.
Registry of Deeds for the sum of P150,000.00.
Another document, Assignment of Real Estate The real estate mortgage does not, in any way, limit nor
Mortgage, was executed on the same day, May 17, minimize the amount of the obligation. Its only purpose
1947, which two documents, were later on is to guarantee the fulfillment of said obligation and,
consolidated. in case of default on the part of the debtor mortgagor, the
The Sheriff sold at public auction the two parcels of creditor mortgagee may execute the obligation on the
land covered by TCT No. 1631 and No. 37641 to the real property given as a mortgage by way of judicial
highest bidder, which was the creditor bank in this or extra-judicial foreclosure, according to our statutes
case, Philippine Bank of Commerce, for the amount and procedure. Therefore, by analogy and applying the
of P86,700.00, and the corresponding certificate of same principle of equity, if after the sale of the mortgaged
sale was issued by the Sheriff property at public auction, there is a resulting deficiency
Creditor bank seeks to recover the balance of his in the application for the payment of the obligation of the
obligation after deducting the price of the land sold at debtor mortgagor to the creditor mortgagee, the latter
public auction, of which, together with the interest up may proceed in a proper action against the debtor
to January 31, 1958, there remained an outstanding mortgagor for the deficiency of the formers
balance of P99,033.20, as per the Statement of obligation. It is of no importance whether the buyer of the
Account highest bidder in the public auction is the creditor itself.
TC: ruled in favor of creditor bank and ordered private
respondent to pay his outstanding obligation. Extrajudicial foreclosure under Act No. 3135 is not
waiver of right to payment for whole debt. The step
Appeal directly to the SC
taken by the mortgagee-bank in resorting to extra-judicial
foreclosure under Act No. 3135, was merely to find a
Issue: W/N creditor bank is entitled to recover the
proceeding for the sale, and its action can not be taken to
deficiency arising after an extrajudicial foreclosure
mean a waiver of its right to demand the payment of the
whole debt.
Held: Yes
WHEREFORE, finding no reversible error in the decision
Respondent argues that since Act No. 3135, as amended,
appealed from of the court a quo, the same is hereby
is silent as to the mortgagees right to recover deficiency
affirmed with costs against the defendant-appellant. So
arising after an extrajudicial foreclosure sale of mortgage,
ordered.
he (mortgagee) may not recover the same.
A reading of the provisions of Act No. 3135, as amended

(re extra-judicial foreclosure) discloses nothing, it is true,
as to the mortgagees right to recover such deficiency. But
neither do we find any provision thereunder which
expressly or impliedly prohibits such recovery.
Article 2131 of the new Civil Code, on the contrary,

expressly provides that: The form, extent and
consequences of a mortgage, both as to its constitution,
modification and extinguishment, and as to other matters
not included in this Chapter, shall be governed by the
provisions of the Mortgage Law and of the Land
Registration Law.
Under the Mortgage Law, which is still in force, the

mortgagee has the right to claim for the deficiency

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33. Philippine Bank of Commerce v.

A reading of the provisions of Act No. 3135, as amended

Article 2131 of the new Civil Code, on the contrary,

Under the Mortgage Law, which is still in force, the

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