G.R. No. L-18816 - Philippine Bank of Commerce vs. De Vera

The parties entered into a contract titled “Consolidation of First Heal Estate Mortgage and Deed of Assignment,” executed on April 26, 1951.
The defendant, Tomas de Vera, incurred a debt to the plaintiff, Philippine Bank of Commerce, amounting to P127,312.24.
The debt was secured by a real estate mortgage covering lands described in TCT No. 1631 of the Register of Deeds of Pasay City, and TCT No. 37641 of the Register of Deeds of the City of Rizal (now Pasay City).
The terms and conditions in the mortgage and deed of assignment, originally dated February 28, 1947, were incorporated into the consolidated document (Exh. A), and these documents were presumably registered in the Registry of Deeds of Pasay City.

The obligation under the contract matured on March 15, 1956.
Despite several demands, the defendant failed to settle the outstanding balance, which stood at P99,033.20 as of January 31, 1958.
In response to the default, the plaintiff initiated foreclosure procedures by filing a petition with the Sheriff of Pasay City on March 14, 1956 (Exh. B) to sell the properties subject to the recorded real estate mortgage.

Acting on the petition, the Sheriff conducted a public auction of the two parcels of land.
The auction led to the sale of the properties to the plaintiff, Philippine Bank of Commerce, for P86,700.00.
The Sheriff issued a certificate of sale dated April 16, 1956 (Exh. C).
The consolidated mortgage documents (Exh. A) and related assignments underscored the legal basis for the foreclosure of the properties.

After the auction, the plaintiff sought to recover the deficiency, i.e., the balance remaining after deducting the sale proceeds from the outstanding debt.
Along with accruing interest until January 31, 1958, the remaining balance was computed at P99,033.20 as reflected in the Statement of Account (Exh. D).
The trial court ordered the defendant to pay this amount, in addition to 6% interest from April 16, 1956, P5,000.00 as attorney’s fees, and other costs.

Whether the trial court correctly held that the Philippine Bank of Commerce was entitled to recover a deficiency of P99,033.20 arising after an extra judicial foreclosure under Act No. 3135, as amended.

The defendant argued that Act No. 3135, as amended, which governs extra judicial foreclosure, is silent regarding the mortgagee’s right to recover any deficiency after the sale.
Whether the absence of a specific provision in the Act precludes the mortgagee from claiming the balance of the debt, despite foreclosing on the mortgaged properties.