G.R. No. L-12610 - Bacolod-Murcia Milling Co., Inc. vs. Central Bank of the Philippines

Spouses Antonio M. Chua and Asuncion M. Chua were registered owners of a parcel of land covered by Transfer Certificate of Title No. P-142.
Upon the death of Antonio M. Chua, his son Allan M. Chua was appointed special administrator of the intestate estate by the probate court.

The probate court authorized Allan M. Chua to obtain a loan amounting to P550,000.00 from Philippine National Bank (PNB), to be secured by a real estate mortgage over the parcel of land.
On June 29, 1989, Allan obtained a loan of P450,000.00 from PNB, evidenced by a promissory note payable on June 29, 1990, with interest at 18.8% per annum.
To secure the loan, Allan executed a deed of real estate mortgage on the parcel of land.

On December 27, 1990, PNB foreclosed extrajudicially on the mortgage through the Ex-Officio Sheriff due to failure to fully pay the loan.
The mortgaged property was sold at public auction, with PNB being the highest bidder at P306,360.00.
At the time of sale, PNB's total claim was P679,185.63, resulting in a remaining loan deficiency balance of P372,825.63.

PNB filed an action before the Regional Trial Court (RTC), Balayan, Batangas, Branch 10, docketed as Civil Case No. 1988, against Asuncion M. Chua and Allan Chua in his capacity as special administrator for recovery of the deficiency.
Respondents failed to answer, leading to default judgment proceedings with evidence received ex parte.
On September 4, 1991, the RTC dismissed PNB’s complaint.
On July 25, 1995, the Court of Appeals affirmed the RTC decision and dismissed the appeal filed by PNB.

PNB filed the present petition for certiorari questioning the dismissal and asserting rights to recover the deficiency claim after extrajudicial foreclosure.

Whether the Philippine National Bank can pursue a deficiency claim after exercising its right to extrajudicially foreclose the mortgage on the deceased debtor’s estate.

Whether Allan M. Chua, as special administrator of the intestate estate, and the heirs (Asuncion M. Chua and Allan M. Chua) are liable for the deficiency claim following the extrajudicial foreclosure sale.