115. Pnb Vs Ca -viene.docx

115. PHILIPPINE NATIONAL BANK vs COURTOF APPEALS & SPS. EDLIBERTO & ELENA NATIVIDAD GR NO. 121739. June 14, 1999 FACTS: Spouses Natividad granted by petitioner bank a one-year time Loan Commercial (P34,000) secured by a real estate mortgage over 9 parcels individually titled lands with total market value of P49,000. Petitioners able to pay P15, 000.00 only and failed to pay the balance which recourse by petitioner bank to foreclosed the mortgage. Petitioner bank as the highest bidder in the properties for P7,000 which resulted to short of P64,624 representing the balance on the principal obligation, accrued interest and other costs. Thus, petitioner filed the instant deficiency claim. ISSUE: Whether the petitioner is entitled for the deficiency amount of the extrajudicial foreclosure mortgage? HELD: Yes. It is settled that if the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of the mortgage, the mortgagee is entitled to claim the deficiency from the debtor. The public auction sale was not tainted with fraud and similar irregularities. The reappraisal of properties from P49,000.00 to P7,000.00 was made in good faith. It was found out that the properties where in fact an agricultural land not a residential which respondents declared during the application of loan. Respondent was the one who declared the properties as residential to the MAO and had them assessed as such. The property was plainly agricultural with no concrete stones, monuments or pavements. It was planted with palay and corn and the property is below road level which makes its value lower than the declared residential classification.