DEFICIENCY IN MORTGAGE CAN BE CLAIMED FROM PROCEEDS OF PUBLIC AUCTION

The mortgagee has the right to claim for the deficiency from the price obtained in the sale of the real
property at a public auction and the outstanding obligation. (Development Bank of the Philippines
vs CA, G.R. No., 23493 August 31, 1978)

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TICKLER

Development Bank of the Philippines vs CA

G.R. No., 23493 August 31, 1978
ANTONIO, J.

FACTS:
Appeal from CFI judgment

Appellee foreclosed extra-judicially the appellant’s mortgaged property and the Sheriff posted the
requisite notice of sale at public auction. The property was sold at public auction on after numerous
transfers made of the date of sale upon requests of the appellants themselves.

Because the proceeds of the sale were not sufficient to satisfy the balance of appellant’s
indebtedness, appellee sued the appellants for the deficiency.

The trial court found for appellee and ordered the appellants to pay the deficiency.

ISSUE:
Whether the mortgagee is entitled to claim the deficiency in extrajudicial foreclosure of mortgage?

HELD:
Yes. In extrajudicial foreclosure of mortgage, where the proceeds of the sale are insufficient to cover
the debt, the mortgagee is entitled to claim the deficiency from the debtor.

Under the Mortgage Law, the mortgagee has the right to claim for the deficiency resulting from the
price obtained in the sale of the real property at public auction and the outstanding obligation.

If the legislature intended to foreclose the right of a creditor to sue for deficiency resulting from the
foreclosure of the security to guarantee the obligation, it so expressly provides.

Thus, the mortgagee is entitled to claim the deficiency in extrajudicial foreclosure of mortgage