Gravina vs.

CA
FACTS: Spouses Arturo Gravina and Zenaida Gravina, were original owners of a 116 square-meter lot in
Tondo, Manila, which they mortgaged to the Daily Savings Loan Association (DLSA) in 1973, as security for
loans totalling P109,000.00. Having failed to settle their obligation when it fell due, the DLSA foreclosed the
mortgage. Ownership was later consolidated and a TCT was issued in favour of DLSA. DLSA sold the property
to Mercantile Financing for P40,000.00 and a TCT was issued in the name of the latter. MFMC sold to Spouses
Tan the same lot. Gravinas, in an action instituted by Tan, were later ordered to vacate the lot. Spouses
Gravina appealed and the CA affirmed the decision of the lower court.
ISSUE: WON the foreclosure was valid?
HELD: Yes. The finding of the trial court, which was sustained by the Court of Appeals, was that the DLSA did
send a letter to the petitioners informing them of the foreclosure of the mortgage but the petitioners failed to
claim the letter. The Court also found that said notice was published in the Evening News, a newspaper of
general circulation in the City of Manila. We are bound by those factual findings of the Court of Appeals
(Leuterio vs. CA, 197 SCRA 369). Moreover, Section 3 of Act No. 3135 (Mortgage Law) requires only the
posting of the notices of sale in three public places and the publication of the same in a newspaper of general
circulation. Personal notice is not required. In the case of Philippine National Bank vs. International Corporate
Bank, 199 SCRA 508, 509, the Court likewise ruled that: "The contention of private respondent in its
opposition that the extrajudicial foreclosure is null and void for failure of the petitioner to inform them of the
said foreclosure and the pertinent dates of redemption so that it can exercise its prerogatives under the law is
untenable. There being obviously no contractual stipulation therefor, personal notice is not necessary and
what governs is the general rule in Section 3 of Act 3135, as amended, which directs the posting of notices of
the sale in at least three (3) public places of the municipality where the property is situated, and the
publication thereof in a newspaper of general circulation in said municipality."||

Benguet Mangmt Corp v. CA

FACTS: Benguet Management Corporation (BMC) and Keppel Bank Philippines Inc. (KBPI) entered into a
Loan Agreement and Mortgage Trust Indenture. For the consideration of Php 190M, BMC mortgaged its
properties located in Alaminos, Laguna and Iba, Zambales.
BMC defaulted so KBPI filed an application for extra-judicial foreclosure of real estate mortgage first with the
Office of the Clerk of Court of the Regional Trial Court in Iba and later with the Office of the Clerk of Court of
the Regional Trial Court in San Pablo City.
BMC contended that the application should be denied on grounds of wrong remedy and forum-shopping.
The trial court granted the foreclosure proceedings.
ISSUES: W/N KBPI violated the rule against forum-shopping in filing applications for extra-judicial
foreclosure of real estate mortgage with both the RTCs in Iba and San Pablo City
HELD: Under the Procedure for Extra-Judicial Foreclosure of Mortgage, an extra-judicial foreclosure covering
several properties located in different provinces but covering only one indebtedness requires the applicant to
pay only one filing fee. This is regardless of the number of properties to be foreclosed. However, the venue of
the extra-judicial foreclosure proceedings is the place where each of the mortgaged property is located.
The rationale of this rule is that an injunction order of the court is enforceable only within its territorial

limits. Therefore, those properties subject to the same mortgage but are located in different provinces are
outside the jurisdiction of the trial court. The remedy of the law is to allow the applicant to file separate
injunction suits with another court which has jurisdiction over the latter properties.
BMC is not guilty of forum-shopping because the remedy provided by law is precisely to file separate
injunction suits.

DBP v. Licuanan
FACTS: Respondent spouses Alejandro and Adelaida Licuanan were granted a piggery loan in the amount of
P4,700 by petitioner, evidenced by a promissory note dated September 20, 1974 and secured by a real estate
mortgage over a 980-square meter parcel of land with a two-storey building. The loans maturity date was
September 23, 1979. Petitioner granted respondents an additional loan of P12,000 evidenced by a
promissory note dated May 29, 1975 payable on or before the year 1980. This was secured by a real estate
mortgage over four parcels of land situated in Pangasinan. On October 2, 1975, petitioner granted respondent
spouses another loan of P22,000 evidenced by a promissory note maturing on October 3, 1985. This was
secured by a real estate mortgage executed in favor of petitioner over another three parcels of land
On July 6, 1981, petitioner sent a letter by registered mail to respondents informing them that, since the
conditions of the mortgage had been breached, petitioner would have the mortgaged properties sold by the
sheriff under Act 3135. The total amount due from the three loans had by then ballooned to P75,298.32.
On July 20, 1981, petitioner filed an application for extrajudicial foreclosure. The mortgaged properties were
sold in a public auction on December 16, 1981. Petitioner, as the highest bidder, acquired them for a total of
P16,340. The certificate of sale was registered on January 25, 1982.
On February 4, 1983, petitioner consolidated its ownership over the properties. After more than a year or on
October 16, 1984, petitioner wrote respondents by registered mail, informing them that the properties (now
ACQUIRED ASSETS OF THE BANK) WOULD BE DISPOSED OF BY PUBLIC AUCTION. ON NOVEMBER 11, 1984,
PETITIONER published an advertisement stating that on November 14, 1984, the properties would be sold by
oral bidding. On this date, however, there were no bidders.
On November 16, 1984, petitioner sent respondents a letter informing them that the properties could be
reacquired by negotiated sale for cash or installment.Three days later, however, on November 19, 1984, the
properties were sold through negotiated sale to one Emelita A. Peralta. Respondents were informed of the
sale by petitioner through a letter dated December 6, 1984.
On the same day, petitioner executed a deed of conditional sale in favor of Peralta. On December 11, 1984,
respondents offered to repurchase the properties from petitioner but they had already been sold to Peralta.
Respondents then filed a complaint for recovery of real properties and damages.
ISSUE: Whether or not respondents are liable for the deficiency claim of petitioner.
Take Note: The price in which the mortgaged property was sold was P104,000 which was less than the
amount of respondents indebtedness which is P131,642.33.
HELD: No. the respondents are not responsible for the deficiency claim. While it is true that in extrajudicial
foreclosure of mortgage, the mortgagee has the right to recover the deficiency from the debtor this
presupposes that the foreclosure must first be valid.
But in this case, the foreclosure is invalid. If demand was made and duly received by the respondents and the
latter still did not pay, then they were already in default and foreclosure was proper. However, if demand was
not made, then the loans had not yet become due and demandable. This meant that respondents had not
defaulted in their payments and the foreclosure by petitioner was premature. Foreclosure is valid only when
the debtor is in default in the payment of his obligation.

PNB vs. Rocamora

FACTS: Spouses Agustin obtained a load from the petitioner bank. To secure the loan, the respondent spouses
executed a real estate and chattel mortgage. In both the promissory note and the mortgage agreements, there
exists an escalation clause which allowed PNB to increase the interest rate at anytime without notice. The
spouses failed to pay the instalments due them, so the PNB foreclosed the properties subject of the mortgage
agreement. The proceeds, however, was insufficient according to PNB. In its computation, the balance was
computed at a new interest rate which is double the agreed interest rate of the parties. Also, the bank delayed
the institution of the foreclosure proceeding contrary to the PD 385 which mandates government financial
institutions to immediately foreclose securities.
ISSUE: Whether of not petitioner bank is entitled to a deficiency judgement.
HELD: No. PNB was not able to prove the basis for the deficiency judgment it seeks. The right of the
mortgagee to pursue the debtor arises only when the proceeds of the foreclosure sale are ascertained to be
insufficient to cover the obligation and the othercosts at the time of the sale. Thus, the amount of the
obligation prior to foreclosure and the proceeds of the foreclosure are
material in a claim for deficiency. Creditors cannot unilaterally increase the interest rates; it is contrary to the
principle of mutuality of contracts. Any increase inthe rate of interest made pursuant to an escalation clause
must be the result of an agreement between the parties. The minds of all the parties must meet on the
proposed modification as this modification affects an important aspect of the agreement. Thus, any change
must be mutually agreed upon, otherwise, the change carries no binding effect. For the Court to grant the
PNBs deficiency claim would be to award it for its delay and its undisputed disregard of PD 385