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defendant-appellant. G.R. No. L-29130 | August 8, 1975

FACTS: Dioniso Mirang, appellant, obtained a loan approval from the Development Bank of the
Philippines amounting to 14,000 (1,000 for the purchase of work animals and farm implements;
1,500 for the construction of farmhouse and laborers’ quarters; and 11,500 for development and
maintenance of 18.5 hectares of abaca land). A mortgage in favor of DBP was executed by the
appellant over his homestead. DBP released the proceeds of the loan gradually and it total up to
13,000. After then, DBP refused to make further releases due to pestilence that wrecked the
plantation being financed. The appellant failed to make amortization and as a result thereof, DBP
foreclosed the property mortgaged extrajudicially and was sold to a public auction on 30 July
1957. By that time, the appellant indebtedness reached 19,714.35 including interest excluding
expenses of sale and registration. DBP as the bidder for 2,010 acquired ownership over the
property. Mirang was not able as well to exercise his right of redemption. Mirang filed a
complaint in 29 May 1962. He raised the issue (1) whether DBP can recover the deficiency from
the auction sale; (2) whether he is exempted from paying his loan since the proceeds were used
in the cultivation of his homestead; (3) whether when the mortgagor wishes to repurchase the
property should he pay the amount paid by the purchases in the auction sale or the total
obligation incurred by him and still outstanding.

ISSUE Whether the issues raised by the appellant has merits?

HELD: On the first issue, it is clear that in the absence of a similar provision in Act 3135, as
amended, it cannot be concluded that the creditor loses his right given him under the Mortgage
Law and recognized in the Rules of Court, to take action for the recovery of any unpaid balance
on the principal obligation, simply because he has chosen to foreclose his mortgage extra-
judicially, pursuant to a special power of attorney given him by the mortgagor in the mortgage
contract. As stated by this Court in Medina vs. Philippine National Bank (56 Phil. 651), a case
analogous to the one at bar, the step taken by the mortgagee-bank in resorting to extra-judicial
foreclosure under Act No. 3135, was 'merely to find a proceeding for the sale, and its action
cannot be taken to mean a waiver of its right to demand the payment of the whole debt.' On the
second issue, His predicament may evoke sympathy, but it does not justify a disregard of the
terms of the contract he entered into. His obligation thereunder is neither conditional nor aleatory
its terms are clear and subject to no exception. On the final issue, the unavoidable conclusion is
that the appellant, in redeeming the foreclosed property, should pay the entire amount he owed to
the Bank on the date of the sale, with interest thereon at the rate agreed upon.