103.

SPS ESMERALDO & ELIZABETH SUICO vs PHILIPPINE NATIONAL BANK & COURT OF APPEALS
GR No. 170215. Aug 28, 2007

FACTS:

Petitioners failed to pay their loan obligation secured by a real estate mortgage, PNB
foreclosed the mortgage. PNB stated therein that petitioners total outstanding obligation
amounted to P1,991,770.38. PNB bidded the amount of P8,511,000.00. Admittedly, PNB did
not pay its bid in cash or deliver the excess either to the City Sheriff who conducted the bid
or to the petitioners after deducting the difference between the amount of its bid and the
amount of petitioners obligation in the Notice of Sale. The petitioners then sought to declare
the nullity of the foreclosure, alleging that their loan obligation amounted only
to P1,991,770.38 in the Notice of Sale, and that PNB did not pay its bid in cash or deliver to
petitioner the surplus, which is required under the law. On the other hand, PNB claims that
petitioners loan obligation reflected in the Notice of Sale dated did not include their other
obligations, which became due at the date of the auction sale; as well as interests,
penalties, other charges, and attorney’s fees due on the said obligation.

ISSUES:
Whether the extrajudicial foreclosure is valid and binding as well as the certificate of
sale and final deed of sale? Whether the Notice of Sale is valid?

HELD:
Yes. Yes. The discrepancy between the amount of petitioners obligation as reflected in
the Notice of Sale and the amount actually due and collected from the petitioners at the
time of the auction sale does not constitute fraud which renders the extrajudicial foreclosure
sale valid.

Notices are given for the purpose of securing bidders and to prevent a sacrifice of the
property. If these objects are attained, immaterial errors and mistakes will not affect the
sufficiency of the notice; but if mistakes or omissions occur in the notices of sale, which are
calculated to deter or mislead bidders, to depreciate the value of the property, or to
prevent it from bringing a fair price, such mistakes or omissions will be fatal to the validity of
the notice, and also to the sale made pursuant thereto.
If the mortgagee is retaining more of the proceeds of the sale than he is entitled to,
this fact alone will not affect the validity of the sale but simply give the mortgagor a cause of
action to recover such surplus. It was held that PNB is directed to return to the petitioners the
amount of P2,101,185.08 with interest at 6% per annum from the time of the filing of the
complaint until its full payment before finality of judgement.