LORDUS FILES
RULES ON DEFICIENCY
WAREHOUSEMAN
What if after the sale there
is still deficiency, meaning
the proceeds of the goods
are not sufficient to satisfy
the lien.
IS THE WAREHOUSEMAN
ENTITLED TO RECOVER
THE DEFICIENCY TO THE
DEPOSITOR?
Yes, under section 35
which provides other
methods in enforcing a lien
bar the right to recover so
much of the
warehouseman's claim as
shall not be paid by the
proceeds of the sale of the
property. So the
warehouseman is entitled
to recover the deficiency
from the depositor even if
he choose to enforce his
lien by causing the
extrajudicial sale of the
property.
The warehouseman is not
precluded from recovering
any deficiency in case it
exists after the sale of the
property.
PLEDGE
ART. 2115. The sale of the
thing pledged shall
extinguish the principal
obligation, whether or not
the proceeds of the sale
are equal to the amount of
the principal obligation,
interest and expenses in a
proper case. If the price of
the sale is more than said
amount, the debtor shall
not be entitled to the
excess, unless it is
otherwise agreed. If the
price of the sale is less,
neither shall the creditor
be entitled to recover the
defi ciency,
notwithstanding any
stipulation to the contrary.
(n)
Timan-e ni ninyo na rule sa
pagbaligya sa thing
pledged. If the price or kita
sa pagbaligya is more than
of the obligation, like if ang
imo utang is 1M, ang kita
sa baligya is 1.5M. So asa
man ang excess na 500T?
It goes to the creditor
UNLESS THE CONTRARY IS
PROVIDED. In other words,
pwedi mo mag agree sa
contract of pledge na ang
excess mauli sa debtor.
That is allowed pero in thw
absence of agreement,
tanan kita sa auction,
ngadto jud sa creditor.
Q: What if the price is less?
A: The creditor does not
get the deficiency. A
contrary stipulation is void.
Example: Mangutang si J ni
R. 50k. Ang value sa ge
prenda is 20k ra. So
pagbaligya auction, ang
nahalin is 15 lang. So wa
jud kabayad silbi si J sa
utang. So 15k ra ang halin
sa auction. Ang question
does R get the deficiency
kang J? The answer is NO.
A contrar stipulation is
void. Di mo pwedi mag
agree didto na 'if ever the
value ofthe thing pledge is
less than the amount of
REAL ESTATE MORTGAGE CHATTEL MORTGAGE
RIGHT TO RECOVER In chattel mortgage, if the
DEFICIENCY - If there be a property is foreclosed and
balance due to the there is deficiency, the
mortgagee after applying creditor is entitled to
the proceeds of the sale, recover the deficiency
the mortgagee is entitled from the debtor except if
to recover the deficiency. the chattel mortgagee is a
In judicial foreclosure, the security for the purchase
Rules of Court specifically of personal property in
gives the mortgagee the installments.
right to claim for
deficiency in casw If there is deficiency,
deficiency exists while Act pwedi maka recover ang
No. 3135 governing mortgagee sa balance
extrajudicial foreclosures except kadtong 1484
does not give a mortgagee bitaw. Kadtong Recto Law.
the right to recover
deficiency after the public Requirements (Recto Law):
auction sale, neither does 1. There must be a
it expressly or impliedly contract;
prohibit such recovery. 2. The contract must be
one of absolute sale;
Stipulation of Upset Price 3. Not a pacto de retro
in Mortgage Contract is transaction;
Void. So i, e. there is 4. Redemption is selected
already a price in the real is installment;
estate mortgage at which 4. What is sold is personal
the property shall be sold property;
at public auction. That is 5. And the sale must be on
VOID. Parties cannot by installment plan.
agreement, contravene
the law and interfere with
the lawful procedure of
the courts.
Effect of inadequacy of
price in foreclosure sale.
That is not an issue at all
because there is the right
of redemption. Inadequacy
of the price is not material
because the judgment
debtor may reacquire the
property or else sell his
right to redeem and thus
recover any loss he claims
to have suffered by reason
of the price obtained at
the auction sale. (Gen rule)
Now the value of the
mortgage property has no
bearing on the bid price at
public auction provided
that the pub auc was
regularly and honestly
conducted. In the absence
of any irregularity in the
foreclosure proceeding,
the sale cannot be nullified
on the mere allegation of
disparity in the bid price
LORDUS FILES
the debt, the creditor has
a right to file a case against
J that against the
deficiency.
Pero naa pa ta’y laen
option. Pwedi man imo
nalang iuli ang alahas.
Unya ikiha nimo si J sa r
egular courts kung
gusto ka mabayaran ka for
the whole amount.
If mu exercise ka sa public
auction (na option as
pledgee), di ka kakuha sa
sobra if ever less sa value.
But if sobra sad ang kita
imo sad tanan. Unless
there is a stipulation to the
contrary (with emphasis
for the 1000th times).
Timan-e na ha kay sa Real
Estate ug Chattel
Mortgage, kay lahi na pud
na siyag rule. Basta sa
pledge lang gyud na siya
na kung naay sobra, imo
unless there is stipulation
to the contrary (with
emphasis on the 2000th
times).
and the property's fair
market value. So that's
why if you read
newspapers, naa na dihay
nga notice of mga
extrajudicial foreclosures
proceedings, the value
usually before the
proceedings is lower than
that of the value of the
prop. Kay ebased ramana
siya sa indebtedness.
The fact that the
mortgagee eventually
acquired the mortgaged
property and that the bid
price was low is not valid
reason for the mortgagor
to refuse to pay the
remaining balance of the
obligation for settled is the
rule that a mortgage is
simply a surety and not a
satisfaction of
indebtedness. (repeat with
emphasis 100th times)
Dili ka engon ang debtor
nga 'ngano maningil man
ka nako sa kuwang na ang
akong prop na ge mortg
kay times 5 paman gae sa
akong utang'.
The mortgagee may
institute an action for debt
or a real action to
foreclose the mortgage.
The m/creditor, pwedi nia
e-waive iyang right to
foreclose the prop by filing
a case in court. (which is
impractical daw)
Take note that as a general
rule that the mortgagor/ee
cannot recover the
balance. In case the
Mortgagee is already dead,
he can no longer recover
the deficiency from the
estate of the deceased. So
namatay na ang m-or and
naa pud siyay estate, if he
choose to extrajudicially
foreclose the prop you
cannot no longer recover
the deficiency against the
estate of the deceased.