- Petitioner
- Development Bank of the Philippines
- Respondent
- Guariña Agricultural
- Citation
- G.R. No. 160758
- Court
- Supreme Court
- Division
- First Division
- Ponente
- Bersamin, J.
- Decided
- January 15, 2014
Summary
DBP granted a P3.387 million loan to Guariña Corporation for resort development, secured by real estate and chattel mortgages. When DBP released only P3.003 million and found the project incomplete, it initiated foreclosure proceedings and sold the mortgaged properties in January 1979. Guariña Corporation sued to nullify the foreclosure. The Supreme Court affirmed lower courts' rulings that the foreclosure was premature and void because Guariña Corporation had not defaulted on the principal obligation. Under reciprocal obligation principles, DBP could not demand loan repayment without first releasing the full loan amount. The Court ordered restoration of possession to Guariña Corporation and payment of reasonable rentals for DBP's use of the properties during the intervening period, emphasizing that mortgage enforcement requires actual default on the principal obligation.