G.R. No. L-28074 May 29, 1970 NORTHERN MOTORS, INC., plaintiff-appellant, vs. CASIANO SAPINOSO and "JOHN DOE", defendants-appellees. DOCTRINE: That the ultimate object of the action is the foreclosure of the chattel mortgage, is of no moment, for it is the fact of foreclosure and actual sale of the mortgaged chattel that bar further recovery by the vendor of any balance on the purchaser's outstanding obligation not satisfied by the sale. FACTS: Sapinoso purchased form Northern Motors a car for P12,171, making a down payment and the balance payable on installment. To secure the payment, Sapinoso executed chattle mortgage on the car. The mortgage contract provided that upon default, the mortgagee may: (a) sell the car; (b)cancel the contract; (c) foreclose the property extrajudicially; (d)foreclose the property judicially; (e) file an ordinary civil action for exact fulfillment further, whichever is the elected remedy, the mortgagor waives his right to reimbursement of any amounts paid by him. Sapinoso failed to pay several installment dues. His other payments were applied almost all on the interest only. With this, Northern Motors filed this present complaint. In the complaint, Northern Motors stated that it was availing itself of the remedy of extrajudicial foreclosure, with a prayer for the issuance of writ of replevin upon filing a bond. Should the mortgagor failed to deliver the car, then it be ordered to pay the amount due plus 25% attorneys fees. Subsequent to the commencement of the action but before filing an answer, Sapinoso paid P1,250. A writ of replevin was issued and served to Sapinoso together with the summons. The next day, the sheriff seized the car and delivered to Northern Motor.
Sapinoso made an answer, stating that he has already paid so much for the car; and that the value of the car is only P5,000; and that the reason for not being able to pay the installment dues is because the car is defective, and that Northern failed to have it fixed even though he had repeatedly called its attention. He also avered that he gave P700 to Northern to have the car fixed, but instead, Northern filed the instant suit. Sapinoso prayed that the car be returned to him, and that he is willing to pay for it in a compromise agreement. The trial court finds that Northern has the right to the possession of the car, and that the delivery of the car to him is ratified. But Northern has to return the P1,250 to Sapinoso plus interest. Northern made an appeal claiming that the court erred in ordering it to return the P1,250. Under Art 1484 of the Civil Code, it is the exercise and not the election of remedy of foreclosure that bars the creditor from recovering the unpaid balance of the debt. Northern states that Sapinoso, in paying him before he files his answer, and by not filing a counter-claim, effectively renounced any right he has to recover. ISSUE: Whether Northern has to return the P1,250 paid to him by Sapinoso after commencement of the present case but before the filing of Sapinoso’s Answer. HELD: No obligation to return. The trial court erred in concluding that the legal effects of the filing of the action was to bar the plaintiff from accepting further payments on the promissory note. That the ultimate object of the action is the foreclosure of the chattel mortgage, is of no moment, for it is the fact of foreclosure and actual sale of the mortgaged chattel that bar further recovery by the vendor of any balance on the purchaser's outstanding obligation not satisfied by the sale. In any event, what Article 1484(3) prohibits is "further action against the purchaser to recover any unpaid balance of the price;" and although this Court has construed the word "action" in said Article 1484 to mean "any judicial or extrajudicial proceeding by virtue of which the vendor may lawfully be enabled to exact recovery of the supposed unsatisfied balance of the purchase price from the purchaser or his privy", there is no occasion at this stage to apply the restrictive provision of the said article, because there has not yet been a foreclosure sale resulting in a deficiency.
The payment of the sum of P1,250.00 by defendant-appellee Sapinoso was a voluntary act on his part and did not result from a "further action" instituted by plaintiff-appellant. DISPOSITIVE: The judgment appealed from is modified by setting aside the portion thereof which orders Northern Motors to pay Sapinoso the sum of P1,250.00.
