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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 Sapinosos 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.