NORTHERN MOTORS VS CASIANO SAPINOSO AND JOHN DOE

May 29, 1970 | Villamor, J. | Appeal from RTC Decision | Barring effect of foreclosure
PLAINTIFF-APPELLANT: Northern Motors
DEFENDANT-APPELLEES: Casiano Sapinoso and John Doe
SUMMARY: Plaintiff filed an action after defendant defaulted in paying the promissory notes he issued. Prior to filing
his answer, he made two payments to plaintiff. While the trial court upheld the foreclosure, it ruled that plaintiff is
barred from recovering the balance for the unpaid promissory notes. Court set aside that part of the judgment because it
is the fact of foreclosure and actual sale of chattel, not the filing of an action, which bars further recovery by the vendor.
DOCTRINE: 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.
FACTS:
Sapinoso purchased from Northern Motors an Opel
Kadett for the price of P12,171, making a downpayment
and executing a promissory note for the balance of
P10,540 payable in installments at 12% interest, as
follows: P361 on July 5, 1965 and P351 on August 5,
1965 up to and including December 5, 1967.

The chattel mortgage executed to secure the

payment provided for the following remedies if the
mortgagor defaults: (a) sale of the car by the
mortgagee; (b) cancellation of the contract of sale;
(c) extrajudicial foreclosure; (d) judicial
foreclosure; (e) ordinary civil action to exact
fulfillment of the mortgage contract. It also includes
an express waiver by the mortgagor of the right to
reimbursement of any amount paid by him upon
mortgagees election of a remedy.
Sapinoso failed to pay the first to fifth installment. He
made payments on Nov 21, Dec 21 and Apr 30, reducing
the balance to P10,218.10. Northern Motors filed a
complaint wherein it availed the remedy of
extrajudicial foreclosure and prayed that a writ of
replevin be issued upon filing of bond.
A writ of replevin was issued by the court. Sapinoso
made two payments before filing its answer.
Subsequently, the sheriff executed the seizure warrant by
turning over the car to defendant.
However, while the court upheld the right to foreclose
the chattel morgtgage, it ordered that plaintiff return the
amount paid by defendant because foreclosure and
recovery of unpaid balance are alternative remedies
which may not be pursued conjunctively.

ISSUE/S: WON the legal effect of filing an action was

to bar plaintiff from receiving payments for the
promissory notes? NO.
RULING: CFI decision MODIFIED, setting aside the
portion ordering return of defendants payment after
filing of the complaint.
RATIO:
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.

The payment of the sum of P1,250.00 by Sapinoso

was a voluntary act on his part and did not result
from a "further action" instituted by plaintiffappellant.
If the mortgage creditor, before the actual
foreclosure sale, is not precluded from recovering
the unpaid balance of the price although he has filed
an action of replevin for the purpose of extrajudicial
foreclosure, or if a mortgage creditor who has
elected to foreclose but who subsequently desists
from proceeding with the auction sale, without
gaining any advantage or benefit, and without
causing any disadvantage or harm to the vendeemortgagor, is not barred from suing on the unpaid
account, there is no reason why a mortgage
creditor should be barred from accepting, before
a foreclosure sale, payments voluntarily tendered

by the debtor-mortgagor who admits a subsisting

indebtedness.