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Allandale Vs Good Devt
Allandale Vs Good Devt
164521 December 18, 2008 the furniture, fixtures, appliances, equipment and other
personal property found in said business establishment, valued
ALLANDALE SPORTSLINE, INC., AND MELBAROSE R. SASOT, at P3,500.00; and List C -- one Toyota Corona 2DR. HT. with
petitioners, vs. Motor No. 18R-1474348, valued at P40,000.00 and one Toyota
Corolla 4DR. SDN with Motor No. 4K-5872110, valued at
THE GOOD DEVELOPMENT CORPORATION, respondent. P35,000.00.8
Before the Court is a Petition for Review on Certiorari On June 24, 1991, GDC demanded that Melbarose pay the
under Rule 45 of the Rules of Court, assailing the May 15, 2003 unpaid account of P179,000.00 or surrender the mortgaged
Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 59475 chattels within five days from notice.9
which dismissed the petition of Allandale Sportsline, Inc. and
Melbarose R. Sasot from the January 13, 1998 Decision2 of the When no payment was made, GDC filed with the RTC a
Regional Trial Court (RTC) of Pasig City, Branch 158 in Civil Case Complaint10 for Replevin and/or Sum of Money with Damages
No. 61053; and the June 12, 2004 CA Resolution3 which denied against ASI, Melbarose, Manipon, Florante Edrino and John
petitioners’ motion for reconsideration. Doe.11 It is significant that plaintiff GDC prayed for alternative
reliefs, to wit:
The relevant facts are as follows:
WHEREFORE, for all the foregoing it is most respectfully
Allandale Sportsline, Inc. (ASI) obtained a loan of prayed of this Honorable Court that:
P204,000.00 from The Good Development Corp. (GDC) under a
Promissory Note signed by Melbarose R. Sasot (Melbarose) and 1. A Writ of Replevin be issued ordering the seizure of the
Allandale R. Sasot (Allandale), President and Vice-President, above described chattels or personal property with all the
respectively, of ASI, with Theresa L. Manipon (Manipon) as one accessories or equipments and directing their transfer to
of three co-makers.4 The Promissory Note provides that the loan Plaintiff for the purposes of foreclosure &/or transfer in
is payable in daily equal installments of P2,000.00 with interest accordance with the law to satisfy Defendants' obligation in
at the rate of 26.002% per annum. In case of default in the favor of Plaintiff; and
payment of any installment, the entire balance of the obligation
shall become immediately due and payable, and subject to 2. After due notice and trial:
liquidated penalty/ collection charge equivalent to 2% of the
principal. a. to enforce said seizure and Plaintiff's right over
aforedescribed chattels and/or personal property; and
To provide additional security, ASI and Melbarose executed
in favor of GDC a Deed of Mortgage6 in which they acceded b. to order Defendants to pay Plaintiff jointly and severally
that: the sum of P43,750.00 as and for attorney's fees and the sum
equivalent to 25% of the obligation as and for liquidated
xxxx should the MORTGAGORS fail to comply with any of damages, plus other expenses of litigation and costs of suit.
the terms of the promissory note and this mortgage contract,
the MORTGAGEE shall automatically have the absolute right On the Alternative Cause of Action, in the event that
without need of prior notice or demand to forthwith judicially or manual delivery of said chattels or personal property cannot be
extrajudicially foreclose this mortgage and proceed against all or obtained for some reason or another, to render judgment
any of the mortgaged rights, interests and properties for the full ordering Defendants to pay plaintiff, jointly and severally as
satisfaction of the MORTGAGORS' entire obligation to the follows:
MORTGAGEE and, in such event, the MORTGAGORS shall be
further liable to the MORTGAGEE in the same judicial or 1. The sum of P175,000.00 plus interest thereon at
extrajudicial foreclosure proceedings for payment of attorney's 26.002% per annum from date of maturity until said sum shall
fees in an amount equivalent to twenty five (25%) per cent of have been fully paid.
the unpaid indebtedness but in no case less that Five hundred
pesos (500.00); liquidated damages in an amount equivalent to
2. The sum of P43,750.00 as and for Attorney's fees, the
twenty-five (25%) percent of said outstanding obligation and all
sum equivalent to 25% of the obligation as and for liquidated
the expenses and costs incidental to the above proceeding xxx.7
damages, such other expenses of litigation and costs of suit.12
(Emphasis supplied)
The RTC issued a Writ of Replevin,13 and by virtue thereof,
The properties subject of the mortgage are itemized in an
the Sheriff seized and delivered to GDC only one unit of Toyota
inventory attached to the deed. They include: List A -- all the
Corona with Motor No. 18R-1474348 and two appliances.14
merchandise and stocks in trade found in the commercial
establishment owned by ASI and Melbarose at #514 M.V. delos
On December 2, 1991, GDC filed an Amended Complaint to
Santos St., Sampaloc, Manila, valued at P100,000.00; List B -- all
include in its application for replevin the items under List A.15
After admitting the Amended Complaint, the RTC issued an Alias Q - Could you tell this Honorable Court if the auction
Writ of Replevin16 over the items in List A, and, by virtue sale pushed through?
thereof, the Sheriff seized and delivered to GDC the assorted
items enumerated therein. A - Yes, sir.
It appears that a Second Alias Writ of Replevin18 was Q - How much were you able to realize from the
issued over one unit Toyota Corolla with Motor No. 4K-5872110, auction sale?
but the records do not indicate that the Sheriff made a return on
the writ. xxxx
Meanwhile, ASI and Melbarose filed their Answer with A - We had pulled amounting to P55,050.00. The
Counterclaim.19 They claimed that their loan obligation to GDC Karaoke – P3,200.00; the t.v. - P500.00; and athletic uniforms
was only for P200,000.00, and after deducting P18,000.00, amounting to P20,000.00.
which amount was retained by GDC as advanced interest
payment, and P29,000.00, which represents payments made
Q - So, all in all how much could that be?
from June 4, 1991 to July 8, 1991, their unpaid obligation was
only P171,000.00;20 that they repeatedly tendered payment of
xxxx
this amount, but GDC rejected their efforts for no valid reason;
that the unreasonable refusal of GDC to accept their tender of
payment relieved them of their loan obligation;21 that its A - More than P78,000.00. I think P78,750.00.25
Complaint being obviously without merit, GDC should be held
liable to them for damages. On cross-examination, the same witness further described
the auction sale:
Manipon filed a separate Answer in which she did not deny
the authenticity of her signature on the Promissory Note, but ATTY. QUINONES:
argued that she did not knowingly or voluntarily sign the
instrument as a co-maker, for at that time she was under the xxxx
impression that the instrument she was signing was her own
loan application with GDC.23 Q - Are you sure that these has been sold already, Miss
Buenviaje?
In its Pre-Trial Order dated May 22, 1992, the RTC
identified only these issues: (a) whether GDC was entitled to A - Yes, sir.
collect P175,000.00, as well as the interests, attorney's fees and
other expenses and costs; (b) whether ASI and Melbarose made Q - When was it sold?
a valid tender of payment; (c) whether Manipon was a real
party-in-interest; and (d) whether the prevailing party was
A - I forgot the exact date.
entitled to damages.
Q - Do you have any document that those items were
However, it is significant that at the trial that ensued, GDC
already sold?
disclosed that after it obtained possession of the properties
subject of the writs of replevin, it caused the auction sale of
some of them and realized proceeds amounting to P78,750.00. A - We have a certificate of sale from the Sheriff.
Q - In this case, Miss witness, you were able to seize by Q - And in turn you were able to sell it to a third party?
way of a writ of replevin some properties of the defendants.
What did you do with these properties? A - Yes, sir.
A - It was being sold by auction sale. Q - And that car was sold already in the amount of
P56,000.00, is that correct?
A - P55,000.00. Promissory Note and a real party-in-interest is already final and
conclusive. Petitioners cannot now question this finding by
Moreover, GDC presented to the RTC a Statement of raising the defense that Manipon signed the promissory note
Account dated August 24, 1992, which indicated that the total without knowledge of the nature of her liability under the
outstanding balance of the loan obligation of ASI and Melbarose instrument. Such defense is personal to Manipon and cannot be
was reduced to P191,111.82 after the proceeds of the auction invoked by petitioners, unless it is shown that their interests are
sale conducted on June 19, 1992 in the amount of P78,750.00 so interwoven with and dependent on Manipon’s as to be
was deducted from the earlier balance of P266,126.17.27 inseparable.32 However, in their pleadings, petitioners do not
deny the authenticity and due execution of the Promissory Note,
The RTC rendered a Decision, the dispositive portion of whereas Manipon has maintained that said instrument was not
which reads: duly executed; hence, their defenses are clearly separate and
distinct.
WHEREFORE, in view of the foregoing, judgment is
rendered in favor of the plaintiff Good Development Corporation Only three issues are left to be resolved.
against defendants Melbarose Sasot, Allandale Sportsline Inc.,
and Ma. Theresa Manipon ordering them to pay the plaintiff Anent the first issue, petitioners contend that they were
jointly and severally the amount of P269,611.82 plus legal relieved of their obligation to pay GDC (respondent) when they
interest thereon effective to date until the full amount is fully made several attempts to tender payment but respondent
paid, and 25% of the total amount due as liquidated damages. refused to accept them without any valid reason. Petitioners
claim that the first tender of payment was made on July 3, 1991
SO ORDERED.28 (Emphasis supplied) when petitioner Sasot sent respondent a PCIB check postdated
October 31, 1991 in the amount of P171,000.00.33 Respondent
rejected the check, citing that the amount was insufficient for, as
ASI, Sasot and Manipon appealed to the CA, which
of July 4, 1991, the balance of the principal loan was
rendered the Decision assailed herein, to wit:
P175,000.00, not P171,000.00; and its maturity was September
13, 1991, not October 31, 1991.
WHEREFORE, premises considered, the instant appeal is
DENIED. The assailed decision of the RTC of Pasig City, Branch
On October 15, 1997, petitioners tendered payment of
158 in Civil Case No. 61053 is hereby AFFIRMED.
P171,000.00 in cash,35 but respondent refused to accept it due
to the insufficiency of the amount.36 Instead, respondent sent
SO ORDERED.
petitioners a Statement of Account dated October 29, 1991,
indicating that as of October 15, 1991 the total balance due was
Their Motion for Reconsideration was also denied by the P228,071.61.37
CA.
On October 29, 1991, petitioners tendered cash payment
Only ASI and Sasot (petitioners) took the present recourse, of P174,986.96,38 but respondent still refused to accept it for
raising the following issues: insufficiency of the amount.39
I. Whether or not petitioners’ check payment of The question then is whether petitioners’ tender of
Php171,000.00, PCIB Check No. 851688, to cover the total payment and respondent’s refusal thereof discharged
balance of their loan to respondent, became a valid tender of petitioners from their obligation.
payment by virtue of the respondent’s acceptance thereof;
Tender of payment, without more, produces no effect;
II. Whether or not the "parol evidence rule" applies on the rather, tender of payment must be followed by a valid
promissory note in question when the co-makers thereon are consignation in order to produce the effect of payment and
total strangers to one another; extinguish an obligation.40
III. Whether or not petitioners are entitled to the return of Tender of payment is but a preparatory act to
their properties pursuant to Section 9, Rule 60 of the Rules of consignation. It is the manifestation by the debtor of a desire to
Court. comply with or pay an obligation. If refused without just cause,
the tender of payment will discharge the debtor of the
IV. Whether or not there is legal basis in the award of obligation to pay but only after a valid consignation of the sum
liquidated damages. due shall have been made with the proper court.41
The second issue deserves scant consideration for lack of Consignation is the deposit of the proper amount with a
basis. Manipon did not join in the petition. Hence, the finding of judicial authority, before whom the debtor must establish
the RTC, as affirmed by the CA, that she was a co-maker of compliance with the following mandatory requirements: (1)
there was a debt due; (2) the consignation of the obligation had xxxx
been made because the creditor to whom tender of payment
was made refused to accept it, or because he was absent or [Respondent] realized P78,500.00[sic] from the auction
incapacitated, or because several persons claim to be entitled to sale of the seized personal property by virtue of the writ of
receive the amount due, or because the title to the obligation replevin. The amount realized from the auction sale is clearly
has been lost; (3) previous notice of the consignation had been insufficient to cover the unpaid balance, interest, attorney’s
given to the person interested in the performance of the fees, costs of the suit and other expenses incidental to litigation.
obligation; (4) the amount due was placed at the disposal of the This amount was deducted from the [petitioners’] total
court; and (5) after the consignation had been made, the person obligation in the amount of P269,111.82 [sic] resulting in the net
interested was notified thereof. Failure to prove any of these total obligation of P191,111.82 as of August 24, 1992.47
requirements is enough ground to render a consignation (Emphasis supplied)
ineffective.
Yet, it is curious that in the dispositive portion of its
Petitioners did not allege or prove that after their tender of Decision, the RTC granted respondent the remedy of collection
payment was refused by respondents, they attempted or of sum of money. The dispositive portion of the RTC Decision is
pursued consignation of the payment with the proper court. reproduced below for emphasis:
Their tender of payment not having been followed by a valid
consignation, it produced no effect whatsoever, least of all the WHEREFORE, in view of the foregoing, judgment is
extinguishment of the loan obligation. Therefore, the first issue rendered in favor of the [respondent] Good Development
of the validity or invalidity of their tender of payment is Corporation against [petitioners] Melbarose Sasot, Allandale
completely moot and academic, for either way the discussion Sportsline Inc., and Ma. Theresa Manipon ordering them to pay
will go, it will lead to no other conclusion but that, without an the [respondent] jointly and severally the amount of
accompanying valid consignation, the tender of payment did not P269,611.82 [sic] plus legal interest thereon effective to date
result in the payment and extinguishment of the loan obligation. until the full amount is fully paid, and 25% of the total amount
The Court cannot take cognizance of such a purely hypothetical due as liquidated damages.
issue.
SO ORDERED.
The third and fourth issues are interrelated because their
resolution depends on the nature of the remedy which
Not only is there no more reference to the conduct of the
respondent actually adopted.
auction sale of the mortgaged properties, there is also no longer
any acknowledgment that the proceeds earned from the auction
As emphasized at the outset, the reliefs respondent prayed sale should be deducted from the total unpaid loan.
for in its Complaint and Amended Complaint are in the
alternative: delivery of the mortgaged properties preparatory to
This is a glaring error.
foreclosure or payment of the unpaid loan.
In Bachrach Motor Co., Inc. v. Icarangal,48 the Court held
Moreover, after respondent acquired possession of the
that the remedies available to any mortgage creditor are
mortgaged properties through the writs of replevin, it caused
alternative, not cumulative or successive,49 viz.:
the auction sale of assorted sports outfits, one unit Sansio
Karaoke, one unit Sony T.V. Set and one unit Toyota Corona, and
For non-payment of a note secured by mortgage, the
earned proceeds amounting to P78,750.00.45 While it appears
creditor has a single cause of action against the debtor. This
that respondent failed to obtain the other personal properties
single cause of action consists in the recovery of the credit with
covered by the Deed of Mortgage and the writs of replevin,
execution of the security. In other words, the creditor in his
there is no doubt that it had effectively elected the remedy of
action may make two demands, the payment of the debt and
extra-judicial foreclosure of the mortgage security over the
the foreclosure of his mortgage. But both demands arise from
remedy of collection of the unpaid loan.
the same cause, the non-payment of the debt, and for that
reason, they constitute a single cause of action. Though the debt
The RTC was aware that respondent had elected one
and the mortgage constitute separate agreements, the latter is
remedy. In its Decision, it cited the fact that some of the
subsidiary to the former, and both refer to one and the same
mortgaged properties which were delivered to respondent by
obligation. Consequently, there exists only one cause of action
means of the Writs of Replevin had been sold on auction, and
for a single breach of that obligation. Plaintiff, then, by applying
acknowledged that the proceeds from said auction sale should
the rules above stated, cannot split up his single cause of action
be deducted from the loan account of petitioners. The RTC
by filing a complaint for payment of the debt, and thereafter
noted:
another complaint for foreclosure of the mortgage. If he does
so, the filing of the first complaint will bar the subsequent
The seized pieces of personal properties by virtue of the complaint. By allowing the creditor to file two separate
writ of replevin and alias writ of replevin were sold in an auction complaints simultaneously or successively, one to recover his
sale where [respondent] realized P78,750.00 from the sale.46
credit and another to foreclose his mortgage, we will, in effect, An examination of the Complaint and Amended Complaint
be authorizing him plural redress for a single breach of contract reveals that respondent did not allege any deficiency account.
at so much cost to the courts and with so much vexation and Nor did it raise the matter in its Pre-Trial Brief.55 This is only to
oppression to the debtor. (Emphasis supplied) be expected because the auction sale of the properties was
apparently conducted on June 19, 1992, long after it filed its
By causing the auction sale of the mortgaged properties, Complaint/Amended Complaint and Pre-trial Brief.
respondent effectively adopted and pursued the remedy of
extra-judicial foreclosure,50 using the writ of replevin as a tool However, the Court notes that evidence on the deficiency
to get hold of the mortgaged properties.51 As emphasized in amount was duly presented by respondent and examined by
Bachrach, one effect of respondent’s election of the remedy of petitioners. Respondent’s employee Leonila Buenviaje testified
extra-judicial foreclosure is its waiver of the remedy of collection that the proceeds respondent earned from the auction sale of
of the unpaid loan. the mortgaged properties amounted to only P78,750.00.56
Another employee, Grace Borja, testified that after applying the
Therefore, there was no more legal basis for the RTC to proceeds of P78,750 to the unpaid account of petitioners, there
grant respondent the relief of collecting from petitioners "the remained a deficiency of P91,111.82.57 Documentary evidence
amount of Php269,611.82 [sic] plus legal interest thereon of the deficiency amount was also presented in the form of the
effective to date until the full amount is fully paid," nor for the August 24, 1992 Statement of Account marked Exhibits "F-1"
CA to affirm it. and "F-2."58 Thus, an independent action to recover the
deficiency will merely entail the presentation of the same
However, another effect of its election of the remedy of evidence of the same claim, in the process taxing the time and
extra-judicial foreclosure is that whatever deficiency remains resources of the parties and the courts.59 Therefore, in the
after applying the proceeds of the auction sale to the total loan higher interest of justice and equity, the Court takes it upon
obligation may still be recovered by respondent. itself to grant the claim of respondent to the deficiency amount
of P191,111.82, as stated in its August 24, 1992 Statement of
Account.
But to recover any deficiency after foreclosure, the rule is
that a mortgage creditor must institute an independent civil
action.53 However, in PCI Leasing & Finance, Inc. v. Dai54 the Yet another effect of the election by respondent of the
Court held that the claim should at least be included in the pre- remedy of extra-judicial foreclosure is the inapplicability of
trial brief. In said case, the mortgage-creditor had foreclosed on Section 9, Rule 60 of the Rules of Court, which states:
the mortgaged properties and sold the same at public auction
during the trial on the action for damages with replevin. After Section 9. Judgment. – After trial of the issues, the court
judgment on the replevin case was rendered, the mortgage- shall determine who has the right of possession to and the value
creditor filed another case, this time for the deficiency amount. of the property and shall render judgment in the alternative for
The Court dismissed the second case on the ground of res the delivery thereof to the party entitled to the same, or for its
judicata, noting that: value in case delivery can not be made and also for such
damages as either party may prove, with costs.
Petitioner ignores the fact that it prayed in the replevin
case that in the event manual delivery of the vessel could not be As already discussed, the properties of petitioners which
effected, the court "render judgment in its favor by ordering were seized by virtue of the Writs of Replevin were extra-
[herein respondents] to pay x x x the sum of P3,502,095.00 plus judicially foreclosed and sold at public auction by respondent in
interest and penalty thereon from October 12, 1994 until fully the exercise of its absolute right under the contract entered into
paid as provided in the Promissory Note." by the parties, without need of prior notice or demand to
forthwith judicially or extra-judicially foreclose this mortgage
Since petitioner had extrajudicially foreclosed the chattel and proceed against all or any of the mortgaged rights, interests
mortgage over the vessel even before the pre-trial of the case, it and properties for the full satisfaction of the mortgagors' entire
should have therein raised as issue during the pre-trial the obligation to the mortgagee.
award of a deficiency judgment. After all, the basis of its above-
stated alternative prayer was the same as that of its prayer for Finally, under the same Deed of Mortgage, it is provided
replevin – the default of respondents in the payment of the that in case of default, petitioners shall be liable for liquidated
monthly installments of their loan. But it did not. (Emphasis penalty/collection charge in the amount equivalent to "twenty-
supplied) five (25%) percent of said outstanding obligation." It being
settled that petitioners defaulted on their loan obligation to
The question in the present case therefore is whether respondent, the former are liable for liquidated damages.
respondent instituted the proper action for the deficiency
amount or raised its claim at the pre-trial.
WHEREFORE, the Court PARTLY GRANTS the petition and
MODIFIES the May 15, 2003 Decision and June 12, 2004
Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 59475,
as follows:
No costs.
SO ORDERED.