Wednesday, February 22, 2012

Allandale Sports Inc. vs. The Good Development Corporation [G. R. No. 164521, December 18, 2008]

Facts: Allandale Sportsline, Inc. (ASI) obtained a loan of P204,000.00 from The Good Development Corp. (GDC). A Deed of Mortgage was also executed in favor of GDC accessory to the loan. The loan was not paid, and so GDC filed a Complaint for Replevin with the RTC and/or Sum of Money with Damages against ASI, Melbarose, Manipon, Florante Edrino and John Doe. 

It is significant that at the trial that ensued, GDC 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. 

The RTC rendered a Decision, the dispositive portion of which orders ASI and Ma. Theresa Manipon to pay GDC the amount of P269,611.82 plus legal interest thereon effective to date until the full amount is fully paid, and 25% of the total amount due as liquidated damages. 

Issue: Whether there is legal basis for the RTC to grant respondent the relief of collecting from petitioners the whole amount of Php269,611.82 when respondents already recovered Php78,750.00 from the auction sale of some of the properties subject of the writs of replevin. 

Held: NO. By causing the auction sale of the mortgaged properties, respondent effectively adopted and pursued the remedy of extra-judicial foreclosure, using the writ of replevin as a tool to get hold of the mortgaged properties. As emphasized in Bachrach, one effect of respondent’s election of the remedy of extra-judicial foreclosure is its waiver of the remedy of collection of the unpaid loan. 

However, another effect of its election of the remedy of extra-judicial foreclosure is that whatever deficiency remains after applying the proceeds of the auction sale to the total loan obligation may still be recovered by respondent. 

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